As filed with the Securities and Exchange Commission on May 7, 1998
Registration No. 333-_____
Post-Effective Amendment No. 1 to Registration No. 333-06929
================================================================================
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
AND POST EFFECTIVE AMENDMENT NO. 1
UNDER THE SECURITIES ACT OF 1933
UACSC AUTO TRUSTS
(Issuer with respect to the securities)
UAC SECURITIZATION CORPORATION
(Originator of the Trusts described herein)
(Exact name of registrant as specified in its charter)
Delaware 35-1937340
(State or other jurisdiction (I.R.S. Employer
of incorporation or Identification No.)
organization of registrant)
9240 Bonita Beach Road, Suite 109-A
Bonita Springs, Florida 34135
(941) 948-1850
(Address, including ZIP code, and
telephone number, including
area code, of registrant's
principal place of business)
LEEANNE W. GRAZIANI
UAC Securitization Corporation
9240 Bonita Beach Road, Suite 109-A
Bonita Springs, Florida 34135
(941) 948-1850
(Name, address, including ZIP code,
and telephone number, including
area code, of agent for service)
Copies to:
ERIC R. MOY, ESQ. RICHARD M. SCHETMAN, ESQ.
Barnes & Thornburg Cadwalader, Wickersham & Taft
11 South Meridian Street 100 Maiden Lane
Indianapolis, Indiana 46204 New York, New York 10038
Approximate date of commencement of proposed sale to the public: From time
to time after the effective date of this Registration Statement as determined by
market conditions.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration number of the earlier effective registration statement for the same
offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
<PAGE>
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
=====================================================================================================================
Proposed Proposed maximum Amount of
Title of each class of Amount to be maximum offering aggregate offering registration
securities registered registered price per unit (1) price (1) fee (2)
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Asset Backed Certificates $125,000,000.00 100% $125,000,000.00 $42,986.74
=====================================================================================================================
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee.
(2) Determined pursuant to Section 6(b) of the Securities Act. $42,295.78
previously paid in connection with $122,657,757.43 of securities remaining
under Registration No. 333-06929 at a rate of 1/29th of one percent and
$690.96 paid herewith in respect of the addtional $2,342,242.57 proposed to
be registered hereunder at the rate of $295 per $1,000,000.
The registrant hereby amends this registration statement on such date or
dates as may be necessary to delay its effective date until the registrant shall
file a further amendment which specifically states that this registration
statement shall thereafter become effective in accordance with Section 8(a) of
the Securities Act of 1933 or until the registration statement shall become
effective on such date as the Commission, acting pursuant to said Section 8(a),
may determine.
Pursuant to Rule 429 under the Securities Act, upon effectiveness, this
Registration Statement shall contain a combined prospectus which also relates to
$122,657,757.43 aggregate amount of securities registered on Form S-3,
Registration No. 333-06929 (which was declared effective on July 18, 1996) for
which the fee of $42,295.78 (at a rate of 1/29th of one percent), has previously
been paid. This Registration Statement also constitutes Post-Effective Amendment
No. 1 to Registration No. 333-06929.
<PAGE>
INTRODUCTORY NOTE
This Registration Statement contains a form of Prospectus relating to the
offering of Series of Asset Backed Certificates by various UACSC Auto Trusts
created from time to time by UAC Securitization Corporation and two forms of
Prospectus Supplement relating to the offering by UACSC [year] - Auto Trust of
the particular Series of Asset Backed Certificates described therein. Each form
of Prospectus Supplement relates only to the securities described therein and is
a form that may be used, among others, by UAC Securitization Corporation to
offer Asset Backed Certificates under this Registration Statement.
I-2
<PAGE>
CROSS REFERENCE SHEET
Name and Caption in Form S-3 Caption in Prospectus
---------------------------- ---------------------
1. Foreport of the Registration
Statement and Outside Front
Cover Page of Prospectus............ Front Cover Page of Registration
Statement; Outside Front Cover Page
of Prospectus and Prospectus
Supplements
2. Inside Front and Outside Back
Cover Pages of Prospectus........... Inside Front Page Prospectus
Supplements
3. Summary Information, Risk Factors
and Ratio of Earnings to Fixed
Charges............................. Summary of Terms (Prospectus
Supplements and Prospectuses), Risk
Factors (Prospectus Supplements and
Prospectus); Yield and Prepayment
Considerations (Prospectus
Supplement)
4. Use of Proceeds..................... Use of Proceeds (Prospectus)
5. Determination of Offering Price..... *
6. Dilution............................ *
7. Selling Security Holders............ *
8. Plan of Distribution................ Underwriting
9. Description of Securities to Be
Registered.......................... Summary of Terms (Prospectus
Supplements and Prospectus); The
Receivables Pools (Prospectus), The
Receivables Pool (Prospectus
Supplements); Description of
Certificates (Prospectus); The
Offered Certificates (Prospectus
Supplements); Certain Legal Aspects
of the Receivables (Prospectus);
Certain Federal Income Tax
Consequences (Prospectus)
10. Interests of Named Experts and
Counsel............................. Legal Opinions
11. Material Changes.................... *
12. Information with Respect to the
Registrant.......................... Union Acceptance Corporation and
Affiliates (Prospectus); The Trusts
(Prospectus); Formation of the
Trust (Prospectus Supplements);
Description of the Certificates
(Prospectus); The Offered
Certificates (Prospectus
Supplement)
13. Incorporation of Certain
Information by Reference............ Incorporation of Certain
Information by Reference
(Prospectus)
14. Disclosure of Commission Position
on Indemnification for Securities
Act Liabilities..................... See page II-2
- -------------
*Not Applicable
<PAGE>
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Prospectus Supplement
(To Prospectus Dated __________________)
$-----------------
UACSC [Year]-__ Auto Trust
[$_____________ ______% Class A-1 Money Market Automobile Receivable Backed
Certificates $_____________ ______% Class A-2 Automobile Receivable Backed
Certificates $_____________ ______% Class A-3 Automobile Receivable Backed
Certificates $_____________ ______% Class A-4 Automobile Receivable Backed
Certificates $_____________ ______% Class A-5 Automobile Receivable Backed
Certificates Class I Interest Only Automobile Receivable Backed Certificates]
UAC Securitization Corporation
Depositor
Union Acceptance Corporation [LOGO]
Servicer
Interest at the applicable pass-through rate shown above, will be
distributed to Class A Certificateholders (as defined herein) on the [third
business day after the 5th] day of each month (the "Distribution Date"),
beginning _____________. Principal will be distributed to Class A
Certificateholders on each Distribution Date in the sequence described herein.
The Class I Certificates will not receive principal payments, but interest at
the Class I Pass-Through Rate of ______% per annum on the Notional Principal
Amount (as defined herein) of the Class I Certificates on each Distribution Date
until the Notional Principal Amount has been reduced to zero as provided herein.
Each Certificate offered hereby will represent an undivided interest in the
UACSC _____-___ Auto Trust (the "Trust") to be formed by UAC Securitization
Corporation, a Delaware corporation, having its principal office and place of
business in Bonita Springs, Florida (the "Depositor"). The Trust property will
include an irrevocable insurance policy guaranteeing payments of interest and
principal on the Class A Certificates and Class I Monthly Interest (the
"Policy") issued by __________________________ (the "Insurer") and a Spread
Account for the benefit of the Class A Certificateholders and the Class I
Certificateholders, as well as the Insurer. Concurrently with the issuance of
the Class A Certificates and the Class I Certificates, the Trust will issue a
Class IC Automobile Receivable Backed Certificate (the "Class IC Certificate").
The Class IC Certificate will be issued to UAC Securitization Corporation, the
Depositor, and will not be offered hereby. The Class A Certificates and the
Class I Certificates are together referred to herein as the "Offered
Certificates."
Prior to their issuance there has been no market for the Offered
Certificates nor can there be any assurance that one will develop, or if it does
develop, that it will provide the holders of the Offered Certificates with
liquidity or will continue for the life of the Offered Certificates. The
Underwriters intend, but are not obligated, to make a market in the Offered
Certificates.
The yield to maturity of the Class I Certificates will be sensitive to the
rate and timing of principal payments (including prepayments) on the
Receivables. Investors in the Class I Certificates should fully consider the
associated risks, including the risk that a rapid rate of principal payments
could result in the failure of such investors to recoup their initial
investments. See "Risk Factors -- Prepayment Risks Associated with the Class I
Certificates," "Yield and Prepayment Considerations" and "The Offered
Certificates -- The Class I Certificates -- Calculation of Notional Principal
Amount" herein.
Prospective investors should consider, among other things, the information
set forth under "Risk Factors" on page S-12 hereof and page 10 of the
Prospectus.
THE OFFERED CERTIFICATES DO NOT REPRESENT INTERESTS IN OR OBLIGATIONS OF
UAC SECURITIZATION CORPORATION OR ANY AFFILIATE THEREOF. NEITHER THESE
SECURITIES NOR THE UNDERLYING RECEIVABLES WILL BE INSURED OR GUARANTEED BY ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED
UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
================================================================================
Price to Underwriting Proceeds to
Public Discounts Depositor (2)
- --------------------------------------------------------------------------------
Per Class A-1 Certificate...... _________% _______% __________%
Per Class A-2 Certificate...... _________% _______% __________%
Per Class A-3 Certificate...... _________% _______% __________%
Per Class A-4 Certificate...... _________% _______% __________%
Per Class A-5 Certificate...... _________% _______% __________%
Per Class I Certificate (1).... _________% _______% __________%
Total.......................... $_________ $_______ $__________
================================================================================
(1) The Price to Public and Proceeds to Depositor are expressed as a percentage
of the Notional Principal Amount (initially $________________), and the
Underwriting Discount is expressed as a percentage of the related Price to
Public.
(2) Before deducting expenses, estimated to be $_____________.
The Offered Certificates are offered, subject to prior sale, when, as and
if accepted by the Underwriters, and subject to approval of certain legal
matters by Cadwalader, Wickersham & Taft, counsel for the Underwriters. It is
expected that delivery of the Offered Certificates in book-entry form will be
made on or about ____________ through the facilities of The Depository Trust
Company, against payment therefor in immediately available funds.
Underwriters of the Class A Certificates
--------------------------- ---------------------------
Underwriter of the Class I Certificates
---------------------------
The date of this Prospectus Supplement is ___________________
<PAGE>
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE OFFERED CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN
THE PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE OFFERED CERTIFICATES MAY NOT
BE CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS
SPECIFIC TO THE TRUST AND THE OFFERED CERTIFICATES AND, TO THAT EXTENT,
SUPPLEMENTS AND REPLACES THE MORE GENERAL INFORMATION PROVIDED IN THE
PROSPECTUS.
----------
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE OFFERED
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
----------
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Offered Certificates, whether or not participating
in this distribution, may be required to deliver this Prospectus Supplement and
the Prospectus. This is in addition to the obligation of dealers to deliver this
Prospectus Supplement and the Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur
only under the limited circumstances described herein), Harris Trust and Savings
Bank, as Trustee, will provide to Cede & Co., the nominee of The Depository
Trust Company, as registered holder of the Offered Certificates, monthly and
annual statements concerning the Trust and the Offered Certificates. Such
statements will not constitute financial statements prepared in accordance with
generally accepted accounting principles. A copy of the most recent monthly or
annual statement concerning the Trust and the Offered Certificates may be
obtained by contacting the Servicer at Union Acceptance Corporation, 250 North
Shadeland Avenue, Indianapolis, Indiana 46219 (telephone (317) 231-2717).
<PAGE>
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Certain capitalized terms used in this Summary are defined elsewhere
in this Prospectus Supplement on the pages indicated in the "Index of Principal
Terms" or, to the extent not defined herein, have the meanings assigned to such
terms in the Prospectus.
Issuer ................................UACSC [YEAR]-__ Auto Trust (the
"Trust").
Depositor...............................UAC Securitization Corporation (the
"Depositor").
Servicer ...............................Union Acceptance Corporation (in its
capacity as servicer, the "Servicer,"
otherwise "UAC").
Trustee ...............................Harris Trust and Savings Bank.
The Certificates ......................The Trust will be formed and will issue
the Certificates on or about __________
(the "Closing Date") pursuant to a
pooling and servicing agreement (the
"Pooling and Servicing Agreement"). The
"Certificates" will consist of: (i)
_______% Class A-1 Money Market
Automobile Receivable Backed
Certificates in the aggregate principal
amount of $______________ (the "Class
A-1 Certificates"); (ii) _____% Class
A-2 Automobile Receivable Backed
Certificates in the aggregate principal
amount of $_______________ (the "Class
A-2 Certificates"); (iii) _____% Class
A-3 Automobile Receivable Backed
Certificates in the aggregate principal
amount of $______________ (the "Class
A-3 Certificates"); (iv) ___% Class A-4
Automobile Receivable Backed
Certificates in the aggregate principal
amount of $______________ (the "Class
A-4 Certificates"); (v) ____% Class A-5
Automobile Receivable Backed
Certificates in the aggregate principal
amount of $___________ (the "Class A-5
Certificates" and together with the
Class A-1 Certificates, the Class A-2
Certificates, the Class A-3 Certificates
and the Class A-4 Certificates, the
"Class A Certificates"); (vi) the Class
I Interest Only Automobile Receivable
Backed Certificates (the "Class I
Certificates") and (vii) the Class IC
Automobile Receivable Backed Certificate
(the "Class IC Certificate"). The Class
I Certificates are interest only
certificates and will not receive
distributions of principal. The Class IC
Certificate will be issued to the
Depositor on the Closing Date and is not
being offered hereby. The Class A
Certificates and the Class I
Certificates are referred to herein as
the "Offered Certificates."
Each of the Certificates will represent
a fractional undivided interest in the
Trust. The Trust assets will include a
pool of simple and precomputed interest
installment sale and installment loan
contracts originated in various states
in the United States of America, secured
by new and used automobiles, light
trucks and vans (the "Receivables"),
certain monies due thereunder as of and
after ____________ (the "Cutoff Date"),
security interests in the related
vehicles financed thereby (the "Financed
Vehicles"), monies on deposit in the
Certificate Account and the proceeds
thereof, any proceeds from claims on
certain insurance policies relating to
the Financed Vehicles or the related
Obligors, any lender's single interest
insurance policy, the Spread Account (as
defined herein) for the benefit of the
Class A Certificateholders, the Class I
Certificateholders and the Insurer, the
Policy for the benefit of the Class A
Certificateholders and Class I
Certificateholders and certain rights
under the Pooling and Servicing
Agreement. Interest paid to the
Certificateholders on the first
Distribution Date will be based upon the
amount of interest accruing from the
Closing Date through the day before the
first Distribution Date and therefore
may include more or less than a full
month's interest.
The Class A Certificates ..............Interest. Interest will be distributable
on the [third business day after the 5th
day] of each month (each, a
"Distribution Date") beginning
____________, to holders of record as of
the last day of the calendar month
immediately preceding the calendar month
in which such Distribution Date occurs
(the "Record Date") of the Class A
Certificates (the "Class A
Certificateholders," which includes the
"Class A-1 Certificateholders," the
"Class A-2 Certificateholders," the
"Class A-3 Certificateholders", the
"Class A-4 Certificateholders" and the
"Class A-5 Certificateholders").
Interest on the Class A-1 Certificates
will be calculated on the basis of a
360-day year and the actual number of
days from the previous Distribution Date
through the day before the related
Distribution Date or, in the case of the
first Distribution Date, the number of
days from the Closing Date through the
day before the first Distribution Date.
Interest on the Class A-2 Certificates,
the Class A-3 Certificates, the Class
A-4 Certificates and the Class A-5
Certificates will be calculated on the
basis of a 360-day year consisting of
twelve 30-day months or, in the case of
the first Distribution Date, the number
of days from the Closing Date through
the day before the first Distribution
Date (assuming the month of the Closing
Date has 30 days). See "Yield and
Prepayment Considerations" and "The
Offered Certificates-- Distributions on
the Offered Certificates" herein . The
amount of interest distributable to the
Class A-1 Certificateholders on any
Distribution Date, other than the first
Distribution Date, is the product of
1/360th of the applicable pass-through
rate of ______% for the Class A-1
Certificates (the "Class A-1
Pass-Through Rate"), the number of days
from the previous Distribution Date
through the day before the related
Distribution Date and the aggregate
outstanding principal balance of the
Class A-1 Certificates (the "Class A-1
Certificate Balance") on the preceding
Distribution Date (after giving effect
to all distributions to
Certificateholders on such date). The
amount of interest distributable to the
Class A-2 Certificateholders, the Class
A-3 Certificateholders and the Class A-4
Certificateholders on any Distribution
Date, other than the first Distribution
Date, is the product of one-twelfth of
the applicable pass-through rate of
____% for the Class A-2 Certificates
(the "Class A-2 Pass-Through Rate"), the
applicable pass-through rate of ______%
for the Class A-3 Certificates (the
"Class A-3 Pass-Through Rate") and the
applicable pass-through rate of ______%
for the Class A-4 Certificates (the
"Class A-4 Pass-Through Rate")
multiplied by the aggregate outstanding
principal balance of the Class A-2
Certificates, the Class A-3 Certificates
and the Class A-4 Certificates
(respectively, the "Class A-2
Certificate Balance," the "Class A-3
Certificate Balance" and the "Class A-4
Certificate Balance") as of the
preceding Distribution Date (after
giving effect to all distributions to
Certificateholders on such date). The
amount of interest distributable to the
Class A-5 Certificateholders on any
Distribution Date, other than the first
Distribution Date, is the product of
one-twelfth of the applicable
pass-through rate of _____% for the
Class A-5 Certificates (which per annum
rate shall be increased by 0.50% after
the Clean-Up Call Date, if required)
(the "Class A-5 Pass-Through Rate")
multiplied by the aggregate outstanding
principal balance of the Class A-5
Certificates (the "Class A-5 Certificate
Balance" and together with the Class A-1
Certificate Balance, the Class A-2
Certificate Balance, the Class A-3
Certificate Balance and the Class A-4
Certificate Balance, the "Certificate
Balance" ) as of the preceding
Distribution Date (after giving effect
to all distributions to
Certificateholders on such date).
Principal. On each Distribution Date,
the Trustee will distribute as principal
to the Class A Certificateholders in a
maximum aggregate amount equal to the
Certificate Balance as of the previous
Distribution Date (after giving effect
to any distributions of Monthly
Principal required to be made on such
Distribution Date) (or, in the case of
the first Distribution Date, as of the
Closing Date) less the aggregate
outstanding principal amount of the
Receivables (the "Pool Balance") on the
last day of the immediately preceding
calendar month ("Monthly Principal").
Monthly Principal will be distributed
sequentially to the Class A
Certificateholders in accordance with
the Principal Distribution Sequence. For
purposes of determining Monthly
Principal, the unpaid principal balance
of a Defaulted Receivable or a Purchased
Receivable will be deemed to be zero on
and after the date such Receivable
became a Defaulted Receivable or a
Purchased Receivable. The final
scheduled Distribution Date of the Class
A-1 Certificates will be ___________
(the "Class A-1 Final Scheduled
Distribution Date"). The final scheduled
Distribution Date of the Class A-2
Certificates will be ____________ (the
"Class A-2 Final Scheduled Distribution
Date"). The final scheduled Distribution
Date of the Class A-3 Certificates will
be _____________ (the "Class A-3 Final
Scheduled Distribution Date"). The final
scheduled Distribution Date of the Class
A-4 Certificates will be _______________
(the "Class A-4 Final Scheduled
Distribution Date"). The final scheduled
Distribution Date of the Class A-5
Certificates will be _____________ (the
"Class A-5 Final Scheduled Distribution
Date").
No Monthly Principal will be distributed
(i) to the Class A-2 Certificateholders
until the Class A-1 Certificate Balance
has been reduced to zero; (ii) to the
Class A-3 Certificateholders until the
Class A-2 Certificate Balance has been
reduced to zero; (iii) to the Class A-4
Certificateholders until the Class A-3
Certificate Balance has been reduced to
zero; and (iv) to the Class A-5
Certificateholders until the Class A-4
Certificate Balance has been reduced to
zero. Since the rate of payment of
principal of each class of Class A
Certificates depends upon the rate of
payment of principal (including
prepayments) of the Receivables, the
final distribution in respect of each
class of Class A Certificates could
occur significantly earlier than the
respective final scheduled distribution
dates. See "The Offered Certificates --
Distributions on the Offered
Certificates" herein.
The Class I Certificates ............Interest. The Class I Certificates are
interest only certificates which will
not be entitled to any principal
distributions. Interest will accrue on
the Notional Principal Amount (defined
below) of the Class I Certificates at
the rate of _____% per annum (the "Class
I Pass-Through Rate"). The Notional
Principal Amount represents a designated
principal component of the Receivables,
originally $__________ (the "Original
Notional Principal Amount").
Interest with respect to the Class I
Certificates will accrue on the basis of
a 360-day year consisting of twelve
30-day months or, in the case of the
first Distribution Date, the number of
days from the Closing Date through the
day before the first Distribution Date
(assuming the month of the Closing Date
has 30 days) divided by 30. On each
Distribution Date, the Trustee shall
distribute pro rata to holders of Class
I Certificates (the "Class I
Certificateholders") of record as of the
preceding Record Date, Class I Monthly
Interest at the Class I Pass-Through
Rate on the Notional Principal Amount
outstanding on the immediately preceding
Distribution Date (after giving effect
to any reduction of the Notional
Principal Amount on such Distribution
Date) or, in the case of the first
Distribution Date, as of the Closing
Date. Holders of the Class I
Certificates will not be entitled to any
distributions after the Notional
Principal Amount thereof has been
reduced to zero.
Planned Amortization Feature;
Calculation of the Class I Notional
Principal Amount. The Class I
Certificates represent an interest-only
planned amortization class. The planned
amortization feature is intended to
reduce the uncertainty to investors in
the Class I Certificates with respect to
prepayments. Because the Class I
Certificates will receive interest based
on the Notional Principal Amount, this
is accomplished by basing the reduction
in the Notional Principal Amount on a
principal paydown schedule rather than
on the reduction in the actual principal
balances of the Receivables, as
described below. The amount which will
be paid to the Class I
Certificateholders is expected to be
derived from the excess of interest
earned on the Receivables over the Class
A Monthly Interest and the monthly
Servicing Fee payable to the Servicer
(the "Monthly Servicing Fee"). Solely
for the purpose of calculating the
amount payable with respect to the Class
I Certificates, the Certificate Balance
will be divided into two principal
components, the "PAC Component" and the
"Companion Component." The sum of the
PAC Component and the Companion
Component will at all times equal the
then aggregate unpaid Certificate
Balance. The "Notional Principal Amount"
of the Class I Certificates at any time
will be equal to the principal balance
of the PAC Component as calculated based
on the allocations of principal payments
described below, originally
$_______________. The Pooling and
Servicing Agreement establishes a
schedule (a "Planned Notional Principal
Amount Schedule") which is set forth
herein under "The Offered
Certificates--The Class I
Certificates-Calculation of Notional
Principal Amount." On each Distribution
Date, Monthly Principal distributed to
Class A Certificateholders will be
allocated first to the PAC Component in
an amount up to the amount necessary to
reduce the amount thereof to the Planned
Notional Principal Amount for such
Distribution Date, as set forth in the
Planned Notional Principal Amount
Schedule, second, to the Companion
Component until the outstanding amount
thereof is reduced to zero and third, to
the PAC Component, without regard to the
Planned Notional Principal Amount. As
described above, the Notional Principal
Amount of the Class I Certificates will
be equal to the outstanding amount of
the PAC Component and thus will be
reduced as the PAC Component is reduced.
The Planned Notional Principal Amount
Schedule has been prepared on the basis
of the assumption, among other things,
that the Receivables prepay at a
constant rate between ____% and ____%
ABS, an assumed constant rate of
prepayments and the prepayment model
used in this Prospectus Supplement. The
yield to maturity of the Class I
Certificates will be sensitive to the
rate and timing of principal payments
(including prepayments) on the
Receivables and may fluctuate
significantly from time to time. If the
Receivables prepay at a constant rate
within the range assumed in preparing
the Planned Notional Principal Amount
Schedule, the PAC Component (and the
Notional Principal Amount of the Class I
Certificates) will be reduced in
accordance with the Planned Notional
Principal Amount Schedule. If the
Receivables prepay at a constant rate
higher than ___% ABS, the amount of the
Companion Component will be reduced to
zero more quickly and the amount of the
PAC Component (and the Notional
Principal Amount of the Class I
Certificates) will be reduced more
quickly than provided in the Planned
Notional Principal Amount Schedule,
thereby reducing the yield to holders of
the Class I Certificates. In general, a
rapid rate of principal prepayments
(including liquidations due to losses,
repurchases and other dispositions) will
have a material negative effect on the
yield to maturity of the Class I
Certificates. The Planned Notional
Principal Amount Schedule is set forth
herein under "The Offered Certificates
-- The Class I Certificates --
Calculation of Notional Principal
Amount." The Planned Notional Principal
Amount Schedule has been prepared on the
basis of certain assumptions, which are
described herein under "The Offered
Certificates -- Class I Yield
Considerations." Prospective investors
in the Class I Certificates should fully
consider the associated risks, including
the risk that a rapid rate of
prepayments could result in the failure
of investors in the Class I Certificates
to recoup their initial investment. See
"Risk Factors -- Prepayment Risks
Associated with the Class I
Certificates" and "Yield and Prepayment
Considerations -- The Class I
Certificates" herein.
Subordination; Spread Account...........The Depositor will establish an account
(the "Spread Account") on the Closing
Date. On each Distribution Date
thereafter, the Servicer will deposit
into the Spread Account any amounts
remaining in the Certificate Account
after the payment on such date of all
amounts owing pursuant to the Pooling
and Servicing Agreement to the
Certificateholders (other than the Class
IC Certificateholder), the Insurer, the
Servicer for the Monthly Servicing Fee
and any permitted reimbursement of
outstanding Advances. In the event that
Available Funds are insufficient on any
Distribution Date prior to the
termination of the Trust (after payment
of the Monthly Servicing Fee) to pay
Monthly Principal and Monthly Interest
to the Class A Certificateholders and
the Class I Certificateholders, draws
will be made on the Spread Account to
the extent of the balance thereof and,
if necessary, the Policy, in the manner
and to the extent described herein. The
Spread Account is solely for the benefit
of the Class A Certificateholders, the
Class I Certificateholders and the
Insurer. In the event the amount on
deposit in the Spread Account is zero,
after giving effect to any draws thereon
for the benefit of the Class A
Certificateholders and the Class I
Certificateholders, and there is a
default under the Policy, any remaining
losses on the Receivables will be borne
directly pro rata by all classes of
Class A Certificateholders (to the
extent of the classes or class of Class
A Certificates which are outstanding at
such time) and Class I
Certificateholders, as described herein.
Any such reduction of the principal
balance of the Receivables due to losses
on the Receivables may also result in a
reduction of the Class I Notional
Principal Amount. See "The Offered
Certificates -- Accounts" and "--
Distributions on the Offered
Certificates" herein.
The Class A Certificates and Class I
Certificates will be senior in right and
interest to the Class IC Certificate.
The Class A Certificateholders and the
Class I Certificateholders will have
equal rights with respect to amounts
collected on or with respect to the
Receivables and other assets of the
Trust in the event of a shortfall. The
Trustee will first withdraw funds from
the Spread Account on each Distribution
Date to the extent of any shortfall in
the Monthly Servicing Fee, permitted
reimbursements of outstanding Advances,
Monthly Interest and Monthly Principal
as described above. Any amount on
deposit in the Spread Account on any
Distribution Date in excess of the
Required Spread Amount (defined below)
after all other required deposits
thereto and withdrawals therefrom have
been made, and after payment therefrom
of all amounts due the Insurer will be
distributed to the holder of the Class
IC Certificate (the "Class IC
Certificateholder"). Any amount so
distributed to the Class IC
Certificateholder will no longer be an
asset of the Trust. While it is intended
that the amount on deposit in the Spread
Account will grow over time, through the
deposit thereto of the excess
collections, if any, on the Receivables,
to the Required Spread Amount, there can
be no assurance that such growth will
actually occur. The "Required Spread
Amount" with respect to any Distribution
Date will equal _____% of the initial
Pool Balance. If the average aggregate
yield of the Receivables pool in excess
of losses falls below a prescribed level
set forth in the Insurance Agreement,
the Required Spread Amount will be
increased to _____% of the Pool Balance.
Upon and during the continuance of an
Event of Default or upon the occurrence
of certain other events described in the
Insurance Agreement generally involving
a failure of performance by the Servicer
or a material misrepresentation made by
the Servicer under the Pooling and
Servicing Agreement or the Insurance
Agreement, the Required Spread Amount
shall be equal to the Policy Amount, as
further described below. Under certain
circumstances, the Required Spread
Amount may be reduced. See "The Offered
Certificates -- Accounts" and "-- The
Policy" herein.
The Policy .............................The Depositor shall obtain an
irrevocable insurance policy (the
"Policy") issued by the Insurer (as
specified below) for the benefit of the
Trustee on behalf of the Class A
Certificateholders and the Class I
Certificateholders. The Trustee shall
draw on the Policy in the event that
sufficient funds are not available
(after payment of the Monthly Servicing
Fee and after withdrawals from the
Spread Account to pay the Class A
Certificateholders and the Class I
Certificateholders on any Distribution
Date in accordance with the Pooling and
Servicing Agreement) to distribute
Monthly Interest and Monthly Principal,
up to the Policy Amount. See "The
Offered Certificates -- The Policy."
Policy Amount ........................The term "Policy Amount" means with
respect to any Distribution Date: (x)
the sum of (A) the lesser of (i) the
Certificate Balance (after giving effect
to any distribution of Available Funds
and any funds withdrawn from the Spread
Account to pay Monthly Principal on such
Distribution Date) and (ii) the Net
Principal Policy Amount, plus (B) Class
A Monthly Interest, plus (C) Class I
Monthly Interest, plus (D) the Monthly
Servicing Fee; less (y) all amounts on
deposit in the Spread Account on such
Distribution Date. "Net Principal Policy
Amount" means the Certificate Balance as
of the first Distribution Date minus all
amounts previously drawn on the Policy
or from the Spread Account with respect
to Monthly Principal.
Insurer ..............................._______________________________________.
Legal Investment ................... The Class A-1 Certificates will be
eligible securities for purchase by
money market funds under Rule 2a-7 of
the Investment Company Act of 1940, as
amended.
Optional Sale .........................The Class IC Certificateholder has the
right to cause the Trustee to sell all
of the Receivables (referred to herein
as an "Optional Sale") as of the last
day of any Collection Period, on which
(i) the Pool Balance is equal to or less
than 10% of the initial Certificate
Balance and (ii) the Notional Principal
Amount of the Class I Certificates will
have been reduced to zero on or before
the related Distribution Date. The
purchase price applicable to the
Optional Sale shall be equal to the fair
market value of the Receivables (but not
less than the sum of (i) 100% of the
outstanding Certificate Balance, (ii)
accrued and unpaid interest on such
amount at the weighted average note
rates of the Receivables less any
payments received but not applied to
interest or principal and (iii) any
amounts due the Insurer).
Clean-Up Call Date......................If the Class IC Certificateholder does
not exercise its rights with respect to
the Optional Sale on the Distribution
Date on which the Optional Sale was
first permitted (the "Clean-Up Call
Date"), the Class A-5 Pass-Through Rate
will be increased by 0.50% on the first
Distribution Date after the Clean-Up
Call Date.
Tax Status ..........................In the opinion of special tax counsel to
the Depositor, the Trust will not be
treated as an association taxable as a
corporation or as a "publicly traded
partnership" taxable as a corporation.
The Trustee and the Certificateholders
will agree to treat the Trust as a
partnership for federal income tax
purposes, which will not be subject to
federal income tax at the Trust level.
See "Certain Federal Income Tax
Consequences" in the Prospectus.
Ratings ...............................As a condition to the issuance of the
Offered Certificates, the Class A
Certificates and the Class I
Certificates must be rated in the
highest category by Moody's Investors
Service, Inc. and Standard & Poor's
Ratings Services, a division of The
McGraw-Hill Companies, Inc. (each a
"Rating Agency" and collectively, the
"Rating Agencies"). The ratings of the
Class I Certificates do not address the
possibility that rapid rates of
principal prepayments could result in a
failure of the holders of the Class I
Certificates to fully recover their
investment. A security rating is not a
recommendation to buy, sell or hold
securities and may be subject to
revision or withdrawal at any time by
the assigning rating agency. See "Risk
Factors-- Certificate Rating."
ERISA Considerations ..................Subject to the considerations discussed
under "ERISA Considerations" in the
Prospectus, the Class A Certificates and
the Class I Certificates may be eligible
for purchase by employee benefit plans
subject to Title I of the Employee
Retirement Income Security Act of 1974,
as amended ("ERISA"). Any benefit plan
fiduciary considering the purchase of an
Offered Certificate should, among other
things, consult with experienced legal
counsel in determining whether all
required conditions for such purchase
have been satisfied. See "ERISA
Considerations" herein and in the
Prospectus.
<PAGE>
RISK FACTORS
Investors should carefully consider the information set forth below as
well as the other investment considerations described in this Prospectus
Supplement.
Limited Liquidity
There is currently no secondary market for the Offered Certificates.
The Underwriters currently intend to make a market in the Offered Certificates,
but are under no obligation to do so. There can be no assurance that a secondary
market will develop or, if one does develop, that it will provide
Certificateholders with liquidity of investment or that it will continue for the
life of the Offered Certificates.
Certificates Solely Obligations of the Trust
The Offered Certificates are interests in the Trust only and do not
represent the obligation of any other person. The Class A Certificateholders and
the Class I Certificateholders are senior in right and interest to the Class IC
Certificateholder (as described under "The Offered Certificates -- Distributions
on the Offered Certificates"). The Trustee will withdraw funds from the Spread
Account, up to the full balance of the funds on deposit in such account, only in
the event that Available Funds are insufficient in accordance with the Pooling
and Servicing Agreement to distribute Monthly Interest and Monthly Principal
(after payment of the Monthly Servicing Fee). The amount on deposit in the
Spread Account is intended to increase over time to an amount equal to the
Required Spread Amount. There is no assurance that such growth will occur or
that the balance in the Spread Account will always be sufficient to assure
payment in full of Monthly Principal and Monthly Interest. If the amount on
deposit in the Spread Account is reduced to zero after giving effect to all
amounts to be deposited to and withdrawn from the Spread Account pursuant to the
Pooling and Servicing Agreement, on any Distribution Date prior to termination
of the Trust, the Trustee will draw on the Policy, in an amount equal to the
shortfall in respect of Monthly Interest and Monthly Principal, up to the Policy
Amount. If the Spread Account is reduced to zero and there is a default under
the Policy, the Trust will depend solely on current distributions on the
Receivables to make distributions on the Offered Certificates and distributions
of interest and principal on the Offered Certificates may be made pro rata based
on the amounts to which Certificateholders of each class are entitled as set
forth under "The Offered Certificates -- Distributions on the Offered
Certificates." See "The Receivables Pool -- Delinquencies, Repossessions and Net
Losses" and "The Offered Certificates -- Accounts" and "-- Distributions on the
Offered Certificates" herein.
Prepayment Risks Associated with the Class I Certificates
If the Receivables prepay at a constant rate within the range assumed
in preparing the Planned Notional Principal Amount Schedule, the PAC Component
(and the Notional Principal Amount) will be reduced in accordance with the
Planned Notional Principal Amount Schedule. If the Receivables prepay at a
constant rate higher than ___% ABS, the Notional Principal Amount will be
reduced more quickly than provided in the Planned Notional Principal Amount
Schedule, thereby reducing the yield to holders of the Class I Certificates. In
general, a rapid rate of principal prepayments will have a material negative
effect on the yield to maturity of the Class I Certificates. Prospective
investors should fully consider the associated risks, including the risk that a
rapid rate of prepayments could result in the failure of investors in the Class
I Certificates to recoup their initial investment. See "Yield and Prepayment
Considerations -- The Class I Certificates" herein.
Certificate Rating
It is a condition of issuance of the Offered Certificates that the
Class A Certificates and the Class I Certificates be rated in the highest
applicable category by the Rating Agencies. Such ratings will reflect only the
views of the relevant rating agency. There is no assurance that any such rating
will continue for any period of time or that it will not be revised or withdrawn
entirely by such rating agency if, in its judgment, circumstances so warrant. A
revision or withdrawal of such rating may have an adverse effect on the market
price of the Offered Certificates. The ratings of the Class I Certificates do
not address the possibility that rapid rates of principal prepayments could
result in a failure of the holders of the Class I Certificates to fully recover
their investment. A security rating is not a recommendation to buy, sell or hold
securities.
FORMATION OF THE TRUST
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the Offered
Certificates. The Depositor will retain the Class IC Certificate. UAC will be
responsible for servicing the Receivables pursuant to the Pooling and Servicing
Agreement and will be compensated for acting as the Servicer. See "Description
of the Transfer and Servicing Agreements -- Servicing Compensation and Payment
of Expenses" in the Prospectus. To facilitate servicing and to minimize
administrative burden and expense, the Servicer will be appointed custodian of
the Receivables by the Trustee, but will not stamp the Receivables to reflect
the sale and assignment of the Receivables to the Trust or make any notation of
the Trust's lien on the certificates of title of the Financed Vehicles. In the
absence of such notation on the certificates of title, the Trustee may not have
perfected security interests in the Financed Vehicles securing the Receivables.
See "Certain Legal Aspects of the Receivables" in the Prospectus. Under the
terms of the Pooling and Servicing Agreement, UAC may delegate its duties as
Servicer and custodian; however, any such delegation will not relieve UAC of its
liability and responsibility with respect to such duties.
The Depositor will establish the Spread Account for the benefit of the
Class A Certificateholders, the Class I Certificateholders and the Insurer and
will obtain the Policy. Withdrawals from the Spread Account and, only after such
withdrawals, draws on the Policy will be made in accordance with the Pooling and
Servicing Agreement in the event that sufficient funds are not available (after
payment of the Monthly Servicing Fee) to distribute, in the case of Class I
Monthly Interest, Class A Monthly Interest and Monthly Principal, up to the
Policy Amount. If the Spread Account is exhausted and there is a default under
the Policy, the Trust will look only to the Obligors on the Receivables and the
proceeds from the repossession and sale of Financed Vehicles that secure
Defaulted Receivables for distributions of interest and principal on the
Certificates. In such event, certain factors, such as the Trustee's not having
perfected security interests in some of the Financed Vehicles, may affect the
Trust's ability to realize on the collateral securing the Receivables, and thus
may reduce the proceeds to be distributed to Certificateholders. See "The
Offered Certificates -- Accounts" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
THE RECEIVABLES POOL
The Receivables were selected from UAFC's prime portfolio, for purchase
by the Depositor by several criteria, including that each Receivable: (i) has an
original number of payments of not more than ___ payments and not less than ___
payments, (ii) has a remaining maturity of not more than ___ months and not less
than ______ months, (iii) provides for level monthly payments that fully
amortize the amount financed over the original term, and (iv) has a Contract
Rate (exclusive of prepaid finance charges) of not less than _____%. The
weighted average remaining maturity of the Receivables will be approximately ___
months as of the Cutoff Date.
Approximately _____% of the aggregate principal balance of the
Receivables as of the Cutoff Date are simple interest contracts which provide
for equal monthly payments. Approximately ____% of the aggregate principal
balance of the Receivables as of the Cutoff Date are Precomputed Receivables (as
defined in the Prospectus) originated in the State of California. All of such
Precomputed Receivables are Rule of 78's Receivables (as defined in the
Prospectus). Approximately ______% of the aggregate principal balance of the
Receivables as of the Cutoff Date represent financing of new vehicles; the
remainder of the Receivables represent financing of used vehicles.
Receivables representing more than 10% of the aggregate principal
balance of the Receivables as of the Cutoff Date were originated in metropolitan
areas in the States of _________ and _________. The performance of the
Receivables in the aggregate could be adversely affected in particular by the
development of adverse economic conditions in such metropolitan areas.
Composition of the Receivables as of the Cutoff Date
<TABLE>
<CAPTION>
Aggregate Original Weighted
Number of Principal Principal Average
Receivables Balance Balance Rate
----------- ------- ------- ----
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty Trucks............ $ $ %
Used Automobiles and Light-Duty Trucks...........
New Vans (1).....................................
Used Vans (1)....................................
All Receivables..................................
</TABLE>
Weighted Weighted Percent of
Average Average Aggregate
Remaining Original Principal
Term(2) Term(2) Balance(3)
------- ------- ----------
New Automobiles and Light-Duty Trucks... mos. mos. %
Used Automobiles and Light-Duty Trucks..
New Vans (1)............................
Used Vans (1)...........................
All Receivables......................... mos. mos. %
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the Receivables.
(3) Sum may not equal 100% due to rounding.
Geographic Distribution of the Receivables as of the Cutoff Date
Percent of Aggregate
State (1)(2) Principal Balance (3)
------------ ---------------------
Arizona...................................... %
California...................................
Colorado.....................................
Florida......................................
Georgia......................................
Idaho........................................
Illinois.....................................
Indiana......................................
Iowa.........................................
Kansas.......................................
Kentucky.....................................
Maryland.....................................
Michigan.....................................
Minnesota....................................
Missouri.....................................
Nebraska.....................................
Nevada.......................................
New Mexico...................................
North Carolina...............................
Ohio.........................................
Oklahoma.....................................
Oregon.......................................
Pennsylvania.................................
South Carolina...............................
Tennessee....................................
Texas........................................
Utah.........................................
Virginia.....................................
Washington...................................
Wisconsin....................................
Total .................................. %
(1) Based on address of the Dealer selling the related Financed Vehicle.
(2) Receivables originated in Ohio were solicited by Dealers for direct
financing by UAC or the Predecessor. All other Receivables were
originated by Dealers and purchased from such Dealers by UAC or the
Predecessor.
(3) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Remaining Term as of the Cutoff Date
Percent of
Remaining Aggregate Average Aggregate
Scheduled Number of Principal Principal Principal
Term Range Receivables Balance Balance Balance(1)
---------- ----------- ------- ------- ----------
0 to 6 months..... $ $ %
7 to 12 months.....
13 to 24 months.....
25 to 36 months.....
37 to 48 months.....
49 to 60 months.....
61 to 66 months.....
67 to 72 months.....
73 to 84 months.....
Total..... $ $ %
(1) Sum may not equal 100% due to rounding.
Distribution of Receivables by Financed Vehicle Model Year
as of the Cutoff Date
Percent Percent
of Total Aggregate of Aggregate
Model Number of Number of Principal Principal
Year Receivables Receivables(1) Balance Balance(1)
---- ----------- -------------- ------- ----------
1981 and earlier... % $ %
1982...............
1983...............
1984...............
1985...............
1986...............
1987...............
1988...............
1989...............
1990...............
1991...............
1992...............
1993...............
1994...............
1995...............
1996...............
1997...............
1998...............
Total............ % $ %
(1) Sum may not equal 100% due to rounding.
Distribution of the Receivables by Note Rate as of the Cutoff Date
Percent of
Aggregate Average Aggregate
Number of Principal Principal Principal
Note Rate Range Receivables Balance Balance Balance(1)
--------------- ----------- ------- ------- ----------
6.000 to 6.999%....... $ $ %
7.000 to 7.999%.......
8.000 to 8.999%.......
9.000 to 9.999%.......
10.000 to 10.999%.......
11.000 to 11.999%.......
12.000 to 12.999%.......
13.000 to 13.999%.......
14.000 to 14.999%.......
15.000 to 15.999%.......
16.000 to 16.999%.......
17.000 to 17.999%.......
18.000 to 18.999%.......
19.000 to 19.999%.......
20.000 to 20.999%.......
21.000 to 21.999%.......
22.000 to 22.999%.......
23.000 to 23.999%.......
24.000 to 24.999%.......
Total....... $ $ %
(1) Sum may not equal 100% due to rounding.
Delinquencies, Repossessions and Net Losses
Set forth below is certain information concerning the experience of UAC
and the Predecessor pertaining to delinquencies, repossessions, and net losses
on its prime fixed rate retail automobile, light truck and van receivables
serviced by UAC and the Predecessor. There can be no assurance that the
delinquency, repossession, and net loss experience on the Receivables will be
comparable to that set forth below.
Delinquency Experience
<TABLE>
<CAPTION>
At June 30,
1995 1996 1997
---------------------- ----------------------- ----------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio .... 117,837 $1,159,349 147,722 $1,548,538 173,693 $1,860,272
------- ---------- ------- ---------- ------- ----------
Delinquencies
30-59 days .......... 1,169 $ 12,097 1,602 $ 17,030 2,487 $ 27,373
60-89 days .......... 377 4,124 694 7,629 1,646 18,931
90 days or more ..... 0 0 333 3,811 723 8,826
------- ---------- ------- ---------- ------- ----------
Total delinquencies .... 1,546 $ 16,221 2,629 $ 28,470 4,856 $ 55,130
======= ========== ======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio ......... 1.31% 1.40% 1.78% 1.84% 2.80% 2.96%
</TABLE>
<PAGE>
At ____________, At ____________,
199___ 199___
------------------------- ----------------------
(Dollars in thousands)
Number of Number of
Receivables Amount Receivables Amount
----------- ------ ----------- ------
Servicing portfolio .... $ $
------- ---------- ------- ----------
Delinquencies
30-59 days .......... $ $
60-89 days ..........
90 days or more .....
------- ---------- ------- ----------
Total delinquencies .... $ $
======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio ......... % % % %
<PAGE>
<TABLE>
<CAPTION>
Credit Loss Experience (1)
Year ended June 30,
1995 1996 1997
------------------------ ----------------------- ------------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing
portfolio(2)............ 104,455 $982,875 132,363 $1,343,770 164,858 $1,759,666
------- -------- ------- ---------- ------- ----------
Gross charge-offs ........... 3,493 $ 28,628 3,663 $ 40,815 6,280 $ 70,830
Recoveries (3) .............. 15,258 19,543 28,511 8,134 8,527 16,661
-------- ---------- ----------
Net losses .................. $ 13,370 $ 21,272 $ 42,319
======== ========== ==========
Gross charge-offs as a %
of avg. servicing
portfolio(4) ............. 3.34% 2.91% 2.77% 3.04% 3.81% 4.03%
Recoveries as a % of gross
charge-offs .............. 53.30% 47.88% 40.25%
Net losses as a % of avg
servicing portfolio(4) ... 1.36% 1.58% 2.40%
</TABLE>
<TABLE>
<CAPTION>
________ Months Ended _____ Months Ended ____ Months Ended
_____________, 199__ (5) __________, 199__ (5) __________, 199____ (5)
------------------------- ------------------------ --------------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing
portfolio(2)............ $ $ $
------- ---------- ------- ---------- ------- ----------
Gross charge-offs ........... $ $ $
Recoveries (3) ..............
---------- ---------- ----------
Net losses .................. $ $ $
========== ========== ==========
Gross charge-offs as a %
of avg. servicing
portfolio(4) ............. % % % % % %
Recoveries as a % of gross
charge-offs .............. % % %
Net losses as a % of avg
servicing portfolio(4) ... % % %
</TABLE>
- -----------
<PAGE>
(1) There is generally no recourse to Dealers under any of the receivables in
the portfolio serviced by UAC or the Predecessor, except to the extent of
representations and warranties made by Dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) In fiscal 1995, the method by which recoveries are stated was changed.
Currently, recoveries include recoveries on receivables previously charged
off, cash recoveries and unsold repossessed assets carried at fair market
value. Under the previous method, reported recoveries excluded unsold
repossessed assets carried at fair market value. Prior period credit loss
experience has been restated to conform to current period classifications.
(4) Variation in the size of the portfolio serviced by UAC will affect the
percentages in "Gross charge-offs as a percentage of average servicing
portfolio" and "Net losses as a percentage of average servicing portfolio."
(5) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
<PAGE>
[Discussion of Delinquencies and Net Losses]
UAC's expectations with respect to delinquency and credit loss trends
constitute forward-looking statements and are subject to important factors that
could cause actual results to differ materially from those projected by UAC.
Such factors include, but are not limited to, general economic factors affecting
obligors' ability to make timely payments on their indebtedness such as
employment status, rates of consumer bankruptcy, consumer debt levels generally
and the interest rates applicable thereto. In addition, credit losses are
affected by UAC's ability to realize on recoveries of repossessed vehicles,
including, but not limited to, the market for used cars at any given time.
YIELD AND PREPAYMENT CONSIDERATIONS
General
Monthly Interest (as defined herein) will be distributed to
Certificateholders on each Distribution Date to the extent of the pass-through
rate applied to the applicable Certificate Balance or Notional Principal Amount,
as applicable, as of the preceding Distribution Date or the Closing Date, as
applicable (after giving effect to distributions of principal on such preceding
Distribution Date). See "The Offered Certificates -- Distributions on the
Offered Certificates" herein. In the event of a full or partial prepayment on a
Receivable, Certificateholders will receive interest for the full month of such
prepayment either through the distribution of interest paid on other
Receivables, from a withdrawal from the Spread Account, an Advance by the
Servicer or draw on the Policy.
Although the Receivables will have different Contract Rates, each
Receivable's Contract Rate generally will exceed the sum of (a) the weighted
average of the Class A-1 Pass-Through Rate, the Class A-2 Pass-Through Rate, the
Class A-3 Pass-Through Rate, the Class A-4 Pass-Through Rate and the Class A-5
Pass-Through Rate, (b) the Class I Pass-Through Rate, (c) the per annum rate
used to calculate the Insurance Premium and (d) the per annum rate used to
calculate the Servicing Fee. The Contract Rate on a small percentage of the
Receivables, however, will be less than the foregoing sum. Disproportionate
rates of prepayments between Receivables with higher and lower Contract Rates
could affect the ability of the Trust to distribute Monthly Interest to
Certificateholders.
The Class I Certificates
The Class I Certificates are interest only certificates. Although the
planned amortization feature of the Class I Certificates is intended to reduce
the uncertainty of prepayments with respect to the Class I Certificates, if the
Receivables prepay sufficiently quickly, the Notional Principal Amount of the
Class I Certificates may be reduced more quickly than provided in the Planned
Notional Principal Amount Schedule, thereby reducing the yield to the holders of
the Class I Certificates. The yield to maturity on the Class I Certificates will
therefore be very sensitive to the rate of prepayments, including voluntary
prepayments and prepayments due to liquidations and repurchases. Prospective
investors should fully consider the associated risks, including the risk that a
rapid rate of prepayments could result in the failure of investors in the Class
I Certificates to recoup their initial investment. See "Risk Factors" and "The
Offered Certificates -- The Class I Certificates -- Calculation of Notional
Principal Amount" and "-- Class I Yield Considerations."
THE DEPOSITOR AND UAC
UAC currently acquires loans from over 3,300 manufacturer franchised
automobile dealerships in 30 states. UAC is an Indiana corporation, formed in
December 1993 by UAC's predecessor, Union Federal Savings Bank of Indianapolis
(the "Predecessor") to succeed to the Predecessor's indirect automobile finance
business which the Predecessor had operated since 1986. UAC began purchasing and
originating receivables in April 1994. For the fiscal years ended June 30, 1994,
1995, 1996 and 1997 UAC and/or the Predecessor acquired prime loans aggregating
$615 million, $767 million, $995 million and $1,076 million, respectively,
representing annual increases of 25%, 30% and 8%, respectively. Of the $1.9
billion of loans in the servicing portfolio of UAC (consisting of the principal
balance of loans held for sale and securitized loans) at June 30, 1997,
approximately 75.43% represented loans on used cars and approximately 24.57%
represented loans on new cars.
[THE INSURER
MBIA Insurance Corporation (the "Insurer") is the principal operating
subsidiary of MBIA Inc., a New York Stock Exchange listed company (the
"Company"). The Company is not obligated to pay the debts of or claims against
the Insurer. The Insurer is domiciled in the State of New York and licensed to
do business in and subject to regulation under the laws of all 50 states, the
District of Columbia, the Commonwealth of Puerto Rico, the Commonwealth of the
Northern Mariana Islands, the Virgin Islands of the United States and the
Territory of Guam. The Insurer has two European branches, one in the Republic of
France and the other in the Kingdom of Spain. New York has laws prescribing
minimum capital requirements, limiting classes and concentrations of investments
and requiring the approval of policy rates and forms. State laws also regulate
the amount of both the aggregate and individual risks that may be insured, the
payment of dividends by the Insurer, changes in control and transactions among
affiliates. Additionally, the Insurer is required to maintain contingency
reserves on its liabilities in certain amounts and for certain periods of time.
Effective February 17, 1998, the Company acquired all of the
outstanding stock of Capital Markets Assurance Corporation ("CMAC") through a
merger with its parent CapMAC Holdings Inc. Pursuant to a reinsurance agreement,
CMAC has ceded all of its net insured risks, as well as its unearned premiums
and contingency reserves, to the Insurer and the Insurer has reinsured CMAC's
net outstanding exposure. The Company is not obligated to pay the debts of or
claims against CMAC.
As of December 31, 1996 the Insurer had admitted assets of $4.4 billion
(audited), total liabilities of $3.0 billion (audited), and total capital and
surplus of $1.4 billion (audited) determined in accordance with statutory
accounting practices prescribed or permitted by insurance regulatory
authorities. As of September 30, 1997, the Insurer had admitted assets of $5.1
billion (unaudited), total liabilities of $3.4 billion (unaudited), and total
capital and surplus of $1.7 billion (unaudited) determined in accordance with
statutory accounting practices prescribed or permitted by insurance regulatory
authorities.
Furthermore, copies of the Insurer's year end financial statements
prepared in accordance with statutory accounting practices are available without
charge from the Insurer. A copy of the Annual Report on Form 10-K of the Company
is available from the Insurer or the Securities and Exchange Commission. The
address of the Insurer is 113 King Street, Armonk, New York 10504. The telephone
number of the Insurer is (914) 273-4545.
The Insurer's financial guarantee insurance policies, such as the
Policy, are not covered by the Property/Casualty Insurance Security Fund
specified in Article 76 of the New York Insurance Law.
Moody's Investors Service, Inc. rates the claims paying ability of the
Insurer "Aaa."
Standard & Poor's Ratings Services, a division of The McGraw-Hill
Companies, Inc. rates the claims paying ability of the Insurer "AAA."
Fitch IBCA, Inc. (formerly known as Fitch Investors Service, L.P.)
rates the claims paying ability of the Insurer "AAA."
Each rating of the Insurer should be evaluated independently. The
ratings reflect the respective rating agency's current assessment of the
creditworthiness of the Insurer and its ability to pay claims on its policies of
insurance. Any further explanation as to the significance of the above ratings
may be obtained only from the applicable rating agency.
The above ratings are not recommendations to buy, sell or hold the
securities, and such ratings may be subject to revision or withdrawal at any
time by the rating agencies. Any downward revision or withdrawal of any of the
above ratings may have an adverse effect on the market price of the securities.
The Insurer does not guaranty the market price of the securities nor does it
guaranty that the ratings on the securities will not be revised or withdrawn.
The tables below present selected financial information of the Insurer
determined in accordance with statutory accounting practices prescribed or
permitted by insurance regulatory authorities ("SAP") as well as generally
accepted accounting principles ("GAAP"):
SAP
-----------------------------------------
December 31 September 30
1996 1997
---- ----
(Audited) (Unaudited)
(in millions)
Admitted Assets $4,476 $5,165
Liabilities 3,009 3,457
Capital and Surplus 1,467 1,708
GAAP
-----------------------------------------
December 31 September 30
1996 1997
---- ----
(Audited) (Unaudited)
(in millions)
Assets $5,066 $5,819
Liabilities 2,262 2,594
Shareholder's Equity 2,804 3,225
Audited financial statements of the Insurer as of December 31, 1996 and
1995 and for each of the three years in the period ended December 31, 1996 are
included herein beginning on page F-1. Unaudited financial statements of the
Insurer for the nine-month period ended September 30, 1997 are included herein
beginning on page F-1. Such financial statements have been prepared on the basis
of GAAP. Copies of the Insurer's 1996 year-end audited financial statements
prepared in accordance with SAP are available from the Insurer. The address of
the Insurer is 113 King Street, Armonk, New York 10504.]
THE OFFERED CERTIFICATES
The Offered Certificates will be issued pursuant to the Pooling and
Servicing Agreement. Copies of the Pooling and Servicing Agreement (without
exhibits) may be obtained by Certificateholders upon request in writing to the
Servicer at the address set forth herein under "Reports to Certificateholders."
Citations to the relevant sections of the Pooling and Servicing Agreement appear
below in parentheses. The following summary does not purport to be complete and
is subject to and qualified in its entirety by reference to the Pooling and
Servicing Agreement.
Distributions
In general, it is intended that the Trustee distribute to the Class A
Certificateholders on each Distribution Date beginning ____________, the
aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of Precomputed Receivables as described below
under "--Accounts"), received on the Receivables during the related Collection
Period, plus Class A Monthly Interest. Principal to be distributed to the Class
A Certificateholders will be allocated on the basis of the Principal
Distribution Sequence (as defined herein). It is also intended that the Trustee
distribute to the Class I Certificateholders, on each Distribution Date
beginning on ___________ and continuing through the Distribution Date on which
the Notional Principal Amount is reduced to zero, the Class I Monthly Interest.
(Section 9.04.) See "-- Distributions on the Offered Certificates." Monthly
Interest may be provided by a payment made by or on behalf of the Obligor, by an
Advance made by the Servicer to cover interest due on a defaulted Receivable or
by a withdrawal from the Spread Account. Monthly Interest may be provided by a
draw on the Policy if there are not sufficient funds (after payment of the
Monthly Servicing Fee, permitted reimbursements of outstanding Advances and
after giving effect to any withdrawals from the Spread Account for the benefit
of the Class A Certificateholders and the Class I Certificateholders) to pay
Monthly Interest and Monthly Principal. Draws on the Policy to pay Monthly
Interest and Monthly Principal will be limited to the Policy Amount. See "--
Sale and Assignment of Receivables" and "-- Accounts" herein.
The Class I Certificates -- Calculation of Notional Principal Amount
The Class I Certificates are interest only planned amortization
securities. The Class I Certificates are entitled to receive interest at the
Class I Pass-Through Rate on the Notional Principal Amount of the Class I
Certificates, initially $_______________. The planned amortization feature is
intended to reduce the uncertainty to investors in the Class I Certificates with
respect to prepayments because the Class I Certificates will receive interest
based on their Notional Principal Amount on a principal paydown schedule rather
than on the reduction in the actual Certificate Balance as a result of principal
payments and prepayments, as described below. Solely for the purpose of
calculating the amount payable with respect to the Class I Certificates, the
Certificate Balance will be divided into two principal components, the "PAC
Component" and the "Companion Component". The Notional Principal Amount will be
equal to the PAC Component, originally $________________. The sum of the PAC
Component and the Companion Component will at all times equal the then aggregate
unpaid Certificate Balance.
The Pooling and Servicing Agreement establishes a schedule (the
"Planned Notional Principal Amount Schedule") pursuant to which principal will
be allocated to the PAC Component and the Companion Component, as described
below. As the PAC Component is reduced, the Notional Principal Amount and
payments to the holders of the Class I Certificates will also be reduced. On
each Distribution Date, the Monthly Principal distributed to Class A
Certificateholders will be allocated first to the PAC Component up to the amount
necessary to reduce the PAC Component to the amount specified in the Planned
Notional Principal Amount Schedule (the "Planned Notional Principal Amount") for
such Distribution Date, second, to the Companion Component until the balance
thereof is reduced to zero and third, to the PAC Component, without regard to
the Planned Notional Principal Amount for such Distribution Date. The foregoing
allocations will be made solely for purposes of calculating the Notional
Principal Amount and correspondingly, the amount of interest payable with
respect to the Class I Certificates. The Class I Certificates are not entitled
to receive any principal payments. The foregoing calculations will not affect
distributions of principal with respect to the Class A Certificates.
Planned Notional Principal Amount Schedule
Planned Notional
Distribution Date in Principal Amount
-------------------- ----------------
Initial.................................................... $
July 1998..................................................
August 1998................................................
September 1998.............................................
October 1998...............................................
November 1998..............................................
December 1998..............................................
January 1999...............................................
February 1999..............................................
March 1999.................................................
April 1999.................................................
May 1999...................................................
June 1999..................................................
July 1999..................................................
August 1999................................................
September 1999.............................................
October 1999...............................................
November 1999..............................................
December 1999..............................................
January 2000...............................................
February 2000..............................................
March 2000.................................................
April 2000.................................................
May 2000...................................................
June 2000..................................................
July 2000..................................................
August 2000................................................
September 2000.............................................
October 2000...............................................
November 2000..............................................
December 2000..............................................
January 2001...............................................
February 2001..............................................
March 2001.................................................
April 2001.................................................
May 2001...................................................
June 2001..................................................
July 2001..................................................
August 2001................................................
The Class I Certificates will not be entitled to any distributions after the
Notional Principal Amount has been reduced to zero.
Class I Yield Considerations
Although the planned amortization feature of the Class I Certificates
is intended to reduce the uncertainty relating to prepayments of the Receivables
with respect to the Class I Certificates, the yield to maturity of the Class I
Certificates will remain extremely sensitive to the prepayment experience of the
Receivables, including voluntary prepayments and prepayments due to liquidations
and repurchases. Prospective investors should fully consider the associated
risks, including the risk that such investors may not fully recover their
initial investment. In particular, investors in the Class I Certificates should
note that they will not be entitled to any distributions after the Notional
Principal Amount of the Class I Certificates has been reduced to zero and that
Receivables may be repurchased due to breaches of representations. See "Risk
Factors."
The following tables illustrate the significant effect that prepayments
on the Receivables have upon the yield to maturity of the Class I Certificates.
The first table assumes that the Receivables have been aggregated into ______
hypothetical pools having the characteristics described therein and that the
level scheduled monthly payment for each of the _____ pools (which is based on
its principal balance, weighted average Contract Rate, weighted average
remaining term as of the Cutoff Date and its weighted average original term)
will be such that such pool will be fully amortized by the end of its weighted
average remaining term. Based on such hypothetical pools, the second table shows
the approximate hypothetical pre-tax yields to maturity of the Class I
Certificates, stated on a corporate bond equivalent basis, under five different
prepayment assumptions based on the assumed purchase price and the ABS
prepayment model described below.
<TABLE>
<CAPTION>
Weighted Average Weighted Average
Cutoff Date Weighted Average Remaining Term to Original Term to
Pool Principal Balance Note Rate Maturity (in Months) Maturity (in Months)
- ---- ----------------- --------- -------------------- --------------------
<S> <C> <C> <C> <C>
1 $ %
2
3
4
</TABLE>
For purposes of the table, it is also assumed that (i) the purchase
price of the Class I Certificates is as set forth below, (ii) the Receivables
prepay monthly at the specified percentages of ABS as set forth in the table
below, (iii) prepayments representing prepayments in full of individual
Receivables are received on the last day of the month and include a full month's
interest thereon, (iv) the Closing Date for the Offered Certificates is
__________, (v) distributions on the Offered Certificates are made, in cash,
commencing on ____________, and on the _______ day of each month thereafter,
(vi) no defaults or delinquencies in the payment of the Receivables are
experienced, and (vii) no Receivable is repurchased for breach of representation
and warranty or otherwise.
Sensitivity of the Yield on the Class I Certificates to Prepayments
1.0% 1.6% 1.8% 2.5% 3.0%
Price(1) ABS ABS ABS ABS ABS
-------- --- --- --- --- ---
_________% % % % % - %
(1) Expressed as a percentage of the original Notional Principal Amount.
Based on the assumptions described above and assuming a purchase price
of __________% at approximately ______% ABS, the pre-tax yield to maturity of
the Class I Certificates would be approximately 0%.
It is highly unlikely that the Receivables will prepay at a constant
rate until maturity or that all of the Receivables will prepay at the same rate.
The foregoing table assumes that each Receivable bears interest at its specified
Contract Rate, has the same remaining amortization term, and prepays at the same
rate. In fact, receivables will prepay at different rates and have different
terms.
The yields set forth in the preceding table were calculated by
determining the monthly discount rates which, when applied to the assumed stream
of cash flows to be paid on the Class I Certificates, would cause the discounted
present value of such assumed cash flows to equal the assumed purchase price of
such Class I Certificates and by converting such monthly rates to corporate bond
equivalent rates. Such calculations do not take into account variations that may
occur in the interest rates at which investors may be able to reinvest funds
received by them as distributions on the Class I Certificates and consequently
do not purport to reflect the return on any investment in the Class I
Certificates when such reinvestment rates are considered.
The Receivables will not necessarily have the characteristics assumed
above and there can be no assurance that (i) the Receivables will prepay at any
of the rates shown in the table or at any other particular rate or will prepay
proportionately, (ii) the pre-tax yield on the Class I Certificates will
correspond to any of the pre-tax yields shown above or (iii) the aggregate
purchase price of the Class I Certificates will be equal to the purchase price
assumed. Because the Receivables will include Receivables that have remaining
terms to stated maturity shorter or longer than those assumed and Contract Rates
higher or lower than those assumed, the pre-tax yield on the Class I
Certificates may differ from those set forth above, even if all of the
Receivables prepay at the indicated constant prepayment rates.
Prepayments on automotive receivables can be measured relative to a
prepayment standard or model. The Absolute Prepayment Model ("ABS") used in the
preceding table represents an assumed rate of prepayment each month relative to
the original number of receivables in a pool of receivables. ABS further assumes
that all the receivables are the same size and amortize at the same rate and
that each receivable in each month of its life will either be paid as scheduled
or be prepaid in full. For example, in a pool of receivables originally
containing 10,000 receivables, a 1% ABS rate means that 100 receivables prepay
each month. ABS does not purport to be an historical description of prepayment
experience or a prediction of the anticipated rate of prepayment of any pool of
receivables, including the Receivables.
Sale and Assignment of Receivables
Certain information with respect to the conveyance of the Receivables
(i) from Union Acceptance Funding Corporation ("UAFC") to the Depositor pursuant
to the Purchase Agreement dated as of _____________, among UAFC, UAC and the
Depositor and (ii) from the Depositor to the Trust pursuant to the Pooling and
Servicing Agreement is set forth under "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables" in the Prospectus.
Accounts
In addition to the Certificate Account, the property of the Trust will
include the Spread Account and the Payahead Account.
Spread Account. On the Closing Date, the Trustee will establish the
Spread Account. Thereafter, the amount held in the Spread Account will be
increased up to the Required Spread Amount by the deposit thereto of payments on
the Receivables not utilized to make payments to the Certificateholders (other
than the Class IC Certificateholder), the Insurer and the Servicer for the
Monthly Servicing Fee and any permitted reimbursements of outstanding Advances
on any Distribution Date. While it is intended that the Spread Account will grow
over time to equal the Required Spread Amount through monthly deposits of excess
collections on the Receivables, if any, there can be no assurance that such
growth will actually occur. The Spread Account will be established for the
benefit of the Class A Certificateholders, the Class I Certificateholders and
the Insurer. On each Distribution Date, any amounts on deposit in the Spread
Account after the payment of any amounts owed to the Insurer in excess of the
Required Spread Amount will be withdrawn from the Spread Account and distributed
to the Class IC Certificateholder.
Under the terms of the Pooling and Servicing Agreement, the Trustee
will withdraw funds from the Spread Account and transfer them to the Certificate
Account for any deficiency of Monthly Interest or Monthly Principal as further
described below under "-- Distributions on the Offered Certificates," to the
extent available, prior to making any draw on the Policy.
In the event that the balance of the Spread Account is reduced to zero
and there is a default under the Policy on any Distribution Date, the Trust will
depend solely on current distributions on the Receivables to make distributions
of principal and interest on the Certificates. Any reduction in the principal
balance of the Receivables due to losses on the Receivables will also result in
a reduction of the Notional Principal Amount of the Class I Certificates. In
addition, because the market value of motor vehicles generally declines with age
and because of difficulties that may be encountered in enforcing motor vehicle
contracts as described in the Prospectus under "Certain Legal Aspects of the
Receivables," the Servicer may not recover the entire amount due on such
Receivables in the event of a repossession and resale of a Financed Vehicle
securing a Receivable in default. In such event, the Certificateholders may
suffer a corresponding loss. Any such losses would be borne pro rata by the
Class A Certificateholders and Class I Certificateholders.
Payahead Account. The Servicer will establish an additional account
(the "Payahead Account"), in the name of the Trustee on behalf of Obligors on
the Receivables and Certificateholders, into which, to the extent required by
the Pooling and Servicing Agreement, early payments by or on behalf of Obligors
on Precomputed Receivables will be deposited until such time as the payment
becomes due. Until such time as payments are transferred from the Payahead
Account to the Certificate Account, they will not constitute collected interest
or collected principal and will not be available for distribution to
Certificateholders. The Payahead Account will initially be maintained with the
Trustee. Interest earned on the balance in the Payahead Account will be remitted
to the Servicer monthly. Collections on a Precomputed Receivable made during a
Collection Period shall be applied first to any overdue scheduled payment on
such Receivable, then to the scheduled payment on such Receivable due in such
Collection Period. If any collections remaining after the scheduled payment is
made are insufficient to prepay the Precomputed Receivable in full, then
generally such remaining collections shall be transferred to and kept in the
Payahead Account until such later Collection Period as the collections may be
retransferred to the Certificate Account and applied either to a later scheduled
payment or to prepay such Receivable in full.
Advances
With respect to each Receivable delinquent more than 30 days at the end
of a Collection Period, the Servicer will make an Advance in an amount equal to
30 days of interest, but only to the extent that the Servicer in its sole
discretion, expects to recoup the Advance from subsequent collections on the
Receivable. The Servicer will deposit the Advance in the Certificate Account on
or before the fifth calendar day of the month following the Collection Period.
The Servicer will recoup its Advance from subsequent payments by or on behalf of
the respective Obligor, from insurance proceeds or, upon the Servicer's
determination that reimbursement from the preceding sources is unlikely, will
recoup its Advance from any collections made on other Receivables. (Section
9.05.)
Distributions on the Class IC Certificate
The Class IC Certificate will be initially issued to the Depositor and
will entitle it to receive monthly all funds held in the Spread Account in
excess of the Required Spread Amount after payment of all amounts owed to the
Insurer. Upon termination of the Trust the Class IC Certificateholder is
entitled to receive any amounts remaining in the Spread Account (only after all
required payments to the Insurer are made) after the payment of expenses and
distributions to Certificateholders. See "-- Accounts" above.
Distributions on the Offered Certificates
The Servicer will deposit in the Certificate Account the amount of
payments on all Receivables received with respect to the preceding Collection
Period. All such payments on the Simple Interest Receivables, the scheduled
payments on Precomputed Receivables, plus the net amount to be transferred from
the Payahead Account to the Certificate Account for the related Distribution
Date, all Advances for such Collection Period and the Purchase Amount for all
Receivables that became Purchased Receivables during the preceding Collection
Period, will be available for distribution pursuant to the terms of the Pooling
and Servicing Agreement on the next succeeding Distribution Date ("Available
Funds"). The Servicer will determine the amount of funds necessary to make
distributions of Monthly Principal and Monthly Interest to the
Certificateholders and to pay the Monthly Servicing Fee to the Servicer. If
there is a deficiency with respect to Monthly Interest or Monthly Principal on
any Distribution Date, after giving effect to payments of the Monthly Servicing
Fee and permitted reimbursements of outstanding Advances to the Servicer on such
Distribution Date, the Servicer will withdraw amounts, to the extent available,
from the Spread Account, in the amount of such deficiency and notify the Trustee
of any remaining deficiency, whereupon the Trustee will draw on the Policy, up
to the Policy Amount, to pay Monthly Interest and Monthly Principal. Moreover,
if the Available Funds for a Distribution Date are insufficient to pay current
and past due Insurance Premiums, and other amounts owed to the Insurer, pursuant
to the Insurance Agreement, plus accrued interest thereon, to the Insurer, the
Servicer will notify the Trustee of such deficiency, and the amount, if any,
then on deposit in the Spread Account (after giving effect to any withdrawal to
satisfy a deficiency described in this and the preceding sentences) will be
available to cover such deficiency.
The Monthly Servicing Fee due to the Servicer in respect of each
Collection Period will be distributed to the Servicer during such Collection
Period from collections received during such Collection Period.
On each Distribution Date, the Trustee will apply or cause to be
applied the Available Funds (plus, to the extent required for payment of Monthly
Interest or Monthly Principal any amounts withdrawn from the Spread Account or
drawn on the Policy, as applicable) to make the following payments in the
following priority:
(a) without duplication, an amount equal to the sum of the amount
of outstanding Advances in respect of Receivables (x) that
became Defaulted Receivables during the prior Collection
Period plus (y) that the Servicer determines to be
unrecoverable, to the Servicer;
(b) the Monthly Servicing Fee, including any overdue Monthly
Servicing Fee, to the Servicer, to the extent not previously
distributed to the Servicer;
(c) pro rata, (y) Monthly Principal, in accordance with the
Principal Distribution Sequence (described below), and Class A
Monthly Interest, including any overdue Class A Monthly
Interest, to the Class A Certificateholders and (z) Class I
Monthly Interest, including any overdue Class I Monthly
Interest, to the Class I Certificateholders;
[(d) the Insurance Premium including any overdue Insurance Premium
plus interest thereon to the Insurer;] (e) the amount of
recoveries of Advances (to the extent such recoveries have not
previously been reimbursed to the Servicer pursuant to clause
(a) above), to the Servicer;
[(f) the aggregate amount of any unreimbursed draws on the Policy
payable to the Insurer, under the Insurance Agreement, for
Class A Monthly Interest, Class I Monthly Interest and Monthly
Principal and any other amounts owing to the Insurer under the
Insurance Agreement plus accrued interest thereon; and]
(g) the balance into the Spread Account.
After all distributions pursuant to clauses (a) through (g) above have
been made for each Distribution Date, the amount of funds remaining in the
Spread Account on such date, if any, in excess of the Required Spread Amount,
will be distributed by the Trustee to the Class IC Certificateholder. Any
amounts so distributed to the Class IC Certificateholder will no longer be
property of the Trust and Certificateholders will have no rights with respect
thereto.
If on any Distribution Date there are not sufficient Available Funds
(together with amounts withdrawn from the Spread Account and/or the Policy) to
pay the distribution required by (c) above, the Available Funds distributable
thereunder shall be distributed proportionately on the basis of the ratio of the
required distribution due each of the Class A Certificateholders and the Class I
Certificateholders, respectively, to the sum of the distributions required by
(c) the Class A Certificateholders and the Class I Certificateholders. The
amount so distributed to the Class A Certificateholders hereunder shall be
allocated first to Class A Monthly Interest, and second to Monthly Principal pro
rata among the Class A Certificateholders.
"Class A Monthly Interest" for any Distribution Date will equal the sum
of Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly
Interest, Class A-4 Monthly Interest and Class A-5 Monthly Interest.
"Class A-1 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one-three hundred sixtieth (1/360th) of the
Class A-1 Pass-Through Rate) multiplied by (the number of days from the Closing
Date through the day before the first Distribution Date) multiplied by the Class
A-1 Certificate Balance at the Closing Date and (ii) for any subsequent
Distribution Date, one-three hundred sixtieth (1/360th) of the product of the
Class A-1 Pass-Through Rate, the actual number of days from the previous
Distribution Date through the day before the related Distribution Date and the
Class A-1 Certificate Balance as of the immediately preceding Distribution Date
(after giving effect to any distribution of Monthly Principal made on such
immediately preceding Distribution Date).
"Class A-2 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-2 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-2 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-2 Pass-Through Rate and the Class A-2 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
"Class A-3 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-3 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-3 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-3 Pass-Through Rate and the Class A-3 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
"Class A-4 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-4 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-4 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-4 Pass-Through Rate and the Class A-4 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
"Class A-5 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-5 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-5 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-5 Pass-Through Rate (as adjusted after the
Clean-Up Call Date) and the Class A-5 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class I Monthly Interest" means (i) for the first Distribution Date,
the product of the following: (one-twelfth of the Class I Pass-Through Rate)
multiplied by (the number of days from the Closing Date (assuming the month of
the Closing Date has 30 days) through the day before the first Distribution Date
divided by 30) multiplied by the Notional Principal Amount of the Class I
Certificates at the Closing Date, and (ii) for any subsequent Distribution Date,
one-twelfth of the product of the Class I Pass-Through Rate and the Notional
Principal Amount as of the immediately preceding Distribution Date (after giving
effect to any application of Monthly Principal on such preceding Distribution
Date); provided, however, that after the Class A-5 Final Scheduled Distribution
Date, the Class I Monthly Interest shall be zero.
"Defaulted Receivable" will mean, for any Collection Period, a
Receivable as to which any of the following has occurred: (i) any payment is 120
days or more delinquent as of the last day of such Collection Period; (ii) the
Financed Vehicle that secures the Receivable has been repossessed; or (iii) the
Receivable has been determined to be uncollectable in accordance with the
Servicer's customary practices on or prior to the last day of such Collection
Period; provided, however, that any Receivable which the Depositor or the
Servicer is obligated to repurchase or purchase pursuant to the Pooling and
Servicing Agreement shall be deemed not to be a Defaulted Receivable.
["Insurance Premium" for any Distribution Date will equal one-twelfth
of the product of the Policy per annum fee rate set forth in the Insurance
Agreement and the Certificate Balance calculated as of the last day of the
Collection Period to which such Distribution Date relates and payable monthly in
arrears.]
"Monthly Interest" for any Distribution Date will equal the sum of the
Class A Monthly Interest and the Class I Monthly Interest.
"Monthly Principal" for any Distribution Date will equal the amount
necessary to reduce the Certificate Balance as of the prior Distribution Date
(after giving effect to the distribution of Monthly Principal on such date) to
the aggregate unpaid principal balance of the Receivables on the last day of the
preceding Collection Period; provided, however, that Monthly Principal on the
final scheduled Distribution Date for each class of Class A Certificates will be
increased by the amount, if any, which is necessary to reduce the Certificate
Balance of such class to zero on such date. For the purpose of determining
Monthly Principal, the unpaid principal balance of a Defaulted Receivable or a
Purchased Receivable is deemed to be zero on and after the last day of the
Collection Period in which such Receivable became a Defaulted Receivable or a
Purchased Receivable.
"Principal Distribution Sequence" means the order in which Monthly
Principal shall be distributed among the Class A Certificateholders in the
following sequence: (i) to the Class A-1 Certificateholders until the Class A-1
Certificate Balance has been reduced to zero; (ii) to the Class A-2
Certificateholders until the Class A-2 Certificate Balance has been reduced to
zero; (iii) to the Class A-3 Certificateholders until the Class A-3 Certificate
Balance has been reduced to zero; (iv) to the Class A-4 Certificateholders until
the Class A-4 Certificate Balance has been reduced to zero; and (v) to the Class
A-5 Certificateholders until the Class A-5 Certificate Balance has been reduced
to zero.
As an administrative convenience, the Servicer will be permitted to
make the deposit of collections and aggregate Advances and Purchase Amounts for
or with respect to the Collection Period, net of distributions to be made to the
Servicer with respect to the Collection Period. The Servicer, however, will
account to the Trustee and to the Certificateholders as if all deposits and
distributions were made individually. (Section 9.06.)
The following chart sets forth an example of the application of the
foregoing provisions to a monthly distribution:
___________ ...........................Collection Period. The Servicer receives
monthly payments, prepayments, and other
proceeds in respect of the Receivables
and deposits them in the Certificate
Account. The Servicer may deduct the
Monthly Servicing Fee from such
deposits.
___________ ...........................Record Date. Distributions on the
Distribution Date are made to
Certificateholders of record at the
close of business on this date.
___________.............................On the [fifth] calendar day after the
end of the Collection Period (the
"Determination Date") the Servicer
notifies the Trustee of the amounts to
be distributed on the Distribution Date
and of any deficiencies.
___________.............................On the [third] business day after the
Determination Date (the "Distribution
Date") the Trustee withdraws funds from
the Spread Account and/or draws on the
Policy, if necessary, to pay Monthly
Principal and Monthly Interest to
Certificateholders as described herein.
The Trustee distributes to
Certificateholders amounts payable in
respect of the Offered Certificates, and
pays the Monthly Servicing Fee to the
extent not previously paid, the
Insurance Premium and any amounts owing
to the Insurer.
[The Policy
On or before the Closing Date, the Depositor and UAC, in its individual
capacity and as Servicer, and the Insurer will enter into an Insurance and
Reimbursement Agreement (the "Insurance Agreement") pursuant to which the
Insurer will issue the Policy. Under the terms of the Pooling and Servicing
Agreement, after withdrawal of any amounts in the Spread Account with respect to
a Distribution Date to pay a deficiency in Monthly Interest or Monthly
Principal, the Trustee will be authorized to draw on the Policy for the benefit
of the Class A Certificateholders and the Class I Certificateholders and credit
the Certificate Account for such draws as described above under "--Distributions
on the Offered Certificates." The maximum amount that may be drawn under the
Policy on any Distribution Date is limited to the Policy Amount for such
Distribution Date. The Policy Amount, with respect to any Distribution Date,
shall equal (x) the sum of (A) the lesser of (i) the Certificate Balance (after
giving effect to any distribution of Available Funds and any funds withdrawn
from the Spread Account to pay Monthly Principal on such Distribution Date) and
(ii) the Net Principal Policy Amount, plus (B) Class A Monthly Interest, plus
(C) Class I Monthly Interest, plus (D) the Monthly Servicing Fee; less (y) all
amounts on deposit in the Spread Account on such Distribution Date. "Net
Principal Policy Amount" means the Certificate Balance as of the first
Distribution Date minus all amounts previously drawn on the Policy or from the
Spread Account with respect to Monthly Principal.
The Insurer will be entitled to receive the Insurance Premium and
certain other amounts on each Distribution Date as described under
"--Distributions on the Offered Certificates" and to receive amounts on deposit
in the Spread Account as described above under "--Accounts." The Insurer will
not be entitled to reimbursement of any amounts from the Certificateholders. The
Insurer's obligation under the Policy is irrevocable. The Insurer will have no
obligation other than its obligations under the Policy to the Certificateholders
or the Trustee.
In the event that the balance in the Spread Account is reduced to zero
and there has been a default under the Policy, the Trust may depend solely on
current collections on the Receivables to make distributions of principal and
interest on the Offered Certificates. Any reduction in the principal balance of
the Receivables due to losses on the Receivables may also result in a reduction
of the Notional Principal Amount of the Class I Certificates. In addition,
because the market value of motor vehicles generally declines with age and
because of difficulties that may be encountered in enforcing motor vehicle
contracts as described in the Prospectus under "Certain Legal Aspects of the
Receivables," the Servicer may not recover the entire amount due on such
Receivables in the event of a repossession and resale of a Financed Vehicle
securing a Receivable in default. In such event, the Certificateholders may
suffer a corresponding loss. Any such losses would be borne pro rata by the
Class A Certificateholders and Class I Certificateholders. See " --
Distributions on the Offered Certificates."
Rights of the Insurer upon Events of Default, Amendment or Waiver
Upon the occurrence of an Event of Default, the Insurer, or the Trustee
upon the consent of the Insurer, will be entitled to appoint a successor
Servicer. In addition to the events constituting an Event of Default as
described in the Prospectus, the Pooling and Servicing Agreement will also
permit the Insurer to appoint a successor Servicer and to redirect payments made
under the Receivables to the Trustee upon the occurrence of certain additional
events involving a failure of performance by the Servicer or a material
misrepresentation made by the Servicer under the Insurance Agreement.
The Pooling and Servicing Agreement cannot be amended or any provisions
thereof waived without the consent of the Insurer if such amendment or waiver
would have a materially adverse effect upon the rights of the Insurer.]
ERISA CONSIDERATIONS
Subject to the considerations set forth under "ERISA Considerations" in the
Prospectus, the Class A Certificates and the Class I Certificates may be
eligible for purchase by an employee benefit plan or an individual retirement
account (a "PlanPlanPlan") subject to Title I of ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan
must determine that the purchase of a Class A Certificate or of a Class I
Certificates is consistent with its fiduciary duties under ERISA and does not
result in a nonexempt prohibited transaction as defined in Section 406 of ERISA
or Section 4975 of the Code. For additional information regarding treatment of
the Class A Certificates and the Class I Certificates under ERISA, see "ERISA
Considerations" in the Prospectus.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement for the sale of the Offered Certificates, dated
___________, the Depositor has agreed to sell and each of the underwriters named
below (the "Underwriters") severally agreed to purchase the principal amount of
the Offered Certificates set forth below its name below:
Principal Amount
of Class A-1 Certificates........ $ $ $
Principal Amount
of Class A-2 Certificates........ $ $ $
Principal Amount
of Class A-3 Certificates........ $ $ $
Principal Amount
of Class A-4 Certificates........ $ $ $
Principal Amount
of Class A-5 Certificates........ $ $ $
Notional Principal Amount
of Class I Certificates.......... $ $ $
In the underwriting agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Offered
Certificates offered hereby if any of the Offered Certificates are purchased.
The Underwriters propose to offer part of the Offered Certificates
directly to the public at the prices set forth on the cover page hereof, and
part to certain dealers at a price that represents a concession not in excess of
______% of the denominations of the Class A-1 Certificates, ______% of the
denominations of the Class A-2 Certificates, ______% of the denominations of the
Class A-3 Certificates, ______% of the denominations of the Class A-4
Certificates, ______% of the denominations of the Class A-5 Certificates or
______% of the gross proceeds of the Class I Certificates. The Underwriters may
allow and such dealers may reallow a concession not in excess of ______% of the
denominations of the Class A-1 Certificates, ______% of the denominations of the
Class A-2 Certificates, ______% of the denominations of the Class A-3
Certificates, ______% of the denominations of the Class A-4 Certificates,
______% of the denominations of the Class A-5 Certificates or ______% of the
gross proceeds of the Class I Certificates to certain other dealers.
The Depositor and UAC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Depositor has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Offered Certificates, as
permitted by applicable laws and regulations. The Underwriters are not
obligated, however, to make a market in the Offered Certificates and any such
market-making may be discontinued at any time at the sole discretion of the
Underwriters. Accordingly, no assurance can be given as to the liquidity of, or
trading markets for, the Offered Certificates.
LEGAL OPINIONS
Certain legal matters relating to the Offered Certificates will be
passed upon for the Depositor by Barnes & Thornburg, Indianapolis, Indiana, and
for the Underwriters by Cadwalader, Wickersham & Taft. Certain federal income
tax consequences with respect to the Offered Certificates will be passed upon
for the Depositor by Cadwalader, Wickersham & Taft.
[EXPERTS
The financial statements of the Insurer, MBIA Insurance Corporation and
Subsidiaries, as of December 31, 1996 and 1995 and for each of the years in the
three-year period ended December 31, 1996 are included herein beginning on page
F-1 and have been audited by Coopers & Lybrand L.L.P., independent certified
public accountants, as set forth in their audit report thereon and are included
in reliance upon the authority of such firm as experts in accounting and
auditing.]
INDEX OF PRINCIPAL TERMS
TERM PAGE
ABS .................................................. S-24
Available Funds ...................................... S-26
Certificates ....................................... S-3
Certificate Balance.................................... S-5
Class A Certificates .............................. S-3, S-4
Class A Certificateholders ......................... S-4
Class A Monthly Interest ............................. S-27
Class A-1 Certificate Balance.......................... S-4
Class A-1 Certificateholders........................... S-4
Class A-1 Certificates................................. S-3
Class A-1 Final Scheduled Distribution Date............ S-5
Class A-1 Monthly Interest ........................... S-27
Class A-1 Pass-Through Rate............................ S-4
Class A-2 Certificate Balance.......................... S-5
Class A-2 Certificateholders........................... S-4
Class A-2 Certificates................................. S-3
Class A-2 Final Scheduled Distribution Date............ S-5
Class A-2 Monthly Interest ........................... S-27
Class A-2 Pass-Through Rate............................ S-5
Class A-3 Certificate Balance.......................... S-5
Class A-3 Certificateholders........................... S-4
Class A-3 Certificates................................. S-3
Class A-3 Final Scheduled Distribution Date............ S-6
Class A-3 Monthly Interest ........................... S-27
Class A-3 Pass-Through Rate............................ S-5
Class A-4 Certificate Balance.......................... S-5
Class A-4 Certificateholders........................... S-4
Class A-4 Certificates................................. S-3
Class A-4 Final Scheduled Distribution Date............ S-6
Class A-4 Monthly Interest ........................... S-27
Class A-4 Pass-Through Rate............................ S-5
Class A-5 Certificate Balance.......................... S-5
Class A-5 Certificateholders........................... S-4
Class A-5 Certificates................................. S-3
Class A-5 Final Scheduled Distribution Date............ S-6
Class A-5 Monthly Interest ........................... S-27
Class A-5 Pass-Through Rate............................ S-5
Class I Certificateholders ........................ S-6
Class I Certificates ............................... S-3, S-6
Class I Monthly Interest ............................. S-28
Class I Pass-Through Rate .......................... S-6
Class IC Certificate ............................... S-1, S-3
Class IC Certificateholder ......................... S-9
Clean-Up Call Date..................................... S-10
Closing Date ....................................... S-3
CMAC................................................... S-19
Code ................................................ S-30
Companion Component.................................... S-7, S-21
Company................................................ S-19
Cutoff Date ........................................ S-3
Defaulted Receivable .................................. S-28
Depositor .......................................... S-1, S-3
Determination Date..................................... S-29
Distribution Date ................................... S-1, S-4, S-29
ERISA .............................................. S-11
Financed Vehicles...................................... S-3
Fitch IBCA, Inc........................................ S-20
GAAP................................................... S-20
Insurance Premium ..................................... S-28
Insurance Agreement ................................... S-29
Insurer ...............................................S-1, S-10, S-19
Issuer................................................. S-3
Legal Investment....................................... S-10
Moody's................................................ S-20
Monthly Interest ..................................... S-28
Monthly Principal .................................... S-5, S-28
Monthly Servicing Fee.................................. S-7
Net Principal Policy Amount............................ S-10, S-29
Notional Principal Amount.............................. S-7
Offered Certificates ................................ S-1, S-3
Optional Sale ..................................... S-10
Original Notional Principal Amount..................... S-6
PAC Component.......................................... S-7, S-21
Payahead Account ...................................... S-25
Plan ................................................. S-30
Planned Notional Principal Amount...................... S-22
Planned Notional Principal Amount Schedule ........... S-7, S-21
Policy................................................. S-1, S-9
Policy Amount.......................................... S-10
Pool Balance ...................................... S-5
Pooling and Servicing Agreement ................... S-3
Predecessor............................................ S-19
Principal Distribution Sequence........................ S-28
Rating Agency.......................................... S-11
Receivables ........................................ S-3
Record Date ........................................ S-4
Required Spread Amount ............................. S-9
SAP.................................................... S-20
Servicer ........................................... S-3
Spread Account......................................... S-8
Standard & Poor's...................................... S-20
Trust .............................................. S-1, S-3
Trustee ............................................ S-3
UAC ................................................ S-3
UAFC ................................................ S-24
Underwriters ......................................... S-30
<PAGE>
[PROSPECTUS SUPPLEMENT FOR GRANTOR TRUST]
Information contained herein is subject to completion or amendment. A
registration statement relating to these securities has been filed with the
Securities and Exchange Commission. These securities may not be sold nor may
offers to buy be accepted prior to the time the registration statement becomes
effective. This prospectus supplement and the accompanying prospectus shall not
constitute an offer to sell or the solicitation of an offer to buy, nor shall
there be any sale of these securities in any State in which such offer,
solicitation or sale would be unlawful prior to registration or qualification
under the securities laws of any such State.
Subject to Completion dated _____________ [YEAR]
PROSPECTUS SUPPLEMENT TO PROSPECTUS DATED _____________ [YEAR]
- --------------------------------------------------------------------------------
UACSC [YEAR] - Auto Trust
$ % Class A Automobile Receivable Pass-Through Certificates
$ % Class B Automobile Receivable Pass-Through Certificates
UAC Securitization Corporation
Depositor
Union Acceptance Corporation
Servicer
- --------------------------------------------------------------------------------
The UACSC [YEAR] - Auto Trust (the "Trust") will be formed and will issue
its % Class A Automobile Receivable Pass-Through Certificates (the "Class A
Certificates") and the % Class B Automobile Receivable Pass-Through Certificates
(the "Class B Certificates" and, with the Class A Certificates, the
"Certificates") pursuant to a pooling and servicing agreement dated as of
_________, [YEAR] (the "Pooling and Servicing Agreement") among UAC
Securitization Corporation, as Depositor, Union Acceptance Corporation, as
Servicer, and _____________________, as Trustee.
Principal and interest will be distributed to holders of the Certificates
on the [third business day after the fifth] day of each month (each, a
"Distribution Date"), in the manner and to the extent described herein. The
Class A Certificates will evidence in the aggregate an undivided ownership
interest in approximately _____% of the Trust, and the Class B Certificates will
evidence in the aggregate an undivided ownership interest in approximately ___%
of the Trust. Principal and interest at the applicable Pass-Through Rate
generally will be distributed to Certificateholders on the day of each month,
commencing , 199 . The rights of the Class B Certificateholders to receive
distributions are subordinated to the rights of the Class A Certificateholders
to the extent described herein. The outstanding principal amount, if any, of the
Certificates will be due and payable on (the "Final Scheduled Distribution
Date").
Prospective investors should consider, among other things, the information set
forth under "Risk Factors" on page S-___ of this Prospectus Supplement and page
10 of the Prospectus.
THE CERTIFICATES REPRESENT BENEFICIAL INTERESTS IN THE TRUST ONLY AND DO NOT
REPRESENT INTERESTS IN OR OBLIGATIONS OF UAC SECURITIZATION CORPORATION OR ANY
OF ITS AFFILIATES. NEITHER THE CERTIFICATES NOR THE RECEIVABLES ARE INSURED
OR GUARANTEED BY UAC SECURITIZATION CORPORATION, ANY OF ITS AFFILIATES OR ANY
GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON
THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
<TABLE>
<CAPTION>
Price to Public Underwriting Discounts and Commissions Proceeds to Depositor(1)
<S> <C> <C> <C>
Per Class A Certificate ................ % % %
Per Class B Certificate ................ % % %
Total ........................ $ $ $
</TABLE>
(1) Before deducting expenses, estimated to be $___________________.
The Certificates are offered, subject to prior sale, when, as and if
accepted by the Underwriters, and subject to approval of certain legal matters
by Cadwalader, Wickersham & Taft, counsel for the Underwriters. It is expected
that delivery of the Certificates in book-entry form will be made on or about ,
199 through the facilities of The Depository Trust Company, against payment
therefor in immediately available funds.
_________________, [YEAR]
<PAGE>
The Certificates represent undivided interests in the Trust, the property
of which will include a pool of simple interest and precomputed interest
installment sale and installment loan contracts originated in various states of
the United States (the "Receivables"), security interests in the new and used
automobiles, light trucks and vans financed thereby and certain monies due
thereunder after _________________, [YEAR] (the "Cutoff Date"). The Trustee will
also hold monies on deposit in a Pre-Funding Account, which will be used to
purchase additional Receivables from the Depositor from time to time on or
before _______, [YEAR] . The Trust may also draw on funds on deposit in a Yield
Supplement Account and a Cash Collateral Account, to the extent described
herein, to meet shortfalls in amounts due to Certificateholders on any
Distribution Date. The Yield Supplement Account and the Cash Collateral Account
will be maintained with the Trustee for the benefit of the Certificateholders,
but will not be part of the Trust.
THIS PROSPECTUS SUPPLEMENT DOES NOT CONTAIN COMPLETE INFORMATION ABOUT
THE OFFERING OF THE CERTIFICATES. ADDITIONAL INFORMATION IS CONTAINED IN THE
PROSPECTUS, AND PROSPECTIVE INVESTORS ARE URGED TO READ BOTH THIS PROSPECTUS
SUPPLEMENT AND THE PROSPECTUS IN FULL. SALES OF THE CERTIFICATES MAY NOT BE
CONSUMMATED UNLESS THE PURCHASER HAS RECEIVED BOTH THIS PROSPECTUS SUPPLEMENT
AND THE PROSPECTUS. THIS PROSPECTUS SUPPLEMENT CONTAINS INFORMATION THAT IS
SPECIFIC TO THE TRUST AND THE CERTIFICATES AND, TO THAT EXTENT, SUPPLEMENTS AND
REPLACES THE MORE GENERAL INFORMATION PROVIDED IN THE PROSPECTUS. INFORMATION
CONTAINED IN THIS PROSPECTUS SUPPLEMENT MAY ALSO REFLECT LEGAL, ECONOMIC AND
OTHER DEVELOPMENTS SINCE THE DATE OF THE PROSPECTUS. TO THE EXTENT INFORMATION
IN THIS PROSPECTUS SUPPLEMENT CONFLICTS WITH INFORMATION IN THE PROSPECTUS, THE
INFORMATION IN THIS PROSPECTUS SUPPLEMENT SHALL CONTROL.
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT OR
EFFECT TRANSACTIONS THAT STABILIZE OR MAINTAIN THE MARKET PRICE OF THE
CERTIFICATES AT A LEVEL ABOVE THAT WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
Until 90 days after the date of this Prospectus Supplement, all dealers
effecting transactions in the Certificates, whether or not participating in this
distribution, may be required to deliver this Prospectus Supplement and the
Prospectus. This is in addition to the obligation of dealers to deliver this
Prospectus Supplement and the Prospectus when acting as underwriters and with
respect to their unsold allotments or subscriptions.
REPORTS TO CERTIFICATEHOLDERS
Unless and until definitive certificates are issued (which will occur only
under the limited circumstances described herein), ___________ [YEAR], as
Trustee, will provide to Cede & Co., the nominee of The Depository Trust
Company, as registered holder of the Certificates, monthly and annual statements
concerning the Trust and the Certificates. Such statements will not constitute
financial statements prepared in accordance with generally accepted accounting
principles. A copy of the most recent monthly or annual statement concerning the
Trust and the Certificates may be obtained by contacting the Servicer at Union
Acceptance Corporation, 250 North Shadeland Avenue, Indianapolis, Indiana 46219
(telephone (317) 231-2717).
S-2
<PAGE>
TABLE OF CONTENTS
Page
REPORTS TO CERTIFICATEHOLDERS...............................................S-2
SUMMARY OF TERMS ......................................................... S-4
RISK FACTORS ............................................................ S-10
The Pre-Funding Account ............................................ S-10
Conveyance of Subsequent Receivables to the Trust .................. S-10
Certificates Solely Obligations of the Trust..........................S-11
Limited Obligations of the Depositor,
UAFC and the Servicer...............................................S-11
Ratings of the Certificates...........................................S-11
FORMATION OF THE TRUST ................................................... S-12
General...............................................................S-12
The Trustee...........................................................S-12
THE RECEIVABLES POOL ..................................................... S-12
Delinquencies, Repossessions and Net Losses ......................... S-16
YIELD AND PREPAYMENT CONSIDERATIONS ...................................... S-18
General ............................................................. S-18
Mandatory Repurchase..................................................S-18
THE DEPOSITOR AND UAC .................................................... S-19
THE CERTIFICATES ......................................................... S-19
General...............................................................S-19
Distributions ....................................................... S-19
Sale and Assignment of Receivables;
Subsequent Receivables ............................................ S-19
Accounts ............................................................ S-20
Subordination of the Class B Certificates.............................S-21
Advances ............................................................ S-21
Distributions on the Certificates.................................... S-21
ERISA CONSIDERATIONS ..................................................... S-24
UNDERWRITING ............................................................. S-24
LEGAL OPINIONS ........................................................... S-24
INDEX OF PRINCIPAL TERMS ................................................. S-25
S-3
<PAGE>
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus Supplement and the
Prospectus. Certain capitalized terms used in this Summary are defined elsewhere
in this Prospectus Supplement on the pages indicated in the "Index of Principal
Terms" or, to the extent not defined herein, have the meanings assigned to such
terms in the Prospectus.
Issuer........................UACSC [YEAR] - Auto Trust.
Depositor.....................UAC Securitization Corporation (the "Depositor").
Servicer......................Union Acceptance Corporation (in its capacity as
servicer, the "Servicer," otherwise "UAC").
Trustee ......................
The Certificates .............The Trust will be formed and will issue the
Certificates on _______, [YEAR] (the "Closing
Date") pursuant to the Pooling and Servicing
Agreement. The Certificates will consist of the
____% Class A Automobile Receivable Pass-Through
Certificates in the aggregate principal amount of
$_____ and the ____% Class B Automobile Receivable
Pass-Through Certificates in the aggregate
principal amount of $_______. The Class A
Certificates will evidence in the aggregate an
undivided ownership interest in approximately
_____% of the Trust (the "Class A Percentage"),
and the Class B Certificates will evidence in the
aggregate an undivided ownership interest in
approximately % of the Trust (the "Class B
Percentage"). The Class B Certificates will be
subordinated to the Class A Certificates to the
extent described herein. See "The Certificates"
herein.
Each of the Certificates will represent a
fractional undivided interest in the Trust. The
Trust assets will include the Receivables, certain
monies due thereunder after the Cutoff Date,
security interests in the related Financed
Vehicles, monies on deposit in the Yield
Supplement Account, the Certificate Account and
the proceeds thereof, any proceeds from claims on
certain insurance policies relating to the
Financed Vehicles or the related Obligors, any
lender's single interest insurance policy, the
Cash Collateral Account, and certain rights under
the Pooling and Servicing Agreement.
Class A Pass-Through Rate.....______% per annum, payable monthly at one-twelfth
the annual rate.
Class B Pass-Through Rate.....______% per annum, payable monthly at one-twelfth
the annual rate.
Distribution Date.............The third business day after the fifth day of the
month following the Record Date, commencing
________, [YEAR].
Monthly Interest..............Interest will be distributable on each
Distribution Date beginning ____________, [YEAR],
to holders of record as of the last day of the
calendar month immediately preceding the calendar
month in which such Distribution Date occurs (the
"Record Date") of (i) the Class A Certificates
(the "Class A Certificateholders") in a maximum
amount equal to the product of 1/12th of ____%
(the "Class A Pass-Through Rate") and the
aggregate outstanding principal balance of the
Class A Certificates (the "Class A Principal
Balance") as of the preceding Distribution Date
(after giving effect to all distributions to
Certificateholders on such date) and (ii) the
Class B Certificates (the "Class B
Certificateholders") in a maximum amount equal to
the product of 1/12th of _____% (the "Class B
Pass-Through Rate") and the aggregate outstanding
principal balance of the Class B Certificates (the
"Class B Principal Balance") as of the preceding
Distribution Date (after giving effect to all
distributions to Certificateholders on such date).
Interest on the Class A Certificates and the Class
B Certificates will be calculated on the basis of
a 360-day year consisting of twelve 30-day months.
See "The Certificates -- Distributions". The
effective yield on the Class A Certificates and
the Class B Certificates will be below that
otherwise produced by the Class A Pass-Through
Rate and the Class B Pass-Through Rate,
respectively, because the distribution of Monthly
Principal and Monthly Interest in respect of any
given month will not be made until on or about the
____ day of the following month. See "Yield and
Prepayment Considerations" herein.
Monthly Principal.............On each Distribution Date, the Trustee will
distribute to the Class A Certificateholders and
the Class B Certificateholders (collectively, the
"Certificateholders") all principal payments on
the Receivables, including full and partial
prepayments received by the Trustee during the
preceding calendar month. Monthly Principal will
be passed through to Certificateholders on each
Distribution Date in a maximum amount equal to the
aggregate outstanding principal amount of the
Receivables (the "Pool Balance") on the last day
of the second preceding calendar month (or, in the
case of the first Distribution Date, as of the
Cutoff Date) less the Pool Balance on the last day
of the immediately preceding calendar month. For
the purpose of determining Monthly Principal, the
unpaid principal balance of a Defaulted Receivable
or a Purchased Receivable will be deemed to be
zero on and after the last day of the calendar
month in which such Receivable becomes a Defaulted
Receivable or a Purchased Receivable, as
applicable.
The weighted average life of the Certificates will
be reduced by full or partial prepayments on the
Receivables (except certain prepayments in respect
of Precomputed Receivables). See "The Certificates
-- Distributions" herein.
The Receivables...............On the Closing Date, the Depositor will convey
Receivables to the Trust (the "Initial
Receivables") having an aggregate principal
balance of approximately $________ as of ______,
[YEAR] (the "Initial Cutoff Date"). The Trust will
acquire the Initial Receivables from the Depositor
pursuant to the Pooling and Servicing Agreement.
In addition, the Depositor will be obligated under
the terms of the Pooling and Servicing Agreement
to sell additional Receivables (the "Subsequent
Receivables") to the Trust (subject only to the
availability thereof) having an aggregate
principal balance equal to approximately $ (the
"Pre-Funded Amount"), and the Trust will be
obligated to purchase the Subsequent Receivables
from the Depositor (subject to the satisfaction of
certain conditions set forth in the Pooling and
Servicing Agreement) prior to the end of the
Funding Period. The Depositor will designate as a
cutoff date (each, a "Subsequent Cutoff Date")
each date as of which particular Subsequent
Receivables are conveyed to the Trust. Each date
during the Funding Period on which Subsequent
Receivables will be conveyed to the Trust is
referred to herein as a "Subsequent Transfer
Date". See "The Certificates -- Sale and
Assignment of Receivables; Subsequent Receivables"
and "The Receivables Pool" herein and "The
Receivables Pools" in the Prospectus.
The Depositor will acquire the Initial Receivables
on or prior to the Closing Date from Union
Acceptance Funding Corporation ("UAFC") pursuant
to a purchase agreement dated as of , 199 (the
"Purchase Agreement") among the Depositor, UAFC
and UAC. UAFC also will be obligated under the
Purchase Agreement to sell the Subsequent
Receivables to the Depositor, for resale by the
Depositor to the Trust. In the Purchase Agreement,
UAC and UAFC will make certain representations and
warranties with respect to the Receivables and UAC
will undertake to repurchase any Receivable with
respect to which an uncured breach of any such
representation or warranty exists if such breach
materially and adversely affects the rights of the
Depositor or its assignee in such Receivable and
if such breach is not cured by UAC or UAFC in a
timely manner. Pursuant to the Pooling and
Servicing Agreement, the Depositor will assign its
rights against UAC and UAFC with respect to any
Receivable of which there exists a breach of any
representation and warranty that materially and
adversely affects the rights of the
Certificateholders. See "The Certificates -- Sale
and Assignment of Receivables; Subsequent
Receivables" herein. None of UAC, UAFC or the
Depositor will have any other obligation with
respect to the Receivables or the Certificates.
The Receivables arise, or will arise, from
Contracts originated or acquired, directly or
indirectly, by UAC from Dealers located in various
states of the United States. The Contracts are
sold in their ordinary course of business by UAC
to UAFC immediately after the origination or
acquisition by UAC. The Initial Receivables have
been selected, and the Subsequent Receivables will
be selected, from the Contracts owned by UAFC
based on the criteria specified in the Pooling and
Servicing Agreement and described herein under
"The Receivables Pool" and in the Prospectus under
"The Receivables Pools". As of the Initial Cutoff
Date, the weighted average Contract Rate of the
Initial Receivables was approximately _____%, the
weighted average remaining term to maturity of the
Initial Receivables was approximately months, and
the weighted average original term to maturity of
the Initial Receivables was approximately months.
No Initial Receivable has, and no Subsequent
Receivable will have, a scheduled maturity later
than (the "Final Scheduled Maturity Date").
Subsequent Receivables may be originated or
acquired by UAC at a later date using credit
criteria that differ from those that were applied
to the Initial Receivables and may be of a
different credit quality and seasoning. In
addition, following the transfer of Subsequent
Receivables to the Trust, the characteristics of
the entire pool of Receivables included in the
Trust may vary significantly from those of the
Initial Receivables. For a description of
provisions for the transfer of Subsequent
Receivables and verification that Subsequent
Receivables conform to the requirements of the
Pooling and Servicing Agreement, see "Risk Factors
-- The Pre-Funding Account", "-- Conveyance of
Subsequent Receivables to the Trust", "The
Receivables Pool" and "The Certificates -- Sale
and Assignment of Receivables; Subsequent
Receivables" herein. See also "Risk Factors --
Sale of Subsequent Receivables," and "Description
of the Transfer and Servicing Agreements -- Sale
and Assignment of Receivables" in the Prospectus.
Pre-Funding Account ..........During the period (the "Funding Period") from and
including the Closing Date until the earliest to
occur of (a) the date on which the amount on
deposit in the Pre-Funding Account is equal to
$_______ or less, (b) the occurrence of an Event
of Default under the Pooling and Servicing
Agreement, (c) the occurrence of certain events of
insolvency with respect to the Depositor or the
Servicer or (d) the [third] Distribution Date, the
Pre-Funded Amount will be maintained in an account
(the "Pre-Funding Account") in the name of the
Trustee. The Funding Period will not be more than
three calendar months. The Pre- Funded Amount
initially will equal $_________ and, during the
Funding Period, will be reduced by the amount
thereof used to purchase
Subsequent Receivables in accordance with the
Pooling and Servicing Agreement. See "Description
of the Transfer and Servicing Agreements -- Trust
Accounts -- Pre-Funding Account" in the Prospectus
and "The Certificates -- Sale and Assignment of
Receivables; Subsequent Receivables" herein.
Funds on deposit in the Pre-Funding Account during
the Funding Period will be invested by the Trustee
in Eligible Investments, provided, however, that
such funds will not be invested in money market
funds unless the Trustee receives an opinion of
counsel to the effect that such an investment in
money market funds would not require the Trust to
register as an investment company under the
Investment Company Act of 1940. Eligible
Investments held in the Pre-Funding Account will
be required to mature not later than the business
day preceding the next scheduled Distribution Date
or the next Subsequent Transfer Date within the
Funding Period identified by the Depositor. Any
Investment Income with respect to such Eligible
Investments will be transferred from the
Pre-Funding Account to the Certificate Account on
each Distribution Date and will be included in
Available Funds for such Distribution Date. Any
Pre-Funded Amount remaining at the end of the
Funding Period will be payable to the
Certificateholders. The Certificates will be
prepaid, in part, pro rata on the basis of their
initial principal amounts, on the Distribution
Date on or immediately following the last day of
the Funding Period in the event that any amount
remains on deposit in the Pre-Funding Account
after giving effect to the purchase of all
Subsequent Receivables, including any such
purchase on such date. The aggregate principal
amount of Certificates to be prepaid will be an
amount equal to the amount then on deposit in the
Pre-Funding Account. Such pre-payment will reduce
the Certificateholders' outstanding principal
balance and anticipated yield. See "Risk Factors
-- The Pre-Funding Account" and "The Certificates
-- Sale and Assignment of Receivables; Subsequent
Receivables" herein. See also "Description of the
Transfer and Servicing Agreements -- Accounts" in
the Prospectus.
Subordination.................The rights of the Class B Certificateholders to
receive distributions to which they would
otherwise be entitled with respect to the
Receivables are subordinated to the rights of the
Class A Certificateholders, as described more
fully herein. See "The Certificates --
Distributions" and "-- Subordination of the Class
B Certificates; Cash Collateral Account" herein.
Cash Collateral
Account ....................The Depositor will establish the Cash Collateral
Account on the Closing Date and will deposit in
such account an amount equal to ____% of the sum
of the initial Class A Principal Balance and the
Class B Principal Balance (collectively, the
"Certificate Principal Balance"). On each
Distribution Date thereafter, the Servicer will
deposit into the Cash Collateral Account any
amounts remaining in the Certificate Account after
the payment on such date of every other obligation
of the Trust. The Trustee will withdraw funds from
the Cash Collateral Account on each Distribution
Date to the extent of any shortfall in the Monthly
Interest and Monthly Principal. Any amount on
deposit in the Cash Collateral Account on any
Distribution Date in excess the Required Cash
Collateral Amount after all other required
deposits thereto and withdrawals therefrom have
been made, will be distributed to the Depositor.
Any amount so distributed to the Depositor will no
longer be an asset of the Trust. The "Required
Cash Collateral Amount" with respect to any
Distribution Date will equal _____% of the
Certificate Principal Balance.
While it is intended that the amount on deposit in
the Cash Collateral Account grow over time,
through the deposit thereto of the excess
collections, if any, on the Receivables, to the
Required Cash Collateral Amount, there can be no
assurance that such growth will actually occur.
See "The Certificates -- Accounts" herein.
The Cash Collateral Account will be maintained
with the Trustee as a segregated trust account for
the benefit of Certificateholders, but will not be
part of the Trust.
Optional Purchase ............The Servicer may purchase all of the Receivables
(referred to herein as an "Optional Purchase") as
of the last day of any Collection Period, at a
purchase price equal to the fair market value of
the Receivables (but not less than their aggregate
outstanding principal balance plus accrued and
unpaid interest thereon), if the Certificate
Principal Balance as of the following Distribution
Date will equal 10% or less of the initial
Certificate Principal Balance.
Tax Status .................. In the opinion of Federal Tax Counsel, the Trust
will be treated as a grantor trust for federal
income tax purposes and will not be subject to
federal income tax. Owners of beneficial interests
in the Certificates will report their pro rata
share of all income earned on the Receivables
(other than amounts, if any, treated as "stripped
coupons") and, subject to certain limitations in
the case of such owners who are individuals,
trusts or estates, may deduct their pro rata share
of reasonable servicing and other fees.
See "Certain Federal Income Tax Consequences" in
the Prospectus for additional information
concerning the application of federal income tax
laws to the Trust and the Certificates.
ERISA Considerations..........Subject to the considerations discussed under
"ERISA Considerations" herein and in the
Prospectus, the Class A Certificates may be
eligible for purchase by employee benefit plans
subject to the Employee Retirement Income Security
Act of 1974, as amended. See "ERISA
Considerations" herein and in the Prospectus.
Because the Class B Certificates are subordinated
to the Class A Certificates, the Class B
Certificates may not be purchased by Plans.
Ratings of the Certificates ..It is a condition to the issuance of the
Certificates that the Class A Certificates be
rated at least _______ and the Class B
Certificates be rated at least _______ by at least
______ nationally recognized statistical rating
agencies. A rating is not a recommendation to
purchase, hold or sell the Certificates, inasmuch
as such rating does not comment as to market price
or suitability for a particular investor. The
ratings address the likelihood that principal of
and interest on the Certificates will be paid
pursuant to their terms. There can be no assurance
that a rating will not be lowered or withdrawn by
a rating agency if circumstances so warrant. See
"Risk Factors -- Ratings of the Certificates"
herein.
S-4
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus
Supplement and the Prospectus, prospective investors should carefully consider
the following risk factors and those discussed in the Prospectus under the
heading "Risk Factors" before investing in the Certificates.
The Pre-Funding Account
On the Closing Date, the Depositor will deposit the Pre-Funded Amount
to the Pre-Funding Account. The Pre-Funding Account will be maintained as an
Eligible Deposit Account. The Pre-Funded Amount will be used only to purchase
Subsequent Receivables. Prior to their withdrawal from the Pre-Funding Account
as payment for Subsequent Receivables, funds on deposit in the Pre-Funding
Account will be invested in Eligible Investments, and any investment income
thereon will be included on the following Distribution Date as part of Available
Funds. Any amounts remaining in the Pre-Funding Account at the end of the
Funding Period will be distributed pro rata to Certificateholders as a
prepayment of principal of the Certificates. Such prepayment will reduce the
Certificateholder's outstanding principal balance and anticipated yield. See
"Yield and Prepayment Considerations -- Mandatory Repurchase" herein and
"Description of the Transfer and Servicing Agreements -- Pre-Funding Account" in
the Prospectus. The amounts on deposit may be invested in Eligible Investments,
provided, however, that such funds will not be invested in money market funds
unless the Trustee receives an opinion of counsel to the effect that such an
investment in money market funds would not require the Trust to register as an
investment company under the Investment Company Act of 1940.
Conveyance of Subsequent Receivables to the Trust
On the Closing Date, the Depositor will convey to the Trust
approximately $__________ of Initial Receivables and the approximately
$_________ Pre-Funded Amount on deposit in the Pre-Funding Account. If the
principal amount of eligible Receivables originated or acquired by UAC and sold
to UAFC prior to the termination of the Funding Period is less than the
Pre-Funded Amount, UAFC will have insufficient Receivables to sell to the
Depositor, and the Depositor will have insufficient Receivables to sell to the
Trust, thereby resulting in a prepayment of principal to the Certificateholders
as described below. In addition, any conveyance of Subsequent Receivables is
subject to the satisfaction, on or before the related Subsequent Transfer Date,
of the following conditions, among others: (i) each such Subsequent Receivable
shall satisfy the eligibility criteria specified in the Pooling and Servicing
Agreement and shall not have been selected from among such eligible Receivables
in a manner that UAFC or the Depositor deems adverse to the interests of the
Certificateholders; (ii) as of the related Subsequent Cutoff Date, the
Receivables in the Trust at that time, including the Subsequent Receivables to
be conveyed by the Depositor to the Trust as of such Subsequent Cutoff Date,
must satisfy the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; (iii) UAFC shall have executed
and delivered to the Depositor, and the Depositor shall have executed and
delivered to the Trustee, a written assignment (including a schedule identifying
such Subsequent Receivables) conveying such Subsequent Receivables to the
Depositor and the Trust, respectively. In addition, the conveyance of the
Subsequent Receivables to the Trust will also be subject to the satisfaction of
the following requirements within days after the termination of the Funding
Period: (a) the Depositor shall deliver certain opinions of counsel to the
Trustee and the Rating Agencies with respect to the validity of the conveyance
of the Subsequent Receivables to the Trust; (b) the Trustee shall receive
written confirmation from a firm of certified public accountants that the
Receivables, including the Subsequent Receivables, meet the criteria described
herein under "The Receivables Pool" and in the Prospectus under "The Receivables
Pools"; and (c) the Rating Agencies shall have notified the Depositor in writing
that, following the conveyance of the Subsequent Receivables to the Trust, the
Certificates will continue to be rated by such Rating Agencies in the same
rating categories in which they were rated on the Closing Date. Such
confirmation of the ratings of the Certificates may depend on factors other than
the characteristics of the Subsequent Receivables, including the delinquency,
repossession and net loss experience on the automobile, light truck and van
receivables in the portfolio serviced by UAC.
S-5
<PAGE>
UAC will immediately repurchase from the Trust any Subsequent
Receivable that fails to satisfy the conditions listed in the preceding
paragraph, at a purchase price equal to the Purchase Amount therefor.
To the extent that amounts on deposit in the Pre-Funding Account have
not been fully applied to the purchase of Subsequent Receivables by the Trust by
the end of the Funding Period, the Certificateholders will receive a prepayment
of principal in an amount equal to the Pre-Funded Amount remaining in the
Pre-Funding Account following the purchase of all Subsequent Receivables. It is
anticipated that the principal amount of the Subsequent Receivables sold to the
Trust will not be exactly equal to the amount on deposit in the Pre-Funding
Account and, therefore, that there will be at least a nominal amount of
principal prepaid to the Certificateholders. See "Yield and Prepayment
Considerations -- Mandatory Repurchase".
Each Subsequent Receivable, at the time it is conveyed to the Trust,
must satisfy the eligibility criteria specified in the Pooling and Servicing
Agreement. However, Subsequent Receivables may have been originated or acquired
by UAC and sold to UAFC at a later date using credit criteria different from
those that were applied to the Initial Receivables and may be of a different
credit quality and seasoning. Therefore, following the transfer of Subsequent
Receivables to the Trust, the characteristics of the entire Receivables Pool
included in the Trust may vary significantly from those of the Initial
Receivables. See "The Receivables Pool" and "The Certificates -- Sale and
Assignment of Receivables; Subsequent Receivables" herein and "The Receivables
Pools" in the Prospectus.
Certificates Solely Obligations of the Trust
The Certificates are interests in the Trust only and do not represent
the obligation of any other person. The Trustee will withdraw funds from the
Cash Collateral Account, up to the full balance of the funds on deposit in such
account, in the event that sufficient funds are not available in accordance with
the Pooling and Servicing Agreement to distribute Monthly Interest and Monthly
Principal and to pay the Servicing Fee on any Distribution Date. The Cash
Collateral Account is initially _____% of the Certificate Principal Balance and
is intended to increase over time to _____% of the Certificate Principal
Balance. There is no assurance that such growth will occur or that the balance
in the Cash Collateral Account will always be sufficient to assure payment in
full of Monthly Principal and Monthly Interest on the Certificates. In the event
the amount on deposit in the Cash Collateral Account is reduced to zero, losses
on the Receivables will be borne directly first by Class B Certificateholders
until the Class B Principal Balance is reduced to zero, and then by Class A
Certificateholders. See "The Receivables Pool -- Delinquencies, Repossession and
Net Losses" and "The Certificates -- Cash Collateral Account".
Limited Obligations of the Depositor, UAFC and the Servicer
None of the Depositor, UAFC or the Servicer is generally obligated to
make any payments in respect of the Certificates or the Receivables; however, if
UAC were to cease acting as Servicer, delays in processing payments on the
Receivables and information in respect thereof could occur and result in delays
in payment to the Certificateholders. In addition, UAC and UAFC make certain
representations and warranties with respect to the Receivables and, in the event
of a breach of any such representation or warranty that materially and adversely
affects the rights of the Certificateholders in a Receivable, UAC is obligated
under the Purchase Agreement and the Pooling and Servicing Agreement to
repurchase such Receivable from the Trust at a repurchase price equal to the
Purchase Amount thereof. See "The Certificates -- Sale and Assignment of
Receivables; Subsequent Receivables" herein and "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables" in the Prospectus.
Ratings of the Certificates
As a condition to the issuance of the Offered Certificates, the Class A
Certificates must be rated at least ______, and the Class B Certificates must be
rated at least ______, by at least _____ nationally recognized rating agency. A
rating is not a recommendation to purchase, hold or sell the Certificates,
inasmuch as a rating does not comment as to market price or suitability for a
particular investor. The ratings of the Certificates address the likelihood of
the timely payment of interest on, and the ultimate repayment of principal of,
the Certificates pursuant to their terms. There can be no assurance that a
rating will remain for any given period of time or that a
S-6
<PAGE>
rating will not be lowered or withdrawn entirely by a Rating Agency if in its
judgment circumstances in the future so warrant. In the event that a rating is
subsequently lowered or withdrawn, no person or entity will be required to
provide any additional credit enhancement. The ratings of the Class A
Certificates are based primarily on the credit quality of the Receivables, the
subordination of the Class B Certificates and the availability of funds in the
Cash Collateral Account, and the ratings of the Class B Certificates are based
primarily on the credit quality of the Receivables and the availability of funds
in the Cash Collateral Account.
FORMATION OF THE TRUST
General
The Depositor will establish the Trust by selling and assigning the
Trust property, as described below, to the Trustee in exchange for the
Certificates. The Servicer will service the Receivables pursuant to the Pooling
and Servicing Agreement and will be compensated for acting as the Servicer. See
"Description of the Transfer and Servicing Agreements -- Servicing Compensation
and Payment of Expenses" in the Prospectus. To facilitate servicing and to
minimize administrative burden and expense, the Servicer will be appointed
custodian of the Receivables and the related documents by the Trustee, but will
not stamp the Receivables to reflect the sale and assignment of the Receivables
to the Trust or amend the certificates of title of the Financed Vehicles. In the
absence of amendments to the certificates of title, the Trustee may not have
perfected security interests in the Financed Vehicles securing the Receivables
in some states. See "Risk Factors -- Certain Legal Aspects -- Security Interests
in Financed Vehicles" and "Certain Legal Aspects of the Receivables" in the
Prospectus. Under the terms of the Pooling and Servicing Agreement, UAC may
delegate its duties as Servicer and custodian; however, any such delegation will
not relieve UAC of its liability and responsibility with respect to such duties.
If the protection provided to Certificateholders by the Cash Collateral
Account and, in the case of the Class A Certificateholders, the subordination of
the Class B Certificates is insufficient, the Trust will look only to the
Obligors on the Receivables and the proceeds from the repossession and sale of
Financed Vehicles that secure Defaulted Receivables to fund distributions of
principal and interest on the Certificates. In such event, certain factors, such
as the Trust's not having first priority perfected security interests in some of
the Financed Vehicles, may affect the Trust's ability to realize on the
collateral securing the Receivables and thus may reduce the proceeds to be
distributed to Certificateholders with respect to the Certificates. See "The
Certificates -- Distributions" and "-- Subordination of the Class B
Certificates; Cash Collateral Account" herein and "Certain Legal Aspects of the
Receivables" in the Prospectus.
Each Certificate represents a fractional undivided ownership interest in
the Trust. The Trust property includes the Contracts transferred by the
Depositor to the Trust and certain payments due thereunder after the Cutoff
Date. The Trust property also includes (i) such amounts as from time to time may
be held in the Certificate Account; (ii) the right to draw on funds on deposit
in the Cash Collateral Account, the Payahead Account and the Yield Supplement
Account, to the extent described herein, (iii) security interests in the
Financed Vehicles and any accessions thereto; (iv) the rights to proceeds with
respect to the Receivables from claims on physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the Obligors, as
the case may be, and any lender's single interest insurance policy; (v) any
property that shall have secured a Receivable and that shall have been acquired
by the Trustee; (vi) the Pre-Funding Account; and (vii) any and all proceeds of
the foregoing. The Cash Collateral Account and the Yield Supplement Account will
be maintained by the Trustee for the benefit of the Certificateholders, but will
not be part of the Trust. The assets of the Trust will not include, and the
Certificateholders will have no interest in, any contract between UAC or the
Predecessor and any Dealer establishing "dealer reserves" or any right pursuant
to any such contract to recapture dealer reserves.
S-7
<PAGE>
The Trustee
__________________________ is Trustee under the Pooling and Servicing Agreement.
______________________________ is a ____________________________________ banking
corporation, and its principal offices are located at _________________________.
The Depositor and its affiliates may maintain normal commercial banking
relations with the Trustee and its affiliates.
THE RECEIVABLES POOL
The pool of Receivables conveyed to the Trust (the "Receivables Pool") will
include the Initial Receivables purchased as of the Initial Cutoff Date and any
Subsequent Receivables purchased as of the applicable Subsequent Cutoff Dates.
The Initial Receivables were, and the Subsequent Receivables were or will
be, selected from UAFC's portfolio for purchase by the Depositor by several
criteria, including that each Receivable: (i) had or will have an original
number of payments of not more than _____ payments and not less than _____
payments, (ii) had or will have a remaining maturity of not more than _____
months and not less than _____ months, (iii) provided or will provide for level
monthly payments that fully amortize the amount financed over the original term,
(iv) had or will have a Contract Rate (exclusive of prepaid finance charges) of
not less than _____%, and (v) was not or will not be more than _____ days past
due as of the Cutoff Date. The weighted average remaining maturity of the
Initial Receivables will be months as of the Initial Cutoff Date.
Approximately _____________% of the Initial Receivables are simple interest
contracts which provide for equal monthly payments. Approximately ________% of
the aggregate principal balance of the Initial Receivables as of the Initial
Cutoff Date are Precomputed Receivables (as defined in the Prospectus)
originated in ____________________. All of such Precomputed Receivables are Rule
of 78's Receivables (as defined in the Prospectus). Approximately ______% of the
aggregate principal balance of the initial Cutoff Date represent financing of
new vehicles; the remainder of the Initial Receivables represent financing of
used vehicles.
Initial Receivables representing more than 10% of the aggregate principal
balance of the Receivables as of the Cutoff Date were originated in metropolitan
areas in each of the States of __________, ____________, __________ and
______________. The performance of the Receivables in the aggregate could be
adversely affected in particular by the development of adverse economic
conditions in such metropolitan areas.
The obligation of the Trust to purchase Subsequent Receivables on a
Subsequent Transfer Date will be subject to the following criteria: [specify
applicable criteria]. In addition, such obligation will be subject to the
Receivables (including the Subsequent Receivables to be transferred to the Trust
on such Subsequent Transfer Date) having a weighted average remaining term not
greater than _____ months. Such criteria will be based on the characteristics of
the Initial Receivables on the Initial Cutoff Date and any Subsequent
Receivables on the related Subsequent Cutoff Date.
The Initial Receivables will represent approximately _____% of the
aggregate initial principal balance of the Certificates. However, except for the
criteria described in the preceding paragraphs, there will be no required
characteristics of the Subsequent Receivables. Therefore, following the transfer
of Subsequent Receivables to the Trust, the aggregate characteristics of the
entire Receivables Pool, including the composition of the Receivables, the
distribution by Contract Rate and the geographic distribution, may vary
significantly from those of the Initial Receivables. The composition,
distribution by Contract Rate and geographic distribution of the Initial
Receivables as of the Initial Cutoff Date are as set forth in the following
tables.
S-8
<PAGE>
Composition of the Initial Receivables as of the Initial Cutoff Date
<TABLE>
<CAPTION>
Aggregate Original Weighted
Number of Principal rincipal Average
Receivables Balance PBalance Rate
------------ ----------- ---------- ------------
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty Trucks..............
Used Automobiles and Light-Duty Trucks.............
New Vans (1).......................................
Used Vans (1)......................................
------------ ----------- ---------- ------------
All Receivables....................................
============ =========== ========== ============
</TABLE>
<TABLE>
<CAPTION>
Weighted Weighted Percent of Scheduled
Average Average Aggregate Weighted
Remaining Original Principal Average
Term (2) Term (2) Balance (3) Life (2)
------------ ----------- ----------- -----------
<S> <C> <C> <C> <C>
New Automobiles and Light-Duty Trucks..............
Used Automobiles and Light-Duty Trucks.............
New Vans (1).......................................
Used Vans (1)......................................
------------ ----------- ----------- -----------
All Receivables....................................
============ =========== =========== ===========
</TABLE>
- -----------------
(1) References to vans include minivans and van conversions.
(2) Based on scheduled maturity and assuming no prepayments of the Receivables.
(3) Sum may not equal 100% due to rounding.
Geographic Distribution of the Initial
Receivables as of the Initial Cutoff Date
Percent of Aggregate
State (1)(2) Principal Balance (3)
- ------------ ---------------------
(1) Based on address of the Dealer selling the related Financed Vehicle.
(2) Receivables originated in Ohio were solicited by Dealers for direct
financing by UAC [or the Predecessor.] All other Receivables were
originated by Dealers and purchased from such Dealers by UAC [or the
Predecessor].
(3) Percentages may not add to 100.0% because of rounding.
S-9
<PAGE>
Distribution of Initial Receivables Vehicles by Model Year
<TABLE>
<CAPTION>
Percentage Principal
Number of of Total (1) Balance as of Percentage
Model Year Receivables Cut Off Date of Total (1)
------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
....................................
------------- ------------ -------------- --------------
Total...................................
============= ============ ============== ==============
</TABLE>
- ------------------------
(1) Sum may not equal 100% due to rounding.
Distribution of the Initial Receivables by
Contract Rate as of the Initial Cutoff Date
<TABLE>
<CAPTION>
Percentage
Aggregate Average of Aggregate
Number of Principal Principal Principal
Contract Rate Range Receivables Balance Balance Balance(1)
------------- ------------ -------------- --------------
<S> <C> <C> <C> <C>
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
to %.........................
------------- ------------ -------------- --------------
to %.........................
============= ============ ============== ==============
- ------------------------
</TABLE>
(1) Sum may not equal 100% due to rounding.
S-10
<PAGE>
Distribution of the Initial Receivables by
Remaining Term as of the Initial Cutoff Date
<TABLE>
<CAPTION>
Percentage of
Aggregate Average Aggregate
Remaining Scheduled Number of Principal Principal Principal
Term Range Receivables Balance Balance Balance (1)
- --------------------------
------------- ------------ ------------ -----------------
<S> <C> <C> <C> <C>
to months......................
to months......................
to months......................
to months......................
to months......................
to months......................
to months......................
to months......................
to months......................
------------- ------------ ------------ -----------------
Total......................................
============= ============ ============ =================
</TABLE>
- ------------------------
(1) Sum may not equal 100% due to rounding.
Delinquencies, Repossessions and Net Losses
Set forth below is certain information concerning the experience of UAC and
the Predecessor pertaining to delinquencies, repossessions, and net losses on
fixed rate retail automobile, light truck and van receivables serviced by UAC
and the Predecessor. There can be no assurance that the delinquency,
repossession, and net loss experience on the Receivables will be comparable to
that set forth below.
<TABLE>
<CAPTION>
At June 30,
1995 1996 1997
---------------------- ----------------------- ----------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Servicing portfolio .... 117,837 $1,159,349 147,722 $1,548,538 173,693 $1,860,272
------- ---------- ------- ---------- ------- ----------
Delinquencies
30-59 days .......... 1,169 $ 12,097 1,602 $ 17,030 2,487 $ 27,373
60-89 days .......... 377 4,124 694 7,629 1,646 18,931
90 days or more ..... 0 0 333 3,811 723 8,826
------- ---------- ------- ---------- ------- ----------
Total delinquencies .... 1,546 $ 16,221 2,629 $ 28,470 4,856 $ 55,130
======= ========== ======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio ......... 1.31% 1.40% 1.78% 1.84% 2.80% 2.96%
</TABLE>
<PAGE>
At ____________, At ____________,
199___ 199___
------------------------- ----------------------
(Dollars in thousands)
Number of Number of
Receivables Amount Receivables Amount
----------- ------ ----------- ------
Servicing portfolio .... $ $
------- ---------- ------- ----------
Delinquencies
30-59 days .......... $ $
60-89 days ..........
90 days or more .....
------- ---------- ------- ----------
Total delinquencies .... $ $
======= ========== ======= ==========
Total delinquencies as a
percent of servicing
portfolio ......... % % % %
<PAGE>
<TABLE>
<CAPTION>
Credit Loss Experience (1)
Year ended June 30,
1995 1996 1997
------------------------ ----------------------- ------------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing
portfolio(2)............ 104,455 $982,875 132,363 $1,343,770 164,858 $1,759,666
------- -------- ------- ---------- ------- ----------
Gross charge-offs ........... 3,493 $ 28,628 3,663 $ 40,815 6,280 $ 70,830
Recoveries (3) .............. 15,258 19,543 28,511 8,134 8,527 16,661
-------- ---------- ----------
Net losses .................. $ 13,370 $ 21,272 $ 42,319
======== ========== ==========
Gross charge-offs as a %
of avg. servicing
portfolio(4) ............. 3.34% 2.91% 2.77% 3.04% 3.81% 4.03%
Recoveries as a % of gross
charge-offs .............. 53.30% 47.88% 40.25%
Net losses as a % of avg
servicing portfolio(4) ... 1.36% 1.58% 2.40%
</TABLE>
<TABLE>
<CAPTION>
________ Months Ended _____ Months Ended ____ Months Ended
_____________, 199__ (5) __________, 199__ (5) __________, 199____ (5)
------------------------- ------------------------ --------------------------
(Dollars in thousands)
Number of Number of Number of
Receivables Amount Receivables Amount Receivables Amount
----------- ------ ----------- ------ ----------- ------
<S> <C> <C> <C> <C> <C> <C>
Avg. servicing
portfolio(2)............ $ $ $
------- ---------- ------- ---------- ------- ----------
Gross charge-offs ........... $ $ $
Recoveries (3) ..............
---------- ---------- ----------
Net losses .................. $ $ $
========== ========== ==========
Gross charge-offs as a %
of avg. servicing
portfolio(4) ............. % % % % % %
Recoveries as a % of gross
charge-offs .............. % % %
Net losses as a % of avg
servicing portfolio(4) ... % % %
</TABLE>
- -----------
<PAGE>
(1) There is generally no recourse to Dealers under any of the receivables in
the portfolio serviced by UAC or the Predecessor, except to the extent of
representations and warranties made by Dealers in connection with such
receivables.
(2) Equals the monthly arithmetic average, and includes receivables sold in
prior securitization transactions.
(3) In fiscal 1995, the method by which recoveries are stated was changed.
Currently, recoveries include recoveries on receivables previously charged
off, cash recoveries and unsold repossessed assets carried at fair market
value. Under the previous method, reported recoveries excluded unsold
repossessed assets carried at fair market value. Prior period credit loss
experience has been restated to conform to current period classifications.
(4) Variation in the size of the portfolio serviced by UAC will affect the
percentages in "Gross charge-offs as a percentage of average servicing
portfolio" and "Net losses as a percentage of average servicing portfolio."
(5) Percentages are annualized in "Gross charge-offs as a percentage of average
servicing portfolio" and "Net losses as a percentage of average servicing
portfolio" for partial years.
S-11
<PAGE>
[Discussion of Delinquencies and Credit Loss Experience]
[To be updated for current information]
S-12
<PAGE>
YIELD AND PREPAYMENT CONSIDERATIONS
General
Monthly Interest (as defined herein) on the Receivables will be
distributed to Certificateholders on each Distribution Date to the extent of the
Pass-Through Rate applied to the Class A Certificate Principal Balance or Class
B Certificate Principal Balance, as applicable, as of the preceding Distribution
Date or the Closing Date, as applicable (after giving effect to distributions of
principal on such preceding Distribution Date). See "The Certificates --
Distributions". In the event of a full or partial prepayment on a Receivable,
Certificateholders will receive interest for the full month of such prepayment
either through the distribution of interest paid on other Receivables or
withdrawal from the Cash Collateral Account.
Although the Receivables will have different Contract Rates, each
Receivable's Contract Rate generally will exceed the sum of (a) the initial
weighted average of the Class A Pass-Through Rate and the Class B Pass-Through
Rate and (b) the per annum rate used to calculate the Servicing Fee. The
Contract Rate on certain of the Receivables, however, will be less than the
weighted average of the Class A Pass-Through Rate and the Class B Pass-Through
Rate plus the per annum rate used to calculate the Servicing Fee. For such
Receivables, amounts on deposit in the Yield Supplement Account will be used to
cover resulting shortfalls with respect to Monthly Interest and the Servicing
Fee. See "The Certificates -- Accounts". The availability of amounts on deposit
in the Yield Supplement Account reduces
S-13
<PAGE>
the likelihood that disproportionate rates of prepayments between Receivables
with higher and lower Contract Rates will affect the ability of the Trust to
distribute Monthly Interest to Certificateholders.
The effective yield to Certificateholders will be below the yield
otherwise produced by the Pass-Through Rate because the distribution of Monthly
Principal and Monthly Interest in respect of any given month will not be made
until the related Distribution Date, which will not be earlier than the day of
the following month.
Mandatory Repurchase
Cash distributions to Certificateholders will be made, on a pro rata
basis, on the Distribution Date on or immediately following the last day of the
Funding Period in the event that funds remain on deposit in the Pre-Funding
Account after giving effect to the purchase of all Subsequent Receivables,
including any such purchase on such date.
THE DEPOSITOR AND UAC
UAC currently acquires loans from over 3,300 manufacturer franchised
automobile dealerships in 30 states. UAC is an Indiana corporation, formed in
December 1993 by UAC's predecessor, Union Federal Savings Bank of Indianapolis
(the "Predecessor") to succeed to the Predecessor's indirect automobile finance
business which the Predecessor had operated since 1986. UAC began purchasing and
originating receivables in April 1994. For the fiscal years ended June 30, 1994,
1995, 1996 and 1997 UAC and/or the Predecessor acquired prime loans aggregating
$615 million, $767 million, $995 million and $1,076 million, respectively,
representing annual increases of 25%, 30% and 8%, respectively. Of the $1.9
billion of loans in the servicing portfolio of UAC (consisting of the principal
balance of loans held for sale and securitized loans) at June 30, 1997,
approximately 75.43% represented loans on used cars and approximately 24.57%
represented loans on new cars.
Additional information regarding UAC and the Depositor is set forth
under "Union Acceptance Corporation and Affiliates" in the Prospectus.
THE CERTIFICATES
General
The Certificates will be issued pursuant to the Pooling and Servicing
Agreement. Copies of the Pooling and Servicing Agreement (without exhibits) may
be obtained by Certificateholders upon request in writing to the Servicer at the
address set forth herein under "Reports to Certificateholders". Citations to the
relevant sections of the Pooling and Servicing Agreement appear below in
parentheses. The following summary does not purport to be complete and is
subject to and qualified in its entirety by reference to the Pooling and
Servicing Agreement.
Distributions
In general, it is intended that the Trustee distribute to the Class A
Certificateholders and the Class B Certificateholders on each Distribution Date
the aggregate principal payments, including full and partial prepayments (except
certain prepayments in respect of Precomputed Receivables as described below
under "-- Accounts") received on the Receivables during the related Collection
Period, plus a full month's interest at the Class A Pass-Through Rate or the
Class B Pass-Through Rate, as applicable, payable monthly at one-twelfth the
annual rate, calculated on the basis of a 360-day year consisting of twelve
30-day months. (Section .) The Class A Certificates are entitled to a certain
priority, relative to the Class B Certificates, in right of distributions on the
Receivables. See "-- Distributions on the Certificates". Interest to
Certificateholders may be provided by a payment made by or on behalf of the
Obligor, by an Advance made by the Servicer to cover an Interest Shortfall, by a
withdrawal from the Cash Collateral Account to cover an Interest Shortfall, and,
in respect of certain Receivables, by the withdrawal of the Yield Supplement
Amount from the Yield Supplement Account. See "-- Sale and Assignment of
Receivables; Subsequent Receivables" and "-- Accounts" herein.
S-14
<PAGE>
Sale and Assignment of Receivables; Subsequent Receivables
Certain information with respect to the conveyance of the Initial
Receivables from UAFC to the Depositor, and from the Depositor to the Trust, on
the Closing Date pursuant to the Purchase Agreement and the Pooling and
Servicing Agreement, respectively, is set forth under "The Transfer and
Servicing Agreements -- Sale and Assignment of the Receivables" in the
Prospectus. In addition, during the Funding Period, pursuant to the Pooling and
Servicing Agreement, UAFC will be obligated to sell to the Depositor and the
Depositor will be obligated to sell to the Trust, Subsequent Receivables having
an aggregate principal balance equal to approximately $ (such amount being equal
to the initial Pre-Funded Amount) to the extent that such Subsequent Receivables
are available.
During the Funding Period on each Subsequent Transfer Date, subject to
the conditions described below, UAFC will sell and assign to the Depositor, and
the Depositor will sell and assign to the Trust, without recourse, their
S-15
<PAGE>
respective interests in the Subsequent Receivables. The Subsequent Receivables
will be designated by UAFC as of the related Subsequent Cutoff Date and
identified in a schedule attached to a subsequent transfer assignment relating
to such Subsequent Receivables, which will be executed and delivered on such
date by the Depositor for delivery to the Trustee pursuant to the Pooling and
Servicing Agreement.
Any conveyance of Subsequent Receivables is subject to the
satisfaction, on or before the related Subsequent Transfer Date, of the
following conditions precedent, among others: (i) each such Subsequent
Receivable must satisfy the eligibility criteria specified in the Pooling and
Servicing Agreement and shall not have been selected from among such eligible
Receivables in a manner that UAFC or the Depositor deems adverse to the
interests of the Certificateholders; (ii) as of the related Subsequent Cutoff
Date, the Receivables in the Trust at that time, including the Subsequent
Receivables to be conveyed by the Depositor as of such Subsequent Cutoff Date,
will satisfy the parameters described under "The Receivables Pool" herein and
under "The Receivables Pools" in the Prospectus; and (iii) UAFC shall have
executed and delivered to the Depositor, and the Depositor shall have executed
and delivered to the Trustee, a written assignment conveying such Subsequent
Receivables to the Depositor and the Trust, respectively (including a schedule
identifying such Subsequent Receivables). Moreover, any such conveyance of
Subsequent Receivables will also be subject to the satisfaction of the following
requirements within days after the termination of the Funding Period: (a) the
Depositor must deliver certain opinions of counsel to the Trustee and the Rating
Agencies with respect to the validity of the conveyance of the Subsequent
Receivables to the Trust; (b) the Trustee shall have received written
confirmation from a firm of certified independent public accountants that the
Receivables, including the Subsequent Receivables, satisfy the parameters
described under "The Receivables Pool" herein and under "The Receivables Pools"
in the Prospectus; and (c) the Rating Agencies shall have notified the Depositor
in writing that, following the addition of the Subsequent Receivables to the
Trust, the Certificates will continue to be rated by such Rating Agencies in the
same rating categories in which they were rated on the Closing Date. Such
confirmation of the ratings of the Certificates may depend on factors other than
the characteristics of the Subsequent Receivables, including the delinquency,
repossession and net loss experience on the automobile, light duty truck and
minivan receivables in the portfolio serviced by the Servicer. UAC will
immediately repurchase from the Trustee, at a price equal to the Purchase Amount
thereof, any Subsequent Receivable that fails to satisfy any of the foregoing
conditions subsequent.
Subsequent Receivables may have been originated or acquired by UAC at a
later date using credit criteria different from those that were applied to the
Initial Receivables. See "Risk Factors -- Conveyance of Subsequent Receivables
to the Trust" and "The Receivables Pool" herein.
Accounts
In addition to the Certificate Account (as described in the
Prospectus), the Servicer will establish with the Trustee for the benefit of the
Certificateholders [the Yield Supplement Account,] the Cash Collateral Account
[and the Payahead Account].
Yield Supplement Account. For each Receivable on which the Contract
Rate is less than the sum of (a) the initial weighted average of the Class A
Pass-Through Rate and the Class B Pass-Through Rate and (b) the annual
percentage rate at which the Servicing Fee is calculated with respect to the
Certificate Principal Balance for such Receivable, on the Closing Date the
Depositor will deposit into the Yield Supplement Account an amount equal to the
aggregate of such shortfall over the term of such Receivables (the "Total Yield
Supplement Deposit") based on the scheduled payments of the Receivables. On each
Determination Date, the Servicer shall withdraw an amount to apply to
distributions on the Certificates on the related Distribution Date equal to the
scheduled shortfall for the previous Collection Period (the "Yield Supplement
Amount"). The Yield Supplement Account will be maintained by the Trustee for the
benefit of the Certificateholders, but will not form part of the Trust. (Section
.)
S-16
<PAGE>
Cash Collateral Account. On the Closing Date, the Depositor will
deposit an amount equal to % of the initial Certificate Principal Balance into
the Cash Collateral Account. Thereafter, the amount held in the Cash Collateral
Account will be increased up to the Required Cash Collateral Amount by the
deposit thereto of payments on the Receivables not utilized to make payments to
the Certificateholders or the Servicer on any Distribution Date. While it is
intended that the Cash Collateral Account will grow over time to equal the
Required Cash Collateral Amount through monthly deposits of excess collections
on the Receivables, if any, there can be no assurance that such growth will
actually occur.
Under the terms of the Pooling and Servicing Agreement, the Trustee
will withdraw funds from the Cash Collateral Account and transfer them to the
Certificate Account for any deficiency as described above under "--
Distributions on the Certificates", to the extent available. Amounts available
for deficiencies on any Distribution Date will be limited to the sum of amounts
on deposit in the Cash Collateral Account on such Distribution Date.
In the event that the balance of the Cash Collateral Account is reduced
to zero on any Distribution Date, the Trust will depend solely on current
distributions on the Receivables to make distributions of principal and interest
on the Certificates. In addition, because the market value of motor vehicles
generally declines with age and because of difficulties that may be encountered
in enforcing motor vehicle contracts as described in the Prospectus under
"Certain Legal Aspects of the Receivables," the Servicer may not recover the
entire amount due on such Receivables in the event of a repossession and resale
of a Financed Vehicle securing a Receivable in default. In such event, the
Certificateholders may suffer a corresponding loss. Any such losses would also
be borne first by the Class B Certificateholders, up to the Class B Principal
Balance, and then by the Class A Certificateholders.
[Payahead Account. On the Closing Date, the Depositor will establish the
Payahead Account, into which payments on Precomputed Receivables will be
deposited and held until they are withdrawn and applied as payments on the
Certificates. [Describe mechanism for determining the precomputed payment
schedule.]
Subordination of the Class B Certificates
The rights of the Class B Certificateholders to receive distributions
with respect to the Receivables will be subordinated to such rights of the Class
A Certificateholders to the extent described herein. This subordination is
intended to enhance the likelihood of timely receipt by the Class A
Certificateholders of the full amount of interest and principal distributable to
them on each Distribution Date, and to afford the Class A Certificateholders
limited protection against losses in respect of the Receivables.
No distribution of interest will be made to the Class B
Certificateholders on any Distribution Date until the full amount of interest
payable on the Class A Certificates on such Distribution Date has been
distributed to the Class A Certificateholders and no distribution of principal
will be made to the Class B Certificateholders on any Distribution Date until
the full amount of interest on and principal of the Class A Certificates payable
on such Distribution Date has been distributed to the Class A
Certificateholders. Distributions of interest on the Class B Certificates will
not be subordinated to distributions of principal of the Class A Certificates.
Because the rights of the Class B Certificateholders to receive distributions of
principal will be subordinated to the rights of the Class A Certificateholders
to receive distributions of interest and principal, the Class B Certificates
will be more sensitive than the Class A Certificates to losses on the
Receivables. If the aggregate amount of losses on the Receivables exceeds the
amount on deposit in the Cash Collateral Account, Class B Certificateholders may
not recover their initial investment in the Class B Certificates.
In the event of delinquencies or losses on the Receivables, the
protection afforded to the Class A Certificateholders will be effected both by
the preferential right of the Class A Certificateholders to receive
distributions on the Receivables in the manner and to the extent described above
and by the establishment of the Cash Collateral Account.
S-17
<PAGE>
Advances
To the extent that interest collected on a Receivable during a
Collection Period falls short of the scheduled interest payment, the Servicer
will make an Advance of the resulting Interest Shortfall, but only to the extent
that the Servicer in its sole discretion, expects to recoup the Advance from
subsequent collections on the Receivable, or withdrawals from the Cash
Collateral Account. The Servicer will deposit the Advance in the Certificate
Account on or before the calendar day of the month following the Collection
Period. The Servicer will recoup its Advance from subsequent payments by or on
behalf of the respective Obligor, from insurance proceeds or, upon the
Servicer's determination that reimbursement from the preceding sources is
unlikely, will recoup its Advance from any collections made on other
Receivables. (Section 14.05.)
Distributions on the Certificates
The Servicer will deposit in the Certificate Account the amount of
payments on all Receivables received with respect to the preceding Collection
Period, the Yield Supplement Amount for the related Distribution Date, all
Advances for such Collection Period, and the Purchase Amount for all Receivables
that became Purchased Receivables during the preceding Collection Period, all of
which amounts will be available for distribution pursuant to the terms of the
Pooling and Servicing Agreement on the next succeeding Distribution Date
("Available Funds") and will determine the amount of funds necessary to make
distributions of Monthly Principal and Monthly Interest to the
Certificateholders and the Servicing Fee to the Servicer. If there is a
deficiency with respect to the foregoing, the Servicer will withdraw amounts, to
the extent available, from the Cash Collateral Account in the amount of such
deficiency and notify the Trustee of any remaining deficiency.
If acceptable to each Rating Agency without a reduction in the rating
of any class of Certificates, the Servicing Fee due to the Servicer in respect
of each Collection Period will be distributed to the Servicer during such
Collection Period from collections received during such Collection Period.
On each such Distribution Date, the Trustee will apply or cause to be
applied the Available Funds plus any amounts withdrawn from the Cash Collateral
Account to make the following payments in the following priority:
(a) the aggregate amount of outstanding Advances on all Receivables
(x) that became Defaulted Receivables during the prior Collection Period,
and (y) that the Servicer determines to be unrecoverable, to the Servicer;
(b) the Servicing Fee, including any overdue Servicing Fee, to the
Servicer, to the extent not previously distributed to the Servicer;
(c) pro rata, Class A Monthly Interest, including any overdue Class A
Monthly Interest, to the Class A Certificateholders;
(d) Class B Monthly Interest, including any overdue Class B Monthly
Interest, to the Class B Certificateholders;
(e) Class A Monthly Principal, to the Class A Certificateholders;
(f) Class B Monthly Principal, to the Class B Certificateholders;
(g) the amount of recoveries of Advances (to the extent such
recoveries have not previously been reimbursed to the Servicer pursuant to
clause (a) above), to the Servicer;
(h) the amount of Liquidation Proceeds on Purchased Receivables
purchased by the Servicer, to the Servicer;
S-18
<PAGE>
(i) the amount of Liquidation Proceeds on Purchased Receivables
repurchased by the Depositor, to the Depositor; and
(j) the balance into the Cash Collateral Account.
After all distributions pursuant to clauses (a) through (j) above have
been made on each Distribution Date, the amount of funds remaining in the Cash
Collateral Account on such date, if any, in excess of the Required Cash
Collateral Amount, will be distributed by the Trustee to UAC. Any amounts so
distributed to UAC will no longer be available for distribution to
Certificateholders, and the Certificateholders will have no rights with respect
thereto.
"Monthly Interest" for any Distribution Date will equal the sum of the
Class A Monthly Interest and the Class B Monthly Interest.
"Monthly Principal" for any Distribution Date will equal the sum of the
Class A Monthly Principal and the Class B Monthly Principal.
"Class A Monthly Interest" for any Distribution Date will equal (i) for
the first Distribution Date, the product of the following: (one-twelfth of the
Class A Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date from the Closing Date divided by 30) multiplied by
(the Class A Principal Balance at the Closing Date) and (ii) with respect to
each subsequent Distribution Date, the product of one-twelfth of the Class A
Pass-Through Rate and the Class A Principal Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
required to be made on such preceding Distribution Date).
"Class A Monthly Principal" for any Distribution Date will equal the
amount necessary to reduce the Class A Principal Balance to ____% of the
aggregate unpaid principal balances of the Receivables on the last day of the
preceding Collection Period; provided, however, that Class A Monthly Principal
on the final scheduled Distribution Date will equal the Class A Principal
Balance on such date. For the purpose of determining Class A Monthly Principal,
the unpaid principal balance of a Defaulted Receivable or a Purchased Receivable
is deemed to be zero on and after the last day of the Collection Period in which
such Receivable became a Defaulted Receivable or a Purchased Receivable.
"Class B Monthly Interest" for any Distribution Date will equal (i) for
the first Distribution Date, the product of the following: (one-twelfth of the
Class B Pass-Through Rate) multiplied by (the number of days remaining in the
month of the Closing Date from the Closing Date divided by 30) multiplied by
(the Class B Principal Balance at the Closing Date) and (ii) with respect to
each subsequent Distribution Date, the product of one-twelfth of the Class B
Pass-Through Rate and the Class B Principal Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
required to be made on such preceding Distribution Date).
"Class B Monthly Principal" for any Distribution Date will equal the
amount necessary to reduce the Class B Principal Balance to ____% of the sum of
the aggregate unpaid principal balances of the Receivables on the last day of
the preceding Collection Period; provided, however, that Class B Monthly
Principal on the final scheduled Distribution Date will equal the Class B
Principal Balance on such date. For the purpose of determining Class B Monthly
Principal, the unpaid principal balance of a Defaulted Receivable or a Purchased
Receivable is deemed to be zero on and after the last day of the Collection
Period in which such Receivable became a Defaulted Receivable or a Purchased
Receivable.
"Defaulted Receivable" will mean, for any Collection Period, a
Receivable as to which any of the following has occurred: (i) the Receivable is
120 days or more delinquent as of the last day of such Collection Period; (ii)
the Financed Vehicle that secures the Receivable has been repossessed; or (iii)
the Receivable has been determined to be uncollectible in accordance with the
Servicer's customary practices on or prior to the last day of such Collection
Period; provided, however, that any Receivable which the Depositor or the
Servicer is obligated to repurchase or purchase pursuant to the Pooling and
Servicing Agreement shall be deemed not to be a Defaulted Receivable.
S-19
<PAGE>
As an administrative convenience, the Servicer will be permitted to
make the deposit of collections and aggregate Advances and Purchase Amounts for
or with respect to the Collection Period, net of distributions to be made to the
Servicer or Depositor with respect to the Collection Period. The Servicer,
however, will account to the Trustee and to the Certificateholders as if all
deposits and distributions were made individually. (Section .)
The following chart sets forth an example of the application of the
foregoing provisions to a monthly distribution:
...................Collection Period. The Servicer receives monthly
payments, prepayments, and other proceeds in
respect of the Receivables and deposits them in
the Certificate Account. [The Servicer may deduct
Servicing Fees from such deposits.]
.....................Record Date. Distributions on the Distribution
Date are made to Certificateholders of record at
the close of business on this date.
.....................Fifth calendar day. On or before this date, the
Servicer notifies the Trustee of the amounts to be
distributed on the Distribution Date.
.....................The Trustee withdraws funds from the Cash
Collateral Account, if necessary.
.....................Distribution Date. The Trustee distributes to
Certificateholders amounts payable in respect of
the Certificates[, and pays the Servicing Fee].
ERISA CONSIDERATIONS
Subject to the considerations set forth under "ERISA Considerations --
Senior Certificates Issued By Grantor Trusts" in the Prospectus, the Class A
Certificates may be eligible for purchase by an employee benefit plan or an
individual retirement account (a "Plan") subject to ERISA or Section 4975 of the
Internal Revenue Code of 1986, as amended (the "Code"). A fiduciary of a Plan
must determine that the purchase of a Class A Certificate is consistent with its
fiduciary duties under ERISA and does not result in a nonexempt prohibited
transaction as defined in Section 406 of ERISA or Section 4975 of the Code. For
additional information regarding treatment of the Class A Certificates under
ERISA, see "ERISA Considerations" in the Prospectus.
Because the Class B Certificates are subordinated to the Class A
Certificates, the Class B Certificates may not be purchased by Plans.
UNDERWRITING
Under the terms and subject to the conditions set forth in the
underwriting agreement for the sale of the Certificates, dated , 199 , the
Depositor has agreed to sell and each of the underwriters named below (the
"Underwriters") severally agreed to purchase the principal amount of the
Certificates set forth opposite its name below:
S-20
<PAGE>
Principal Amount of Principal Amount of
Underwriters Class A Certificates Class B Certificates
--------------------- -------------------
.................... $ $
....................
--------------------- -------------------
Total.................... $ $
===================== ===================
In the underwriting agreement, the Underwriters have agreed, subject to
the terms and conditions set forth therein, to purchase all the Certificates
offered hereby if any of the Certificates are purchased.
The Underwriters propose to offer part of the Certificates directly to the
public at the prices set forth on the cover page hereof, and part to certain
dealers at a price that represents a concession not in excess of ___% of the
denominations of the Class A Certificates or ______% of the denominations of the
Class B Certificates. The Underwriters may allow and such dealers may reallow a
concession not in excess of _____% of the denominations of the Class A
Certificates or ____% of the denominations of the Class B Certificates.
The Depositor and UAC have agreed to indemnify the Underwriters against
certain liabilities, including liabilities under the Securities Act.
The Depositor has been advised by the Underwriters that the
Underwriters presently intend to make a market in the Certificates, as permitted
by applicable laws and regulations. The Underwriters are not obligated, however,
to make a market in the Certificates and any such market-making may be
discontinued at any time at the sole discretion of the Underwriters.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Certificates.
LEGAL OPINIONS
Certain legal matters relating to the Certificates will be passed upon for
the Depositor by Barnes & Thornburg, Indianapolis, Indiana, and for the
Underwriters by Cadwalader, Wickersham & Taft. Certain federal income tax
consequences with respect to the Certificates will be passed upon for the
Depositor by .
S-21
<PAGE>
INDEX OF PRINCIPAL TERMS
TERM PAGE
Available Funds............................................................S-21
Certificate Principal Balance...............................................S-7
Certificateholders..........................................................S-5
Certificates................................................................S-1
Class A Principal Balance...................................................S-4
Class A Certificateholders..................................................S-4
Class A Certificates........................................................S-1
Class A Monthly Interest...................................................S-22
Class A Monthly Principal..................................................S-22
Class A Pass-Through Rate...................................................S-4
Class A Percentage..........................................................S-4
Class B Principal Balance...................................................S-4
Class B Certificateholders..................................................S-4
Class B Certificates........................................................S-1
Class B Monthly Interest...................................................S-23
Class B Monthly Principal..................................................S-23
Class B Pass-Through Rate...................................................S-4
Class B Percentage..........................................................S-4
Closing Date................................................................S-4
Code.......................................................................S-24
Cutoff Date.................................................................S-2
Defaulted Receivable.......................................................S-23
Depositor...................................................................S-4
Distribution Date...........................................................S-1
Final Scheduled Distribution Date...........................................S-1
Final Scheduled Maturity Date...............................................S-6
Funding Period..............................................................S-6
Initial Cutoff Date.........................................................S-5
Initial Receivables.........................................................S-5
Monthly Interest...........................................................S-22
Monthly Principal..........................................................S-22
Optional Purchase...........................................................S-8
Plan.......................................................................S-24
Pooling and Servicing Agreement.............................................S-1
Pre-Funded Amount...........................................................S-5
Pre-Funding Account.........................................................S-7
Purchase Agreement..........................................................S-6
Receivables.................................................................S-2
Receivables Pool...........................................................S-12
Record Date.................................................................S-4
Required Cash Collateral Amount.............................................S-7
Servicer....................................................................S-4
Subsequent Cutoff Date......................................................S-5
Subsequent Receivables......................................................S-5
Subsequent Transfer Date....................................................S-5
Total Yield Supplement Deposit.............................................S-20
Trust.......................................................................S-1
UAC.........................................................................S-4
UAFC........................................................................S-6
Underwriters...............................................................S-24
Yield Supplement Amount....................................................S-20
S-22
<PAGE>
PROSPECTUS
UACSC Auto Trusts
Asset Backed Certificates
UAC Securitization Corporation
Depositor
Union Acceptance Corporation
Servicer
The asset backed certificates described herein (the "Certificates") may be sold
from time to time in one or more series (each, a "Series"), in amounts, at
prices and on terms to be determined at the time of sale and to be set forth in
a supplement to this Prospectus (a "Prospectus Supplement"). Each Series of
Certificates will be issued by a trust (each, a "Trust") to be formed with
respect to such Series and will include one or more classes of Certificates. The
property of each Trust will include one or more pools of motor vehicle
installment sale and/or installment loan contracts secured by new and used
automobiles, light trucks and vans (the "Receivables"), certain monies received
thereunder after the applicable cutoff date, security interests in the vehicles
financed thereby and certain other property, as more fully described herein and
in the related Prospectus Supplement. If so specified in the related Prospectus
Supplement, the property of a Trust will include monies on deposit in a trust
account, which will be used to purchase additional Receivables after the related
closing date. Union Acceptance Corporation will act as servicer of the
Receivables for each Trust.
Except as otherwise specified in the related Prospectus Supplement, each class
of Certificates of any Series will represent the right to receive a specified
amount of payments of principal and interest on the related Receivables, at the
rates, on the dates and in the manner described herein and in the related
Prospectus Supplement. If so provided in the related Prospectus Supplement, a
Series of Certificates may include one or more classes of Certificates entitled
to interest distributions with disproportionate, nominal or no distributions in
respect of principal, or to principal distributions with disproportionate,
nominal or no distributions in respect of interest. As more fully described
herein and in the related Prospectus Supplement, distributions on any class of
Certificates may be senior or subordinate to distributions on one or more other
classes of Certificates of the same Series. Prospective investors should
consider the factors set forth under "Risk Factors" on page 10 of this
Prospectus and in the related Prospectus Supplement.
EXCEPT AS OTHERWISE SPECIFIED IN THE RELATED PROSPECTUS SUPPLEMENT, THE
CERTIFICATES OF A SERIES WILL REPRESENT BENEFICIAL INTERESTS IN THE RELATED
TRUST ONLY, AND WILL NOT REPRESENT OBLIGATIONS OF OR INTERESTS IN, AND ARE NOT
GUARANTEED OR INSURED BY, UAC SECURITIZATION CORPORATION, ANY AFFILIATE THEREOF
OR ANY GOVERNMENTAL AGENCY OR INSTRUMENTALITY.
THESE CERTIFICATES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION, NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF
THIS PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
Retain this Prospectus for future reference. This Prospectus may not be
used to consummate sales of Certificates of any Series unless accompanied by the
related Prospectus Supplement.
May 7, 1998
<PAGE>
AVAILABLE INFORMATION
The Depositor, as originator of the Trusts, has filed with the
Securities and Exchange Commission (the "Commission") a Registration Statement
on Form S-3 (together with all amendments and exhibits thereto, the
"Registration Statement") under the Securities Act of 1933, as amended, with
respect to the Certificates being offered hereby. This Prospectus does not
contain all of the information set forth in the Registration Statement, certain
parts of which have been omitted in accordance with the rules and regulations of
the Commission. For further information, reference is made to the Registration
Statement, which is available for inspection without charge at the public
reference facilities of the Commission at Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549, and the regional offices of the Commission at
Citicorp Center, 500 West Madison Street, Suite 1400, Chicago, Illinois
60661-2511, and Seven World Trade Center, Suite 1300, New York, New York 10048.
Copies of such information can be obtained from the Public Reference Section of
the Commission at Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C.
20549, at prescribed rates. The Commission also maintains a web site on the
internet that contains reports, proxy and information statements and other
information regarding registrants that file electronically with the Commission,
including the Registration Statement. The address of such site is:
http://www.sec.gov.
Upon receipt of a request by an investor who has received an electronic
Prospectus Supplement and Prospectus from an Underwriter or a request by such
investor's representative within the period during which there is an obligation
to deliver a Prospectus Supplement and Prospectus, the Depositor or such
Underwriter will promptly deliver, or cause to be delivered, without charge, to
such investor a paper copy of the Prospectus Supplement and Prospectus.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
All documents filed by the Servicer or the Depositor on behalf of the
Trust referred to in the accompanying Prospectus Supplement with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the date of this Prospectus and
prior to the termination of the offering of the Certificates offered by such
Trust shall be deemed to be incorporated by reference in this Prospectus and to
be a part hereof from the dates of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated by
reference herein shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein (or in the
accompanying Prospectus Supplement) or in any subsequently filed document that
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Prospectus.
The Servicer on behalf of any Trust will provide without charge to each
person to whom a copy of this Prospectus is delivered, on the written or oral
request of such person, a copy of any or all of the documents incorporated
herein by reference, except the exhibits to such documents. Requests to the
Servicer for such copies should be addressed to Union Acceptance Corporation,
250 North Shadeland Avenue, Indianapolis, Indiana 46219, (317) 231-2717.
SUMMARY OF TERMS
This Summary is qualified in its entirety by reference to the detailed
information appearing elsewhere in this Prospectus and by reference to the
information with respect to each Series of Certificates contained in the related
Prospectus Supplement to be prepared and delivered in connection with the
offering of such Certificates. Certain capitalized terms used in this summary
are defined elsewhere in this Prospectus on the pages indicated in the "Index of
Principal Terms".
Issuer .................................With respect to any Series of
Certificates, a Trust formed pursuant to
a pooling and servicing agreement (each,
a "Pooling and Servicing Agreement")
among the Depositor, the Servicer and
the Trustee for such Trust.
Depositor ..............................UAC Securitization Corporation, a
Delaware corporation having its
principal office and place of business
in Bonita Springs, Florida (the
"Depositor"). The Depositor's principal
executive offices are located at 9240
Bonita Beach Road, Suite 1109-A, Bonita
Springs, Florida 34135, and its
telephone number is (941) 948-1850.
Servicer ...............................Union Acceptance Corporation, an Indiana
corporation having its principal office
and place of business in Indianapolis,
Indiana (in its capacity as servicer the
"Servicer", otherwise "UAC"). The
Servicer's principal offices are located
at 250 North Shadeland Avenue,
Indianapolis, Indiana 46219, and its
telephone number is (317) 231-2717.
Trustee ...............................With respect to each Trust, the trustee
specified in the related Prospectus
Supplement (the "Trustee").
Securities Offered ....................Each Series of asset backed securities
issued by a Trust will consist of one or
more classes of Certificates. Each class
of Certificates of a Series will be
issued pursuant to the related Pooling
and Servicing Agreement. The related
Prospectus Supplement will specify which
class or classes of Certificates of the
related Series are being offered
thereby.
Unless otherwise specified in the
related Prospectus Supplement, each
class of Certificates will have a stated
certificate principal balance (the
"Class Certificate Balance") and will
accrue interest on such Class
Certificate Balance at a specified rate
(with respect to each class of
Certificates, the "Pass-Through Rate").
If so specified in the related
Prospectus Supplement, one or more
classes of Certificates ("Strip
Certificates") may be entitled to (i)
interest distributions with
disproportionate, nominal or no
principal distributions or (ii)
principal distributions with
disproportionate, nominal or no interest
distributions. See "Description of the
Certificates -- Distributions of
Principal and Interest".
Each class of Certificates may have a
different Pass-Through Rate, which may
be a fixed, variable or adjustable
Pass-Through Rate, or any combination of
the foregoing. The related Prospectus
Supplement will specify the Pass-Through
Rate, or the method for determining the
applicable Pass-Through Rate, for each
class of Certificates.
A Series of Certificates may include two
or more classes of Certificates that
differ as to timing and/or priority of
distributions, seniority, allocations of
losses, Pass-Through Rate, amount of
distributions in respect of principal or
interest, or any combination of the
foregoing. Additionally, distributions
in respect of principal or interest in
respect of any such class or classes may
or may not be made upon the occurrence
of specified events or on the basis of
collections from designated portions of
the related Receivables Pool.
Unless otherwise specified in the
related Prospectus Supplement,
Certificates will be available in
book-entry form only and will be
available for purchase in minimum
denominations of $1,000 and integral
multiples thereof, except that one
Certificate of each class may be issued
in such denomination as is required to
include any residual amount. Unless
otherwise specified in the related
Prospectus Supplement,
Certificateholders will be able to
receive Definitive Certificates only in
the limited circumstances described
herein or in the related Prospectus
Supplement. See "Description of the
Certificates -- Definitive
Certificates".
If so provided in the related Prospectus
Supplement, the Servicer or one or more
other entities may be entitled to
purchase the Receivables of a Trust or
to cause such Receivables to be
purchased by another entity, in the
manner and subject to the conditions
described in such Prospectus Supplement.
If the Servicer or any such other entity
exercises any such option to purchase
the Receivables or to cause the
Receivables to be purchased, the
Certificates will be prepaid as set
forth in the related Prospectus
Supplement. See "Description of the
Transfer and Servicing Agreements --
Termination" herein. In addition, if the
related Prospectus Supplement provides
that the property of a Trust will
include a Pre-Funding Account, one or
more classes of Certificates may be
subject to a partial prepayment of
principal following the end of the
Funding Period, in the manner and to the
extent specified in the related
Prospectus Supplement. See "Description
of the Transfer and Servicing Agreements
-- Accounts -- Pre-Funding Account"
herein.
The Trust Property ..................The property of each Trust will include
one or more pools of simple interest and
precomputed interest installment sale
and installment loan contracts secured
by new and used automobiles, light
trucks and vans (the "Receivables"),
certain monies due or received
thereunder after the date specified in
the related Prospectus Supplement (each,
a "Cutoff Date"), security interests in
the vehicles financed thereby (the
"Financed Vehicles"), any right to
recourse of UAC against the dealers who
sold the Financed Vehicles (the
"Dealers"), proceeds from claims on
certain insurance policies and certain
rights under the purchase agreement
(each, a "Purchase Agreement") among
UAC, the Depositor and Union Acceptance
Funding Corporation ("UAFC") pursuant to
which the Depositor will purchase the
related Receivables from UAFC. The
property of each Trust also will include
amounts on deposit in, or certain rights
with respect to, certain accounts,
including the related Certificate
Account and any Pre-Funding Account,
Cash Collateral Account (or Spread
Account), yield supplement account or
any other account identified in the
applicable Prospectus Supplement. If
provided in the related Prospectus
Supplement, one or more of the pools of
Receivables in the Trust will include
(i) certain non-prime automobile
installment sale and installment loan
contracts or (ii) Receivables which were
originated or purchased by third parties
not affiliated with UAC (each, a "Third
Party Originator") and sold to UAC.
Receivables purchased from Third Party
Originators shall not comprise more than
10% of the aggregate amount of the Class
Certificate Balances of each class of
Certificates for the related Series (the
"Certificate Balance"), unless provided
otherwise in the applicable Prospectus
Supplement. See "Description of the
Transfer and Servicing Agreements--
Accounts".
The Receivables arise, or will arise,
from motor vehicle installment sale
contracts that were originated by
Dealers for assignment to UAC (directly
or through UAC Finance Corporation, a
wholly-owned subsidiary of UAC
("UACFC"), Union Federal Savings Bank of
Indianapolis (the "Predecessor"), UAC's
parent corporation before the completion
on August 7, 1995 of a spin-off), any
Third Party Originator described in the
applicable Prospectus Supplement or
motor vehicle loan contracts that were
solicited by dealers for origination by
UAC, UACFC, the Predecessor or a Third
Party Originator (collectively, the
"Contracts"). In the ordinary course of
its business, immediately after UAC
originates or otherwise acquires the
Contracts, UAC sells the Contracts to
UAFC. Payment of the amount due under
each Contract is secured by a first
perfected security interest in the
related Financed Vehicle. UAFC, UAC,
UACFC, the Predecessor or a Third Party
Originator is or will be the registered
lienholder on the certificate of title
of each of the Financed Vehicles. The
Receivables for each Receivables Pool
will be selected from the Contracts
owned by UAFC based on the criteria
specified in the related Pooling and
Servicing Agreement and described herein
under "The Receivables Pools" and
"Description of the Transfer and
Servicing Agreement -- Sale and
Assignment of Receivables" and in the
related Prospectus Supplement under "The
Receivables Pool".
On the date of issuance of a Series of
Certificates (each, a "Closing Date"),
the Depositor will convey Receivables to
the related Trust in the aggregate
principal amount provided in the related
Prospectus Supplement and, if so
provided in such Prospectus Supplement,
will deposit the amount specified in
such Prospectus Supplement (the
"Pre-Funded Amount") into a trust
account established in the name of the
Trustee for the benefit of the
Certificateholders (the "Pre-Funding
Account"). The Pre-Funded Amount with
respect to any Trust will not exceed 25%
of the initial aggregate Certificate
Balance for the related Series.
If the property of a Trust includes a
Pre-Funding Account, UAFC will be
obligated under the related Purchase
Agreement to sell additional Receivables
(the "Subsequent Receivables") to the
Depositor from time to time during the
period provided in the related
Prospectus Supplement (the "Funding
Period") having an aggregate principal
balance approximately equal to the
Pre-Funded Amount. The Depositor, in
turn, will be obligated under the
Pooling and Servicing Agreement to sell
such Subsequent Receivables to the
related Trust, and the Trust will be
obligated to purchase the Subsequent
Receivables, subject to the satisfaction
of certain conditions set forth in the
Pooling and Servicing Agreement and
described herein under "Description of
the Transfer and Servicing Agreements --
Sale and Assignment of Receivables". As
used in this Prospectus, the term
Receivables will include the Receivables
transferred to a Trust on the related
Closing Date as well as any Subsequent
Receivables transferred to such Trust
during the related Funding Period.
Amounts on deposit in any Pre-Funding
Account during the Funding Period will
be invested by the Trustee (as directed
by the Servicer) in Eligible
Investments, and any resultant
investment income (less any related
investment expenses) will be included,
on the Distribution Date immediately
following the date on which such
investment income is paid to the Trust,
in the Available Funds for such
Distribution Date. Any funds remaining
in a Pre-Funding Account at the end of
the related Funding Period will be
distributed to holders of the related
Series of Certificates (the
"Certificateholders") as a prepayment of
principal of the Certificates, in the
amounts and priority described in the
related Prospectus Supplement. No
Funding Period will continue for more
than three calendar months after the
related Closing Date. See "Description
of the Transfer and Servicing Agreements
-- Accounts -- Pre-Funding Account".
In each Purchase Agreement, UAC and UAFC
will make certain representations and
warranties with respect to the related
Receivables and will undertake to
repurchase from the Depositor any
Receivable with respect to which there
exists an uncured breach of any of its
representations or warranties, if such
breach materially and adversely affects
the rights of the Depositor, or the
Depositor's assignee, in such
Receivable. In each Pooling and
Servicing Agreement, the Depositor will
assign to the related Trust certain
rights under the related Purchase
Agreement, including the right to cause
UAC to repurchase any Receivable in
respect of which it is in breach of a
breach or warranty that materially and
adversely affects the interest of the
Trust in such Receivable. None of UAC,
UAFC or the Depositor will have any
other obligation with respect to the
Receivables or the Certificates. See
"Description of the Transfer and
Servicing Agreements -- Sale and
Assignment of Receivables".
Credit and Cash
Flow Enhancement ...................If and to the extent specified in the
related Prospectus Supplement, credit
enhancement with respect to a Trust or
any class or classes of Certificates may
include any one or more of the
following: subordination of one or more
other classes of Certificates of the
same Series, segregation of different
pools of Receivables within the Trust,
Cash Collateral Accounts, Spread
Accounts, yield supplement accounts,
surety bonds, insurance policies,
letters of credit, credit or liquidity
facilities, over-collateralization,
guaranteed investment contracts, swaps
or other interest rate and/or prepayment
rate protection agreements, repurchase
obligations, other agreements with
respect to third-party payments or other
support, cash deposits, or other
arrangements. To the extent specified in
the related Prospectus Supplement, a
form of credit enhancement with respect
to a Trust or class or classes of
Certificates may be subject to certain
limitations and exclusions from coverage
thereunder.
Transfer and Servicing
Agreements .........................Pursuant to each Purchase Agreement,
UAFC will sell the related Receivables
to the Depositor without recourse and,
if so stated in the related Prospectus
Supplement, will undertake to sell
Subsequent Receivables, in the aggregate
amount specified therein, to the
Depositor during the related Funding
Period. The Depositor, in turn, will
sell such Receivables to the related
Trust, without recourse, and will
undertake to sell any such Subsequent
Receivables to the related Trust during
the related Funding Period. In addition,
the Servicer will agree in each Pooling
and Servicing Agreement to be
responsible for servicing, managing,
maintaining custody of and making
collections on the related Receivables.
Unless otherwise provided in the related
Prospectus Supplement, the Servicer will
advance funds (each, an "Advance") on
the Receivables made during the
preceding calendar month (the
"Collection Period") to cover 30 days of
interest due on a Receivable that is
more than 30 days delinquent (each, an
"Interest Shortfall"), but only to the
extent that the Servicer, in its sole
discretion, expects to be able to recoup
such Advance from subsequent payments on
the Receivable. Advances by the Servicer
will add to the funds available for
distributions to Certificateholders on a
Distribution Date, but the Servicer will
be entitled to reimbursement for such
Advances from subsequent payments of the
Receivables or, to the extent set forth
in the related Prospectus Supplement,
from insurance proceeds or withdrawals
from any Cash Collateral Account or
similar form of credit enhancement. See
"Description of the Transfer and
Servicing Agreements -- Advances".
Unless otherwise provided in the related
Prospectus Supplement, UAC will be
obligated to repurchase from the Trust
any Receivable in which the interest of
such Trust is materially and adversely
affected as a result of a breach of any
representation or warranty made by UAC
and/or UAFC in the related Purchase
Agreement if such breach is not cured in
a timely manner following the discovery
by or notice to UAC. In addition, unless
otherwise provided in the related
Prospectus Supplement, the Servicer will
be obligated under each Pooling and
Servicing Agreement to purchase any
Receivable if (i) among other things,
the Servicer reduces the rate of
interest under the related Contract (the
"Contract Rate"), changes the amount of
the scheduled monthly payments or the
amount financed or fails to maintain a
perfected security interest in the
related Financed Vehicle and (ii) the
interest of the Certificateholders in
such Receivable is materially and
adversely affected by such action or
failure to act of the Servicer. If the
Servicer extends the date for final
payment by the obligor on the related
Contract (each, an "Obligor") beyond the
latest final scheduled maturity date for
any class specified in the related
Prospectus Supplement (the "Final
Scheduled Maturity Date"), the Servicer
will be obligated to purchase the
Receivable on such Final Scheduled
Maturity Date.
Unless otherwise specified in the
related Prospectus Supplement, the
Servicer will receive a fee for
servicing the Receivables of each Trust
equal to the Servicing Fee Rate times
the aggregate outstanding principal
balance of the related Receivables (the
"Pool Balance"), plus certain late fees,
prepayment charges and other
administrative fees or similar charges.
UAC may also receive investment earnings
from certain accounts and other cash
flows with respect to a Trust. See
"Description of the Transfer and
Servicing Agreements -- Servicing
Compensation and Payment of Expenses"
herein.
Certain Legal Aspects
of the Receivables;
Repurchase Obligations ..............In connection with each sale of
Receivables by UAFC to the Depositor and
by the Depositor to a Trust, security
interests in the related Financed
Vehicles will be assigned by UAFC to the
Depositor and by the Depositor to the
Trust; due to administrative burden and
expense, however, the certificates of
title to such Financed Vehicles will not
be amended to reflect the assignment
either to the Depositor or to the Trust.
In the absence of such an amendment, the
Trust may not have a perfected security
interest in the Financed Vehicles
securing the Receivables in some states.
Unless otherwise specified in the
related Prospectus Supplement, UAC will
be obligated to repurchase from a Trust
any Receivable sold to such Trust as to
which all action necessary to secure a
first perfected security interest in the
Financed Vehicle securing such
Receivable in the name of UAC, UAFC,
PFC, UACFC, the Predecessor or a Third
Party Originator (collectively, the
"Named Lienholders") shall not have been
taken as of the date such Receivable is
purchased by such Trust, if such breach
materially and adversely affects the
interest of the related
Certificateholders in such Receivable
and if such failure or breach is not
cured by the last day of the second
month following the discovery by or
notice to UAC of such breach. If a Trust
does not have a perfected security
interest in a Financed Vehicle, its
ability to realize on such Financed
Vehicle in the event of a default may be
adversely affected. To the extent the
security interest is perfected, a Trust
will have a prior claim over subsequent
purchasers of the Financed Vehicle and
holders of subsequently perfected
security interests. However, as against
liens for repairs of Financed Vehicles
or for taxes unpaid by the related
Obligor, or through fraud or negligence,
a Trust could lose its security interest
or the priority of its security interest
in a Financed Vehicle. None of the Named
Lienholders will be obligated to
repurchase a Receivable with respect to
which a Trust loses its security
interest or the priority of its security
interest in the related Financed Vehicle
after the Closing Date as the result of
any such tax lien or mechanic's lien or
the fraud or negligence of a third
party.
Federal and state consumer protection
laws impose requirements on creditors in
connection with extensions of credit and
collections of retail installment loans,
and certain of these laws make an
assignee of such a loan liable to the
obligor thereon for any violation by the
lender. Unless otherwise specified in
the related Prospectus Supplement, UAC
will be required to repurchase from the
Trust any Receivable that fails to
comply with the requirements of such
consumer protection laws on or before
the last day of the month following
discovery by or notice to UAC of such
failure, if such failure materially and
adversely affects the interests of the
related Certificateholders in such
Receivable. See "Certain Legal Aspects
of the Receivables".
Tax Considerations ....................If a Prospectus Supplement specifies
that the related Trust is a grantor
trust and except as otherwise provided
in such Prospectus Supplement, upon the
issuance of the related Series of
Certificates, special federal tax
counsel to the Trust identified in the
related Prospectus Supplement (the
"Federal Tax Counsel") will deliver an
opinion to the effect that such Trust
will be treated as a grantor trust for
federal income tax purposes and will not
be subject to federal income tax.
If a Prospectus Supplement does not
specify that the related Trust is a
grantor trust, upon the issuance of the
related Series of Certificates Federal
Tax Counsel will deliver an opinion to
the effect that such Trust will not be
treated as an association taxable as a
corporation or as a "publicly traded
partnership" taxable as a corporation.
See "Certain Federal Income Tax
Consequences" for additional information
regarding the application of federal tax
laws to a Trust and the related Series
of Certificates.
ERISA Considerations....................Subject to the considerations discussed
under "ERISA Considerations" herein and
in the related Prospectus Supplement and
unless otherwise provided therein, any
Certificates that meet certain
Department of Labor requirements are
eligible for purchase by employee
benefit plans and plans subject to the
Employee Retirement Income Security Act
of 1974, as amended ("ERISA"). Unless
otherwise specified in the related
Prospectus Supplement, any class of
Certificates that is subordinated to any
other class of Certificates of the same
Series may not be acquired by any such
employee benefit plan, plan subject to
ERISA or an individual retirement
account. See "ERISA Considerations"
herein and in the related Prospectus
Supplement.
Ratings ...............................It is a condition to the issuance of the
Certificates to be offered hereunder
that they be rated in one of the four
highest rating categories by at least
one nationally recognized statistical
rating organization (each, a "Rating
Agency"). A rating is not a
recommendation to purchase, hold or sell
Certificates inasmuch as a rating does
not comment as to market price or
suitability for a particular investor.
Ratings of Certificates will address the
likelihood of the payment of principal
of and interest on the Certificates
pursuant to their terms. There can be no
assurance that a rating will remain for
a given period of time or that a rating
will not be lowered or withdrawn
entirely by a Rating Agency if in its
judgment circumstances in the future so
warrant. See "Risk Factors-- Ratings of
the Certificates" herein. For more
detailed information regarding the
ratings assigned to any class of
Certificates of a particular Series, see
"Summary of Terms-- Ratings" and "Risk
Factors-- Certificate Rating" in the
related Prospectus Supplement.
<PAGE>
RISK FACTORS
In addition to the other information contained in this Prospectus and
in the related Prospectus Supplement to be prepared and delivered in connection
with the offering of any Series of Certificates, prospective investors should
carefully consider the following risk factors before investing in any class or
classes of Certificates of any such Series.
Pre-Funding Accounts. If so provided in the related Prospectus
Supplement, on the Closing Date the Depositor will deposit the Pre-Funded Amount
specified in such Prospectus Supplement into the Pre-Funding Account. In no
event will the Pre-Funded Amount exceed 25% of the initial Certificate Balance
of the related Series of Certificates. The Pre-Funded Amount will be used to
purchase Subsequent Receivables from the Depositor (which, in turn, will acquire
such Subsequent Receivables from UAFC) from time to time during the Funding
Period. During the Funding Period and until such amounts are applied by the
Trustee to purchase Subsequent Receivables, amounts on deposit in the
Pre-Funding Account will be invested by the Trustee (as instructed by the
Servicer) in Eligible Investments, and any investment income with respect
thereto (net of any related investment expenses) will be distributed on each
Distribution Date during the Funding Period as part of the Available Funds for
the related Collection Period. No Funding Period will end more than three
calendar months after the related Closing Date.
To the extent that the entire Pre-Funded Amount has not been applied to
the purchase of Subsequent Receivables by the end of the related Funding Period,
any amounts remaining in the Pre-Funded Account will be distributed as a
prepayment of principal to Certificateholders following the end of the Funding
Period, in the amounts and pursuant to the priorities set forth in the related
Prospectus Supplement. Such prepayment will reduce the Certificateholder's
outstanding principal balance and anticipated yield.
Sales of Subsequent Receivables. If so provided in the related
Prospectus Supplement, (i) UAFC will be obligated pursuant to the Purchase
Agreement to sell Subsequent Receivables (subject only to the availability
thereof) to the Depositor from time to time during the Funding Period in an
aggregate principal amount approximately equal to the Pre-Funded Amount, (ii)
the Depositor, in turn, will be obligated pursuant to the Pooling and Servicing
Agreement to sell such Subsequent Receivables to the Trust and (iii) the Trust
will be obligated to purchase such Subsequent Receivables, subject only to the
satisfaction of certain conditions set forth in the Pooling and Servicing
Agreement and described in the related Prospectus Supplement. If the principal
amount of eligible Subsequent Receivables originated or acquired by UAC during a
Funding Period is less than the Pre-Funded Amount, UAFC and the Depositor may
have insufficient Subsequent Receivables to transfer to a Trust, and holders of
one or more classes of the related Series of Certificates may receive a full or
partial prepayment of principal at the end of the Funding Period as described
above under "-- Pre-Funding Accounts".
Receivables purchased from Third Party Originators will not be included
in the Subsequent Receivables, unless provided otherwise in the Prospectus
Supplement.
Any conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction, on or before the related transfer date (each, a "Subsequent
Transfer Date"), of the following conditions precedent, among others: (i) each
such Subsequent Receivable must satisfy the eligibility criteria specified in
the related Pooling and Servicing Agreement; (ii) the Subsequent Receivables
shall have been selected based on the criteria specified in the applicable
Prospective Supplement and neither UAFC nor the Depositor shall have selected
such Subsequent Receivables in a manner that it deems is adverse to the
interests of holders of the related Certificates; (iii) as of the respective
Cutoff Date for such Subsequent Receivables, all of the Receivables in the
Trust, including the Subsequent Receivables to be conveyed to the Trust as of
such date, must satisfy the parameters described under "The Receivables Pools"
herein and "The Receivables Pool" in the related Prospectus Supplement; (iv) any
required deposit to any Cash Collateral Account or other similar account shall
have been made; and (v) UAFC must execute and deliver to the Depositor, and the
Depositor must execute and deliver to such Trust, a written assignment conveying
such Subsequent Receivables to the Depositor or such Trust, as applicable. In
addition, the conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction of the following conditions subsequent, among others, each of which
must be satisfied within the applicable time period specified in the related
Prospectus Supplement: (a) the Depositor must deliver certain opinions of
counsel to the related Trustee with respect to the validity of the conveyance of
the Subsequent Receivables to the Trust; (b) the Trustee must receive written
confirmation from a firm of certified independent public accountants that, as of
the end of the period specified therein, the Receivables in the Trust, including
the Subsequent Receivables, satisfied the parameters described under "The
Receivables Pools" herein and "The Receivables Pool" in the related Prospectus
Supplement; and (c) each of the Rating Agencies must notify the Depositor in
writing that, following the conveyance of the Subsequent Receivables to the
Trust, each class of Certificates will have the same rating assigned to it by
such Rating Agency that it had on the Closing Date. Such confirmation of the
ratings of the Certificates may depend on factors other than the characteristics
of the Subsequent Receivables, including the delinquency, repossession and net
loss experience on the automobile, light truck and van receivables in the
portfolio serviced by UAC. UAC will be required pursuant to each Purchase
Agreement and Pooling and Servicing Agreement to repurchase immediately from a
Trust any Subsequent Receivable, at a price equal to the Purchase Amount
thereof, with respect to which any of the foregoing conditions is not satisfied.
Non-Prime Receivables and Receivables from Third Party Originators. If
non-prime Receivables are included in the pool of Receivables in a Trust, the
Prospectus Supplement will disclose and describe the delinquency and net credit
loss of UAC with respect to its non-prime Receivable portfolio. In addition, the
delinquency and net credit loss experience of Third Party Originators will be
different from the experience of UAC. To the extent Receivables included in any
Trust were purchased from a Third Party Originator, the applicable Prospectus
Supplement will disclose and describe the delinquency and credit loss history of
such Receivables or Third Party Originator to the extent material to investors.
No more than 10% of the Certificate Balance included in a Trust shall be
Receivables purchased from a Third Party Originator, unless provided otherwise
in the applicable Prospectus Supplement.
Certain Legal Aspects -- Security Interests in Financed Vehicles.
Simultaneously with each sale of Receivables, UAFC will assign to the Depositor,
and the Depositor will assign to the related Trust, security interests in the
related Financed Vehicles; due to administrative burden and expense, however,
the certificates of title to such Financed Vehicles will not be amended to
reflect the assignment to either the Depositor or the Trust. In the absence of
such amendments, a Trust may not have a perfected security interest in such
Financed Vehicles in some states. Except as otherwise provided in the related
Prospectus Supplement, UAC will be obligated to repurchase from the related
Trust any Receivable sold to a Trust as to which all actions necessary to secure
a first perfected security interest in the Financed Vehicle securing such
Receivable in the name of UAFC (or, in certain cases, one of the other Named
Lienholders) shall not have been taken as of the date such Receivable is
transferred to such Trust, if such breach materially and adversely affects the
interest of the Certificateholders in such Receivable and if such failure or
breach is not timely cured following discovery by or notice thereof to the
Depositor or UAC.
If a Trust does not have a perfected security interest in a Financed
Vehicle, its ability to realize on such Financed Vehicle in the event of a
default may be adversely affected. To the extent the security interest is
perfected, the Trust will have a prior claim over subsequent purchasers of such
Financed Vehicle and holders of subsequently perfected security interests;
however, the Trust could lose its security interest or the priority of its
security interest in a Financed Vehicle as against liens for repairs of such
Financed Vehicle or for taxes unpaid by the related Obligor or through fraud or
negligence. None of the Depositor or the Named Leinholders will have any
obligation to repurchase a Receivable in respect of which a Trust loses its
security interest or the priority of its security interest in the related
Financed Vehicle as the result of any such mechanic's or tax lien or the fraud
or negligence of a third party occurring after the date such security interest
was conveyed to the Trust. See "Certain Legal Aspects of the Receivables --
Security Interest in Vehicles".
Certain Legal Aspects -- Consumer Protection Laws. Federal and state
consumer protection laws impose requirements on creditors in connection with
extensions of credit and collections of retail installment loans, and certain of
these laws make an assignee of such a loan (such as a Trust) liable to the
obligor thereon for any violation by the lender. To the extent specified herein
and in the related Prospectus Supplement, UAC will be obligated to repurchase
from the related Trust any Receivable that fails to comply with such
requirements. See "Certain Legal Aspects of the Receivables -- Consumer
Protection Laws".
Certain Legal Aspects -- Insolvency Considerations. UAC and UAFC will
warrant to the Depositor in each Purchase Agreement (the benefit of which
warranty will be assigned by the Depositor to each Trust in the related Pooling
and Servicing Agreement) that the sale of the Receivables by UAFC to the
Depositor, and by the Depositor to such Trust, respectively, is a valid sale of
the Receivables to the Depositor and to such Trust. Notwithstanding the
foregoing, if UAC, UACFC, UAFC, PFC or the Depositor were to become a debtor in
a bankruptcy case and a creditor or trustee-in-bankruptcy of such debtor or such
debtor itself were to take the position that the sale of Receivables to the
Depositor or such Trust, as applicable, should be treated as a pledge of such
Receivables to secure a borrowing of such debtor, then delays in payments of
collections of Receivables to Certificateholders could occur or (should the
court rule in favor of any such trustee, creditor or debtor) reductions in the
amounts of such payments could result. If the transfer of Receivables to the
Depositor or any Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of UAFC or the Depositor, as applicable, arising
before the transfer of such Receivables to such Trust may have priority over
such Trust's interest in such Receivables. If the transactions contemplated
herein are treated as a sale, the Receivables would not be part of UAFC's or the
Depositor's bankruptcy estate and would not be available to creditors of UAFC or
the Depositor. See "Certain Legal Aspects of the Receivables -- Bankruptcy
Matters".
The decision of the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas Systems, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993), contains language to the effect that under the UCC accounts sold by a
debtor would remain property of the debtor's bankruptcy estate, whether or not
the sale of the accounts was perfected. Although the Receivables constitute
chattel paper under the UCC, rather than accounts, Article 9 of the UCC applies
to the sale of chattel paper as well as the sale of accounts, and perfection of
a security interest in both chattel paper and accounts may be accomplished by
the filing of a UCC-1 financing statement. If, following a bankruptcy of UAC,
UAFC, UACFC or the Depositor, a court were to follow the reasoning of the Tenth
Circuit reflected in the above case, then the Receivables could be included in
the bankruptcy estate of UAC, UAFC, UACFC or the Depositor, as applicable, and
delays in payments of collections on or in respect of the Receivables could
occur. UAC and UAFC will warrant to the Depositor in each Purchase Agreement,
and the Depositor will warrant to the Trust in each Pooling and Servicing
Agreement, that the sale of the related Receivables to the Depositor or the
related Trust is a sale of such Receivables to the Depositor and to the Trust,
respectively.
Limited Obligations of UAC, UAFC, UACFC and the Depositor. None of UAC,
UAFC, UACFC or the Depositor (or any affiliates thereof) will be generally
obligated to make any payments to a Trust in respect of the related Certificates
or Receivables. However, in connection with the sale of the Receivables, UAC and
UAFC will make representations and warranties regarding the characteristics of
such Receivables and, in certain circumstances, UAC will be required to
repurchase from the Trust any Receivables with respect to which such
representations and warranties have been breached. See "Description of the
Transfer and Servicing Agreements -- Sale and Assignment of Receivables". In
addition, UAC, as Servicer, may be required to purchase Receivables from a Trust
under certain circumstances set forth in the Pooling and Servicing Agreement.
See "Description of the Transfer and Servicing Agreements -- Servicing
Procedures".
Subordination of Certain Classes of Certificates; Segregation of Pools.
To the extent specified in the related Prospectus Supplement, distributions of
interest and principal on one or more classes of Certificates may be
subordinated in priority of payment to interest and principal due on one or more
other classes of Certificates of the same Series. In addition, the Receivables
may be segregated into one or more pools based upon different characteristics
such as credit quality at origination and, to the extent described in the
applicable Prospectus Supplement, different classes of certificates may have
differing rights and priorities based upon the pool of Receivables to which they
relate.
Limited Assets of each Trust. None of the Trusts will have, nor will
any such Trust be permitted or expected to have, any significant assets or
sources of funds other than the related Receivables and, to the extent provided
in the related Prospectus Supplement, a Pre-Funding Account or Cash Collateral
Account, yield supplement account or other form of credit enhancement. The
Certificates of each Series will represent interests solely in the related Trust
and will not represent obligations of or interests in, or be insured or
guaranteed by, UAC, UAFC, UACFC, the Depositor, the Trustee or any other entity.
Consequently, holders of the Certificates of any Series must rely for repayment
upon payments on the related Receivables and, if and to the extent available,
amounts available under any available form of credit enhancement, all as
specified in the related Prospectus Supplement.
Maturity and Prepayment Considerations. All of the Receivables are
prepayable at any time by the related Obligor. As used herein with respect to
any Receivable, the term prepayment includes prepayments in full, partial
prepayments (including those related to rebates of extended warranty contract
costs and insurance premiums) and liquidations due to defaults, as well as
receipts of proceeds from physical damage, credit life and disability insurance
policies and any lender's single insurance policy, and Purchase Amounts with
respect to certain other Receivables repurchased by UAC as a result of a breach
of a representation or warranty or purchased by the Servicer for administrative
reasons. The rate of prepayments on the Receivables may be influenced by a
variety of economic, social and other factors, including the fact that an
Obligor generally may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of UAFC (or, if applicable one of the other Named
Lienholders). The rate of prepayment on the Receivables may also be influenced
by the structure of the underlying loans. To the extent prepayments on the
Receivables are more rapid than expected, Certificateholders' anticipated yield
will be reduced, except to the extent protection against prepayment risks is
provided to Certificateholders as described in the related Prospectus
Supplement. See "Weighted Average Life of the Certificates". In addition, if so
provided in the related Prospectus Supplement, the Servicer or one or more other
entities may be entitled to purchase, or to cause another person or entity to
purchase, the Receivables of a given Receivables Pool under the circumstances
described in such Prospectus Supplement. See "Description of the Transfer and
Servicing Agreements - Termination".
In addition, a Series of Certificates may include one or more classes
of interest-only or other Strip Certificates that may be more sensitive than
other classes of Certificates of such Series to the rate of payment on the
related Receivables. Prospective investors in any such class of Certificates
should carefully consider the information provided with respect to such
Certificates under "Risk Factors" and elsewhere in the related Prospectus
Supplement.
Ratings of the Certificates. It is a condition of the issuance of the
Certificates to be offered hereunder that they be rated in one of the four
highest rating categories by at least one nationally recognized statistical
rating organization. A rating is not a recommendation to purchase, hold or sell
Certificates inasmuch as a rating does not comment as to market price or
suitability for a particular investor. The ratings of the Certificates will
address the likelihood of the payment of principal and interest thereon pursuant
to their terms. There can be no assurance that a rating will remain in effect
for any given period of time or that a rating will not be lowered or withdrawn
entirely by a Rating Agency if in its judgment circumstances in the future so
warrant. For more detailed information regarding the ratings assigned to any
class of a particular Series of Certificates, see "Summary of Terms -- Ratings"
and "Risk Factors -- Certificate Rating" in the related Prospectus Supplement.
Book-Entry Registration. Unless otherwise specified in the related
Prospectus Supplement, each class of the Certificates of a given Series
initially will be represented by one or more certificates registered in the name
of Cede & Co. ("Cede"), or any other nominee of The Depository Trust Company
("DTC") set forth in the related Prospectus Supplement, and will not be
registered in the names of the holders of such Certificates or their nominees.
Because of this, unless and until Definitive Certificates for such Series are
issued, the beneficial owners of such Certificates will not be recognized by the
Trustee as "Certificateholders" (as such term is used herein or in the related
Pooling and Servicing Agreement). Hence, until Definitive Certificates are
issued, beneficial owners of the Certificates will be able to exercise the
rights of Certificateholders only indirectly through DTC and its participating
organizations. See "Description of the Certificates -- Book-Entry Registration"
and " -- Definitive Certificates".
THE TRUSTS
Each Series of Certificates will be issued by a separate Trust
established by the Depositor pursuant to a Pooling and Servicing Agreement for
the transactions described herein and in the related Prospectus Supplement. The
property of each Trust will include one or more pools (each a "Receivables
Pool") of simple interest or precomputed interest retail installment sale or
installment loan contracts secured by new or used automobiles, light trucks or
vans and certain payments due or received thereunder after the applicable Cutoff
Date. The Receivables in each Receivables Pool were or will be either (a)
originated by Dealers for assignment to UAC (either directly or indirectly
through UACFC, any Third Party Originator or the Predecessor), (b) solicited by
Dealers for origination by UAC, UACFC or the Predecessor or (c) originated
directly or indirectly by a Third Party Originator and sold to the Depositor or
UAC and thereafter sold to the Depositor for inclusion in a Trust. Immediately
after the origination or other acquisition of the Contracts by UAC, UAC sells
the Contracts to UAFC in the ordinary course of business. One of the Named
Leinholders will be the registered lienholder listed on the certificates of
title of the Financed Vehicles. The Receivables will continue to be serviced by
UAC as the initial Servicer under each Pooling and Servicing Agreement.
On or prior to the applicable Closing Date, UAFC will sell to the
Depositor, pursuant to the Purchase Agreement, Receivables in the aggregate
principal amount specified in the related Prospectus Supplement. Thereafter, on
such Closing Date, the Depositor will convey such Receivables and, if so
provided in the related Prospectus Supplement, the Pre-Funded Amount to the
related Trust in exchange for the delivery to the Depositor of the Series of
Certificates issued on such date by such Trust. If the Prospectus Supplement
provides for the conveyance of a Pre-Funded Amount to the related Trust, UAFC
will also be required under the Purchase Agreement, and the Depositor will be
required under the related Pooling and Servicing Agreement, to convey to the
Depositor and the Trust, respectively, Subsequent Receivables from time to time
during the Funding Period in an aggregate principal amount approximately equal
to such Pre-Funded Amount. Any Subsequent Receivables so conveyed to a Trust
will also be assets of such Trust. Except as otherwise provided in the related
Prospectus Supplement, the property of each Trust will also include (i)
interests in certain amounts that may from time to time be held in separate
trust accounts established and maintained pursuant to the related Pooling and
Servicing Agreement and, if so provided in the related Prospectus Supplement,
the proceeds of such accounts; (ii) security interests in the Financed Vehicles
and any other interest of the Named Lienholders and the Depositor in such
Financed Vehicles; (iii) any recourse rights of the Named Lienholders against
Dealers; (iv) any rights of the Named Lienholders to proceeds from claims on or
refunds of premiums with respect to certain physical damage, credit life and
disability insurance policies covering the Financed Vehicles or the Obligors, as
the case may be, including any lender's single interest insurance policy; (v)
any property that secures a Receivable and that has been acquired by the Trust;
(vi) certain rights under the related Purchase Agreement; and (vii) any and all
proceeds of the foregoing. UAFC will not convey to the Depositor, and the
Depositor will not convey to a Trust, and the related Certificateholders will
have no interest in, any contract with a Dealer establishing "dealer reserves"
or any rights to recapture dealer reserves pursuant to such a contract. To the
extent specified in the related Prospectus Supplement, a Pre-Funding Account or
a Cash Collateral Account, a yield supplement account, surety bond, swap or
other interest rate protection, or any other form of credit enhancement may be a
part of the property of a Trust or may be held by the Trustee for the benefit of
holders of the related Certificates.
UAC, as initial Servicer under each Pooling and Servicing Agreement,
will continue to service the Receivables held by each Trust and will receive
fees for such services. See "Description of the Transfer and Servicing
Agreements -- Servicing Compensation and Payment of Expenses" herein. To
facilitate the servicing of the Receivables, the Depositor and each Trustee will
designate the Servicer as custodian of the Receivables and the related documents
for the related Trust; due to the administrative burden and expense, however,
the certificates of title to the Financed Vehicles will not be amended to
reflect the sale and assignment of the security interest in the Financed
Vehicles to either the Depositor or the Trust. In the absence of such an
amendment, a Trust may not have a perfected security interest in certain of the
Financed Vehicles in some states. See "Certain Legal Aspects of the Receivables"
and "Description of the Transfer and Servicing Agreements -- Sale and Assignment
of Receivables".
If the protection provided to the holders of the Certificates of any
Series (the "Certificateholders") by the subordination, if any, of one or more
classes of Certificates of such Series and by any Cash Collateral Account, yield
supplement account or other available form of credit enhancement for such Series
is insufficient, such Certificateholders will have to look to payments by or on
behalf of Obligors on the related Receivables and the proceeds from the
repossession and sale of Financed Vehicles that secure defaulted Receivables for
distributions of principal of and interest on the related Certificates. In such
event, certain factors, such as the Trust's not having perfected security
interests in all of the Financed Vehicles, may limit the ability of a Trust to
realize on the collateral securing the related Receivables or may limit the
amount realized to less than the amount due thereunder. Certificateholders may
thus be subject to delays in payment on, or may incur losses on their investment
in, such Certificates as a result of defaults or delinquencies by Obligors and
depreciation in the value of the related Financed Vehicles. See "Description of
the Transfer and Servicing Agreements -- Credit and Cash Flow Enhancement" and
"Certain Legal Aspects of the Receivables".
The Trustee
The Trustee for each Trust will be specified in the related Prospectus
Supplement. The Trustee's liability in connection with the issuance and sale of
the related Certificates is limited solely to the express obligations of such
Trustee set forth in the related Pooling and Servicing Agreement. A Trustee may
resign at any time, in which event the Servicer will be obligated to appoint a
successor Trustee. The Servicer may also remove a Trustee if such Trustee ceases
to be eligible to continue as Trustee under the related Pooling and Servicing
Agreement or if such Trustee becomes insolvent. If the Servicer so removes a
Trustee, the Servicer will be obligated to appoint a successor to such Trustee.
Any resignation or removal of a Trustee and appointment of a successor Trustee
will not become effective until acceptance of the appointment by the successor
Trustee.
THE RECEIVABLES POOLS
General
The Receivables in each Receivables Pool were or will be acquired by
one of the Named Lienholders from Dealers or originated by the Named Lienholders
through Dealers in the ordinary course of business. Immediately after their
origination or acquisition by UAC, the Receivables were or will be conveyed to
UAFC. One of the Named Lienholders will be the registered lienholder on the
certificates of title to each of the Financed Vehicles.
The Receivables to be sold to each Trust will be selected from UAFC's
portfolio for inclusion in a Receivables Pool based on several criteria,
including that, unless otherwise provided in the related Prospectus Supplement,
each Receivable (i) is secured by a new or used vehicle, (ii) provides for level
monthly payments (except for the last payment, which may be different from the
level payments) that fully amortize the amount financed over the original term
to maturity of the Receivable, (iii) is a Precomputed Receivable or a Simple
Interest Receivable and (iv) satisfies the other criteria, if any, set forth in
the related Prospectus Supplement. No selection procedures believed by UAFC or
the Depositor to be adverse to Certificateholders were or will be used in
selecting the Receivables.
Underwriting Procedures
UAC uses the degree of the applicant's creditworthiness as the basic
criterion when originating an installment sale contract or purchasing such a
contract from a Dealer. Each credit application requires that the applicant
provide current information regarding the applicant's employment history, bank
accounts, debts, credit references, and other factors that bear on
creditworthiness. UAC applies uniform underwriting standards when originating
loans on new and used vehicles. UAC also typically obtains credit reports from
major credit reporting agencies summarizing the applicant's credit history and
paying habits, including such items as open accounts, delinquent payments,
bankruptcies, repossessions, lawsuits, and judgments. UAC's credit analysts may
verify an applicant's employment or, where appropriate, check directly with the
applicant's creditors. On the basis of such information, extensive historical
data and the experience of its senior management, UAC is in a position to assess
an applicant's ability to repay a loan. Since December 1988, the criteria
applied by UAC to evaluate applicants have included credit scoring using models
developed by independent firms experienced in developing credit scoring models.
Credit scoring evaluates an applicant's credit profile to arrive at an estimate
of the associated credit risk. Credit scoring models are developed by
statistically evaluating common characteristics of applicants and their
correlation with credit risk.
While UAC adheres to no specific loan-to-value ratios, the amount
financed by UAC under an installment contract generally will not exceed, in the
case of new vehicles, the manufacturer's suggested retail price of the financed
vehicle, including sales tax, license fees and title fees, plus the cost of
service and warranty contracts and premiums for physical damage, credit life and
disability insurance obtained in connection with the vehicle or the financing.
In the case of used vehicles, if the applicant meets UAC's creditworthiness
criteria, the amount financed may exceed the "average black book value" (as
published by National Auto Research, a standard reference source for dealers in
used cars) of the financed vehicle, including sales tax, license fees and title
fees, plus the cost of service and warranty contracts and premiums for physical
damage, credit life and disability insurance obtained in connection with the
vehicle or financing. UAC believes that the resale value of a new vehicle
purchased by an obligor will generally decline below the manufacturer's
suggested retail price and, in some cases, may decline for a period of time
below the principal balance outstanding on the related installment contract. UAC
also believes that the resale value of a used vehicle purchased by an obligor
will generally decline, but believes that the percentage of such decline
generally will be less than the percentage of decline in the resale value of a
new vehicle. UAC regularly reviews the quality of the Contracts purchased from
Dealers and periodically conducts quality audits to ensure compliance with its
established policies and procedures.
The underwriting procedures and standards employed by the Predecessor
are substantially similar to those used by UAC and, accordingly, references to
UAC in the foregoing discussion of UAC's underwriting procedures apply also to
any Receivables included in a Receivables Pool that was acquired by UAC from
UACFC or the Predecessor or Receivables that are otherwise originated by UACFC
or the Predecessor. See also "Union Acceptance Corporation and Affiliates"
herein.
The applicable Prospectus Supplement will describe the underwriting
procedures utilized by any Third Party Originator which sold Receivables to UAC
that are included in the Trust to the extent material to investors.
Allocation of Payments
The Receivables will be either Simple Interest Receivables or
Precomputed Receivables. "Simple Interest Receivables" provide for equal monthly
payments that are applied, first, to interest accrued to the date of such
payment, then to principal due on such date, then to pay any applicable late
charges, and then to further reduce the outstanding principal balance.
Accordingly, if an Obligor pays a fixed monthly installment before its due date
under a Simple Interest Receivable, the portion of the payment allocable to
interest for the period since the preceding payment will be less than it would
have been had the payment been made on the contractual due date, and the portion
of the payment applied to reduce the principal balance of the Receivable will be
correspondingly greater. Conversely, if an Obligor pays a fixed monthly
installment under a Simple Interest Receivable after its contractual due date,
the portion of such payment allocable to interest for the period since the
preceding payment will be greater than it would have been had the payment been
made when due, and the portion of such payment applied to reduce the principal
balance of the Receivable will be correspondingly less, in which case a larger
portion of the principal balance may be due on the final scheduled payment date.
"Precomputed Receivables" consist of either (i) monthly actuarial
receivables ("Actuarial Receivables") or (ii) receivables that provide for
allocation of payments according to the "sum of periodic balances" method,
similar to the Rule of 78's ("Rule of 78's Receivables"). An Actuarial
Receivable provides for amortization of the loan over a series of fixed level
payment monthly installments. Each monthly installment, including the monthly
installment representing the final payment of the receivable, consists of an
amount of interest equal to 1/12 of the annual percentage rate of the loan
multiplied by the unpaid principal balance of the loan, and an amount of
principal equal to the remainder of the monthly payment. A Rule of 78's
Receivable provides for the payment by the Obligor of a specified total amount
of payments, payable in equal monthly installments on each due date, which total
represents the principal amount financed and add-on interest for the term of the
receivable. The rate at which the amount of add-on interest is earned and,
correspondingly, the amount of each fixed monthly payment allocated to reduction
of the outstanding principal amount of the Receivable are calculated in
accordance with the sum of the periodic time balances or the "Rule of 78's". If
a Precomputed Receivable is prepaid in full (voluntarily or by liquidation,
acceleration or otherwise), under the terms of the Contract a "refund" or
"rebate" will be made to the Obligor of the portion of the total amount of
payments then due and payable under the Contract allocable to "unearned"
interest. Unearned interest is calculated in accordance with the sum of the
periodic time balances method or a method equivalent to the "Rule of 78's". The
amount of any such rebate under a Precomputed Receivable generally will be less
than or equal to the remaining scheduled payments of interest that would have
been due under a Simple Interest Receivable for which all payments were made on
schedule and generally will be significantly less than such amount.
Unless otherwise stated in the related Prospectus Supplement, all of
the Receivables that are Precomputed Receivables will be Rule of 78's
Receivables; however, the Trust will account for all Rule of 78's Receivables as
if such Receivables were Actuarial Receivables. Except as otherwise indicated in
the related Prospectus Supplement, early payments on Precomputed Receivables
("Payaheads") will be deposited to the Payahead Account as described under
"Description of the Transfer and Servicing Agreements -- Accounts". Amounts
received upon prepayment in full of a Rule of 78's Receivable in excess of the
then outstanding principal balance of such Receivable (computed on an actuarial
basis) will not be passed through to Certificateholders, except to the extent
necessary to pay interest and principal on the Certificates.
In the event of the liquidation of a Receivable or the repossession of
a Financed Vehicle, amounts recovered are applied first to the expenses of
repossession, and then to unpaid principal and interest and any related payment
or other fee.
Delinquencies, Repossessions and Net Losses
Certain information concerning the experience of UAC pertaining to
delinquencies, repossessions and net losses with respect to new and used retail
automobile, light truck and van receivables (including receivables previously
sold by UAC or the Predecessor but which UAC continues to service) will be set
forth in each Prospectus Supplement. There can be no assurance that the
delinquency, repossession and net loss experience with respect to any
Receivables Pool will be comparable to prior experience or to such information.
WEIGHTED AVERAGE LIFE OF THE CERTIFICATES
The weighted average life of the Certificates of any Series generally
will be influenced by the rate at which the principal balances of the related
Receivables are paid, which payment may be in the form of scheduled amortization
or prepayments. For this purpose, the term prepayments includes prepayments in
full, partial prepayments (including those related to rebates of extended
warranty contract costs and insurance premiums), liquidations due to defaults,
as well as receipts of proceeds, if any, from physical damage, credit life and
disability and/or any lender's single interest insurance policies, and the
Purchase Amount of Receivables repurchased by UAC due to a breach of a
representation or warranty or purchased by the Servicer for administrative
purposes. All of the Receivables are prepayable at any time without penalty to
the Obligor. The rate of prepayment of automotive receivables is influenced by a
variety of economic, social and other factors, including the fact that an
Obligor generally may not sell or transfer the Financed Vehicle securing a
Receivable without the consent of the registered lienholder (or the Servicer on
behalf of such lienholder). The rate of prepayment on the Receivables may also
be influenced by the structure of the loan. In addition, under certain
circumstances, UAC will be obligated to repurchase Receivables from a Trust
pursuant to the related Purchase Agreement and Pooling and Servicing Agreement
as a result of breaches of representations and warranties, and the Servicer will
be obligated to purchase Receivables from a Trust pursuant to the related
Pooling and Servicing Agreement as a result of breaches of certain covenants.
See "Description of the Transfer and Servicing Agreements -- Sale and Assignment
of Receivables" and " -- Servicing Procedures". See also "Description of the
Transfer and Servicing Agreements -- Termination" regarding the option of the
Servicer or any other entity to purchase or cause the Receivables to be
purchased from a Trust.
A Series of Certificates may include one or more classes of Strip
Certificates that are more sensitive than certain other classes of Certificates
of the same Series to the rate of payment of the related Receivables.
Prospective investors in any such Strip Certificates should consider carefully
the information regarding such Certificates in the related Prospectus
Supplement.
In light of the above considerations, there can be no assurance as to
the amount of principal payments to be made on the Certificates of a Series on
any Distribution Date since such amount will depend, in part, on the amount of
principal collected on the related Receivables Pool during the applicable
Collection Period. Unless otherwise provided by a prepayment risk protection
arrangement described in the related Prospectus Supplement, any reinvestment
risks resulting from a faster or slower incidence of prepayment of Receivables
will be borne entirely by the Certificateholders. The related Prospectus
Supplement may also set forth certain additional information with respect to the
maturity and prepayment considerations applicable to the particular Receivables
Pool and the related Series of Certificates or particular classes of
Certificates.
POOL FACTORS AND OTHER CERTIFICATE INFORMATION
The "Certificate Pool Factor" for each class of Certificates will be a
seven-digit decimal which the Servicer will compute prior to each distribution
with respect to such class of Certificates and which will indicate the remaining
Certificate Balance of such class of Certificates, as of the applicable
Distribution Date (after giving effect to distributions to be made on such
Distribution Date), as a fraction of the initial Certificate Balance of such
class of Certificates. Each Certificate Pool Factor will be 1.0000000 as of the
related Closing Date and thereafter will decline to reflect reductions in the
applicable Class Certificate Balance. A Certificateholder's portion of the
aggregate outstanding Class Certificate Balance will equal the product of (a)
the original denomination of such Certificateholder's Certificate and (b) the
applicable Certificate Pool Factor at the time of determination.
Unless otherwise provided in the related Prospectus Supplement, the
Certificateholders will receive reports on or about each Distribution Date
concerning payments received on the Receivables, the Pool Balance and each
Certificate Pool Factor. In addition, Certificateholders of record during any
calendar year will be furnished information for tax reporting purposes not later
than the latest date permitted by law. See "Description of the Certificates --
Statements to Certificateholders".
USE OF PROCEEDS
On each Closing Date, the Depositor will convey the Receivables and, if
so provided in the related Prospectus Supplement, the applicable Pre-Funded
Amount to the related Trust in exchange for the related Series of Certificates.
Unless otherwise provided in the related Prospectus Supplement, the Depositor
will apply the net proceeds from the sale of the Certificates to the purchase of
the Receivables from UAFC and, if so provided in the related Prospectus
Supplement, to fund the Pre-Funding Account. UAFC will use the portion of such
proceeds paid to it to repay short-term borrowings and/or to purchase Contracts
from UAC and for general corporate purposes, and UAC will use such proceeds for
general corporate purposes.
UNION ACCEPTANCE CORPORATION AND AFFILIATES
UAC is an automotive finance company engaged primarily in the indirect
financing (the purchase of loan contracts from Dealers) of automobile purchases
by individuals.
UAC consummated its initial public offering of its Class A Common Stock
on August 7, 1995. In conjunction with such offering, the Predecessor effected a
spin-off of UAC. UAC is no longer a subsidiary of the Predecessor.
UACFC is a wholly-owned subsidiary of UAC, formed in November 1996 as
an Indiana corporation. UACFC is organized primarily for the purpose of
purchasing automobile installment sale and installment loan contracts from
Dealers in certain states where UAC is not licensed to do so, reselling such
receivables to UAC and conducting activities incidental thereto.
UAFC is a wholly-owned subsidiary of UAC, formed in April 1994 as a
Delaware corporation, and is organized for the limited purpose of acquiring from
UAC and holding automobile installment sale and installment loan contracts,
reselling such receivables and conducting activities incidental thereto.
Immediately upon its acquisition of receivables, UAC sells such receivables to
UAFC, together with its security interest in the related Financed Vehicle and
other collateral. UAFC (or, with respect to certain Receivables, UAC or the
Predecessor) is registered as lienholder on the certificates of title for the
Financed Vehicles. In March 1998, UAFC acquired the non-prime automobile
financing portfolio of Performance Funding Corporation ("PFC"), another
wholly-owned subsidiary of UAC, and also succeeded to its business of purchasing
non-prime automobile loan contracts from UAC. The related Prospectus Supplement
will disclose if any non-prime Receivables will be included in the Trust.
The Depositor is a wholly-owned subsidiary of UAC, formed in October
1994 as a Delaware corporation and is organized for the limited purpose of
acquiring automobile installment sale and installment loan contracts from UAC or
UAFC, reselling such receivables and conducting activities incidental thereto.
The Depositor has taken steps in structuring the transactions
contemplated hereby that are intended to ensure that the voluntary or
involuntary application for relief by UAC or UAFC under the United States
Bankruptcy Code or similar applicable state laws ("Insolvency Laws") will not
result in the consolidation of the assets and liabilities of the Depositor with
those of UAC, UACFC or UAFC. These steps include the creation of the Depositor
as a separate, limited-purpose subsidiary pursuant to a certificate of
incorporation containing certain limitations (including restrictions on the
nature of the Depositor's business, as described above, and restrictions on the
Depositor's ability to commence a voluntary case or proceeding under any
Insolvency Law without the unanimous affirmative vote of all its directors).
However, there can be no assurance that the activities of the Depositor would
not result in a court concluding that the assets and liabilities of the
Depositor should be consolidated with those of UAC or UAFC in a proceeding under
an Insolvency Law. See "Certain Legal Aspects of the Receivables -- Bankruptcy
Matters".
In addition, tax and certain other statutory liabilities, such as
liabilities to the Pension Benefit Guaranty Corporation, if any, relating to the
underfunding of pension plans of UAC or its affiliates can be asserted against
the Depositor. To the extent that any such liabilities arise after the transfer
of Receivables to a Trust, the Trust's interest in the Receivables would be
prior to the interest of the claimant with respect to any such liabilities.
However, the existence of a claim against the Depositor could permit the
claimant to subject the Depositor to an involuntary proceeding under the
Bankruptcy Code or other Insolvency Laws. See "Certain Legal Aspects of the
Receivables -- Bankruptcy Matters".
DESCRIPTION OF THE CERTIFICATES
General
Each Trust will issue a Series of Certificates pursuant to a Pooling
and Servicing Agreement. A form of the Pooling and Servicing Agreement has been
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part. The following summary does not purport to be complete and is subject to,
and is qualified in its entirety by reference to, the provisions of the related
Certificates and Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, the
Certificates will be available for purchase in minimum denominations of $1,000
and integral multiples in excess thereof in book-entry form only.
Distributions of Principal and Interest
The timing and priority of distributions, seniority, allocations of
losses, Pass-Through Rate and amount of or method of determining distributions
with respect to principal and interest on each class of Certificates of a Series
will be described in the related Prospectus Supplement. Distributions on such
Certificates will be made on the dates specified in the related Prospectus
Supplement (the "Distribution Date") and may be made prior to distributions with
respect to principal of such Certificates. To the extent provided in the related
Prospectus Supplement, a Series of Certificates may include one or more classes
of Strip Certificates entitled to (i) interest distributions with
disproportionate, nominal or no principal distributions or (ii) principal
distributions with disproportionate, nominal or no interest distributions. Each
class of Certificates may have a different Pass-Through Rate, which may be a
fixed, variable or adjustable Pass-Through Rate (and which may be zero for
certain classes of Strip Certificates) or any combination of the foregoing. The
related Prospectus Supplement will specify the Pass-Through Rate for each class
of Certificates of a Series or the method for determining such Pass-Through
Rate.
To the extent specified in any Prospectus Supplement, one or more
classes of Certificates of a given Series may have fixed principal and/or
interest distribution schedules or may be correlated to one or more Receivables
Pools.
In the case of a Series of Certificates that includes two or more
classes of Certificates, the timing, sequential order, priority of payment or
amount of distributions in respect of interest and principal, and any schedule
or formula or other provisions applicable to the determination thereof, of each
such class shall be as set forth in the related Prospectus Supplement. Unless
otherwise specified in the related Prospectus Supplement, distributions in
respect of interest on and principal of any class of Certificates will be made
on a pro rata basis among all holders of Certificates of such class.
Book-Entry Registration
Unless otherwise specified in the related Prospectus Supplement, each
class of Certificates initially will be represented by one or more certificates,
in each case registered in the name of the nominee of DTC. Unless another
nominee is specified in the related Prospectus Supplement, the nominee of DTC
will be Cede & Co. Accordingly, such nominee is expected to be the holder of
record of the Certificates of each Series, except for Certificates, if any,
retained by the Depositor or UAC. Unless and until Definitive Certificates are
issued under the limited circumstances described herein or in the related
Prospectus Supplement, no Certificateholder will be entitled to receive a
physical certificate representing a Certificate, all references herein and in
the related Prospectus Supplement to actions by Certificateholders will refer to
actions taken by DTC upon instructions from the Participants, and all references
herein and in the related Prospectus Supplement to distributions, notices,
reports and statements to Certificateholders will refer to distributions,
notices, reports and statements to DTC or its nominee, as the case may be, as
the registered holder of the Certificates, for distribution to
Certificateholders in accordance with DTC's procedures with respect thereto.
Beneficial owners of the Certificates ("Certificate Owners") will not be
recognized as "Certificateholders" by the related Trustee, as such term is used
in each Pooling and Servicing Agreement, and Security Owners will be permitted
to exercise the rights of Certificateholders only indirectly through DTC and its
participating members ("Participants").
DTC is a limited-purpose trust company organized under the laws of the
State of New York, a "banking organization" within the meaning of the New York
Banking Law, a member of the Federal Reserve System, a "clearing corporation"
within the meaning of the Uniform Commercial Code (the "UCC") in effect in the
State of New York, and a "clearing agency" registered pursuant to the provisions
of Section 17A of the Exchange Act. DTC was created to hold securities for the
Participants and to facilitate the clearance and settlement of securities
transactions between Participants through electronic book-entries, thereby
eliminating the need for physical movement of certificates. Participants include
securities brokers and dealers, banks, trust companies and clearing
corporations. Indirect access to the DTC system also is available to banks,
brokers, dealers and trust companies that clear through or maintain a custodial
relationship with a Participant, either directly or indirectly (the "Indirect
Participants").
Unless otherwise specified in the related Prospectus Supplement,
Certificate Owners that are not Participants or Indirect Participants but desire
to purchase, sell or otherwise transfer ownership of, or an interest in, the
Certificates may do so only through Participants and Indirect Participants. In
addition, all Certificate Owners will receive all distributions of principal and
interest from the related Trustee through Participants. Under a book-entry
format, Certificate Owners may experience some delay in their receipt of
payments, since such payments will be forwarded by the Trustee to DTC's nominee.
DTC will then forward such payments to the Participants, which thereafter will
forward them to Indirect Participants or Certificate Owners.
Under the rules, regulations and procedures creating and affecting DTC
and its operations (the "Rules"), DTC is required to make book-entry transfers
among Participants on whose behalf it acts with respect to the Certificates and
to receive and transmit distributions of principal of and interest on the
Certificates. Participants and Indirect Participants with which Certificate
Owners have accounts with respect to the Certificates similarly are required to
make book-entry transfers and to receive and transmit such payments on behalf of
their respective Certificate Owners. Accordingly, although Certificate Owners
will not possess physical certificates representing the Certificates, the Rules
provide a mechanism by which Participants and Indirect Participants will receive
payments and transfer interests, directly or indirectly, on behalf of
Certificate Owners.
Because DTC can act only on behalf of Participants, who in turn act on
behalf of Indirect Participants and certain banks, the ability of a Certificate
Owner to pledge Certificates to persons or entities that do not participate in
the DTC system, or otherwise take actions with respect to such Certificates, may
be limited due to the lack of a physical certificate representing such
Certificates.
DTC has advised the Depositor that it will take any action permitted to
be taken by a Certificate Owner under the Pooling and Servicing Agreement only
at the direction of one or more Participants to whose account with DTC the
Certificates are credited. DTC may take conflicting actions with respect to
other undivided interests to the extent that such actions are taken on behalf of
Participants whose holdings include such undivided interests.
Except as required by law, the related Trustee will not have any
liability for any aspect of the records relating to or payments made on account
of beneficial ownership interests of Certificates of any Series held by DTC's
nominee, or for maintaining, supervising or reviewing any records relating to
such beneficial ownership interests.
Definitive Certificates
Unless otherwise stated in the related Prospectus Supplement, the
Certificates of a given Series will be issued in fully registered, certificated
form ("Definitive Certificates") to Certificateholders or their respective
nominees, rather than to DTC or its nominee, only if (i) the related Trustee
determines that DTC is no longer willing or able to discharge properly its
responsibilities as depository with respect to the related Certificates and such
Trustee is unable to locate a qualified successor, (ii) the Trustee elects, at
its option, to terminate the book-entry system through DTC or (iii) after the
occurrence of an Event of Default, Certificate Owners representing at least a
majority of the outstanding principal amount of the Certificates of such Series,
advise the related Trustee through DTC that the continuation of a book-entry
system through DTC (or a successor thereto) is no longer in the best interests
of the related Certificate Owners.
Upon the occurrence of any of the events described in the immediately
preceding paragraph, the related Trustee will be required to notify the related
Certificate Owners, through Participants, of the availability of Definitive
Certificates. Upon surrender by DTC of the certificates representing all
Certificates of any affected class and the receipt of instructions for
re-registration, the Trustee will issue Definitive Certificates to the related
Certificate Owners. Distributions on the related Definitive Certificates will be
made thereafter by the related Trustee directly to the holders in whose name the
related Definitive Certificates are registered at the close of business on the
applicable record date, in accordance with the procedures set forth herein and
in the related Pooling and Servicing Agreement. Distributions will be made by
check mailed to the address of such holders as they appear on the register
specified in the related Pooling and Servicing Agreement; however, the final
payment on any Certificates (whether Definitive Certificates or Certificates
registered in the name of a depository or its nominee) will be made only upon
presentation and surrender of such Certificates at the office or agency
specified in the notice of final distribution to Certificateholders.
Definitive Certificates will be transferable and exchangeable at the
offices of the related Trustee (or any security registrar appointed thereby). No
service charge will be imposed for any registration of transfer or exchange, but
such Trustee may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith.
Statements to Certificateholders
With respect to each Series of Certificates, on or prior to each
Distribution Date, the Servicer (to the extent applicable to such
Certificateholder) will prepare and forward to the related Trustee to be
included with the distribution to each Certificateholder of record a statement
setting forth for the related Collection Period the following information (and
any other information specified in the related Prospectus Supplement):
(i) the amount of the distribution allocable to principal of each
class of Certificates of such Series;
(ii) the amount of the distribution allocable to interest on each
class of Certificates of such Series;
(iii) the amount of the Servicing Fee paid to the Servicer with
respect to the related Collection Period;
(iv) the Class Certificate Balance and Certificate Pool Factor for each
class of Certificates of such Series as of the Distribution Date after giving
effect to all payments under clause (i) above on such date;
(v) the balance of any Cash Collateral Account or other form of credit
enhancement, after giving effect to any additions thereto or withdrawals
therefrom or reductions thereto to be made on the following Distribution Date;
(vi) with respect to any Series of Certificates as to which a
Pre-Funding Account has been established, for Distribution Dates during the
Funding Period, the remaining Pre-Funded Amount; and
(vii) with respect to any Series of Certificates as to which a
Pre-Funding Account has been established, for the Distribution Date that falls
on or immediately after the end of the Funding Period, if any, the amount of the
Pre-Funded Amount that has not been used to purchase Subsequent Receivables.
Dollar amounts described in items (i), (ii) and (iv) above will be
expressed as a dollar amount per $1,000 of initial Class Certificate Balance of
such Certificates.
In addition, within the prescribed period of time for tax reporting
purposes after the end of each calendar year during the term of each Trust, the
related Trustee, as applicable, will mail to each person who at any time during
such calendar year shall have been a registered Certificateholder a statement
containing certain information for the purposes of such Certificateholder's
preparation of federal income tax returns. See "Certain Federal Income Tax
Consequences".
List of Certificateholders
Unless otherwise specified in the related Prospectus Supplement, each
Trustee, within 15 days after receipt of written request of the Servicer, will
provide the Servicer with a list of the names and addresses of all holders of
record as of the most recent record date of the related Series of Certificates.
In addition, three or more holders of the Certificates of any Series or one or
more holders of such Certificates evidencing not less than 25% of the applicable
Certificate Balance may, by written request to the related Trustee, obtain
access to the list of all Certificateholders maintained by such Trustee for the
purpose of communicating with other Certificateholders with respect to their
rights under the related Pooling and Servicing Agreement or under such
Certificates.
DESCRIPTION OF THE TRANSFER AND SERVICING AGREEMENTS
The following summary describes certain terms of each Purchase
Agreement and Pooling and Servicing Agreement (collectively, the "Transfer and
Servicing Agreements") pursuant to which the Depositor will purchase Receivables
from UAFC, a Trust will purchase Receivables from the Depositor, and the
Servicer will agree to service such Receivables. Forms of the Purchase Agreement
and Pooling and Servicing Agreement have been filed as exhibits to the
Registration Statement of which this Prospectus forms a part. The following
summary does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, the provisions of the related Transfer and
Servicing Agreements.
Sale and Assignment of Receivables
On the related Closing Date, (i) UAFC will sell and assign to the
Depositor pursuant to the related Purchase Agreement, without recourse, its
entire right in the related Receivables, including its security interests in the
related Financed Vehicles and (ii) the Depositor will sell and assign to the
related Trust pursuant to the related Pooling and Servicing Agreement, without
recourse, (a) its entire right in such Receivables, including the security
interests in the Financed Vehicles, and (b) if so provided in the related
Prospectus Supplement, the applicable Pre-Funded Amount. Each Receivable will be
identified in a schedule appearing as an exhibit to the related Purchase
Agreement and Pooling and Servicing Agreement. The Trustee will, concurrently
with such sale and assignment of the Receivables and, if applicable, the
Pre-Funded Amount, to the related Trust, execute, authenticate and deliver the
related Series of Certificates to the Depositor in exchange for such Receivables
and such Pre-Funded Amount, if any. The related Prospectus Supplement will
specify whether the property of a Trust will include the Pre-Funded Amount and,
if so, the terms, conditions and manner under which Subsequent Receivables will
be sold and assigned by the Depositor to the related Trust.
In each Purchase Agreement, UAFC and UAC will represent and warrant to
the Depositor, among other things, that (i) the information provided with
respect to the related Receivables is correct in all material respects; (ii) the
Obligor on each such Receivable has obtained or agreed to obtain and maintain
physical damage insurance covering the Financed Vehicle in accordance with UAC's
normal requirements; (iii) at the Closing Date, with respect to Receivables
conveyed to a Trust on the Closing Date, and on the applicable Subsequent
Transfer Date with respect to any Subsequent Receivables, the Receivables are
free and clear of all security interests, liens, charges and encumbrances, other
than the lien of the Depositor, and no offsets, defenses or counterclaims
against the Depositor, UAFC, UACFC or UAC have been asserted or threatened with
respect to the related Receivables; (iv) at the Closing Date or Subsequent
Transfer Date, as applicable, each of the related Receivables is secured by a
first perfected security interest in the related Financed Vehicle in favor of
UAFC (or one of the other Named Leinholders) or all necessary action has been
taken by the Named Lienholders to secure such a first perfected security
interest; and (v) each of the related Receivables, at the time it was
originated, complied and, at the Closing Date or Subsequent Transfer Date, as
applicable, complies, in all material respects with applicable federal and state
laws, including, without limitation, consumer credit, truth in lending, equal
credit opportunity and disclosure laws. As of the last day of any Collection
Period following the discovery by or notice to UAC of a breach of any such
representation or warranty that materially and adversely affects the interests
of the Depositor or its assignee in a Receivable (or as of the last day of the
preceding Collection Period, if UAC so elects), UAC, unless it has cured such
breach, will repurchase the Receivable at a price equal to the unpaid principal
balance owed by the Obligor thereon plus, if the nonpayment of interest on such
Receivable would require a withdrawal from or on any Cash Collateral Account or
other form of credit enhancement in connection with the purchase of such
Receivable on such date, accrued interest thereon at the applicable Contract
Rate to the date of purchase (the "Purchase Amount"), and such Receivable will
be considered a "Purchased Receivable" as of such date. In each Pooling and
Servicing Agreement, the Depositor will assign certain rights under the related
Purchase Agreement to the related Trust, including the right to cause UAC to
repurchase Receivables with respect to which it is in breach of any such
representation and warranty. The repurchase obligation of UAC pursuant to each
Purchase Agreement and Pooling and Servicing Agreement will constitute the sole
remedy available to the related Certificateholders or Trustee for any uncured
breach of a representation or warranty.
UAC anticipates that any Receivables purchased from a Third Party
Originator will be acquired directly or indirectly by UAFC and assigned to the
Trust under the arrangements described above. Any other arrangement in respect
of Receivables acquired from a Third Party Originator will be fully described in
the applicable Prospectus Supplement.
If the related Prospectus Supplement provides that the property of a
Trust will include a Pre-Funding Account, UAFC will be obligated to sell and
assign to the Depositor pursuant to the related Purchase Agreement, and the
Depositor will be obligated to sell and assign to the related Trust pursuant to
the related Pooling and Servicing Agreement, Subsequent Receivables from time to
time during the Funding Period in an aggregate outstanding principal amount
approximately equal to the Pre-Funded Amount. The related Trust will be
obligated pursuant to the related Pooling and Servicing Agreement to purchase
all such Subsequent Receivables from the Depositor subject to the satisfaction,
on or before the related Subsequent Transfer Date, of the following conditions
precedent, among others: (i) each such Subsequent Receivable shall satisfy the
eligibility criteria specified in the related Pooling and Servicing Agreement
and shall not have been selected from among the eligible Receivables in a manner
that UAFC or the Depositor deems adverse to the interests the related
Certificateholders; (ii) as of the applicable Cutoff Date for such Subsequent
Receivables, all of the Receivables in the related Trust, including the
Subsequent Receivables to be conveyed to the Trust as of such date, must satisfy
the parameters described under "The Receivables Pools" herein and "The
Receivables Pool" in the related Prospectus Supplement; (iii) any required
deposit to any Cash Collateral Account or other similar account must have been
made; and (iv) UAFC must execute and deliver to the Depositor, and the Depositor
must execute and deliver to such Trust, a written assignment conveying such
Subsequent Receivables to the Depositor and the related Trust, respectively. In
addition, the conveyance of Subsequent Receivables to a Trust is subject to the
satisfaction of the following conditions subsequent, among others, each of which
must be satisfied within the applicable time period specified in the related
Prospectus Supplement: (a) the Depositor must deliver certain opinions of
counsel to the related Trustee with respect to the validity of the conveyance of
such Subsequent Receivables to the Trust; (b) the Trustee must receive written
confirmation from a firm of certified independent public accountants that, as of
the end of the period specified therein, the Receivables in the related
Receivables Pool, including all such Subsequent Receivables, satisfied the
parameters described under "The Receivables Pools" herein and "The Receivables
Pool" in the related Prospectus Supplement; and (c) each of the Rating Agencies
must have notified the Depositor in writing that, following the conveyance of
the Subsequent Receivables to the Trust, each class of Certificates of the
related Series will have the same rating assigned to it by such Rating Agency
that it had on the related Closing Date. If any such conditions precedent or
conditions subsequent are not met with respect to any Subsequent Receivables
within the time period specified in the related Prospectus Supplement, UAC will
be required under the related Purchase Agreement and Pooling and Servicing
Agreement to repurchase such Subsequent Receivables from the related Trust, at a
purchase price equal to the related Purchase Amounts therefor.
Accounts
Certificate Account. With respect to each Trust, the Servicer will
establish and maintain with the related Trustee one or more accounts, in the
name of the Trustee on behalf of the related Certificateholders, into which all
payments made on or in respect of the related Receivables will be deposited and
from which all distributions with respect to the related Certificates will be
made (the "Certificate Account"). The amounts on deposit in the Certificate
Account will be invested by the Trustee in Eligible Investments.
Payahead Account. If so provided in the related Prospectus Supplement,
the Servicer will establish one or more additional accounts (each a "Payahead
Account"), in the name of the Trustee and for the benefit of Obligors on the
Receivables, into which, to the extent required by the Agreement, Payaheads on
Precomputed Receivables will be deposited until such time as the payment becomes
due. Until such time as payments are transferred from the Payahead Account to
the Certificate Account, they will not constitute collected interest or
collected principal and will not be available for distribution to
Certificateholders. The Payahead Account will initially be maintained with the
Trustee. Interest earned on the balance in the Payahead Account will be remitted
to the Servicer monthly. Collections on a Precomputed Receivable made during a
Collection Period shall be applied first to any overdue scheduled payment on
such Receivable, then to the scheduled payment on such Receivable due in such
Collection Period. If any collections remaining after the scheduled payment is
made are insufficient to prepay the Precomputed Receivable in full, then
generally such remaining collections shall be transferred to and kept in the
Payahead Account until such later Collection Period as the collections may be
retransferred to the Certificate Account and applied either to a later scheduled
payment or to prepay such Receivable in full.
Pre-Funding Account. If so provided in the related Prospectus
Supplement, the Servicer will establish and maintain an account, in the name of
the related Trustee on behalf of the related Certificateholders, into which the
Depositor will deposit the Pre-Funded Amount on the related Closing Date (the
"Pre-Funding Account"). In no event will the Pre-Funded Amount exceed 25% of the
aggregate Certificate Balance of the related Series of Certificates. The
Pre-Funded Amount will be used by the related Trustee to purchase Subsequent
Receivables from the Depositor from time to time during the Funding Period. The
amounts on deposit in the Pre-Funding Account during the Funding Period will be
invested by the Trustee in Eligible Investments. Any investment income received
on the Eligible Investments during a Collection Period (such amounts, net of any
related investment expenses, "Investment Income") will be included in the
interest distribution amount on the following Distribution Date. The Funding
Period, if any, for a Trust will begin on the related Closing Date and will end
on the date specified in the related Prospectus Supplement, which in no event
will be later than the date that is three calendar months after the related
Closing Date. Any amounts remaining in the Pre-Funding Account at the end of the
Funding Period will be distributed to the related Certificateholders, in the
manner and priority specified in the related Prospectus Supplement, as a
prepayment of principal of the related Certificates. Receivables purchased from
Third Party Originators will not be included in the Subsequent Receivables,
unless provided otherwise in the Prospectus Supplement.
Any other accounts to be established with respect to a Trust, including
any Cash Collateral Account or yield supplement account, will be described in
the related Prospectus Supplement.
For each Series of Certificates, funds in the Certificate Account,
Pre-Funding Account and any other account identified as such in the related
Prospectus Supplement (collectively, the "Trust Accounts") will be invested as
provided in the related Pooling and Servicing Agreement in Eligible Investments
and any related Investment Income will be distributed as described herein and in
the related Prospectus Supplement. "Eligible Investments" generally will be
limited to investments acceptable to the Rating Agencies as being consistent
with the rating of the related Certificates. Except as may be otherwise
indicated in the applicable Prospectus Supplement, Eligible Investments will
include (i) direct obligations of, and obligations guaranteed by, the United
States of America, the Federal National Mortgage Association, or any
instrumentality of the United States of America; (ii) demand and time deposits
in or similar obligations of any depository institution or trust company
(including the Trustee or any agent of the Trustee, acting in their respective
commercial capacities) rated P-1 by Moody's or A-1+ by Standard & Poor's (an
"Approved Rating") or any other deposit which is fully insured by the Federal
Deposit Insurance Corporation; (iii) repurchase obligations with respect to any
security issued or guaranteed by an instrumentality of the United States of
America entered into with a depository institution or trust company having an
Approved Rating (acting as principal); (iv) short-term corporate securities
bearing interest or sold at a discount issued by any corporation incorporated
under the laws of the United States of America or any State, the short-term
unsecured obligations of which have an Approved Rating, or higher, at the time
of such investment; (v) commercial paper having an Approved Rating at the time
of such investment; (vi) a guaranteed investment contract issued by any
insurance company or other corporation acceptable to the Rating Agencies; (vii)
interests in any money market fund having a rating of Aaa by Moody's Investors
Service, Inc. or AAAm by Standard & Poor's Ratings Services; and (viii) any
other investment approved in advance in writing by the Rating Agencies.
Except as described herein or in the related Prospectus Supplement,
Eligible Investments will be limited to obligations or securities that mature on
or before the date of the next scheduled distribution to Certificateholders of
such Series; provided, however, that, unless the related Prospectus Supplement
requires otherwise, each Pooling and Servicing Agreement will generally permit
the investment of funds in any Cash Collateral Account or similar type of credit
enhancement account to be invested in Eligible Investments without the
limitation that such Eligible Investments mature not later than the business day
prior to the next succeeding Distribution Date if (i) the Servicer obtains a
liquidity facility or similar arrangement with respect to such Cash Collateral
Account or other account and (ii) each rating agency that initially rated the
related Certificates confirms in writing that the ratings of such Certificates
will not be lowered or withdrawn as a result of eliminating or modifying such
limitation.
The Accounts will be maintained as Eligible Deposit Accounts. "Eligible
Deposit Account" means either (a) a segregated account with an Eligible
Institution or (b) a segregated trust account with the corporate trust
department of a depository institution organized under the laws of the United
States of America or any one of the states thereof or the District of Columbia
(or any domestic branch of a foreign bank), having corporate trust powers and
acting as trustee for funds deposited in such account, so long as any of the
securities of such depository institution have a credit rating from each Rating
Agency in one of its generic rating categories that signifies investment grade.
"Eligible Institution" means, with respect to a Trust, (a) the corporate trust
department of the related Trustee or (b) a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank) (i) that
has either (A) a long-term unsecured debt rating of at least Baa3 from Moody's
Investor's Service, Inc. or (B) a long-term unsecured debt rating, a short-term
unsecured debt rating or a certificate of deposit rating acceptable to the
Rating Agencies and (ii) whose deposits are insured by the FDIC.
Servicing Procedures
The Servicer will make reasonable efforts to collect all payments due
with respect to the Receivables and will, consistent with the related Pooling
and Servicing Agreement, follow such collection procedures as it follows with
respect to comparable automotive installment contracts that it owns or services
for others. The Servicer will continue to follow such normal collection
practices and procedures as it deems necessary or advisable to realize upon any
Receivables with respect to which the Servicer determines that eventual payment
in full is unlikely. The Servicer may sell the Financed Vehicle securing such
Receivables at a public or private sale, or take any other action permitted by
applicable law.
Consistent with its normal procedures, the Servicer may, in its
discretion, arrange with the Obligor on a Receivable to extend or modify the
payment schedule; if, however, the extension of a payment schedule causes a
Receivable to remain outstanding on the latest final scheduled Distribution Date
of any class of Certificates with respect to a Series of Certificates specified
in the related Prospectus Supplement (the "Final Scheduled Distribution Date"),
the Servicer will purchase such Receivable as of the last day of the Collection
Period preceding such Final Scheduled Distribution Date. The Servicer's purchase
obligation will constitute the sole remedy available to the related
Certificateholders or Trustee for any such modification of a Contract.
Collections
With respect to each Trust, the Servicer will deposit all payments
(from whatever source) on and all proceeds of the related Receivables collected
during a Collection Period into the related Certificate Account not later than
two business days after receipt thereof. However, at any time that and for so
long as (i) UAC is the Servicer, (ii) no Event of Default shall have occurred
and be continuing with respect to the Servicer and (iii) each other condition to
making deposits less frequently than daily as may be specified by the Rating
Agencies or set forth in the related Prospectus Supplement is satisfied, the
Servicer will not be required to deposit such amounts into the Certificate
Account until on or before the applicable Distribution Date. Pending deposit
into the Certificate Account, collections may be invested by the Servicer at its
own risk and for its own benefit and will not be segregated from its own funds.
If the Servicer were unable to remit such funds, Certificateholders might incur
a loss. To the extent set forth in the related Prospectus Supplement, the
Servicer may, in order to satisfy the requirements described above, obtain a
letter of credit or other security for the benefit of the related Trust to
secure timely remittances of collections on the related Receivables and payment
of the aggregate Purchase Amounts with respect to Receivables purchased by the
Servicer.
Unless otherwise provided in the applicable Prospectus Supplement,
Payaheads on Precomputed Receivables will be transferred from the Certificate
Account and deposited into the Payahead Account for subsequent transfer to the
Certificate Account, as described above under "-- Accounts"
Advances
Unless otherwise provided in the related Prospectus Supplement, if a
Receivable is delinquent more than 30 days at the end of a Collection Period,
the Servicer will make an Advance in the amount of 30 days of interest due on
such Receivable, but only to the extent that the Servicer, in its sole
discretion, expects to recoup the Advance from subsequent collections on the
Receivable or from withdrawals from any Cash Collateral Account or other form of
credit enhancement. The Servicer will deposit Advances in the Certificate
Account on or prior to the date specified therefor in the related Prospectus
Supplement. If the Servicer determines that reimbursement of an Advance from
subsequent payments on or with respect to the related Receivable is unlikely,
the Servicer may recoup such Advance from insurance proceeds, collections made
on other Receivables or from any other source specified in the related
Prospectus Supplement.
Servicing Compensation and Payment of Expenses
Unless otherwise specified in the related Prospectus Supplement, the
Servicer will be entitled to receive a fee with respect to each Trust (the
"Servicing Fee"), equal to one percent (1.00%) per annum (the "Servicing Fee
Rate"), payable monthly at one-twelfth the annual rate, of the related aggregate
Certificate Balance as of the preceding Distribution Date (after giving effect
to distributions to be made on such preceding Distribution Date). Unless
otherwise provided in the related Prospectus Supplement, the Servicer also will
collect and retain any late fees, prepayment charges, other administrative fees
or similar charges allowed by applicable law with respect to the Receivables and
will be entitled to reimbursement from each Trust for certain liabilities.
The Servicing Fee will compensate the Servicer for performing the
functions of a third-party servicer of automotive receivables as an agent for
the related Trust, including collecting and posting all payments, making
Advances, responding to inquiries of Obligors on the Receivables, investigating
delinquencies, sending payment coupons to Obligors, and overseeing the
collateral in cases of Obligor default. The Servicing Fee will also compensate
the Servicer for administering the related Receivables Pool, including
accounting for collections and furnishing monthly and annual statements to the
related Trustee with respect to distributions, and generating federal income tax
information for such Trust and for the related Certificateholders. The Servicing
Fee also will reimburse the Servicer for certain taxes, accounting fees, outside
auditor fees, data processing costs, and other costs incurred in connection with
administering the applicable Receivables Pool.
Distributions
With respect to each Series of Certificates, beginning on the
Distribution Date specified in the related Prospectus Supplement, distributions
of principal and interest (or, where applicable, of interest only or principal
only) on each class of Certificates entitled thereto will be made by the related
Trustee to the related Certificateholders. The timing, calculation, allocation,
order, source and priorities of, and requirements for, all distributions to the
holders of each class of Certificates will be set forth in the related
Prospectus Supplement.
With respect to each Trust, collections on or with respect to the
related Receivables will be deposited into the related Certificate Account for
distribution to the related Certificateholders on each Distribution Date to the
extent and in the priority provided in the related Prospectus Supplement. Credit
enhancement, such as a Cash Collateral Account or yield supplement account or
other arrangement, may be available to cover shortfalls in the amount available
for distribution on such date to the extent specified in the related Prospectus
Supplement. As more fully described in the related Prospectus Supplement, and
unless otherwise specified therein, distributions in respect of principal of a
class of Certificates of a Series will be subordinate to distributions in
respect of interest on such class, and distributions in respect of one or more
classes of Certificates of a Series may be subordinate to payments in respect of
other classes of Certificates. Distributions of principal on the Certificates of
a Series may be based on the amount of principal collected or due, or the amount
of realized losses incurred, in a Collection Period.
Credit and Cash Flow Enhancement
The amounts and types of any credit and cash flow enhancement
arrangements and the provider thereof, if applicable, with respect to each class
of Certificates of a Series will be set forth in the related Prospectus
Supplement. To the extent provided in the related Prospectus Supplement, credit
or cash flow enhancement may be in the form of subordination of one or more
classes of Certificates, Cash Collateral Accounts, Spread Accounts, reserve
accounts, yield supplement accounts, letters of credit, surety bonds, insurance
policies, over-collateralization, credit or liquidity facilities, guaranteed
investment contracts, swaps or other interest rate and/or prepayment rate
protection agreements, repurchase obligations, other agreements with respect to
third-party payments or other support, cash deposits, or such other arrangements
as may be described in the related Prospectus Supplement, or any combination of
the foregoing. If specified in the applicable Prospectus Supplement, credit or
cash flow enhancement for a class of Certificates may cover one or more other
classes of Certificates of the same Series, and credit enhancement for a Series
of Certificates may cover one or more other Series of Certificates.
The existence of a Cash Collateral Account or other form of credit
enhancement for the benefit of any class or Series of Certificates is intended
to enhance the likelihood of receipt by the Certificateholders of such class or
Series of the full amount of principal and interest due thereon and to decrease
the likelihood that such Certificateholders will experience losses. Unless
otherwise specified in the related Prospectus Supplement, the credit enhancement
for a class or Series of Certificates will not provide protection against all
risks of loss and will not guarantee repayment of all principal and interest
thereon. If losses occur which exceed the amount covered by such credit
enhancement or which are not covered by such credit enhancement,
Certificateholders will bear their allocable share of such losses, as described
in the related Prospectus Supplement. In addition, if a form of credit
enhancement covers more than one Series of Certificates, Certificateholders of
any such Series will be subject to the risk that such credit enhancement may be
exhausted by the claims of Certificateholders of other Series.
Cash Collateral Account. If so provided in the related Prospectus
Supplement, pursuant to the related Pooling and Servicing Agreement the
Depositor will establish an account (a "Cash Collateral Account" or "Spread
Account") for a Series or class or classes of Certificates, which will be
maintained with the related Trustee. Unless otherwise provided in the related
Prospectus Supplement, a Cash Collateral Account will be funded by an initial
deposit by the Depositor on the Closing Date in the amount set forth in the
related Prospectus Supplement and, if the related Series has a Funding Period,
may also be funded on each Subsequent Transfer Date to the extent described in
the related Prospectus Supplement. As further described in the related
Prospectus Supplement, the amount on deposit in the Cash Collateral Account may
be increased or reinstated on each Distribution Date, to the extent described in
the related Prospectus Supplement, by the deposit thereto of the amount of
collections on the related Receivables remaining on such Distribution Date after
the payment of all other required payments and distributions on such date. The
related Prospectus Supplement will describe the circumstances under which and
the manner in which distributions may be made out of any such Cash Collateral
Account, either to holders of the Certificates covered thereby or to the
Depositor or to any other entity.
Evidence as to Compliance
Each Pooling and Servicing Agreement will provide that a firm of
independent public accountants will furnish annually to the related Trustee a
statement as to compliance by the Servicer during the preceding twelve months
with certain standards relating to the servicing of the Receivables.
Each Pooling and Servicing Agreement will also provide for delivery to
the related Trustee each year of a certificate signed by an officer of the
Servicer stating that the Servicer has fulfilled its obligations under the
related Pooling and Servicing Agreement throughout the preceding twelve months
or, if there has been a default in the fulfillment of any such obligation,
describing each such default. The Servicer has agreed or will agree to give each
Trustee notice of the occurrence of certain Events of Defaults under the related
Pooling and Servicing Agreement.
Copies of the foregoing statements and certificates may be obtained by
Certificateholders by a request in writing addressed to the related Trustee at
the Corporate Trust Office for such Trustee specified in the related Prospectus
Supplement.
Certain Matters Regarding the Servicer
Each Pooling and Servicing Agreement will provide that UAC may not
resign from its obligations and duties as Servicer thereunder, except upon
determination that UAC's performance of such duties is no longer permissible
under applicable law. No such resignation will become effective until the
related Trustee or a successor servicer has assumed UAC's servicing obligations
and duties under the related Pooling and Servicing Agreement.
Each Pooling and Servicing Agreement will further provide that neither
the Servicer nor any of its directors, officers, employees and agents will be
under any liability to the related Trust or Certificateholders for taking any
action or for refraining from taking any action pursuant to the related Pooling
and Servicing Agreement or for errors in judgment; provided, however, that
neither the Servicer nor any such person will be protected against any liability
that would otherwise be imposed by reason of willful misfeasance, bad faith or
negligence in the performance of the Servicer's duties or by reason of reckless
disregard of its obligations and duties thereunder. In addition, each Pooling
and Servicing Agreement will provide that the Servicer is under no obligation to
appear in, prosecute or defend any legal action that is not incidental to its
servicing responsibilities under such Pooling and Servicing Agreement and that,
in its opinion, may cause it to incur any expense or liability.
Under the circumstances specified in each Pooling and Servicing
Agreement, any entity into which UAC may be merged or consolidated, or any
entity resulting from any merger or consolidation to which UAC is a party, or
any entity succeeding to the indirect automobile financing and receivable
servicing business of UAC, which corporation or other entity assumes the
obligations of the Servicer, will be the successor to the Servicer under the
related Pooling and Servicing Agreement.
Events of Default
Unless otherwise provided in the related Prospectus Supplement, "Events
of Default" under each Pooling and Servicing Agreement will consist of: (i) any
failure by the Servicer or UAC to deliver to the related Trustee for
distribution to the related Certificateholders any required payment, which
failure continues unremedied for five business days after written notice to the
Servicer of such failure from the Trustee or holders of the related Certificates
evidencing not less than 25% of the aggregate Certificate Balance (or notional
principal amount, if applicable); (ii) any failure by the Servicer, UAC or the
Depositor duly to observe or perform in any material respect any covenant or
agreement in the related Pooling and Servicing Agreement, which failure
materially and adversely affects the rights of the related Certificateholders
and which continues unremedied for 60 days after written notice of such failure
is given (1) to the Servicer, UAC or the Depositor, as the case may be, by the
related Trustee or (2) to the Servicer, UAC or the Depositor, as the case may
be, and to the related Trustee by holders of the related Certificates evidencing
not less than 25% of the related Certificate Balance (or notional principal
amount, if applicable); and (iii) certain events of insolvency, readjustment of
debt, marshalling of assets and liabilities, or similar proceedings with respect
to the Servicer and certain actions by the Servicer indicating its insolvency,
reorganization pursuant to bankruptcy proceedings or inability to pay its
obligations.
Rights Upon Event of Default
Unless otherwise provided in the related Prospectus Supplement, as long
as an Event of Default under the related Pooling and Servicing Agreement remains
unremedied, the related Trustee, upon direction to do so by holders of
Certificates of the related Series evidencing not less than 25% of the
Certificate Balance (or notional principal amount, if applicable), may terminate
all the rights and obligations of the Servicer under such Pooling and Servicing
Agreement, whereupon a successor Servicer appointed by the related Trustee or
such Trustee will succeed to all the responsibilities, duties and liabilities of
the Servicer under such Pooling and Servicing Agreement and will be entitled to
similar compensation arrangements. If, however, a bankruptcy trustee or similar
official has been appointed for the Servicer, and no Event of Default other than
such appointment has occurred, such trustee or official may have the power to
prevent the related Trustee or the related Certificateholders from effecting a
transfer of servicing. In the event that the related Trustee is unwilling or
unable to act as successor to the Servicer, such Trustee may appoint, or may
petition a court of competent jurisdiction to appoint, a successor with assets
of at least $50,000,000 and whose regular business includes the servicing of
automotive receivables. The related Trustee may arrange for compensation to be
paid to such successor Servicer, which in no event may be greater than the
servicing compensation paid to the Servicer under the related Pooling and
Servicing Agreement.
Waiver of Past Defaults
Unless otherwise provided in the related Prospectus Supplement, holders
of Certificates evidencing not less than a majority of the related aggregate
Certificate Balance (or notional principal amount, if applicable) may, on behalf
of all such Certificateholders, waive any default by the Servicer in the
performance of its obligations under the related Pooling and Servicing Agreement
and its consequences, except a default in making any required deposits to or
payments from any Account in accordance with the Pooling and Servicing
Agreement. No such waiver will impair the Certificateholders' rights with
respect to subsequent Events of Default.
Amendment
Unless otherwise specified in the related Prospectus Supplement, each
Pooling and Servicing Agreement may be amended from time to time by the
Depositor, the Servicer and the related Trustee, without the consent of the
related Certificateholders, to cure any ambiguity, correct or supplement any
provision therein that may be inconsistent with other provisions therein, or to
make any other provisions with respect to matters or questions arising under
such Pooling and Servicing Agreement that are not inconsistent with the
provisions of the Pooling and Servicing Agreement; provided that such action
shall not, in the opinion of counsel satisfactory to the related Trustee,
materially and adversely affect the interests of any related Certificateholder.
Each Pooling and Servicing Agreement may also be amended by the Depositor, the
Servicer and the related Trustee with the consent of the holders of the related
Certificates evidencing not less than 51% of the related aggregate Certificate
Balance (and notional principal amount, if applicable) for the purpose of adding
any provisions to or changing in any manner or eliminating any of the provisions
of such Pooling and Servicing Agreement or of modifying in any manner the rights
of such Certificateholders; provided, however, that no such amendment may (i)
increase or reduce in any manner the amount of, or accelerate or delay the
timing of, collections of payments on or in respect of the related Receivables
or distributions that are required to be made for the benefit of such
Certificateholders or (ii) reduce the aforesaid percentage of the Certificate
Balance of such Series that is required to consent to any such amendment,
without the consent of the holders of all of the outstanding Certificates of
such Series. No amendment of a Pooling and Servicing Agreement shall be
permitted unless an opinion of counsel is delivered to the Trustee to the effect
that such amendment will not adversely affect the tax status of the Trust.
Termination
Unless otherwise specified in the related Prospectus Supplement, the
obligations of the Servicer, the Depositor and the related Trustee pursuant to
the related Pooling and Servicing Agreement will terminate upon the earliest to
occur of (i) the maturity or other liquidation of the last Receivable in the
related Receivables Pool and the disposition of any amounts received upon
liquidation of any such remaining Receivables and (ii) the payment to the
related Certificateholders of all amounts required to be paid to them pursuant
to the Pooling and Servicing Agreement.
Unless otherwise specified in the related Prospectus Supplement, in order
to avoid excessive administrative expenses, the Servicer or one or more other
entities identified in the related Prospectus Supplement, will be permitted, at
its option, to purchase from each Trust or to cause such Trust to sell all
remaining Receivables in the related Receivables Pool as of the end of any
Collection Period, if the Certificate Balance as of the Distribution Date
following such Collection Period would be less than or equal to 10% of the
initial Pool Balance, at a purchase price equal to the fair market value of such
Receivables, but not less than the sum of (x) the outstanding Pool Balance and
(y) accrued and unpaid interest on such amount computed at a rate equal to the
weighted average Contract Rate, minus any amount representing payments received
on the Receivables and not yet applied to reduce the principal balance thereof
or interest related thereto.
If and to the extent provided in the related Prospectus Supplement, the
related Trustee will, within ten days following a Distribution Date as of which
the Pool Balance is equal to or less than 10% of the original Pool Balance,
solicit bids for the purchase of the Receivables remaining in such Trust, in the
manner and subject to the terms and conditions set forth in such Prospectus
Supplement. If such Trustee receives satisfactory bids as described in such
Prospectus Supplement, then the Receivables remaining in such Trust will be sold
to the highest bidder.
CERTAIN LEGAL ASPECTS OF THE RECEIVABLES
Security Interest in Vehicles
Installment sale contracts such as those included in the Receivables
evidence the credit sale of automobiles, light trucks and vans by dealers to
obligors; the contracts and the installment loan and security agreements also
constitute personal property security agreements and include grants of security
interests in the vehicles under the UCC. Perfection of security interests in the
vehicles is generally governed by the motor vehicle registration laws of the
state in which the vehicle is located. In all of the States where UAC currently
acquires or originates Receivables, a security interest in a vehicle is
perfected by notation of the secured party's lien on the vehicle's certificate
of title. With respect to the Receivables, the lien is or will be perfected in
the name of one of the Named Lienholders. Each Receivable prohibits the sale or
transfer of the Financed Vehicle without the lienholder's consent.
Pursuant to each Purchase Agreement, UAFC will assign its security
interests in the Financed Vehicles to the Depositor along with the Receivables.
Pursuant to each Pooling and Servicing Agreement, the Depositor will assign its
security interests in the Financed Vehicles to the related Trustee along with
the Receivables. Because of the administrative burden and expense, neither the
Depositor nor the related Trustee will amend any certificate of title to
identify itself as the secured party.
In most states, an assignment such as that under a Pooling and
Servicing Agreement is an effective conveyance of a security interest without
amendment of any lien noted on a vehicle's certificate of title, and the
assignee succeeds thereby to the assignor's rights as secured party. In many
states in which the Receivables were originated, the laws governing certificates
of title are silent on the question of the effect of an assignment on the
continued validity and perfection of a security interest in vehicles. However,
with respect to security interests perfected by a central filing, the UCC in
these states provides that a security interest continues to be valid and
perfected even though the security interest has been assigned to a third party
and no amendments or other filings are made to reflect the assignment. An
official comment to the UCC states that this rule should control a security
interest in a vehicle which is perfected by the notation of the lien on the
certificate of title. Although the comment does not have the force of law,
official comments are typically given substantial weight by the courts.
The other states in which the Receivables were originated have
statutory provisions that address or could be interpreted as addressing
assignments. However, nearly all of these statutory provisions either do not
require compliance with the procedure outlined to insure the continued validity
and perfection of the lien or are ambiguous on the issue of whether the
procedure must be followed. Under the official comment noted above, if these
procedures for noting an assignee's name on a certificate of title are
determined to be merely permissive in nature, the procedures would not have to
be followed as a condition to the continued validity and perfection of the
security interest.
By not identifying the Trust as the secured party on the certificate of
title, the security interest of the Trust in the vehicle could be defeated
through fraud or negligence. In the absence of fraud or forgery by the vehicle
owner, one of the Named Lienholders or administrative error by state or local
agencies, the notation of the UAFC's or the Predecessor's lien on the
certificates should be sufficient to protect the Trust against the right of
subsequent purchasers of a vehicle or subsequent lenders who take a security
interest in a vehicle securing a Receivable. If there are any vehicles as to
which one of the Named Lienholders failed to obtain a perfected security
interest, its security interest would be subordinate to, among others,
subsequent purchasers of the vehicles and holders of perfected security
interests. Such a failure, however, would constitute a breach of warranties
under the related Pooling and Servicing Agreement and Purchase Agreement and
would create an obligation of UAC to repurchase the related Receivable, unless
such breach were cured in a timely manner. See "Description of the Transfer and
Servicing Agreements -- Sale and Assignment of Receivables."
Under the laws of most states, including most of the states in which
the Receivables have been or will be originated, the perfected security interest
in a vehicle continues for four months after a vehicle is moved to a state other
than the state which issued the certificate of title and thereafter until the
vehicle owner re-registers the vehicle in the new state. A majority of states
require surrender of a certificate of title to re-register a vehicle. Since UAFC
(or one of the other Named Lienholders) will have its lien noted on the
certificates of title and the Servicer will retain possession of the
certificates issued by most states in which Receivables were or will be
originated, the Servicer would ordinarily learn of an attempt at re-registration
through the request from the obligor to surrender possession of the certificate
of title or would receive notice of surrender from the state of re-registration
since the security interest would be noted on the certificate of title. Thus,
the secured party would have the opportunity to re-perfect its security interest
in the vehicle in the state of relocation. In states that do not require a
certificate of title for registration of a motor vehicle, re-registration could
defeat perfection.
In the ordinary course of servicing receivables, the Servicer takes
steps to effect re-perfection upon receipt of notice of re-registration or
information from the obligor as to relocation. Similarly, when an obligor sells
a vehicle, the Servicer must surrender possession of the certificate of title or
will receive notice as a result of the lien of UAFC (or one of the other Named
Lienholders) noted thereon and accordingly will have an opportunity to require
satisfaction of the related Receivable before release of the lien. Under each
Pooling and Servicing Agreement, the Servicer is obligated to take appropriate
steps, at its own expense, to maintain perfection of security interests in the
Financed Vehicles.
Under the laws of most states, liens for repairs performed on a motor
vehicle and liens for unpaid taxes would take priority over even a perfected
security interest in a Financed Vehicle. In some states, a perfected security
interest in a Financed Vehicle may take priority over liens for repairs.
UAC and UAFC will represent and warrant in each Purchase Agreement and
Pooling and Servicing Agreement that, as of the date of issuance of the
Certificates, each security interest in a Financed Vehicle is or will be prior
to all other present liens (other than tax liens and liens that arise by
operation of law) upon and security interests in such Financed Vehicle. However,
liens for repairs or taxes could arise at any time during the term of a
Receivable. No notice will be given to the Trustee or Certificateholders in the
event such a lien arises.
Repossession
In the event of a default by vehicle purchasers, the holder of a retail
installment sale contract or an installment loan and security agreement has all
of the remedies of a secured party under the UCC, except where specifically
limited by other state laws. The remedy employed by the Servicer in most cases
of default is self-help repossession and is accomplished simply by taking
possession of the Financed Vehicle. The self-help repossession remedy is
available under the UCC in most of the states in which Receivables have been or
will be originated as long as the repossession can be accomplished without a
breach of the peace.
In cases where the obligor objects or raises a defense to repossession,
or if otherwise required by applicable state law, a court order must be obtained
from the appropriate state court. The vehicle must then be repossessed in
accordance with that order.
Notice of Sale; Redemption Rights
In the event of default by an obligor, some jurisdictions require that
the obligor be notified of the default and be given a time period within which
the obligor may cure the default prior to repossession. Generally, this right of
reinstatement may be exercised on a limited number of occasions in any one-year
period.
The UCC and other state laws require the secured party to provide an
obligor with reasonable notice of the date, time and place of any public sale
and/or the date after which any private sale of the collateral may be held. The
obligor generally has the right to redeem the collateral prior to actual sale by
paying the secured party the unpaid principal balance of the obligation plus
reasonable expenses for repossessing, holding, and preparing the collateral for
disposition and arranging for its sale, and, to the extent provided in the
related retail installment sale contract, and, as permitted by law, reasonable
attorneys' fees.
Deficiency Judgments and Excess Proceeds
The proceeds of resale of the vehicles generally will be applied first
to the expenses of resale and repossession and then to the satisfaction of the
indebtedness. If the net proceeds from resale do not cover the full amount of
the indebtedness, a deficiency judgment may be sought. However, the deficiency
judgment would be a personal judgment against the obligor for the shortfall, and
a defaulting obligor can be expected to have very little capital or sources of
income available following repossession. Therefore, in many cases, it may not be
useful to seek a deficiency judgment or, if one is obtained, it may be settled
at a significant discount.
Occasionally, after resale of a vehicle and payment of all expenses and
all indebtedness, there is a surplus of funds. In that case, the UCC requires
the lender to remit the surplus to any holder of a lien with respect to the
vehicle or if no such lienholder exists, the UCC requires the lender to remit
the surplus to the former owner of the vehicle.
Consumer Protection Laws
Numerous federal and state consumer protection laws and related
regulations impose substantial requirements upon lenders and servicers involved
in consumer finance. These laws include the 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 Magnuson-Moss Warranty Act, the Federal Reserve Board's Regulations B
and Z, state adaptations of the National Consumer Act and of the Uniform
Consumer Credit Code and state motor vehicle retail installment sales acts, and
other similar laws. Also, state laws impose finance charge ceilings and other
restrictions on consumer transactions and require contract disclosures in
addition to those required under federal law. Those requirements impose specific
statutory liabilities upon creditors who fail to comply with their provisions.
In some cases, this liability could affect an assignee's ability to enforce
consumer finance contracts such as the Receivables.
The so-called "Holder-in-Due-Course" Rule of the Federal Trade
Commission (the "FTC Rule"), the provisions of which are generally duplicated by
the Uniform Consumer Credit Code, other state statutes, or the common laws in
certain states, has the effect of subjecting a seller (and certain related
lenders and their assignees) in a consumer credit transaction and any assignee
of the seller to all claims and defenses that the obligor in the transaction
could assert against the seller of the goods. Liability under the FTC Rule is
limited to the amounts paid by the obligor under the contract, and the holder of
the contract may also be unable to collect any balance remaining due thereunder
from the obligor. Most of the Receivables will be subject to the requirements of
the FTC Rule. Accordingly, the Trustee, as holder of the Receivables, will be
subject to any claims or defenses that the purchaser of the related financed
vehicle may assert against the seller of the vehicle. Such claims are limited to
a maximum liability equal to the amounts paid by the Obligor on the Receivable.
Under most state motor vehicle dealer licensing laws, dealers of motor
vehicles are required to be licensed to sell motor vehicles at retail sale. In
addition, with respect to used vehicles, the Federal Trade Commission's Rule on
Sale of Used Vehicles requires that all sellers of used vehicles prepare,
complete and display a "Buyer's Guide" which explains the warranty coverage for
such vehicles. Furthermore, Federal Odometer Regulations promulgated under the
Motor Vehicle Information and Cost Savings Act requires that all sellers of used
vehicles furnish a written statement signed by the seller certifying the
accuracy of the odometer reading. If a seller is not properly licensed or if
either a Buyer's Guide or Odometer Disclosure Statement was not provided to the
purchaser of the related financed vehicle, the obligor may be able to assert a
defense against the seller of the vehicle. If an Obligor were successful in
asserting any such claim or defense, such claim or defense would constitute a
breach of UAC's representations and warranties under each Purchase Agreement and
Pooling and Servicing Agreement and would create an obligation of UAC to
repurchase the Receivable unless such breach were cured in a timely manner. See
"Description of the Transfer and Servicing Agreements -- Sale and Assignment of
Receivables."
Courts have applied general equitable principles to secured parties
pursuing repossession or litigation involving deficiency balances. These
equitable principles may have the effect of relieving an obligor from some or
all of the legal consequences of a default.
In several cases, consumers have asserted that the self-help remedies
of secured parties under the UCC and related laws violate the due process
protections provided under the 14th Amendment to the Constitution of the United
States. Courts have generally upheld the notice provisions of the UCC and
related laws as reasonable or have found that the repossession and resale by the
creditor do not involve sufficient state action to afford constitutional
protection to consumers.
UAC will represent and warrant in each Purchase Agreement that each
Receivable complies with all requirements of law in all material respects.
Accordingly, if an Obligor has a claim against a Trust for violation of any law
and such claim materially and adversely affects the Trust's interest in a
Receivable, such violation would constitute a breach of UAC's representations
and warranties under the Purchase Agreement and would create an obligation of
UAC to repurchase such Receivable unless the breach were cured. See "Description
of the Transfer and Servicing Agreements -- Sale and Assignment of Receivables."
Other Limitations
In addition to the laws limiting or prohibiting deficiency judgments,
numerous other statutory provisions, including federal bankruptcy laws and
related state laws, may interfere with or affect the ability of a lender to
realize upon collateral or enforce a deficiency judgment. For example, in a
Chapter 13 proceeding under the federal bankruptcy law, a court may prevent a
lender from repossessing an automobile, and, as part of the rehabilitation plan,
reduce the amount of the secured indebtedness to the market value of the
automobile at the time of bankruptcy (as determined by the court), leaving the
party providing financing as a general unsecured creditor for the remainder of
the indebtedness. A bankruptcy court may also reduce the monthly payments due
under a contract or change the rate of interest and time of repayment of the
indebtedness.
Bankruptcy Matters
UAC and UAFC will represent and warrant to the Depositor in each
Purchase Agreement, and the Depositor will warrant to the related Trust in each
Pooling and Servicing Agreement, that the sales of the Receivables by UAC to
UAFC, by UAFC to the Depositor and by the Depositor to the Trust are valid sales
of the Receivables to UAFC, the Depositor and such Trust, respectively.
Notwithstanding the foregoing, if UAC, UAFC, UACFC or the Depositor were to
become a debtor in a bankruptcy case and a creditor or trustee-in-bankruptcy of
such debtor or such debtor itself were to take the position that the sale of
Receivables to UAFC, the Depositor or the Trust should instead be treated as a
pledge of such Receivables to secure a borrowing of such debtor, delays in
payments of collections of Receivables to Certificateholders could occur or
(should the court rule in favor of any such trustee, debtor or creditor)
reductions in the amounts of such payments could result. If the transfer of
Receivables to the Trust is treated as a pledge instead of a sale, a tax or
government lien on the property of UAC, UAFC or the Depositor arising before the
transfer of the related Receivables to such Trust may have priority over such
Trust's interest in such Receivables. If the transactions contemplated herein
are treated as a sale, the Receivables would not be part of the UAC's, UAFC's,
UACFC's or the Depositor's bankruptcy estate and would not be available to the
bankrupt entity's creditors.
The decision of the U.S. Court of Appeals for the Tenth Circuit,
Octagon Gas System, Inc. v. Rimmer (In re Meridian Reserve, Inc.) (decided May
27, 1993), contains language to the effect that under the UCC accounts sold by a
debtor would remain property of the debtor's bankruptcy estate, whether or not
the sale of the accounts was perfected. Although the Receivables constitute
chattel paper under the UCC, rather than accounts, Article 9 of the UCC applies
to the sale of chattel paper as well as the sale of accounts, and perfection of
a security interest in both chattel paper and accounts may be accomplished by
the filing of a UCC-1 financing statement. If, following a bankruptcy of UAC,
UAFC or the Depositor, a court were to follow the reasoning of the Tenth Circuit
reflected in the above case, then the Receivables could be included in the
bankruptcy estate of UAC, UAFC, UACFC or the Depositor, as applicable, and
delays in payments of collections on or in respect of the Receivables could
occur. UAC and UAFC will warrant to the Depositor in each Purchase Agreement,
and the Depositor will warrant to the Trust in each Pooling and Servicing
Agreement, that the sale of the related Receivables to the Depositor or the
related Trust is a sale of such Receivables to the Depositor and to the Trust,
respectively.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of certain federal income tax
consequences of the purchase, ownership and disposition of Certificates. The
summary does not purport to deal with federal income tax consequences applicable
to all categories of holders, some of which may be subject to special rules. For
example, its does not discuss the tax treatment of Certificateholders that are
insurance companies, regulated investment companies or dealers in securities.
Prospective investors are urged to consult their own tax advisors in determining
the federal, state, local, foreign and any other tax consequences to them of the
purchase, ownership and disposition of the Certificates.
The following summary is based upon current provisions of the Internal
Revenue Code of 1986, as amended (the "Code"), the Treasury regulations
promulgated thereunder and judicial or ruling authority, all of which are
subject to change, which change may be retroactive. Each Trust will be provided
with an opinion of federal tax counsel regarding certain federal income tax
matters discussed below. Such opinions, however, are not binding on the IRS or
the courts. No ruling on any of the issues discussed below will be sought from
the IRS. For purposes of the following summary, references to the Trust, the
Certificates and related terms, parties and documents shall be deemed to refer,
unless otherwise specified herein, to each Trust and the Certificates and the
related terms, parties and documents applicable to such Trust.
The federal income tax consequences to Certificateholders will vary
depending on whether the Trust is treated as a partnership under the Code and
applicable Treasury regulations or whether the Trust will be treated as a
grantor trust. The Prospectus Supplement for each Series of Certificates will
specify whether the Trust will be treated as a partnership or as a grantor
trust.
FASITs
Sections 860H through 860L of the Code provide for the creation of an
entity for federal income tax purposes, referred to as a "financial asset
securitization investment trust" ("FASIT"). These provisions were effective as
of September 1, 1997, but many technical issues concerning FASITs must be
addressed by Treasury regulations. To qualify as a FASIT, an entity must meet
certain requirements under Section 860L of the Code and must elect such
treatment. The applicable Pooling and Servicing Agreement may be amended in
accordance with the provisions thereof to provide that the Depositor and trustee
will cause a FASIT election to be made for the Trust if the Depositor delivers
to the trustee and the Certificate Insurer an opinion of counsel to the effect
that, for federal income tax purposes, (i) the deemed issuance of FASIT regular
interests (occuring in connection with such election) will not adversely affect
the federal income tax treatment of Certificates, (ii) following such election
such Trust will not be deemed to be an association (or publicly traded
partnership) taxable as a corporation and (iii) such election will not cause or
constitute an event in which gain or loss would be recognized by any
Certificateholder or the Trust.
TRUSTS TREATED AS PARTNERSHIPS
Tax Characterization of the Trust as a Partnership
A Trust which does not affirmatively elect to be treated as a
corporation will be treated as a partnership under applicable Treasury
regulations as long as there are two or more beneficial owners and will be
ignored as a separate entity where there is a single beneficial owner of all
classes of the related series. Federal Tax Counsel will deliver its opinion that
a Trust will not be an association (or publicly traded partnership) taxable as a
corporation for federal income tax purposes. This opinion will be based on the
assumption that the terms of the Pooling and Servicing Agreement and related
documents will be complied with, including the making of no affirmative election
to be treated as a corporation. Such counsel's opinion will also conclude that
the nature of the income of the Trust will exempt it from the rule that certain
publicly traded partnerships are taxable as corporations.
If a Trust were taxable as a corporation for federal income tax
purposes, it would be subject to corporate income tax on its taxable income. The
Trust's taxable income would include all of its income on the related
Receivables, less servicing fees and other deductible expenses. Any such
corporate income tax could materially reduce cash available to make
distributions on the Certificates, and beneficial owners of Certificates (the
"Certificate Owners") could be liable for any such tax that is unpaid by the
Trust.
Tax Consequences to Holders of the Certificates
Treatment of the Trust as a Partnership. The Depositor and the Servicer
will agree, and the related Certificate Owners will agree by their purchase of
Certificates, to treat the Trust as a partnership for purposes of federal and
state income tax, franchise tax and any other tax measured in whole or in part
by income, with the assets of the partnership being the assets held by the
Trust, the partners of the partnership being the Certificate Owners (including
the holder of the Class IC Certificate).
Partnership Taxation. As a partnership, the Trust will not be subject
to federal income tax. Rather, each Certificate Owner will be required to
separately take into account such holder's allocated share of income, gains,
losses, deductions and credits of the Trust. The Trust's income will consist
primarily of interest and finance charges earned on the related Receivables
(including appropriate adjustments for market discount, original issue discount
("OID") and bond premium) and any gain upon collection or disposition of such
Receivables. The Trust's deductions will consist primarily of servicing and
other fees, and losses or deductions upon collection or disposition of
Receivables.
The tax items of a partnership are allocable to the partners in
accordance with the Code, Treasury regulations and the partnership agreement
(i.e., the Pooling and Servicing Agreement and related documents). The Pooling
and Servicing Agreement will provide, in general, that the Certificate Owners
will be allocated taxable income of the Trust for each month equal to the sum
of: (i) the interest that accrues on the Certificates in accordance with their
terms for such month, including interest accruing at the related Pass-Through
Rate for such month and interest, if any, on amounts previously due on the
Certificates but not yet distributed; (ii) any Trust income attributable to
discount on the related Receivables that corresponds to any excess of the
principal amount of the Certificates over their initial issue price; (iii) any
other amounts of income payable to the Certificate Owners for such month; and
(iv) in the case of an individual, estate or trust, such Certificate Owner's
share of income corresponding to the miscellaneous itemized deductions described
in the next paragraph. Such allocation will be reduced by any amortization by
the Trust of premium on Receivables that corresponds to any excess of the issue
price of Certificates over their principal amount. Unless otherwise provided in
the related Prospectus Supplement, all remaining taxable income of the Trust
will be allocated to the Class IC Certificateholder. In the event the Trust
issues interest-only Class I Certificates, the amount allocated to such
Certificate Owners will equal the excess of (i) the Class I Pass-Through Rate
times the Notional Principal Amount for such month over (ii) the portion of the
amount distributed with respect to the Class I Certificates for such month that
would constitute a return of basis if the Class I Certificates constituted an
instrument described in Section 860G(a)(1)(B)(ii) of the Code, applying the
principles of Section 1272(a)(6) of the Code and employing the constant yield
method of accrual (utilizing the appropriate prepayment assumption); provided,
that no negative accruals shall be permitted, and, provided further, that other
deductions derived by the Trust equal to the aggregate remaining capital account
balances of the Class I Certificate Owners will be allocated to the Class I
Certificates in proportion to the respective capital account balances
immediately before the final redemption.
The portion of expenses of the Trust (including fees to the Servicer,
but not interest expense) allocated to taxpayers that are individuals, estates
or trusts would be miscellaneous itemized deductions to such taxpayers. Such
deductions might be disallowed to such taxpayers in whole or in part and might
result in such taxpayers being taxed on an amount of income that exceeds the
amount of cash actually distributed to such taxpayers over the life of the
Trust. Any net loss of the Trust will be allocated first to the Class IC
Certificateholder to the extent of its adjusted capital account then to the
other Certificate Owners in the priorities set forth in the Pooling and
Servicing Agreement to the extent of their respective adjusted capital accounts,
and thereafter to the Class IC Certificateholder.
The Trust intends to make all calculations relating to market discount
income and amortization of premium with respect to both Simple Interest
Receivables and Precomputed Receivables on an aggregate basis rather than a
Receivable-by-Receivable basis. If the IRS were to require that such
calculations be made separately for each Receivable, the Trust might be required
to incur additional expense, but it is believed that there would not be a
material adverse effect on Certificate Owners.
Discount and Premium. Except as otherwise provided in the related
Prospectus Supplement, it is believed that the Receivables were not issued with
OID, and, therefore, the Trust should not have OID income. However, the purchase
price paid by the Trust for the related Receivables may be greater or less than
the remaining principal balance of the Receivables at the time of purchase. If
so, the Receivables will have been acquired at a premium or discount, as the
case may be. (As indicated above, the Trust will make this calculation on an
aggregate basis, but might be required to recompute it on a
Receivable-by-Receivable basis.)
If the Trust acquires the related Receivables at a market discount or
premium, it will elect to include any such discount in income currently as it
accrues over the life of such Receivables or to offset any such premium against
interest income on such Receivables. As indicated above, a portion of such
market discount income or premium deduction may be allocated to Certificate
Owners.
Section 708 Termination. Under Section 708 of the Code, the Trust will
be deemed to terminate for federal income tax purposes if 50% or more of the
capital and profits interests in the Trust are sold or exchanged within a
12-month period. Under applicable Treasury regulations, such a 50% or greater
transfer would cause a deemed contribution of the assets of the Trust to a new
partnership in exchange for interests in the Trust. Such interests in a new
partnership would be deemed distributed to the partners of the Trust in
liquidation thereof, which would not constitute a sale or exchange. The Trust
will not comply with certain technical requirements that might apply when such a
constructive termination occurs. As a result, the Trust may be subject to
certain tax penalties and may incur additional expenses if it is required to
comply with those requirements. Furthermore, the Trust might not be able to
comply due to lack of data.
Disposition of Certificates. Generally, capital gain or loss will be
recognized on a sale of Certificates in an amount equal to the difference
between the amount realized and the seller's tax basis in the Certificates sold.
With respect to noncorporate Certificate Owners, such capital gain or loss will
be short-term, mid-term, or long-term, depending on whether the Grantor Trust
Certificate has been held for 12 months or less, more than 12 months but not
more than 18 months, or more than 18 months, respectively. (Long-term capital
gain tax rates provide a further reduction as compared with mid-term rates;
short-term capital gains are taxed at ordinary income tax rates.) A Certificate
Owner's tax basis in a Certificate will generally equal the holder's cost
increased by the holder's share of Trust income (includible in income) and
decreased by any distributions received with respect to such Certificate. In
addition, both the tax basis in the Certificates and the amount realized on a
sale of a Certificate would include the holder's share of the liabilities of the
Trust. A holder acquiring Certificates at different prices may be required to
maintain a single aggregate adjusted tax basis in such Certificates and, upon
sale or other disposition of some of the Certificates, to allocate a portion of
such aggregate tax basis to the Certificates sold (rather than maintaining a
separate tax basis in each Certificate for purposes of computing gain or loss on
a sale of that Certificate).
Any gain on the sale of a Certificate attributable to the holder's
share of unrecognized accrued market discount on the related Receivables would
generally be treated as ordinary income to the holder and would give rise to
special tax reporting requirements. The Trust does not expect to have any other
assets that would give rise to such special reporting requirements. Thus, to
avoid those special reporting requirements, the Trust will elect to include
market discount in income as it accrues.
If a Certificate Owner is required to recognize an aggregate amount of
income (not including income attributable to disallowed itemized deductions
described above) over the life of the Certificates that exceeds the aggregate
cash distributions with respect thereto, such excess will generally give rise to
a capital loss upon the retirement of the Certificates.
Allocations Between Transferors and Transferees. In general, the
Trust's taxable income and losses will be determined monthly and the tax items
for a particular calendar month will be apportioned among the Certificate Owners
in proportion to the principal amount of Certificates (or notional principal
amount, in the case of any interest only Certificates) owned by them as of the
close of the last day of such month. As a result, a holder purchasing
Certificates may be allocated tax items (which will affect its tax liability and
tax basis) attributable to periods before the actual transaction.
The use of such a monthly convention may not be permitted by existing
regulations. If a monthly convention is not allowed (or only applies to
transfers of less than all of the partner's interest), taxable income or losses
of the Trust might be reallocated among the Certificate Owners. The Class IC
Certificateholder, acting as tax matters partner for the Trust, will be
authorized to revise the Trust's method of allocation between transferors and
transferees to conform to a method permitted by future regulations.
Section 754 Election. In the event that a Certificate Owner sells its
Certificates at a profit (loss), the purchasing Certificate Owner will have a
higher (lower) basis in the Certificates than the selling Certificate Owner had.
The tax basis of the Trust's assets will not be adjusted to reflect that higher
(or lower) basis unless the Trust were to file an election under Section 754 of
the Code. In order to avoid the administrative complexities that would be
involved in keeping accurate accounting records, as well as potentially onerous
information reporting requirements, the Trust will not make such election. As a
result, Certificate Owners might be allocated a greater or lesser amount of
Trust income than would be appropriate based on their own purchase price for
Certificates.
Administrative Matters. The Trustee is required to keep or have kept
complete and accurate books of the Trust. Such books will be maintained for
financial reporting and tax purposes on an accrual basis, and the fiscal year of
the Trust is expected to be the calendar year. The Trustee will file a
partnership information return (IRS Form 1065) with the IRS for each taxable
year of the Trust and will report each Certificate Owner's allocable share of
items of Trust income and expense to holders and the IRS on Schedule K-1. The
Trust will provide the Schedule K-l information to nominees that fail to provide
the Trust with the information statement described below and such nominees will
be required to forward such information to the beneficial owners of the
Certificates. Generally, holders must file tax returns that are consistent with
the information return filed by the Trust or be subject to penalties unless the
holder notifies the IRS of all such inconsistencies.
Under Section 6031 of the Code, any person that holds Certificates as a
nominee at any time during a calendar year is required to furnish the Trust with
a statement containing certain information on the nominee, the beneficial owners
and the Certificates so held. Such information includes (i) the name, address
and taxpayer identification number of the nominee and (ii) as to each beneficial
owner (a) the name, address and identification number of such person, (b)
whether such person is a United States person, a tax-exempt entity or a foreign
government, an international organization, or any wholly owned agency or
instrumentality of either of the foregoing, and (c) certain information on
Certificates that were held, bought or sold on behalf of such person throughout
the year. In addition, brokers and financial institutions that hold Certificates
through a nominee are required to furnish directly to the Trust information as
to themselves and their ownership of Certificates. A clearing agency registered
under Section 17A of the Exchange Act is not required to furnish any such
information statement to the Trust. The information referred to above for any
calendar year must be furnished to the Trust on or before the following January
31. Nominees, brokers and financial institutions that fail to provide the Trust
with the information described above may be subject to penalties.
Unless otherwise specified in the related Prospectus Supplement, the
Class IC Certificateholder will be designated as the tax matters partner for
each Trust in the related Pooling and Servicing Agreement and, as such, will be
responsible for representing the Certificate Owners in any dispute with the IRS.
The Code provides for administrative examination of a partnership as if the
partnership were a separate and distinct taxpayer. Generally, the statute of
limitations for partnership items does not expire before three years after the
date on which the partnership information return is filed. Any adverse
determination following an audit of the return of the Trust by the appropriate
taxing authorities could result in an adjustment of the returns of the
Certificate Owners, and, under certain circumstances, a Certificate Owner may be
precluded from separately litigating a proposed adjustment to the items of the
Trust. An adjustment could also result in an audit of a Certificate Owner's
returns and adjustments of items not related to the income and losses of the
Trust.
Tax Consequences to Foreign Certificate Owners. Pursuant to a recent
change in the safe harbor provisions of Section 864(b)(2)(A) of the Code
(applicable to tax years beginning after December 31, 1997), foreign Certificate
Owners will not be considered to be engaged in a trade or business in the United
States for purposes of federal withholding taxes with respect to non-U.S.
persons solely as a result of owning or trading Certificates. As a result, the
Trust is not obligated to withhold on the portion of its taxable income that is
allocable to foreign Certificate Owners at regular graduated rates (35% for
foreign holders that are taxable as corporations and 39.6% for all other foreign
holders), unless such foreign Certificate Owners hold Certificates in connection
with the conduct of a U.S. trade or business.
Interest allocable to a foreign Certificate Owner that does not hold
Certificates in connection with the conduct of a U. S. trade or business will
not qualify for the exemption for portfolio interest under Section 871(h) of the
Code, because underlying receivables owned by the Trust are not in "registered
form" as that term is defined in applicable Treasury regulations. As a result,
foreign holders of Certificates will be subject to United States withholding tax
on interest or OID attributable to the underlying Receivables (whether or not
such amount is distributed) at a rate of 30 percent, unless reduced or
eliminated pursuant to an applicable treaty. Potential investors who are not
United States persons should consult their own tax advisors regarding the
specific tax consequences of owning a Certificate.
Backup Withholding. Distributions made on the Certificates and proceeds
from the sale of the Certificates will be subject to a "backup" withholding tax
of 31% if, in general, the Certificate Owner fails to comply with certain
identification procedures, unless the holder is an exempt recipient under
applicable provisions of the Code.
TRUSTS TREATED AS GRANTOR TRUSTS
Tax Characterization of Grantor Trusts
If specified in the related Prospectus Supplement, Federal Tax Counsel
will deliver its opinion that the Trust will not be classified as an association
taxable as a corporation and that such Trust will be classified as a grantor
trust under subpart E, Part I of subchapter J of the Code. In this case,
beneficial owners of Certificates (referred to herein as "Grantor Trust
Certificateholders") will be treated for federal income tax purposes as owners
of a portion of the Trust's assets as described below. The Certificates issued
by a Trust that is treated as a grantor trust are referred to herein as "Grantor
Trust Certificates".
Characterization. Each Grantor Trust Certificateholder will be treated
as the owner of a pro rata undivided interest in the interest and principal
portions of the Trust represented by the Grantor Trust Certificates and will be
considered the equitable owner of a pro rata undivided interest in each of the
Receivables in the Trust or, to the extent specified in the applicable
Prospectus Supplement, in one or more specified pools of Receivables within the
Trust. Any amounts received by a Grantor Trust Certificateholder in lieu of
amounts due with respect to any Receivable because of a default or delinquency
in payment will be treated for federal income tax purposes as having the same
character as the payments they replace.
Each Grantor Trust Certificateholder will be required to report on its
federal income tax return in accordance with such Grantor Trust
Certificateholder's method of accounting its pro rata share of the entire income
from the Receivables (or a specific pool thereof) in the Trust represented by
Grantor Trust Certificates, including interest, OID, if any, prepayment fees,
assumption fees, any gain recognized upon an assumption and late payment charges
received by the Servicer. Under Code Sections 162 or 212, each Grantor Trust
Certificateholder will be entitled to deduct its pro rata share of servicing
fees, prepayment fees, assumption fees and late payment charges retained by the
Servicer, provided that such amounts are reasonable compensation for services
rendered to the Trust. Grantor Trust Certificateholders that are individuals,
estates or trusts will be entitled to deduct their share of expenses only to the
extent such expenses plus all other Section 212 expenses exceed two percent of
their respective adjusted gross incomes. A Grantor Trust Certificateholder using
the cash method of accounting must take into account its pro rata share of
income and deductions as and when collected by or paid to the Servicer. A
Grantor Trust Certificateholder using an accrual method of accounting must take
into account its pro rata share of income and deductions as they become due or
are paid to the Servicer, whichever is earlier. If the servicing fees paid to
the Servicer are deemed to exceed reasonable servicing compensation, the amount
of such excess could be considered as an ownership interest retained by the
Servicer (or any person to whom the Servicer assigned for value all or a portion
of the servicing fees) in a portion of the interest payments on the Receivables.
The Receivables would then be subject to the "coupon stripping" rules of the
Code discussed below.
Stripped Bonds and Stripped Coupons
Although the tax treatment of stripped bonds is not entirely clear,
based on recent guidance by the IRS, it appears that each purchaser of a Grantor
Trust Certificate will be treated as the purchaser of a stripped bond which
generally should be treated as a single debt instrument issued on the day it is
purchased for purposes of calculating any original issue discount. Generally,
under recently issued Treasury regulations (the "Section 1286 Treasury
Regulations"), if the discount on a stripped bond is larger than a de minimis
amount (as calculated for purposes of the OID rules of the Code) such stripped
bond will be considered to have been issued with OID. For these purposes, OID is
the excess of the "stated redemption price at maturity" (generally, principal
and any interest which is not "qualified stated interest") of a debt instrument
over its issue price. See "-- Original Issue Discount" below. Based on the
preamble to the Section 1286 Treasury Regulations, Federal Tax Counsel is of the
opinion that, although the matter is not entirely clear, the interest income on
the Certificates at the sum of the Pass-Through Rate and the portion of the
Servicing Fee Rate that does not constitute excess servicing will be treated as
"qualified stated interest" within the meaning of the Section 1286 Treasury
Regulations and such income will be so treated in the Trustee's tax information
reporting. It is possible that the treatment described in this paragraph will
apply only to that portion of the Receivables in a particular trust as to which
there is "excess servicing" and that the remainder of such Receivables will not
be treated as stripped bonds, but as undivided interests as described above.
Unless indicated otherwise in the applicable Prospectus Supplement, it is not
anticipated that Grantor Trust Certificates will be issued with greater than de
minimis OID.
Original Issue Discount. The rules of the Code relating to OID
(currently Sections 1271 though 1273 and 1275) will be applicable to a person
comparable to a Grantor Trust Certificateholder that acquires an undivided
interest in a stripped bond issued or acquired with OID, and such person must
include in gross income the sum of the "daily portions," as defined below, of
the OID on such stripped bond for each day on which it owns a Certificate,
including the date of purchase but excluding the date of disposition. Because
payments on such stripped bonds may be accelerated by prepayments on the
underlying obligations, OID will be determined as required under Code Section
1272(a)(6). Pursuant to Code Section 1272(a)(6), OID accruals will be calculated
based on a constant interest method and a prepayment assumption indicated in
such Prospectus Supplement. In the case of an original Grantor Trust
Certificateholder, the daily portions of OID generally would be determined as
follows. A calculation will be made of the portion of OID that accrues on the
stripped bond during each successive monthly accrual period (or shorter period
in respect of the date of original issue or the final Distribution Date). This
will be done, in the case of each full monthly accrual period, by adding (i) the
present value of all remaining payments to be received on the stripped bond
under the prepayment assumption used in respect of the Grantor Trust
Certificates and (ii) any payments received during such accrual period, and
subtracting from the total the "adjusted issue price" of the stripped bond at
the beginning of such accrual period. No representation is made that the Grantor
Trust Certificates will prepay at any prepayment assumption. The "adjusted issue
price" of a stripped bond at the beginning of the first accrual period is its
issue price (as determined for purposes of the OID rules of the Code) and the
"adjusted issue price" of a stripped bond at the beginning of a subsequent
accrual period is the "adjusted issue price" at the beginning of the immediately
preceding accrual period plus the amount of OID allocable to that accrual period
and reduced by the amount of any payment (other than "qualified stated
interest") made at the end of or during that accrual period. The OID accruing
during such accrual period will then be divided by the number of days in the
period to determine the daily portion of OID for each day in the period. A
subsequent Grantor Trust Certificateholder will be required to adjust its OID
accrual to reflect its purchase price, the remaining period to maturity and,
possibly, a new prepayment assumption. The Servicer will report to all Grantor
Trust Certificateholders as if they were original holders.
With respect to the Receivables, the method of calculating OID as
described above will cause the accrual of OID to either increase or decrease
(but never below zero) in any given accrual period to reflect the fact that
prepayments are occurring at a faster or slower rate than the prepayment
assumption used in respect of the Receivables. Subsequent purchasers that
purchase Grantor Trust Certificates at more than a de minimis discount should
consult their tax advisors with respect to the proper method to accrue such OID.
Market Discount. A Grantor Trust Certificateholder that acquires an
undivided interest in Receivables may be subject to the market discount rules of
Sections 1276 though 1278 to the extent an undivided interest in a Receivable or
stripped bond is considered to have been purchased at a "market discount".
Generally, the amount of market discount is equal to the excess of the portion
of the principal amount of such Receivable or stripped bond allocable to such
holder's undivided interest over such holder's tax basis in such interest.
Market discount with respect to a Grantor Trust Certificate will be considered
to be zero if the amount allocable to the Grantor Trust Certificate is less than
0.25% of the Grantor Trust Certificate's stated redemption price at maturity
multiplied by the weighted average maturity remaining after the date of
purchase. Treasury regulations implementing the market discount rules have not
yet been issued; therefore, investors should consult their own tax advisors
regarding the application of these rules and the advisability of making any of
the elections allowed under Code Section 1276 and 1278.
The Code provides that any principal payment (whether a scheduled
payment or a prepayment) or any gain or disposition of a market discount bond
shall be treated as ordinary income to the extent that it does not exceed the
accrued market discount at the time of such payment. The amount of accrued
market discount for purposes of determining the tax treatment of subsequent
principal payments or dispositions of the market discount bond is to be reduced
by the amount so treated as ordinary income.
The Code also grants the Treasury Department authority to issue
regulations providing for the computation of accrued market discount on debt
instruments, the principal of which is payable in more than one installment.
While the Treasury Department has not yet issued regulations, rules described in
the relevant legislative history will apply. Under those rules, the holder of a
market discount bond may elect to accrue market discount either on the basis of
a constant interest rate or according to one of the following methods. If a
Grantor Trust Certificate is issued with OID, the amount of market discount that
accrues during any accrual period would be equal to the product of (i) the total
remaining market discount and (ii) a fraction, the numerator of which is the OID
accruing during the period and the denominator of which is the total remaining
OID at the beginning of the accrual period. For Grantor Trust Certificates
issued without OID, the amount of market discount that accrues during a period
is equal to the product of (i) the total remaining market discount and (ii) a
fraction, the numerator of which is the amount of stated interest paid during
the accrual period and the denominator of which is the total amount of stated
interest remaining to be paid at the beginning of the accrual period. For
purposes of calculating market discount under any of the above methods in the
case of instruments (such as the Grantor Trust Certificates) that provide for
payments that may be accelerated by reason of prepayments of other obligations
securing such instruments, the same prepayment assumption applicable to
calculating the accrual of OID will apply. Because the regulations described
above have not been issued, it is impossible to predict what effect those
regulations might have on the tax treatment of a Grantor Trust Certificate
purchased at a discount or premium in the secondary market.
A holder who acquired a Grantor Trust Certificate at a market discount
also may be required to defer a portion of its interest deductions for the
taxable year attributable to any indebtedness incurred or continued to purchase
or carry such Grantor Trust Certificate purchased with market discount. For
these purposes, the de minimis rule referred to above applies. Any such deferred
interest expense would not exceed the market discount that accrues during such
taxable year and is, in general, allowed as a deduction not later than the year
in which such market discount is includible in income. If such holder elects to
include market discount in income currently as it accrues on all market discount
instruments acquired by such holder in that taxable year or thereafter, the
interest deferral rule described above will not apply.
Premium. To the extent a Grantor Trust Certificateholder is considered
to have purchased an undivided interest in a Receivable or stripped bond for an
amount that is greater than its stated redemption price at maturity of such
Receivable or stripped bond, such Grantor Trust Certificateholder will be
considered to have purchased the Receivable with "amortizable bond premium"
equal in amount to such excess. A Grantor Trust Certificateholder (who does not
hold the Certificate for sale to customers or in inventory) may elect under
Section 171 of the Code to amortize such premium. Under the Code, premium is
allocated among the interest payments on the Receivables or stripped bonds to
which it relates and is considered as an offset against (and thus a reduction
of) such interest payments. With certain exceptions, such an election would
apply to all debt instruments held or subsequently acquired by the electing
holder. Absent such an election, the premium will be deductible as an ordinary
loss only upon disposition of the Certificate or pro rata as principal is paid
on the Receivables or stripped bonds.
Election to Treat All Interest as OID. The OID regulations permit a
Grantor Trust Certificateholder to elect to accrue all interest, discount
(including de minimis market discount or original issue discount) and premium in
income as interest, based on a constant yield method. If such an election were
to be made with respect to a Grantor Trust Certificate with market discount, the
Certificate Owner would be deemed to have made an election to include in income
currently market discount with respect to all other debt instruments having
market discount that such Grantor Trust Certificateholder acquires during the
year of the election or thereafter. Similarly, a Grantor Trust Certificateholder
that makes this election for a Grantor Trust Certificate that is acquired at a
premium will be deemed to have made an election to amortize bond premium with
respect to all debt instruments having amortizable bond premium that such
Grantor Trust Certificateholder owns or acquires. See "-- Premium" herein. The
election to accrue interest, discount and premium on a constant yield method
with respect to a Grantor Trust Certificate is irrevocable.
Sale or Exchange of a Grantor Trust Certificate. Sale or exchange of a
Grantor Trust Certificate prior to its maturity will result in gain or loss
equal to the difference, if any, between the amount received and the owner's
adjusted basis in the Grantor Trust Certificate. Such adjusted basis generally
will equal the seller's purchase price for the Grantor Trust Certificate,
increased by the OID and any market discount included in the seller's gross
income with respect to the Grantor Trust Certificate, and reduced by any market
premium amortized by the Depositor and by principal payments on the Grantor
Trust Certificate previously received by the seller. Such gain or loss will be
capital gain or loss to an owner for which a Grantor Trust Certificate is a
"capital asset" within the meaning of Section 1221 (except in the case of gain
attributable to accrued market discount, as noted above under "--Market
Discount") and, with respect to noncorporate owners, will be short-term,
mid-term, or long-term, depending on whether the Grantor Trust Certificate has
been held for 12 months or less, more than 12 months but not more than 18
months, or more than 18 months, respectively. (Long-term capital gain tax rates
provide a further reduction as compared with mid-term rates; short-term capital
gains are taxed at ordinary income tax rates.)
Grantor Trust Certificates will be "evidences of indebtedness" within
the meaning of Section 582(c)(1), so that gain or loss recognized from the sale
of a Grantor Trust Certificate by a bank or a thrift institution to which such
section applies will be treated as ordinary income or loss.
Non-U.S. Persons. Interest or OID paid to non-U.S. Owners of Grantor
Trust Certificates will be treated as "portfolio interest" for purposes of
United States withholding tax. Such interest (including OID, if any)
attributable to the underlying Receivables will not be subject to the normal 30%
(or such lower rate provided for by an applicable tax treaty) withholding tax
imposed on such amounts provided that (i) the Non-U.S. Certificate Owner is not
a "10% shareholder" (within the definition of Section 871(h)(3)) of any obligor
on the Receivables; and is not a controlled foreign corporation (within the
definition of Section 957) related to any Obligor on the Receivables and (ii)
such Certificate Owner fulfills certain certification requirements. Under these
requirements, the Certificate Owner must certify, under penalty of perjury, that
it is not a "United States person" and must provide its name and address. For
this purpose "United States person" means a citizen or resident of the United
States, a corporation, partnership (except to the extent provided in applicable
Treasury regulations), or other entity created or organized in or under the laws
of the United States or any political subdivision thereof, or an estate that is
subject to U.S. federal income tax regardless of the source of its income or a
trust if a court within the United States is able to exercise primary
supervision over the administration of such trust, and one or more such United
States persons have the authority to control all substantial decisions of such
trust (or, to the extent provided in applicable Treasury regulations, certain
trusts in existence on August 20, 1996, which are eligible to and elect to be
treated as United States persons). If, however, such interest or gain is
effectively connected to the conduct of a trade or business within the United
States by such Certificate Owner, such owner will be subject to United States
federal income tax thereon at graduated rates. Potential investors who are not
United States persons should consult their own tax advisors regarding the
specific tax consequences of owning a Certificate.
Information Reporting and Backup Withholding. The Servicer will furnish
or make available, within a reasonable time after the end of each calendar year,
to each person who was a Grantor Trust Certificateholder at any time during such
year, such information as may be deemed necessary or desirable to assist Grantor
Trust Certificateholders in preparing their federal income tax returns, or to
enable holders to make such information available to beneficial owners or
financial intermediaries that hold Grantor Trust Certificates as nominees on
behalf of beneficial owners. If a holder, beneficial owner, financial
intermediary or other recipient of a payment on behalf of a beneficial owner
fails to supply a certified taxpayer identification number or if the Secretary
of the Treasury determines that such person has not reported all interest and
dividend income required to be shown on its federal income tax return, 31%
backup withholding may be required with respect to any payments. Any amounts
deducted and withheld from a distribution to a recipient would be allowed as a
credit against such recipient's federal income tax liability.
***
THE FEDERAL TAX DISCUSSIONS SET FORTH ABOVE ARE INCLUDED FOR GENERAL
INFORMATION ONLY AND MAY NOT BE APPLICABLE DEPENDING UPON A CERTIFICATEHOLDER'S
PARTICULAR TAX SITUATION. PROSPECTIVE PURCHASERS OF CERTIFICATES SHOULD CONSULT
THEIR TAX ADVISORS WITH RESPECT TO THE TAX CONSEQUENCES TO THEM OF THE PURCHASE,
OWNERSHIP AND DISPOSITION OF CERTIFICATES, INCLUDING THE TAX CONSEQUENCES UNDER
STATE, LOCAL AND FOREIGN AND OTHER TAX LAWS AND THE POSSIBLE EFFECTS OF CHANGES
IN FEDERAL OR OTHER TAX LAWS.
ERISA CONSIDERATIONS
Section 406 of ERISA, and Section 4975 of the Code prohibit a pension,
profit sharing or other employee benefit plan, as well as individual retirement
accounts and certain types of Keogh Plans (each, a "Plan"), from engaging in
certain transactions involving "plan assets" with persons that are "parties in
interest" under ERISA or "disqualified persons" under the Code with respect to
the Plan. ERISA also imposes certain duties on persons who are fiduciaries of
Plans subject to ERISA and prohibits certain transactions between a Plan and
parties in interest with respect to such Plans. Under ERISA, any person who
exercises any authority or control with respect to the management or disposition
of the assets of a Plan is considered to be a fiduciary of such Plan (subject to
certain exceptions not here relevant). A violation of these "prohibited
transaction" rules may generate excise tax and other liabilities under ERISA and
the Code for such persons.
Certain transactions involving a Trust might be deemed to constitute
prohibited transactions under ERISA and the Code with respect to a Benefit Plan
that purchased Certificates if assets of the Trust were deemed to be assets of
the Benefit Plan. Under a regulation issued by the United States Department of
Labor (the "Plan Assets Regulations"), the assets of a Trust would be treated as
plan assets of a Benefit Plan for the purposes of ERISA and the Code only if the
Benefit Plan acquired an "equity interest" in the Trust and none of the
exceptions contained in the Plan Assets Regulation was applicable. An equity
interest is defined under the Plan Assets Regulation as an interest other than
an instrument that is treated as indebtedness under applicable local law and
which has no substantial equity features. The likely treatment in this context
of Certificates of a given Series will be discussed in the related Prospectus
Supplement.
Employee benefit plans that are governmental plans (as defined in
Section 3(32) of ERISA) and certain church plans (as defined in Section 3(33) of
ERISA) are not subject to ERISA requirements.
A plan fiduciary considering the purchase of Certificates of a given
Series should consult its tax and/or legal advisors regarding whether the assets
of the related Trust would be considered plan assets, the possibility of
exemptive relief from the prohibited transaction rules and other issues and
their potential consequences.
The U.S. Department of Labor has granted to the underwriter (or in the
case of series offered by more than one underwriter, the lead underwriter) named
in each Prospectus Supplement an exemption (the "Exemption") from certain of the
prohibited transaction rules of ERISA with respect to the initial purchase, the
holding and the subsequent resale by Benefit Plans of certificates representing
interests in asset-backed pass-through trusts that consist of certain
receivables, loans and other obligations that meet the conditions and
requirements of the Exemption. The receivables covered by the Exemption include
motor vehicle installment sales contracts such as the Receivables. The Exemption
will apply to the acquisition, holding and resale of nonsubordinated
Certificates (referred to herein as "Senior Certificates") by a Plan, provided
that certain conditions (certain of which are described below) are met.
Among the conditions that must be satisfied for the Exemption to apply
to the Senior Certificates are the following:
(1) The Trust is considered to consist solely of obligations which bear
interest or are purchased at a discount and which are secured by motor vehicles
or equipment, or "qualified motor vehicle leases" (as defined in the Exemption),
property that had secured such obligations or qualified motor vehicle leases,
cash or temporary investments maturing no later than the next date on which
distributions are to be made to the Senior Certificate Owners, and rights of the
Trustee under the Pooling and Servicing Agreement and under credit support
arrangements with respect to such obligations or qualified motor vehicle leases.
(2) The acquisition of the Senior Certificates by a Plan is on terms
(including the price for the Senior Certificates) that are at least as favorable
to the Plan as they would be in an arm's length transaction with an unrelated
party;
(3) The rights and interests evidenced by the Senior Certificates
acquired by the Plan are not subordinated to the rights and interests evidenced
by other certificates of the Trust;
(4) The Senior Certificates acquired by the Plan have received a rating
at the time of such acquisition that is in one of the three highest generic
rating categories from either Standard & Poor's Ratings Group, Moody's Investors
Service, Inc., Duff & Phelps Credit Rating Co. or Fitch Investors Service, L.P.;
(5) The related Trustee is not an affiliate of any other member of the
Restricted Group (as defined below);
(6) The sum of all payments made to the underwriters in connection with
the distribution of the Senior Certificates represents not more than reasonable
compensation for underwriting the Senior Certificates; the sum of all payments
made to and retained by the Depositor pursuant to the sale of the Contracts to
the related Trust represents not more than the fair market value of such
Contracts; and the sum of all payments made to and retained by the Servicer
represents not more than reasonable compensation for the Servicer's services
under the related Pooling and Servicing Agreement and reimbursement of the
Servicer's reasonable expenses in connection therewith; and
(7) The Plan investing in the Senior Certificates is an "accredited
investor" as defined in Rule 501(a)(1) of Regulation D of the Commission under
the Securities Act of 1933, as amended.
Moreover, the Exemption would provide relief from certain
self-dealing/conflict of interest or prohibited transactions only if, among
other requirements, (i) in the case of the acquisition of Senior Certificates in
connection with the initial issuance, at least fifty percent of the Senior
Certificates are acquired by persons independent of the Restricted Group (as
defined below), (ii) the Benefit Plan's investment in Senior Certificates does
not exceed twenty-five percent of all of the Senior Certificates outstanding at
the time of the acquisition and (ii) immediately after the acquisition, no more
than twenty-five percent of the assets of the benefit Plan are invested in
certificates representing an interest in one or more trusts containing assets
sold or serviced by the same entity. The Exemption does not apply to Plans
sponsored by the Depositor, any underwriter, the related Trustee, the Servicer,
any obligor with respect to Contracts included in the related Trust constituting
more than five percent of the aggregate unamortized principal balance of the
assets in the Trust, or any affiliate of such parties (the "Restricted Group").
As mentioned above, whether or not the Exemption will apply to the
purchase and holding of Senior Certificates by Plans will depend on, among other
things, whether the Trust consists solely of permitted assets. The Exemption
provides that a Trust may include, among other assets, undistributed cash or
temporary investments made therewith maturing no later than the next date on
which distributions are to be made to Certificateholders. There can be no
assurance that the cash or Eligible Investments in the Cash Collateral Account
and the Yield Supplement Account or the cash or Eligible Investments in the
Pre-Funding Account or any pre-funding reserve account held by the Trust would
meet this definition, and not render the Exemption inapplicable. In view of the
foregoing, any Plan fiduciary who proposes to cause a Plan to purchase Senior
Certificates should consult with its own counsel with respect to the
applicability of the Exemption and should determine whether all of the
conditions of the Exemption have been satisfied.
PLAN OF DISTRIBUTION
On the terms and conditions set forth in an underwriting agreement with
respect to a given Series (the "Underwriting Agreement"), the Depositor will
agree to cause the related Trust to sell to the underwriters named therein and
in the related Prospectus Supplement, and each of such underwriters will
severally agree to purchase, the principal amount of each class of Certificates
of the related Series set forth therein and in the related Prospectus
Supplement.
In each Underwriting Agreement, the several underwriters will agree,
subject to the terms and conditions set forth therein, to purchase all of the
Certificates described therein that are offered hereby and by the related
Prospectus Supplement if any of such Certificates are purchased.
Each Prospectus Supplement will either (i) set forth the price at which
each class of Certificates being offered thereby will be offered to the public
and any concessions that may be offered to certain dealers participating in the
offering of such Certificates or (ii) specify that the related Certificates are
to be resold by the underwriters in negotiated transactions at varying prices to
be determined at the time of such sale. After the initial public offering of any
such Certificates, such public offering prices and such concessions may be
changed.
Each Underwriting Agreement will provide that UAC and the Depositor
will indemnify the related underwriters against certain civil liabilities,
including liabilities under the Securities Act, or contribute to payments the
several underwriters may be required to make in respect thereof.
Each Trust may, from time to time, invest the funds in the related
Accounts in Eligible Investments acquired from such underwriters.
Pursuant to each Underwriting Agreement, the closing of the sale of any
class of Certificates subject thereto will be conditioned on the closing of the
sale of all other classes of Certificates of such Series.
The place and time of delivery for the Certificates in respect of which
this Prospectus is delivered will be set forth in the related Prospectus
Supplement.
LEGAL MATTERS
Certain legal matters relating to the Certificates of any Series will
be passed upon for the related Trust, the Depositor and the Servicer by Barnes &
Thornburg, Indianapolis, Indiana, and for the underwriters by Cadwalader,
Wickersham & Taft, New York, New York or such other firm as shall be identified
in the related Prospectus Supplement. Certain federal income tax and other
matters will be passed upon for each Trust by Cadwalader, Wickersham & Taft,
Barnes & Thornburg or such other firm as shall be identified in the related
Prospectus Supplement.
INDEX OF PRINCIPAL TERMS
Set forth below is a list of certain of the more significant terms used in
this Prospectus and the pages on which the definitions of such terms may be
found herein.
TERM PAGE
Actuarial Receivables........................................... 16
Advance ...................................................... 7
Approved Rating................................................. 24
Cash Collateral Account......................................... 27
Cede .......................................................... 13
Certificate Account ........................................... 23
Certificate Balance .......................................... 5
Certificate Owners ............................................20, 35
Certificate Pool Factor ....................................... 17
Certificateholders .......................................... 6, 14
Certificates ................................................. 1
Class Certificate Balance .................................... 3
Closing Date .................................................. 5
Code .......................................................... 34
Collection Period ............................................. 7
Commission ................................................... 2
Contracts....................................................... 5
Contract Rate................................................... 7
Cutoff Date .................................................. 4
Dealers ...................................................... 4
Definitive Certificates ....................................... 20
Depositor....................................................... 3
Distribution Date ............................................. 19
DTC ........................................................... 13
Eligible Deposit Account ..................................... 25
Eligible Institution ......................................... 25
Eligible Investments .......................................... 24
ERISA ......................................................... 9
Events of Default ............................................. 28
Exchange Act.................................................... 2
Exemption....................................................... 42
FASIT........................................................... 34
Federal Tax Counsel............................................. 9
Final Scheduled Distribution Date............................... 25
Final Scheduled Maturity Date ................................ 7
Financed Vehicles ............................................. 4
FTC Rule ...................................................... 32
Funding Period ............................................... 5
Grantor Trust Certificates .................................... 38
Grantor Trust Certificateholders................................ 38
Indirect Participants ........................................ 20
Interest Shortfall.............................................. 7
Investment Income............................................... 24
IRS ........................................................... 36
Named Lienholder or Named Lienholders........................... 8
Obligor ...................................................... 7
OID .......................................................... 34
Participants ................................................. 20
Pass-Through Rate ........................................... 3
Payaheads....................................................... 16
Payahead Account ............................................. 23
PFC............................................................. 45
Plan .......................................................... 42
Plan Assets Regulations......................................... 42
Pooling and Servicing Agreement .............................. 3
Pool Balance.................................................... 8
Precomputed Receivables ...................................... 16
Predecessor..................................................... 5
Pre-Funded Amount ........................................... 5
Pre-Funding Account ......................................... 5, 24
Prospectus Supplement ........................................ 1
Purchase Agreement.............................................. 5
Purchase Amount ............................................... 23
Purchased Receivable............................................ 23
Rating Agency ................................................ 9
Receivables ................................................. 1, 4
Receivables Pool .............................................. 13
Registration Statement ....................................... 2
Restricted Group................................................ 43
Rules ........................................................ 20
Rule of 78's Receivables........................................ 16
Section 1286 Treasury Regulations............................... 39
Senior Certificates ............................................ 43
Series ....................................................... 1
Servicer ..................................................... 3
Servicing Fee ................................................ 26
Servicing Fee Rate ............................................ 26
Simple Interest Receivables ................................... 16
Spread Account.................................................. 27
Strip Certificates ........................................... 3
Subsequent Receivables ...................................... 5
Subsequent Transfer Date ....................................... 10
Third Party Originator or Third Party Originators............... 5
Transfer and Servicing Agreements .............................. 22
Trust ....................................................... 1
Trust Accounts ............................................... 24
Trustee ..................................................... 3
UAC............................................................. 3
UACFC........................................................... 5
UAFC............................................................ 4
UCC .......................................................... 20
Underwriting Agreement ........................................ 44
<PAGE>
No dealer, salesman, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus Supplement and the Prospectus in connection with the offer contained
herein, and, if given or made, such information or representations must not be
relied upon as having been authorized by the Depositor, the Servicer or the
Underwriters. This Prospectus Supplement and the Prospectus do not constitute an
offer to sell or a solicitation of an offer to buy any of the securities offered
hereby in any jurisdiction to any person to whom it is unlawful to make such
offer or solicitation in such jurisdiction. The delivery of this Prospectus
Supplement and the Prospectus at any time does not imply that the information
herein or therein is correct as of any time subsequent to the date hereof.
TABLE OF CONTENTS
Page
Prospectus Supplement
Reports to Certificateholders........................................... S-2
Summary of Terms........................................................ S-3
Risk Factors ........................................................... S-12
Formation of the Trust ................................................ S-13
The Receivables Pool.................................................... S-14
Yield and Prepayment Considerations..................................... S-18
The Depositor and UAC ................................................. S-19
The Insurer............................................................. S-19
The Offered Certificates .............................................. S-21
ERISA Considerations.................................................... S-30
Underwriting............................................................ S-30
Legal Opinions.......................................................... S-31
Experts................................................................. S-31
Index of Principal Terms ............................................... S-32
Financial Statements of the
Insurer.............................................................. F-1
Prospectus
Available Information ............................................... 2
Incorporation of Certain Documents
by Reference......................................................... 2
Summary of Terms........................................................ 3
Risk Factors............................................................ 10
The Trusts.............................................................. 13
The Receivables Pools................................................... 14
Weighted Average Life of the Certificates............................... 16
Pool Factors and Other
Certificate Information.............................................. 17
Use of Proceeds......................................................... 17
Union Acceptance Corporation and Affiliates............................. 18
Description of the Certificates......................................... 18
Description of the Transfer
and Servicing Agreements............................................. 22
Certain Legal Aspects of the Receivables................................ 29
Certain Federal Income Tax Consequences................................. 33
ERISA Considerations.................................................... 42
Plan of Distribution.................................................... 43
Legal Matters........................................................... 44
Index of Principal Terms................................................ 45
<PAGE>
$--------------------
UACSC [Year] -__ Auto Trust
$---------------
_____% Class A-1 Money Market
Automobile Receivable Backed Certificates
$---------------
_____% Class A-2 Automobile
Receivable Backed Certificates
$---------------
_____% Class A-3 Automobile
Receivable Backed Certificates
$---------------
_____% Class A-4 Automobile
Receivable Backed Certificates
$---------------
_____% Class A-5 Automobile
Receivable Backed Certificates
Class I Interest Only Automobile
Receivable Backed Certificates
Union Acceptance Corporation
Servicer
UAC Securitization Corporation
Depositor
[LOGO]
Underwriters of the Class A Certificates
Underwriter of the Class I Certificates
Prospectus Supplement
Dated _____________
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
Expenses in connection with the offering of the Certificates being
registered herein are estimated as follows:
* SEC registration fee ..................................... $
* Legal fees and expenses ..................................
* Accounting fees and expenses .............................
* Blue sky fees and expenses ...............................
* Rating agency fees .......................................
* Trustees' fees and expenses ..............................
* Printing .................................................
* Miscellaneous ............................................
----------
Total................................................. $
------------
* To be provided by amendment
- ------------
Item 15. Indemnification of Directors and Officers.
Section 145 of the Delaware General Corporation Law provides that a
Delaware corporation may indemnify any persons, including officers and
directors, who are, or are threatened to be made, parties to any threatened,
pending or completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such claim, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he or she reasonably believed to be
in or not opposed to the corporation's best interests, and, for criminal
proceedings, had no reasonable cause to believe that his or her conduct was
illegal. A Delaware corporation may indemnify officers and directors in an
action by or in the right of the corporation under the same conditions, except
that no indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify such officer or director
against the expenses that such officer or director actually and reasonably
incurred.
The Bylaws of UAC Securitization Corporation provide for indemnification of
officers and directors to the full extent permitted by the Delaware General
Corporation Law.
The Pooling and Servicing Agreement provides that the Servicer, any
subservicer and the partners, directors, officers, employees or agents of any of
them will be entitled to indemnification by the Trust and will be held harmless
against any loss, liability or expense incurred in connection with any legal
action relating to the Pooling and Servicing Agreement or the Certificates,
other than any loss, liability or expense incurred by reason of willful
misfeasance, bad faith or gross negligence in the performance of such persons
duties thereunder or by reason of reckless disregard of such persons obligations
and duties thereunder.
II-1
<PAGE>
Item 16. Exhibits.
1 Underwriting Agreement Standard Provisions for UACSC
Trusts
3 Certificate of Incorporation and Bylaws of UAC
Securitization Corporation (incorporated by reference to
Exhibit 3 to Form S-3 of UACSC 1995-A Grantor Trust, Reg.
No. 33- 88352)
4.1(a) Form of Pooling and Servicing Agreement for Grantor
Trusts including form of Certificates (incorporated by
reference to Exhibit 4.1(a) to Form S-3 Amendment No. 1
of UACSC Auto Trusts, Reg. No. 33-97320)
4.1(b) Form of Standard Terms and Conditions of UACSC Grantor
Trusts (incorporated by reference to Exhibit 4.1(b) to
Form S-3 Amendment No. 1 of UACSC Auto Trusts, Reg. No.
33- 97320)
4.2 Form of Pooling and Servicing Agreement for trusts other
than Grantor Trusts, including form of Certificates
* 5(a) Opinion of Barnes & Thornburg with respect to
legality of the Certificates, dated ______________
* 5(b) Opinion of Cadwalader, Wickersham & Taft with respect
to legality of the Certificates, dated ____________
* 8 Opinion of Cadwalader, Wickersham & Taft with respect
to tax matters, dated _____________
10 Form of Purchase Agreement
* 23(a) Consent of Barnes & Thornburg (included in Exhibit 5.(a))
* 23(b) Consent of Cadwalader, Wickersham & Taft (included in
Exhibit 5(b))
* 23(c) Consent of Cadwalader, Wickersham & Taft (included in
Exhibit 8)
24 Power of Attorney (included on page II-4)
- ----------------------
* To be provided by amendment
Item 17. Undertakings.
The undersigned Registrant hereby undertakes as follows:
(a) To file during any period in which offers or sales are being made,
a post-effective amendment to this registration statement to include any
material information with respect to the plan of distribution not
previously disclosed in the registration statement or any material change
to such information in the registration statement.
(b) That, for the purpose of determining any liability under the
Securities Act of 1933, as amended (the "Securities Act"), each such
post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
(c) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
(d) For purposes of determining any liability under the Securities Act,
each filing of the Registrant's annual reports pursuant to Section 13(a) or
Section 15(d) of the Certificates Exchange Act of 1934 that is incorporated
by reference in the registration statement shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-2
<PAGE>
(e) To provide to the Underwriters at the closing specified in the
Underwriting Agreements certificates in such denominations and registered
in such names as required by the Underwriters to provide prompt delivery to
each purchaser.
(f) Insofar as indemnification for liabilities arising under the
Securities Act may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the foregoing provisions, or
otherwise, the Registrant has been advised that in the opinion of the
Securities and Exchange Commission (the "Commission") such indemnification
is against public policy as expressed in the Securities Act and is,
therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of
expenses incurred or paid by a director, officer or controlling person of
the Registrant in the successful defense of any action, suit or proceeding)
is asserted by such director, officer or controlling person in connection
with the securities being registered, the Registrant will, unless in the
opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question
whether such indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication of such
issue.
(g) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of this
registration statement in reliance upon Rule 430A and contained in a form
of prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(h) For the purpose of determining any liability under the Securities
Act, each post-effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
II-3
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3, and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in the City of Bonita Springs, State of Florida, on May 7, 1998.
UAC SECURITIZATION CORPORATION
as Depositor
(Registrant)
By /s/ Thomas M. West
-------------------------------
Thomas M. West
President
POWER OF ATTORNEY
Each person whose signature appears below hereby authorizes Thomas M. West
and Leeanne W. Graziani, and each of them, to file one or more amendments
(including post-effective amendments) to be the registration statement, which
amendments may make such changes in the registration statement as either of them
deem appropriate, and each such person hereby appoints Thomas M. West and
Leeanne W. Graziani, and each of them, as attorney-in-fact to execute in the
name and on the behalf of each person individually, and in each capacity stated
below, and such amendments to the registration statement.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates indicated.
UAC SECURITIZATION CORPORATION Date: May 7, 1998
Signature Title
---------------------- ------------------------
/s/ Thomas M. West President and Director
----------------------------- (Principal Executive Officer)
Thomas M. West
/s/ Leeanne W. Graziani
----------------------------- Assistant Treasurer (Principal
Leeanne W. Graziani Financial and Accounting
Officer)
/s/ Jerry D. Von Deylen
----------------------------- Director
Jerry D. Von Deylen
/s/ John M. Stainbrook
----------------------------- Director
John M. Stainbrook
----------------------------- Director
Gary Mullennix
/s/ Patrick J. Baker
----------------------------- Director
Patrick J. Baker
II-4
<PAGE>
EXHIBIT INDEX
Exhibit No.
- -----------
1 Underwriting Agreement Standard Provisions
for UACSC Trusts
3 Certificate of Incorporation and Bylaws of
UAC Securitization Corporation (incorporated
by reference to Exhibit 3 to Form S-3 of
UACSC 1995-A Grantor Trust, Reg. No.
33-88352)
4.1(a) Form of Pooling and Servicing Agreement for
Grantor Trusts including form of Certificates
(incorporated by reference to Exhibit 4.1(a)
to Form S-3 Amendment No. 1 of UACSC Auto
Trusts, Reg. No. 33-97320)
4.1(b) Form of Standard Terms and Conditions of
UACSC Grantor Trusts (incorporated by
reference to Exhibit 4.1(b) to Form S-3
Amendment No. 1 of UACSC Auto Trusts, Reg.
No. 33-97320)
4.2 Form of Pooling and Servicing Agreement for
trusts other than grantor trusts
(including form of Certificates)
* 5(a) Opinion of Barnes & Thornburg with respect to
legality of the Certificates, dated
_________________
* 5(b) Opinion of Cadwalader, Wickersham & Taft with
respect to legality of the Certificates,
dated _______________
* 8 Opinion of Cadwalader, Wickersham & Taft
with respect to tax matters, dated
_________________
10 Form of Purchase Agreement
* 23(a) Consent of Barnes & Thornburg (included in
Exhibit 5(a))
* 23(b) Consent of Cadwalader, Wickersham & Taft
(included in Exhibit 5(b))
* 23(c) Consent of Cadwalader, Wickersham & Taft
(included in Exhibit 8)
24 Power of Attorney (included on page II-4)
- -------
* To be filed by amendment.
UAC SECURITIZATION CORPORATION
UNION ACCEPTANCE CORPORATION
AND
[UNDERWRITER]
UNDERWRITING AGREEMENT
STANDARD PROVISIONS
FOR
UACSC TRUSTS
AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
- -----------------
<PAGE>
[Underwriter]
as representative of the several
Underwriters named in the respective
Underwriting Agreements hereinafter
described
c/o
----------------
Dear Sirs:
From time to time, UAC Securitization Corporation ("UACSC") and Union
Acceptance Corporation ("UAC") may enter into one or more underwriting
agreements that provide for the sale of Securities (as defined herein) to you
and to such other underwriters as may be named therein. The standard provisions
set forth herein (the "Standard Provisions") may be incorporated by reference in
any such underwriting agreement (each, an "Underwriting Agreement") with such
changes hereto as provided in the Underwriting Agreement. Any such Underwriting
Agreement shall be in the form of Annex I hereto, with such additions and
deletions as the parties thereto may determine. Unless otherwise defined herein,
terms defined in the Underwriting Agreement are used herein as therein defined
and terms not otherwise defined in this Agreement are used herein as defined in
the Pooling and Servicing Agreement referred to below.
I.
UACSC proposes to sell to the several underwriters named in the
Underwriting Agreement automobile receivable pass-through and/or automobile
receivable backed certificates (the "Securities") representing undivided
interests in a trust fund including a pool of automotive retail installment sale
contracts, or other similar evidences of installment indebtedness, secured by
new and used automobiles and light trucks (the "Receivables"). The Securities
will be issued by a trust (the "Trust") pursuant to a pooling and servicing
agreement (the "Pooling and Servicing Agreement") between UACSC and the bank or
trust company or other financial institution identified as trustee therein (the
"Trustee"). The terms and rights of any particular issuance of Securities shall
be as specified in the Underwriting Agreement relating thereto and in or
pursuant to the Pooling and Servicing Agreement identified in such Underwriting
Agreement. The Securities which are the subject of any particular Underwriting
Agreement into which these Standard Provisions are incorporated are herein
referred to as the "Offered Securities." The Securities will represent undivided
interests in a trust fund consisting of a pool of the Receivables, certain
monies due thereunder after a specified date, security interests in the vehicles
financed thereunder, and other instruments, funds, and accounts as may be
specified in the Pooling and Servicing Agreement (collectively, the "Trust
Fund"). The Securities with respect to each Underwriting Agreement and the
related Pooling and Servicing Agreement shall be issued with the title and in
the amount set forth in such Underwriting Agreement.
1
<PAGE>
Particular sales of Securities may be made from time to time to you, or
to the Underwriters named in the Underwriting Agreement, for whom you, or you
together with such other firm or firms specified in the Underwriting Agreement,
will act as representatives (the "Representatives"). The terms "Representatives"
and "Underwriters" shall mean you in such instances where you act as sole
Underwriters. These Standard Provisions shall not be construed as an obligation
of UACSC to sell any of the Securities or as an obligation of any of the
Underwriters to purchase the Securities. The obligation of UACSC to sell any of
the Securities and the obligation of any of the Underwriters to purchase any of
the Securities shall be evidenced by the Underwriting Agreement with respect to
the Securities specified therein. Each Underwriting Agreement shall specify the
aggregate original principal amount of such Securities or, if applicable, an
indication that the offering will be an at-the- market offering, the purchase by
the Underwriters of such Securities, the names of the Representatives of such
Underwriters (if applicable), and the aggregate original principal amount of
such Securities to be purchased by each Underwriter and shall set forth the
date, time, and delivery of such Securities and the manner of payment therefor.
The Underwriting Agreement shall also specify (to the extent not set forth in
the Pooling and Servicing Agreement and the registration statement and
prospectus with respect thereto) the terms of such Securities. An Underwriting
Agreement shall be in the form of an executed writing (which may be in
counterparts), and may be evidenced by an exchange of telegraphic communication
or any other rapid transmission device designed to produce a written record of
communications transmitted. The obligation of the Underwriters under an
Underwriting Agreement shall be several and not joint.
II.
Representations and Warranties. UACSC represents and warrants to, and
agrees with, each Underwriter of any Offered Securities as of the date hereof
and as of the date of any Underwriting Agreement that:
(a) A registration statement on Form S-1 or S-3, including a
prospectus, relating to the Certificates has been filed with the
Securities and Exchange Commission (the "Commission"), pursuant to the
Securities Act of 1933, as amended (the "Act"), and such registration
statement may have been amended. If the registration statement has been
filed on Form S-3, UACSC is eligible to use Form S-3 in connection with
the offer and sale of the Offered Securities. UACSC, as registrant,
will file with the Commission either, prior to effectiveness of such
registration statement, an amendment thereto (including the form of
final prospectus and prospectus supplement) or, after effectiveness of
such registration statement, final prospectus and/or prospectus
supplement in accordance with Rules 430A and 424(b)(1), (2) or (4). As
filed, such amendment and form of final prospectus and prospectus
supplement, or such final prospectus and/or prospectus supplement,
shall include all Rule 430A Information and, except to the extent that
the Underwriters shall agree in writing to a modification, shall be in
all substantive respects in the form furnished to the Underwriters
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional information
and other changes (beyond that contained
2
<PAGE>
in the latest Preliminary Prospectus) as UACSC has advised the
Underwriters, prior to the Execution Time, will be included or made
therein.
As used herein, the term "the Effective Date" shall mean each
date that the Registration Statement and any post-effective amendment
or amendments thereto relating to the Offered Securities became or
become effective. "Execution Time" shall mean the date and time that
the Underwriting Agreement is executed and delivered by the parties
thereto. "Preliminary Prospectus" shall mean any preliminary prospectus
and prospectus supplement referred to in the preceding paragraph and
any preliminary prospectus included in the Registration Statement at
the Effective Date that omits Rule 430A Information. "Base Prospectus"
and "Prospectus Supplement" shall mean the prospectus and prospectus
supplement relating to the Certificates that is filed pursuant to Rule
424(b) in respect of the Offered Securities or, if no filing pursuant
to Rule 424(b) is required, shall mean the form of final prospectus and
prospectus supplement included in the Registration Statement at the
Effective Date (the Base Prospectus and Prospectus Supplement are
hereinafter referred to as the "Prospectus"). "Registration Statement"
shall mean the registration statement referred to in the preceding
paragraph, including any Registration Statement serving as a shelf
registration for multiple issuances of Securities thereunder,
incorporated documents, exhibits and financial statements, in the form
in which it has or shall become effective and, in the event any
post-effective amendment relating to the Offered Securities thereto
becomes effective prior to the Closing Date (as hereinafter defined),
shall also mean such registration statement as so amended; such term
shall include Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A. "Rule 424" and "Rule 430A"
refer to such rules under the Act. "Rule 430A Information" means
information with respect to the Offered Securities and the offering
thereof permitted to be omitted from the Registration Statement, at the
Effective Date, pursuant to Rule 430A.
(b) On the Effective Date, the Registration Statement did or
will, and, when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus
(together with any supplements thereto) will, comply in all material
respects with the applicable requirements of the Act and the rules and
regulations of the Commission (the "Rules and Regulations"); on the
Effective Date, the Registration Statement did not or will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the
Closing Date, the Prospectus (together with any supplement thereto)
will not, include any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; provided, however, that UACSC makes no representations
or warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectus (or any supplement thereto)
in reliance upon and in conformity with written information furnished
3
<PAGE>
to UACSC by or on behalf of the Underwriters specifically for use in
connection with preparation of the Registration Statement or the
Prospectus (or any supplement thereto).
(c) The computer tape of the Receivables underlying the
Offered Securities made available to the Representatives by UACSC was
complete and accurate as of the date that it was delivered to the
Representatives and includes a description of the Receivables that are
described in the "Schedule of Receivables" that will be an exhibit to
the Pooling and Servicing Agreement.
(d) UACSC has been duly incorporated and is validly existing
as a corporation under the laws of the State of Delaware and has
corporate and other power and authority to own its properties and
conduct its business, as now conducted by it, and to enter into and
perform its obligations under these Standard Provisions, the
Underwriting Agreement, and the Pooling and Servicing Agreement. UAC
has been duly incorporated and is validly existing under the laws of
the State of Indiana, UAFC has been duly incorporated and is validly
existing under the laws of the State of Delaware, and each of UAC and
UAFC has corporate and other power and authority to own its properties
and conduct its business, as now conducted by it. All other
subsidiaries of UAC have been duly incorporated and are validly
existing under the laws of the State of their incorporation and have
corporate and other power and authority to own their properties and
conduct their businesses, as now conducted by them.
(e) UACSC is not aware of (i) any request by the Commission
for any further amendment of the Registration Statement or the
Prospectus or for any additional information, (ii) the issuance by the
Commission of any stop order suspending the effectiveness of the
Registration Statement or the institution or threatening of any
proceeding for that purpose or (iii) any notification with respect to
the suspension of the qualification of the Offered Securities for sale
in any jurisdiction or the initiation or threatening of any proceeding
for such purpose.
(f) These Standard Provisions have been duly authorized,
executed, and delivered by UACSC, the Underwriting Agreement, the
Purchase Agreement and the Pooling and Servicing Agreement, when
delivered by UACSC, will each have been duly authorized, executed, and
delivered by UACSC, and these agreements will each constitute a legal,
valid, and binding agreement of UACSC, enforceable against UACSC in
accordance with its terms, subject, as to the enforcement of remedies,
to applicable bankruptcy, insolvency, reorganization, moratorium,
receivership, and other similar laws affecting creditors' rights
generally and to general principles of equity (regardless of whether
the enforcement of such remedies is considered in a proceeding in
equity or at law).
(g) The Offered Securities will conform in all material
respects to the description thereof contained in the Prospectus and,
assuming that the Offered Securities have been duly and validly
authorized, executed, and issued by the Trustee in accordance with the
Pooling
4
<PAGE>
and Servicing Agreement, will, when duly and validly authenticated by
the Trustee and delivered to and paid for by the Underwriters in
accordance with these Standard Provisions and the Underwriting
Agreement, be entitled to the benefits of the Pooling and Servicing
Agreement.
(h) As of the Closing Date, each of the Receivables will meet
the criteria for selection described in the Prospectus, and on such
Closing Date the representations and warranties of UACSC with respect
to the Receivables contained in the Pooling and Servicing Agreement
will be true and correct.
(i) Neither the sale of the Offered Securities, nor the
consummation of any other of the transactions herein contemplated, nor
the fulfillment of the terms of the Pooling and Servicing Agreement, or
these Standard Provisions, or the Underwriting Agreement, will
constitute a breach of any term or provision of the certificate of
incorporation or by-laws of UACSC, or conflict with or constitute a
breach, violation, or acceleration of or a default under the terms of
any indenture or other material agreement or instrument to which UACSC
is a party or by which it is bound, or any statute, regulation, or
order applicable to UACSC of any governmental body, administrative
agency, regulatory body, or court having jurisdiction over UACSC or
UACSC's material properties. UACSC is not a party to, bound by or in
breach or violation of any indenture or other material agreement or
instrument, or subject to or in violation of any statute, regulation,
or order of any governmental body, administrative agency, regulatory
body, or court having jurisdiction over it, that materially and
adversely affects or would in the future materially and adversely
affect (i) the ability of UACSC to perform its obligations under these
Standard Provisions, the Underwriting Agreement, the Purchase Agreement
or the Pooling and Servicing Agreement or (ii) the business,
operations, or financial condition, or the material properties or
assets of UACSC.
(j) There are no actions or proceedings against, or
investigations of, UACSC pending or, to the knowledge of UACSC,
threatened before any court, administrative agency, or other tribunal
(i) asserting the invalidity of these Standard Provisions, the
Underwriting Agreement, the Purchase Agreement, the Pooling and
Servicing Agreement, or the Offered Securities, (ii) seeking to prevent
the issuance of the Offered Securities or the consummation of any of
the transactions contemplated by this Agreement, the Underwriting
Agreement, or the Pooling and Servicing Agreement, (iii) that might
materially and adversely affect the performance by UACSC of its
obligations under, or the validity or enforceability of, this
Agreement, the Underwriting Agreement, the Pooling and Servicing
Agreement, or the Offered Securities, (iv) seeking to affect adversely
the federal income tax attributes of the Offered Securities described
in the Prospectus, or (v) that if determined adversely as to UACSC
would have a material adverse effect on the business, operations, or
financial condition or the material properties or assets of UACSC.
(k) There has not been any material adverse change, or
development involving a material adverse prospective change, in the
business, operations, or financial condition or the
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material properties or assets of UACSC and UAC, taken as a whole, since
the end of the most recent fiscal quarter for which publicly available
earnings statements were delivered to the Representatives prior to the
date of the related Underwriting Agreement.
(l) Any taxes, fees, and other governmental charges in
connection with the execution and delivery of this Agreement, the
Underwriting Agreement, and the Pooling and Servicing Agreement and the
execution, delivery, and sale of the Offered Securities have been or
will be paid at or before the Closing Date.
III.
Purchase By the Underwriters. The Offered Securities to be purchased by
the Underwriters pursuant to the Underwriting Agreement relating thereto, in
definitive form to the extent practicable, and in such authorized denominations
and registered in such names as the Underwriters may request upon three full
Business Days prior notice to UACSC, shall be delivered by or on behalf of UACSC
to the Representatives for the account of such Underwriters, against payment by
such Underwriters or on such Underwriters' behalf of the purchase price therefor
(i) by wire transfer or by certified or official bank check or checks, payable
to the order of UACSC in immediately available funds, or (ii) by such other
means and in such other form as is specified in the Underwriting Agreement, all
at the place, time, and date specified in the Underwriting Agreement or at such
other place, time, and date as the Underwriters and UACSC may agree upon in
writing, such time and date being herein called the "Closing Date" for such
Offered Securities.
UACSC agrees to have the Offered Securities available for inspection,
checking, and packaging by the Representatives in New York, New York (or such
other location as may be specified by the Representatives) not later than 10:00
A.M. on the Business Day prior to the Closing Date.
IV.
Offering by the Underwriters. UACSC is advised by the Representatives
that upon the execution of the Underwriting Agreement and authorization by the
Representatives of the release of such Offered Securities, the Underwriters
propose to offer such Offered Securities for sale upon the terms and conditions
set forth in the Prospectus as amended or supplemented. The Underwriters intend
to make a market in the Offered Securities, as permitted by the applicable laws
and regulations. The Underwriters are not obligated to make a market in the
Offered Securities and any such market-making may be discontinued at any time in
the Underwriters' sole discretion.
V.
Agreements. UACSC agrees with each of the Underwriters of any Offered
Securities that:
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(a) UACSC will promptly advise each such Underwriter (i) when
any amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any amendment to
the Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv)
of the receipt by UACSC of any notification with respect to the
suspension of the qualification of the Offered Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for
such purpose. UACSC will not file any amendment to the Registration
Statement or supplement to the Prospectus after the date of the
Underwriting Agreement and prior to the Closing Date for such Offered
Securities unless UACSC has furnished each such Underwriter a copy for
its review prior to filing and will not file any such proposed
amendment or supplement to which any such Underwriter reasonably
objects. Subject to the foregoing sentence, UACSC will cause the
Prospectus, as supplemented or amended, to be transmitted to the
Commission for filing pursuant to Rule 424(b) under the Act by means
reasonably calculated to result in timely filing with the Commission
pursuant to said rule. UACSC will use its best efforts to prevent the
issuance of any stop order suspending the effectiveness of the
Registration Statement and, if issued, to obtain as soon as possible
the withdrawal thereof.
(b) If, at any time when in the opinion of counsel for the
Underwriters the Prospectus is required by law to be delivered, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Act or the rules under the Act, UACSC
will promptly prepare and file with the Commission, subject to
paragraph (a) of this Article V, an amendment or supplement that will
correct such statement or omission or an amendment that will effect
such compliance and, if such amendment or supplement is required to be
contained in a post-effective amendment to the Registration Statement,
will use its best efforts to cause such amendment of the Registration
Statement to be made effective as soon as possible.
(c) UACSC will furnish to the Underwriters and/or their
counsel, upon request, and without charge, executed copies of the
Registration Statement (including exhibits thereto) and, so long as
delivery of a prospectus by the Underwriters or a dealer may be
required by the Act, as many copies of the Prospectus, as amended or
supplemented, and any amendments and supplements thereto as the
Underwriters may reasonably request. UACSC will pay the expenses of
printing all offering documents relating to the offering of the Offered
Securities.
(d) UACSC agrees that, so long as the Offered Securities shall
be outstanding, it will deliver or cause to be delivered to the
Representatives the annual statement as to compliance delivered to the
Trustee pursuant to the Pooling and Servicing Agreement and the annual
statement of a firm of independent public accountants furnished to the
Trustee
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pursuant to the Pooling and Servicing Agreement, as soon as such
statements are furnished to UACSC.
(e) As soon as practicable, but not later than sixteen months
after the effective date of the Registration Statement, UACSC will
cause the Trust to make generally available to securityholders of the
Trust an earnings statement of the Trust covering a period of at least
12 months beginning after the effective date of the Registration
Statement which will satisfy the provisions of Section 11(a) of the Act
and, at the option of UACSC, will satisfy the requirements of Rule 158
under the Act.
(f) UACSC will furnish such information, execute such
instruments and take such action, if any, as may be required to qualify
the Offered Securities for sale (including, but not limited to, such
action as may be required for the qualification or exemption of the
sale of the Offered Securities under state securities or Blue Sky laws)
and to determine their eligibility for investment under the laws of
such jurisdictions as the Underwriters may designate and will maintain
such qualification in effect so long as required for the distribution
of the Offered Securities. UACSC will furnish such information, execute
such instruments and take such action, if any, as the Underwriters may
reasonably request in connection with any filing with the National
Association of Securities Dealers, Inc. relating to the Offered
Securities should the Underwriters determine that such filing is
required or appropriate.
(g) UACSC will pay all costs and expenses in connection with
the transactions herein contemplated, including, but not limited to,
the fees and disbursements of its counsel; the costs and expenses of
printing (or otherwise reproducing) and delivering the Pooling and
Servicing Agreement, and the Underwriting Agreement, and printing or
engraving and distributing the Offered Securities; any transfer taxes
relating to the transfer of the Offered Securities to the Underwriters;
accounting fees and disbursements; the costs and expenses in connection
with the qualification or exemption of the sale of the Offered
Securities under state securities or Blue Sky laws and the
determination of their eligibility for investment under state and
federal laws, including filing fees and reasonable fees and
disbursements of counsel in connection therewith and the costs and
expenses of preparing and distributing any memoranda concerning the
Offered Securities' eligibility for investment; the cost and expenses
in connection with the preparation, printing, and filing of the
Registration Statement (including exhibits thereto) and the Prospectus
and amendments and supplements thereto, the preparation and printing of
this Agreement and any Underwriting Agreement and the furnishing to the
Underwriters of such copies of each Preliminary Prospectus, Prospectus,
and any amendments and supplements thereto as the Underwriters may
reasonably request, the fees of the rating agency that initially rates
the Offered Securities, and any filing fees of the National Association
of Securities Dealers, Inc. relating to the Offered Securities should
the Underwriters determine that such filing is required or appropriate.
Except as expressly provided in the Underwriting Agreement, UACSC shall
not be obligated to pay the fees or disbursements of the Underwriters'
counsel.
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(h) During a period of 20 calendar days from the date as of
which the respective Underwriting Agreement is executed, neither UACSC
nor any affiliate of UACSC will, without the Underwriters' prior
written consent (which consent shall not be unreasonably withheld),
enter into any agreement to offer or sell receivables or securities as
identified in such Underwriting Agreement.
(i) So long as any of the Offered Securities are outstanding,
UACSC will furnish to the Underwriters as soon as practicable after the
end of the fiscal year, (i) all documents required to be distributed to
securityholders of the Trust or filed with the Commission pursuant to
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
or any order of the Commission thereunder and (ii) from time to time,
any other information concerning UACSC filed with any government or
regulatory authority that is otherwise publicly available, as the
Underwriters may reasonably request.
(j) On or before the Closing Date UACSC shall cause its
computer records relating to the Receivables to be marked in such a
manner as shall clearly indicate the Trust's absolute ownership of the
Receivables, and from and after the Closing Date UACSC shall not take
any action inconsistent with the Trust's ownership of such Receivables,
other than as permitted by the Pooling and Servicing Agreement.
(k) To the extent, if any, that the rating provided with
respect to the Offered Securities by the rating agency that initially
rates the Offered Securities is conditional upon the furnishing of
documents or the taking of any other actions by UACSC, UACSC shall, as
soon as practicable, furnish such documents and take any such other
actions.
VI.
Conditions to the Obligations of the Underwriters. The obligation of
the Underwriters of any Offered Securities under the Underwriting Agreement to
purchase the Offered Securities shall be subject to the accuracy of the
representations and warranties on the part of UACSC contained herein as of the
date hereof and the Closing Date, to the accuracy of the statements of UACSC
made in any certificates pursuant to the provisions hereof, to the performance
by UACSC of its obligations hereunder and to the following additional conditions
with respect to the Offered Securities:
(a) The Registration Statement shall have become effective not
later than 4:00 p.m., New York City time, on the day following the date
of the Underwriting Agreement; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened; and the Prospectus shall have been timely filed with the
Commission pursuant to Rule 424(b) under the Act.
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(b) The Underwriters shall have received from Barnes &
Thornburg and Barrett & McNagny, counsel for UACSC, favorable opinions,
dated the Closing Date and satisfactory in form and substance to
counsel for the Underwriters, to the effect set forth in Exhibit A.
Such opinions (a) may express reliance as to factual matters on the
representations and warranties made by, and on certificates or other
documents furnished by, officers of the parties to these Standard
Provisions, the Underwriting Agreement, and the Pooling and Servicing
Agreement, (b) may assume the due authorization, execution, and
delivery of the instruments and documents referred to therein by the
parties thereto other than UACSC, and (c) to the extent such opinion
relates to law other than the laws of the State of Indiana and the
federal laws of the United States, may rely on a favorable opinion of
local counsel satisfactory to the Representatives, dated the Closing
Date, and satisfactory in form and substance to counsel for the
Underwriters. The counsel for UACSC will also deliver an opinion to the
Underwriters, dated the Closing Date and satisfactory in form and
substance to counsel for the Underwriters with respect to the
characterization of the transfer of the Receivables from UACSC to the
Trust as a sale.
(c) The Underwriters shall have received from Cadwalader,
Wickersham & Taft, counsel for the Underwriters, a favorable opinion,
dated the Closing Date and satisfactory in form and substance to the
Underwriters.
(d) The Underwriters shall have received on the Closing Date,
addressed to the Underwriters and dated the Closing Date, any opinion
delivered to the rating agency in connection with its rating of the
Offered Securities.
(e) The Underwriters shall have received from counsel for the
Trustee, a favorable opinion dated the Closing Date and satisfactory in
form and substance to counsel for the Underwriters, to the effect set
forth in Exhibit B.
(f) The Underwriters shall have received a favorable opinion
addressed to the Underwriters and UACSC from counsel for the third
party credit enhancer, if any, dated the Closing Date and satisfactory
in form and substance to counsel for the Underwriters and UACSC, to the
effect set forth in Exhibit C.
(g) The Offered Securities shall be rated in the highest
category by a nationally recognized rating agency or such other
category as shall be designated in the Underwriting Agreement. Further,
subsequent to the execution and delivery of this Agreement and prior to
the Closing Date, there shall not have occurred any downgrading, nor
shall any notice have been given of (i) any intended or potential
downgrading or (ii) any review or possible change that does not
indicate the direction of a possible change, in the rating accorded (i)
the Offered Securities by any nationally recognized rating agency which
rates the Offered Securities, (ii) any rated debt instrument issued by
UACSC or (iii) any rated debt instrument issued by the third party
credit enhancer, if any.
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(h) UACSC and UAC will enter into the Pooling and Servicing
Agreement at or before the Closing Date and, when delivered by UACSC
and UAC, the Pooling and Servicing Agreement will have been duly
authorized, executed, and delivered by UACSC and UAC and will
constitute the legal, valid, and binding agreement of UACSC and UAC.
(i) UACSC shall have delivered to the Underwriters a
certificate, dated the Closing Date, of the President or a Vice
President of UACSC to the effect that the signer of such certificate
has carefully examined these Standard Provisions, the Underwriting
Agreement, and the Pooling and Servicing Agreement and to the effect
that: (i) the representations and warranties of UACSC contained in such
agreements are true and current in all material respects at and as of
the Closing Date with the same effect as if made at the Closing Date,
(ii) UACSC has complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or prior to the
Closing Date, (iii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to UACSC's knowledge threatened, (iv)
there shall have been no material adverse change in the condition of
UACSC and any of its subsidiaries, taken as a whole, from that set
forth in the Registration Statement, (v) nothing has come to his
attention that would lead him to believe that the Prospectus contains
any untrue statement of a material fact or omits to state any material
fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading, (vi)
UACSC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware
with corporate and other power and authority to own its properties and
conduct its business, as now conducted by it, and to enter into and
perform its obligations under this Agreement and the Pooling and
Servicing Agreement, (vii) each of UAC and UAFC has been duly
incorporated and is validly existing under the laws of the State of its
incorporation and has corporate and other power and authority to own
its properties and conduct its business, as now conducted by it, (viii)
all other subsidiaries of UAC that have engaged in any business
activity have been duly incorporated and are validly existing under the
laws of the State of their incorporation and have corporate and other
power and authority to own their properties and conduct their
businesses, as now conducted by them, (ix) these Standard Provisions,
the Underwriting Agreement and the Pooling and Servicing Agreement have
been duly authorized, executed, and delivered by UACSC, (x) the
fulfillment of the terms of these Standard Provisions, the Underwriting
Agreement and the Pooling and Servicing Agreement will not constitute a
breach of any term or provision of the charter or by-laws of UACSC, or
conflict with or constitute a breach, violation, or acceleration of or
a default under, the terms of any indenture or other material agreement
or instrument to which UACSC is a party, and (xi) UACSC is not a party
to, bound by, or in breach or violation of any indenture or other
material agreement or instrument, or subject to or in violation of any
statute, regulation, or order of any governmental body, administrative
agency, regulatory body, or court having jurisdiction over UACSC, that
materially and adversely affects or would in the future materially and
adversely affect the business, operations, or financial condition or
the material properties or assets of UACSC.
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(j) The Underwriters shall have received from independent
accountants of UACSC, one or two letters, one such letter dated the
date of the Prospectus relating to such Offered Securities and
satisfactory in form and substance to the Underwriters and counsel for
the Underwriters, and a second letter, if necessary, dated the Closing
Date, as to such matters as the Underwriters may reasonably request in
form and substance satisfactory to the Underwriter and counsel to the
Underwriters, provided by UACSC.
(k) All proceedings in connection with the transactions
contemplated by this Agreement and the Underwriting Agreement and all
documents incident hereto or thereto shall be satisfactory in form and
substance to the Underwriters and counsel for the Underwriters, and the
Underwriters and counsel for the Underwriters shall have received such
information, certificates, opinions, and documents as the Underwriters
may reasonably request.
VII.
Reimbursement of Underwriters' Expenses. If the sale of any Offered
Securities provided for in the Underwriting Agreement relating thereto is not
consummated because any condition to the obligations of the Underwriters set
forth in Article VI hereof is not satisfied or because of any refusal,
inability, or failure on the part of UACSC to perform any agreement herein or
therein or comply with any provision hereof, other than by reason of a default
by the Underwriters, UACSC will reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by the Underwriters in connection with the
proposed purchase and sale of such Offered Securities.
VIII.
Indemnification and Contribution. (a) UACSC and UAC agree to indemnify
and hold harmless the Underwriters and each person who controls any Underwriter
within the meaning of the Act or the Exchange Act from and against any and all
losses, claims, damages, or liabilities, joint or several, to which the
Underwriters may become subject under the Act, the Exchange Act, or other
federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) (i) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement as
originally filed or in any amendment thereof, or arise out of or are based upon
the omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading or
(ii) arise out of or are based upon any untrue statement of a material fact or
omission or alleged omission to state a material fact contained in the
Prospectus (together with any supplement thereto) necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, on the Effective Date, if not filed pursuant to Rule
424(b), and on the date of any filing pursuant to Rule 424(b) and on the Closing
Date; and agree to reimburse each such indemnified party for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim,
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damage, liability, or action, as such expenses are incurred; provided, however,
that UACSC and UAC will not be liable in any such case to the extent that any
such loss, claim, damage, or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to UACSC and/or UAC as herein stated by or on behalf of the
Underwriters specifically for use in connection with the preparation thereof.
This indemnity agreement will be in addition to any liability that UACSC and UAC
may otherwise have.
(b) The Underwriters agree, severally and not jointly, to indemnify and
hold harmless UACSC and UAC, its directors, each of UACSC and UAC's officers who
sign the Registration Statement, and each person, if any, who controls UACSC and
UAC within the meaning of the Act, to the same extent as the foregoing indemnity
from UACSC and UAC to the Underwriters, but only insofar as such losses, claims,
damages, or liabilities arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission that was made in the
Registration Statement, any Preliminary Prospectus or the Prospectus, as amended
or supplemented, or any amendment or supplement thereto, in reliance upon and in
conformity with written information furnished to UACSC and/or UAC as herein
stated by or on behalf of the Underwriters specifically for use in the
preparation of the documents referred to in the foregoing indemnity. This
indemnity agreement will be in addition to any liability that the Underwriters
may otherwise have.
(c) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to paragraphs (a) or (b), such person (the "indemnified party")
shall promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
in addition to any local counsel for all such indemnified parties and that all
such fees and expenses shall be reimbursed as they are incurred. Such firm shall
be designated in writing by [Underwriter] in the case of parties indemnified
pursuant to paragraph (a) of this Article VIII and by UACSC in the case of
parties indemnified pursuant to paragraph (b) of this Article VIII. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, the indemnifying party agrees to
indemnify the indemnified party from and against any loss or liability by reason
of such settlement or judgment. Notwithstanding the foregoing sentence, if at
any time an indemnified party shall have requested an
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indemnifying party to reimburse the indemnified party for fees and expenses of
counsel as contemplated by the third sentence of this paragraph, the
indemnifying party agrees that it shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is
entered into more than 30 calendar days after receipt by such indemnifying party
of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such proceeding.
(d) If the indemnification provided for in this Article VIII is
unavailable to an indemnified party under paragraphs (a) or (b) of this Article
VIII or is insufficient in respect of any losses, claims, damages, or
liabilities referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
or liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by UACSC and/or UAC on the one hand, and the Underwriters on
the other, from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) but also the relative fault of UACSC or UAC on the one hand,
and the Underwriters on the other, in connection with the statements or
omissions which resulted in such losses, claims, damages, or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by UACSC or UAC on the one hand, and the Underwriters on the other, in
connection with the offering of the Offered Securities shall be deemed to be in
the same proportion as the total net proceeds from the offering of such Offered
Securities (before deducting expenses) received by UACSC or UAC bear to the
total underwriting discounts and commissions received by the Underwriters in
respect thereof. The relative fault of UACSC and/or UAC on the one hand, and the
Underwriters on the other, shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by UACSC and/or UAC or the Underwriters and the parties' relative
intent, knowledge, access to information, and opportunity to correct or prevent
such statement or omission.
(e) UACSC, UAC and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Article VIII were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
considerations referred to in the immediately preceding paragraph. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, and liabilities referred to in the immediately preceding paragraph
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article VIII, no Underwriter shall be
required to contribute any amount in excess
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of the amount by which the total price at which the Offered Securities
underwritten and distributed to the public by such Underwriter were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Article VIII are several, in proportion to the respective principal amounts of
Offered Securities purchased by each of such Underwriters (as defined in the
Agreement Among Underwriters), and not joint.
IX.
Termination. These Standard Provisions and each Underwriting Agreement
shall be subject to termination in your absolute discretion, by notice given to
UACSC, if (a) after the execution and delivery of these Standard Provisions and
prior to the Closing Date (i) trading generally shall have been suspended or
materially limited on or by, as the case may be, any of the New York Stock
Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) a general moratorium on commercial
banking activities in New York shall have been declared by either Federal or New
York State authorities, or (iii) there shall have occurred any outbreak or
escalation of hostilities or any change in financial markets or any calamity or
crisis that, in your judgment, is material and adverse and (b) in the case of
any of the events specified in clauses (a)(i) through (iii), such event singly
or together with any other such event makes it, in your judgment, impracticable
to market the Offered Securities on the terms and in the manner contemplated in
the Prospectus.
X.
Substitution Of and Default By An Underwriter. If, on the Closing Date,
any one or more of the Underwriters shall fail or refuse to purchase the Offered
Securities which it or they have agreed to purchase under the Underwriting
Agreement relating thereto, and the aggregate principal amount of the Offered
Securities which such defaulting Underwriter or Underwriters agreed but failed
or refused to purchase is not more than one-tenth of the aggregate principal
amount of the Offered Securities to which such Underwriting Agreement relates,
the other Underwriters shall be obligated severally in the proportions which the
amounts of such Offered Securities set forth opposite their names in such
Underwriting Agreement bear to the aggregate principal amount of such Offered
Securities set forth opposite the names of all such non-defaulting Underwriters,
or in such other proportions as the Representatives may specify, to purchase the
Offered Securities which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase; provided that in no event shall the principal
amount of the Offered Securities which any Underwriter has agreed to purchase
hereunder be increased pursuant to this Article X by an amount in excess of
one-ninth of
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such principal amount of such Offered Securities without the written consent of
such Underwriter. If, on the Closing Date, any Underwriter or Underwriters shall
fail or refuse to purchase the Offered Securities which it or they agreed to
purchase hereunder and the aggregate principal amount of the Offered Securities
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase is more than one-tenth of the aggregate principal amount of the
Offered Securities to which such Underwriting Agreement relates and arrangements
satisfactory to the Representatives and UACSC for the purchase of such Offered
Securities are not made within 36 hours after such default, such Underwriting
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or of UAC or UACSC. In any such case either the Representatives or
UACSC shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be affected. Any action taken under this Article X or any such
termination shall not relieve any defaulting Underwriter from liability in
respect of any default of such Underwriter under these Standard Provisions or
such Underwriting Agreement.
XI.
Representations and Indemnities to Survive. The respective agreements,
representations, warranties, indemnities, and other statements of UACSC or UAC
or on their behalf by its officers and the Underwriters set forth in or made
pursuant to these Standard Provisions and each Underwriting Agreement will
remain in full force and effect, regardless of any investigation made by the
Underwriters or on the Underwriters' behalf, UACSC or UAC or any of the
officers, directors, or controlling persons referred to in Article VIII hereof,
and will survive delivery of and payment for the Offered Securities. The
provisions of Sections V(g), VII, and VIII hereof shall survive the termination
or cancellation of these Standard Provisions or any Underwriting Agreement.
XII.
Notices. In all dealings hereunder, NationsBanc Montgomery Securities
LLC shall act on behalf of each of the Underwriters and the other parties hereto
shall be entitled to act and rely upon any statement, request, notice or
agreement (including, without limitation, any Underwriting Agreement) on behalf
of any Underwriter made or given by [Underwriter]. All communications hereunder
or under any Underwriting Agreement will be in writing and effective only on
receipt, and, if sent to the Underwriters, will be mailed, delivered or
telegraphed and confirmed to ___________
;
or, if sent to UACSC, will be mailed, delivered or telegraphed and confirmed to
UACSC at UAC Securitization Corporation, 9240 Bonita Beach Road, Suite 1109-A,
Bonita Springs, Florida 34135, Attention: Leeanne Graziani and if sent to UAC to
Union Acceptance Corporation, 250 North Shadeland Avenue, Indianapolis, Indiana
46219, Attention: John M. Stainbrook.
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XIII.
Successors. These Standard Provisions and each Underwriting Agreement
will inure to the benefit of and be binding upon the parties hereto and their
respective successors and the officers and directors and controlling persons
referred to in Article VIII hereof, and their successors and assigns, and no
other person will have any right or obligation hereunder.
XIV.
Applicable Law. These Standard Provisions and each Underwriting
Agreement will be governed by and construed in accordance with the laws of the
State of New York applicable to agreements made and to be performed therein.
These Standard Provisions and any Underwriting Agreement may be executed in any
number of counterparts, each of which shall for all purposes be deemed to be an
original and all of which shall together constitute but one and the same
instrument.
XV.
Headings. The headings used in these Standard Provisions are for
convenience of reference only and are not to affect the construction of or to be
taken into consideration in interpreting this Agreement.
[Next page is signature page]
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
letter and your acceptance shall represent a binding agreement between UACSC and
you.
Very truly yours,
UAC SECURITIZATION CORPORATION
By:
Name: Leeanne W. Graziani
Title: Vice President
UNION ACCEPTANCE CORPORATION
By:
Name: Rick A. Brown
Title: Vice President
The foregoing Standard Provisions are hereby confirmed and accepted as of the
date first above written.
[UNDERWRITER]
By:
Name:
Title:
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EXHIBIT A
OPINION OF COUNSEL FOR UAC SECURITIZATION CORPORATION
The Opinion of Counsel for UAC Securitization Corporation ("UACSC") and
the Trust Fund, to be delivered pursuant to Article VI, paragraph (b) of the
document entitled the UAC Securitization Corporation and
_____________________________________ Underwriting Agreement Standard Provisions
for UACSC Trusts, Automobile Receivable Backed Certificates (the "Agreement")
shall
be to the effect that:
(i) UACSC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under the Agreement, the
Underwriting Agreement, the Pooling and Servicing Agreement, and the Offered
Securities and had at all times relevant to such agreement and now has requisite
power, authority and legal right to acquire, own, sell, and service the
Receivables.
(ii) UAFC has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware with
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and Prospectus
and to enter into and perform its obligations under the Purchase Agreement, and
had at all times relevant to such agreement and now has the power, authority and
legal right to acquire, own, and sell the Receivables.
(iii) To such counsel's knowledge, each of UACSC and UAFC is duly
qualified to do business and in good standing and has obtained all necessary
licenses and approvals in each jurisdiction in which failure to qualify or to
obtain such license or approval would have a material adverse effect on the
transactions contemplated in the Agreement, the Underwriting Agreement, the
Purchase Agreement or the Pooling and Servicing Agreement or would render any
receivable unenforceable by UACSC or the Trustee on behalf of any holder of the
Offered Securities.
(iv) The Registration Statement (which for purposes of such opinion
shall not be deemed to include any exhibits filed therewith) has become
effective under the Act and, to such counsel's knowledge, no proceedings for a
stop order have been instituted or are threatened under Article 8(d) of the Act.
(v) The Registration Statement, as of its effective date, and the
Prospectus, as amended or supplemented, for the Offered Securities, as of its
date, complied as to form in all material respects with the requirements of the
Act and the rules thereunder.
(vi) The Agreement, the Underwriting Agreement, the Purchase Agreement
and the Pooling and Servicing Agreement have been duly authorized, executed, and
delivered by UACSC and each constitute a legal, valid, and binding agreement of
UACSC, enforceable against UACSC in accordance with its respective terms, except
(i) as enforceability may be limited by bankruptcy,
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insolvency, reorganization, moratorium, receivership, or other similar laws
affecting the enforcement of creditors' rights in general and may be further
limited by the exercise of judicial discretion in applying principles of equity,
including (but not limited to) the availability or effects of a preliminary
injunction, a restraining order, or specific performance (regardless of whether
such enforceability is considered in a proceeding in equity or at law); and (ii)
the enforcement of certain provisions respecting indemnification and
contribution may be limited by applicable law or public policy.
(vii) The Purchase Agreement has been duly authorized, executed, and
delivered by UAFC and constitutes a legal, valid, and binding agreement of UAFC
enforceable against UAFC in accordance with its terms, except (i) as
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium, receivership, or other similar laws affecting the enforcement of
creditors' rights in general and may be further limited by the exercise of
judicial discretion in applying principles of equity, including (but not limited
to) the availability or effects of a preliminary injunction, a restraining
order, or specific performance (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(viii) Neither UACSC nor the Trust Fund is an "investment company" or
under the "control" of an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
(ix) The Pooling and Servicing Agreement is not required to be
qualified under the Trust Indenture Act of 1939, as amended, and the Trust Fund
is not required to be registered under the Investment Company Act of 1940, as
amended.
(x) No registration with or consent, approval, authorization or order
of any Federal court or governmental agency or body is required for the
consummation by UACSC of the transactions contemplated by the Agreement or the
Underwriting Agreement, except such as may be required under the Blue Sky laws
of any jurisdiction in connection with the offer and sale of the Offered
Securities.
(xi) The execution and delivery of the Agreement, the Underwriting
Agreement, the Purchase Agreement and the Pooling and Servicing Agreement, sale
of the Offered Securities to the Underwriters pursuant to the Agreement and the
Underwriting Agreement, the transfer of the Receivables, the assignment of the
security interest in the vehicles financed under any of the Receivables (the
"Financed Vehicles"), to UACSC and by UACSC to the Trustee acting on behalf of
the Trust, the consummation of the other transactions contemplated by the
Agreement, Underwriting Agreement or the Purchase Agreement, and the fulfillment
of the terms of the Pooling and Servicing Agreement, the Purchase Agreement, the
Agreement and the Underwriting Agreement do not constitute a breach or violation
of any term or provision of, or a default under, the Charter or Certificate of
Incorporation or By-laws of UACSC or UAFC, or, to the knowledge of such counsel,
any indenture or other material agreement or instrument to which UACSC or UAFC
is a party or by which either of them is bound, or any Federal statute or
regulation known to such counsel to be applicable to UACSC or UAFC or, to the
knowledge of such counsel, any order of any Federal court,
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regulatory body, administrative agency or governmental body having jurisdiction
over UACSC or UAFC.
(xii) No filing or other action other than the filing of the Uniform
Commercial Code financing statements (i) naming UAFC as Seller and UACSC as
buyer and (ii) naming UACSC as seller and the Trustee as buyer, which has been
completed, is necessary to perfect the sale and transfer of the Receivables by
UAFC to UACSC acting on behalf of the Trust; provided, however, that any such
transfer may be subject to the rights of purchasers who take possession of any
of the Receivables for value in the ordinary course of business without
knowledge of the transfer to the Trustee.
(xiii) Such counsel is familiar with UAC's and the Predecessor's
standard operating procedures relating to the acquisition of a perfected first
priority security interest in the vehicles financed by the retail installment
sale contracts purchased by UAC or the Predecessor in the ordinary course of
business. Assuming that UAC's and the Predecessor's standard procedures are
followed with respect to the perfection of security interests in the Financed
Vehicles (and such counsel has no reason to believe that UAC or the Predecessor
has not or will not continue to follow their standard procedures in connection
with the perfection of security interests in the Financed Vehicles), either UAFC
or the Predecessor has acquired or will acquire a perfected first priority
security interest in the Financed Vehicles.
(xiv) The Offered Securities have been duly authorized and assuming
that the Offered Securities are duly executed, authenticated, and delivered by
the Trustee as specified in the Pooling and Servicing Agreement and are issued
and delivered to, and paid for by, the Underwriters pursuant to the Agreement
and the Underwriting Agreement, will be validly issued and outstanding, will
evidence valid ownership interests in the Trust Fund, and will be entitled to
the benefits of the Pooling and Servicing Agreement.
(xv) UACSC has the corporate power and authority to assign and deliver
the Trust Fund to the Trustee under the Pooling and Servicing Agreement in
exchange for the Offered Securities, has duly authorized such assignment and
delivery to the Trustee by all necessary action on the part of UACSC, and the
Trust Fund has been duly and validly assigned and delivered by UACSC to the
Trustee under the Pooling and Servicing Agreement.
(xvi) The statements in the Prospectus under the captions "Prospectus
Summary," "Formation of the Trust," "The Trust Property," "The Receivables
Pool," "Yield Considerations," "Certificate Factors and Other Certificate
Information," "Use of Proceeds," "Union Acceptance Corporation and Affiliates,"
"The Certificates," and "Certain Legal Aspects of the Receivables," insofar as
such statements constitute a summary of the Offered Securities, the Pooling and
Servicing Agreement, the Purchase Agreement or other documents and other matters
of law or legal conclusions referred to therein, have been reviewed by such
counsel and are accurate in all material respects.
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(xvii) The statements in the Prospectus under the captions "Certain
Federal Income Tax Consequences" (including the description of such counsel's
opinion expressed therein) and "ERISA Considerations", to the extent that they
constitute matters of law or legal conclusions with respect thereto, have been
prepared or reviewed by such counsel and are accurate in all material respects.
(xviii) To such counsel's knowledge and other than as set forth or
contemplated in the Prospectus, there are no legal or governmental proceedings
pending, threatened, or contemplated to which UACSC or UAFC is a party or by
which any property of UACSC or UAFC is the subject (A) asserting the invalidity
of the Agreement, the Underwriting Agreement, the Offered Securities, the
Purchase Agreement or the Pooling and Servicing Agreement, (B) seeking to
prevent the issuance of the Offered Securities or the consummation of any of the
transactions contemplated by the Agreement, the Underwriting Agreement, the
Purchase Agreement or the Pooling and Servicing Agreement, or (C) which, if
determined adversely to UACSC or UAFC, would individually or in the aggregate
have a material adverse effect on (1) the ability of UACSC or UAFC to perform
its obligations under the Agreement, the Underwriting Agreement, the Purchase
Agreement or the Pooling and Servicing Agreement, or (2) the business,
operations, financial condition, properties or assets of UACSC.
Such counsel shall also state that, during the preparation of the
Registration Statement and the Prospectus, including amendments and supplements
thereto, such counsel participated in conferences with officers and other
representatives of UACSC, its accountants, the Underwriters and counsel for the
Underwriters and that, while such counsel has not undertaken to determine
independently, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (and amendments and supplements thereto) on the
basis of such conferences and such counsel's review of the documents referenced
in such counsel's opinion, no facts have come to the attention of such counsel
that have caused such counsel to believe that (1) the Registration Statement
contained, at the time that the Registration Statement became effective, an
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
(2) the Prospectus contained on the date of the Underwriting Agreement or
contains, as amended or supplemented, if applicable, on the Closing Date, an
untrue statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and (3) there are any
material contracts, indentures, or other documents of a character required to be
described in the Registration Statement or Prospectus or to be filed as exhibits
to the Registration Statement other than those described therein or so filed.
Terms capitalized herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
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EXHIBIT B
OPINION OF COUNSEL FOR THE TRUSTEE
The Opinion of counsel for the Trustee, to be delivered pursuant to
Article VI, paragraph (e) of the document entitled the UAC Securitization
Corporation and ______________________ ______________ Underwriting Agreement
Standard Provisions for UACSC Trusts, Automobile Receivable Backed Certificates
(the "Agreement") shall be to the effect that:
(i) the Trustee has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation with full power and authority (corporate or other) and to enter
into, and to take all action required of it under, the Pooling and Servicing
Agreement;
(ii) the Pooling and Servicing Agreement has been duly authorized,
executed, and delivered by the Trustee and constitutes a legal, valid and
binding obligation of the Trustee enforceable against the Trustee in accordance
with its terms, except as the enforceability thereof may be limited by (a)
bankruptcy, insolvency, reorganization, and other similar laws affecting the
enforcement of creditors' rights generally, as such laws would apply in the
event of a bankruptcy, insolvency or reorganization or similar occurrence
affecting the Trustee, and (b) general principles of equity (regardless of
whether such enforceability is considered in a proceeding in equity or at law);
(iii) the Trustee has duly executed the Offered Securities on behalf of
the Trust;
(iv) the Trustee has duly authenticated and delivered the Offered
Securities;
(v) the execution and delivery of the Pooling and Servicing Agreement
by the Trustee and the performance by the Trustee of its terms do not conflict
with or result in a violation of (A) any law or regulation of the United States
of America or the State of New York governing the banking or trust powers of the
Trustee, or (B) the Charter or By-laws of the Trustee; and
(vi) no approval, authorization or other action by, or filing with, any
governmental authority of the United States of America or the State of New York
having jurisdiction over the banking or trust powers of the Trustee is required
in connection with the execution and delivery by the Trustee of the Pooling and
Servicing Agreement or the performance by the Trustee of the terms of the
Pooling and Servicing Agreement.
Terms capitalized herein and not otherwise defined shall have the
meanings assigned to them in the Pooling and Servicing Agreement.
<PAGE>
EXHIBIT C
OPINION OF COUNSEL FOR THE CREDIT ENHANCER
The Opinion of Counsel for the Credit Enhancer to be delivered pursuant
to Article VI, paragraph (f) of the document entitled the UAC Securitization
Corporation and __________ ______________ Underwriting Agreement Standard
Provisions for UACSC Trusts, Automobile Receivable Backed Certificates (the
"Agreement") shall be substantially to the effect that:
(i) the Credit Enhancer is duly incorporated, validly existing
and in good standing under the laws of the _______________________;
(ii) the Credit Enhancer of [Credit Bank] has the corporate
power to execute and deliver, and to take all action required of it
under, the [credit enhancement instrument(s)];
(iii) the [credit enhancement instrument(s)] has been duly
authorized by the Credit Enhancer and, when duly executed and delivered
by the Credit Enhancer, will constitute the legal, valid and binding
obligation of Credit Enhancer, enforceable against it in accordance
with its terms subject, as to enforcement, to bankruptcy, insolvency,
liquidation, reorganization, adjustment of debt, moratorium and other
laws relating to, or affecting generally the enforcement of, creditor's
rights and remedies; and
(iv) the [Credit Enhancement instrument] is not required to be
registered under the Securities Act of 1933, as amended.
Terms capitalized herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
<PAGE>
ANNEX I
Form of Underwriting Agreement
UAC SECURITIZATION CORPORATION
UNION ACCEPTANCE CORPORATION
AND
[UNDERWRITER]
UNDERWRITING AGREEMENT
FOR
UACSC 199_-_ TRUST
[ ] AUTOMOBILE RECEIVABLE BACKED CERTIFICATES
_________, 199_
2
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___________ ___, 199__
UAC Securitization Corporation
250 North Shadeland Avenue, Suite 210A
Indianapolis, Indiana 46219
Union Acceptance Corporation
250 North Shadeland Avenue
Indianapolis, Indiana 46219
Dear Sirs:
We understand that UAC Securitization Corporation, a Delaware
corporation ("UACSC"), proposes to sell $______ aggregate amount of Certificates
designated "[ ] Automobile Receivable Backed Certificates" (the "Offered
Securities"), issued by UACSC 199_-_ [Auto] Trust. Subject to the terms and
conditions set forth in or incorporated by reference in this Agreement (this
"Agreement"), [we] [the Underwriters named on page __ of the copy of the
Prospectus attached hereto as Annex A (such Underwriters being herein called the
"Underwriters")] hereby agree severally and not jointly to purchase all of the
Offered Securities. The purchase price at which [we] [the Underwriters] will
purchase the Offered Securities is _____% of the original principal amount
thereof, plus, accrued interest from _______________ to the date of payment and
delivery of the Offered Securities pursuant to the following paragraph.
We [the Underwriters] will pay for the Offered Securities in
immediately available funds upon delivery thereof at the offices of Barnes &
Thornburg in Indianapolis, Indiana, or at such other location as shall be
designated by [us] [the Underwriters], at _____ A.M. (Indianapolis time) on
____________, 199_, or at such other time, not later than ____________, 199_, as
shall be designated by [us] [the Underwriters].
The Offered Securities shall have the terms set forth in the copy of
the Prospectus attached hereto as Annex A and shall conform in all material
respects to the description thereof contained in such Prospectus.
All the provisions contained in the document entitled UAC
Securitization Corporation and [Underwriter] Underwriting Agreement Standard
Provisions for UACSC [Auto] Trusts, Automobile Receivable Backed Certificates,
dated ____________, 199_ (the "Standard Provisions"), a copy of which you have
previously received, are herein incorporated by reference in their entirety and
shall be deemed to be a part of this Agreement to the same extent as if such
provisions had been set forth in full herein. All references to the
"Underwriters," the "several Underwriters" or the
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"Representative" in the Standard Provisions shall be deemed to refer to
[Underwriter] and ___________________________, Underwriters hereunder.
In connection with paragraph (h) of Article V of the Standard
Provisions, during the period specified in the Standard Provisions, neither
UACSC nor any affiliate of UACSC will, without our prior written consent, enter
into any agreement to offer or sell any automotive receivables or any securities
issued by UACSC or any affiliate of UACSC secured by, evidencing interests in,
or otherwise backed by automotive receivables, in any single transaction
involving a principal amount of automotive receivables in excess of
$___________.
[Next page is signature page]
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Please confirm your agreement by having authorized officers sign a copy
of this Agreement in the spaces set forth below and returning the signed copy to
us.
Very truly yours,
[UNDERWRITER]
AND ________________________________
[as Underwriters]
By: NationsBanc Montgomery Securities LLC
By:___________________________
Title:_______________________
Accepted:
UAC SECURITIZATION CORPORATION
By:___________________________
Title:_______________________
UNION ACCEPTANCE CORPORATION
By:___________________________
Title:_______________________
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ANNEX A
[Copy of Prospectus]
UAC SECURITIZATION CORPORATION
Depositor
UNION ACCEPTANCE CORPORATION
Servicer
and
HARRIS TRUST AND SAVINGS BANK,
Trustee
POOLING AND SERVICING AGREEMENT,
Dated as of __________, 199__
$---------------
UACSC [Year]-__ Auto Trust
$____________ ______% Class A-1 Money Market Automobile Receivable Backed
Certificates
$____________ ______ Class A-2 Automobile Receivable Backed Certificates
$____________ ______ Class A-3 Automobile Receivable Backed Certificates
$____________ ______ Class A-4 Automobile Receivable Backed Certificates
$____________ ______ Class A-5 Automobile Receivable Backed Certificates
Class I Interest Only Automobile Receivable Backed Certificates
and
Class IC Automobile Receivable Backed Certificate
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TABLE OF CONTENTS
Page
ARTICLE I Creation of Trust........................................1
ARTICLE II Definitions..............................................1
SECTION 2.01. Definitions............................................1
SECTION 2.02. Usage of Terms........................................18
SECTION 2.03. Cutoff Date and Record Date...........................18
SECTION 2.04. Section References....................................18
ARTICLE III Conveyance of Receivables...............................19
ARTICLE IV Acceptance by Trustee...................................20
ARTICLE V Information Delivered to the Rating Agencies............20
ARTICLE VI Agent for Service.......................................21
ARTICLE VII The Receivables.........................................21
SECTION 7.01. Representations and Warranties of Depositor...........21
SECTION 7.02. Repurchase Upon Breach................................22
SECTION 7.03. Custody of Receivable Files...........................22
SECTION 7.04. Duties of Servicer as Custodian.......................22
SECTION 7.05. Instructions; Authority to Act........................23
SECTION 7.06. Custodian's Indemnification...........................23
SECTION 7.07. Effective Period and Termination......................23
ARTICLE VIII Administration and Servicing of Receivables.............24
SECTION 8.01. Duties of Servicer....................................24
SECTION 8.02. Collection of Receivable Payments.....................24
SECTION 8.03. Realization Upon Receivables..........................25
SECTION 8.04. Physical Damage Insurance.............................25
SECTION 8.05. Maintenance of Security Interests
in Financed Vehicles............................25
SECTION 8.06. Covenants of Servicer.................................25
SECTION 8.07. Purchase of Receivables Upon Breach...................26
SECTION 8.08. Servicing Fee.........................................26
SECTION 8.09. Servicer's Certificate................................26
SECTION 8.10. Annual Statement as to Compliance;
Notice of Default...............................27
SECTION 8.11. Annual Independent Certified
Public Accountant's Report......................27
SECTION 8.12. Access to Certain Documentation and
Information Regarding Receivables...............27
SECTION 8.13. Servicer Expenses.....................................28
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SECTION 8.14. Reports to Certificateholders.........................28
ARTICLE IX Distributions; Statements to Certificateholders.........28
SECTION 9.01. Certificate Account...................................28
SECTION 9.02. Collections...........................................28
SECTION 9.03. Purchase Amounts......................................29
SECTION 9.04. Distributions to Parties..............................29
SECTION 9.05. Advances..............................................31
SECTION 9.06. Net Deposits..........................................32
SECTION 9.07. Statements to Certificateholders......................32
SECTION 9.08. Intentionally Blank...................................33
SECTION 9.09. Payahead Account. ...................................33
SECTION 9.10. Calculation of Notional Principal Amount..............34
ARTICLE X Credit Enhancement......................................34
SECTION 10.01. Subordination........................................34
SECTION 10.02. Spread Account.......................................34
SECTION 10.03. Policy...............................................35
ARTICLE XI The Certificates........................................36
SECTION 11.01. The Certificates.....................................36
SECTION 11.02. Authentication of Certificates.......................36
SECTION 11.03. Registration of Transfer and
Exchange of Certificates........................36
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates...37
SECTION 11.05. Persons Deemed Owners................................37
SECTION 11.06. Access to Agreement and List of
Certificateholders' Names and Addresses.........37
SECTION 11.07. Maintenance of Office or Agency......................38
SECTION 11.08. Book-Entry Certificates..............................38
SECTION 11.09. Notices to Clearing Agency...........................38
SECTION 11.10. Definitive Certificates..............................39
SECTION 11.11. The Tax Partnership Agreement........................39
ARTICLE XII The Depositor...........................................39
SECTION 12.01. Representations and Undertakings of Depositor........39
SECTION 12.02. Liability of Depositor; Indemnities..................41
SECTION 12.03. Merger or Consolidation of, or Assumption of
the Obligations of Depositor....................42
SECTION 12.04. Limitation on Liability of Depositor and Others......42
SECTION 12.05. Depositor May Own Certificates.......................42
ARTICLE XIII The Servicer............................................43
SECTION 13.01. Representations of Servicer..........................43
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SECTION 13.02. Indemnities of Servicer..............................44
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer.........................45
SECTION 13.04. Limitation on Liability of Servicer and Others.......45
SECTION 13.05. Servicer Not to Resign...............................46
SECTION 13.06. Delegation of Duties.................................46
ARTICLE XIV Default.................................................46
SECTION 14.01. Events of Default....................................46
SECTION 14.02. Appointment of Successor.............................47
SECTION 14.03. Notification to Certificateholders...................48
SECTION 14.04. Waiver of Past Defaults..............................48
ARTICLE XV The Trustee.............................................49
SECTION 15.01. Duties of Trustee....................................49
SECTION 15.02. Trustee's Certificate................................50
SECTION 15.03. Trustee's Assignment of Purchased Receivables........51
SECTION 15.04. Certain Matters Affecting the Trustee................51
SECTION 15.05. Trustee Not Liable for Certificates or Receivables...52
SECTION 15.06. Trustee May Own Certificates.........................53
SECTION 15.07. Trustee's Fees and Expenses..........................53
SECTION 15.08. Eligibility Requirements for Trustee.................53
SECTION 15.09. Resignation or Removal of Trustee....................53
SECTION 15.10. Successor Trustee....................................54
SECTION 15.11. Merger or Consolidation of Trustee...................54
SECTION 15.12. Appointment of Co-Trustee or Separate Trustee........55
SECTION 15.13. Representations and Warranties of Trustee............56
ARTICLE XVI Termination.............................................56
SECTION 16.01. Termination of the Trust.............................56
SECTION 16.02. Optional Disposition of All Receivables..............57
ARTICLE XVII Miscellaneous Provisions................................58
SECTION 17.01. Amendment............................................58
SECTION 17.02. Protection of Title to Trust.........................59
SECTION 17.03. Limitation on Rights of Certificateholders...........60
SECTION 17.04. Governing Law........................................61
SECTION 17.05. Notices..............................................61
SECTION 17.06. Severability of Provisions...........................61
SECTION 17.07. Assignment...........................................61
SECTION 17.08. Certificates Nonassessable and Fully Paid............62
SECTION 17.09. Nonpetition Covenant.................................62
SECTION 17.10. Counterparts.........................................62
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SECTION 17.11. Third Party Beneficiary. ...........................62
EXHIBIT 1 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT A-1 - Form of Class A-1 Automobile Receivable Backed Certificate
EXHIBIT A-2 - Form of Class A-2 Automobile Receivable Backed Certificate
EXHIBIT A-3 - Form of Class A-3 Automobile Receivable Backed Certificate
EXHIBIT A-4 - Form of Class A-4 Automobile Receivable Backed Certificate
EXHIBIT A-5 - Form of Class A-5 Automobile Receivable Backed Certificate
EXHIBIT B - Form of Class I Automobile Receivable Backed Certificate
EXHIBIT C - Form of Class IC Automobile Receivable Backed Certificate
EXHIBIT D - Form of Depository Trust Co. Letter of Representations
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
SCHEDULE C - Planned Notional Principal Amount Schedule
ANNEX A - Tax Partnership Agreement
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This POOLING AND SERVICING AGREEMENT, dated as of __________, 199__, is
made with respect to the formation of the UACSC 1998-___ Auto Trust, among UAC
SECURITIZATION CORPORATION, a Delaware corporation as depositor (the
"Depositor"), UNION ACCEPTANCE CORPORATION, an Indiana corporation as servicer
(the "Servicer"), and HARRIS TRUST AND SAVINGS BANK, an Illinois banking
corporation, as trustee (the "Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Creation of Trust
Upon the execution of this Agreement by the parties hereto, there is
hereby created the UACSC 1998-___ Auto Trust.
The parties hereto intend that this Agreement be construed so as to
create a partnership formed to facilitate the direct investment by
Certificateholders in the assets of the Trust.
ARTICLE II
Definitions
SECTION 2.01. Definitions. Whenever used in this Agreement, the
following words and phrases, unless the context otherwise requires, shall have
the following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior
to the opening of business on the day following the Cutoff Date.
"Advance" means, with respect to a Receivable and with respect to a
Collection Period, the amount that the Servicer is required to advance pursuant
to Section 9.05.
"Agreement" means this Pooling and Servicing Agreement executed by the
Depositor, the Servicer and the Trustee, and all amendments and supplements
thereto.
"Amount Financed", with respect to a Receivable, means the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"Approved Rating" means a rating of P-1 by Moody's or A-l+ by Standard
& Poor's.
"Authorized Newspaper" means a newspaper of general circulation in the
Borough of Manhattan, the City of New York, printed in the English language and
customarily published on each Business Day, whether or not published on
Saturdays, Sundays and holidays.
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"Available Spread Amount" means, on any Distribution Date, the amount
on deposit in the Spread Account, including any income or gain from any
investment of funds in the Spread Account, net of any losses from such
investment before giving effect to deposits into or withdrawals from the Spread
Account pursuant to Article IX.
"Available Funds" means the amount defined as such in Section 9.02.
"Book-Entry Certificates" means certificates evidencing a beneficial
interest in the Certificates, ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 11.08;
provided, however, that after the occurrence of a condition whereupon book-entry
registration and transfer are no longer permitted and Definitive Certificates
are to be issued to the Certificate Owners, such Certificates shall no longer be
"Book-Entry Certificates".
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in Chicago, Illinois
or New York, New York (or, if the Servicer has previously provided notice to the
Trustee that such day is not a Business Day, Little Rock, Arkansas or
Indianapolis, Indiana) shall be authorized or obligated by law, executive order,
or governmental decree to be closed.
"Certificate" means a Class A Certificate, a Class I Certificate or a
Class IC Certificate.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any consent, waiver, request, or demand
pursuant to the Agreement, the interest evidenced by any Certificate registered
in the name of the Depositor, the Servicer or UAC, or any Person controlling,
controlled by, or under common control with the Depositor or the Servicer, shall
not be taken into account in determining whether the requisite percentage of
Certificates (except the Class IC Certificate) necessary to effect any such
consent, waiver, request, or demand shall have been obtained.
"Certificate Account" means the account designated as such, established
and maintained pursuant to Section 9.01.
"Certificate Balance" means, at any time, the Initial Certificate
Balance minus all distributions of Monthly Principal made up to such time.
"Certificate Factor" means a seven digit decimal number computed by the
Servicer and stated in the Servicer's Certificate which is computed by dividing
the Certificate Balance (after giving effect to any prior distribution of
Monthly Principal) by the Initial Certificate Balance.
"Certificate Owner" means, with respect to a Book-Entry Certificate,
the Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the
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books of a Person maintaining an account with such Clearing Agency (directly or
as an indirect participant, in accordance with the rules of such Clearing
Agency).
"Certificate Register" and "Certificate Registrar" mean, respectively,
the register maintained and the registrar appointed pursuant to Section 11.03.
"Class A Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-1, Exhibit A-2, Exhibit A-3, Exhibit A-4 or Exhibit A-5.
"Class A Certificateholder" means the Person in whose name the
respective Class A Certificate shall be registered in the Certificate Register,
except that, solely for the purposes of giving any consent, waiver, request, or
demand pursuant to this Agreement, the interest evidenced by any Class A
Certificate registered in the name of the Depositor, the Servicer or UAC, or any
Person controlling, controlled by, or under common control with the Depositor or
the Servicer, shall not be taken into account in determining whether the
requisite percentage necessary to effect any such consent, waiver, request, or
demand shall have been obtained.
"Class A Monthly Interest" means, for any Distribution Date, the sum of
Class A-1 Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly
Interest, Class A-4 Monthly Interest and Class A-5 Monthly Interest.
"Class A-1 Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-1.
"Class A-1 Certificate Balance" means, at any time, the Initial Class
A-1 Certificate Balance minus all distributions of Monthly Principal to Class
A-1 Certificateholders made up to such time.
"Class A-1 Certificate Factor" means a seven digit decimal number
computed by the Servicer and stated in the Servicer's Certificate which is
computed by dividing the Class A-1 Certificate Balance (after giving effect to
any prior distribution of Monthly Principal to the Class A-1 Certificateholders)
by the Initial Class A-1 Certificate Balance.
"Class A-1 Certificateholder" means the Person in whose name the
respective Class A-1 Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request, or demand pursuant to this Agreement, the interest evidenced by any
Class A-1 Certificate registered in the name of the Depositor, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Class A-1 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one-three hundred sixtieth (1/360th) of the
Class A-1 Pass-Through Rate) multiplied by
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(the actual number of days from the Closing Date through the day before the
first Distribution Date) multiplied by the Class A-1 Certificate Balance at the
Closing Date and (ii) for any subsequent Distribution Date, one-three hundred
sixtieth (1/360th) of the product of the Class A-1 Pass-Through Rate, the actual
number of days from the previous Distribution Date through the day before the
related Distribution Date and the Class A-1 Certificate Balance as of the
immediately preceding Distribution Date (after giving effect to any distribution
of Monthly Principal made on such immediately preceding Distribution Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal
to be distributed to Class A-1 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-1 Pass-Through Rate" means ______% per annum.
"Class A-1 Stated Final Distribution Date" means ______________.
"Class A-2 Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-2.
"Class A-2 Certificate Balance" means, at any time, the Initial Class
A-2 Certificate Balance minus all distributions of Monthly Principal to Class
A-2 Certificateholders made up to such time.
"Class A-2 Certificate Factor" means a seven digit decimal number
computed by the Servicer and stated in the Servicer's Certificate which is
computed by dividing the Class A-2 Certificate Balance (after giving effect to
any prior distribution of Monthly Principal to the Class A-2 Certificateholders)
by the Initial Class A-2 Certificate Balance.
"Class A-2 Certificateholder" means the Person in whose name the
respective Class A-2 Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request, or demand pursuant to this Agreement, the interest evidenced by any
Class A-2 Certificate registered in the name of the Depositor, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Class A-2 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-2 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-2 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-2 Pass- Through Rate and the Class A-2 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
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"Class A-2 Monthly Principal" means that portion of Monthly Principal
to be distributed to Class A-2 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-2 Pass-Through Rate" means ____% per annum.
"Class A-2 Stated Final Distribution Date" means ___________.
"Class A-3 Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-3.
"Class A-3 Certificate Balance" means, at any time, the Initial Class
A-3 Certificate Balance minus all distributions of Monthly Principal to Class
A-3 Certificateholders made up to such time.
"Class A-3 Certificate Factor" means a seven digit decimal number
computed by the Servicer and stated in the Servicer's Certificate which is
computed by dividing the Class A-3 Certificate Balance (after giving effect to
any prior distribution of Monthly Principal to the Class A-3 Certificateholders)
by the Initial Class A-3 Certificate Balance.
"Class A-3 Certificateholder" means the Person in whose name the
respective Class A-3 Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request, or demand pursuant to this Agreement, the interest evidenced by any
Class A-3 Certificate registered in the name of the Depositor, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Class A-3 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-3 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-3 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-3 Pass- Through Rate and the Class A-3 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
"Class A-3 Monthly Principal" means that portion of Monthly Principal
to be distributed to Class A-3 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-3 Pass-Through Rate" means ______% per annum.
"Class A-3 Stated Final Distribution Date" means _____________.
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"Class A-4 Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-4.
"Class A-4 Certificate Balance" means, at any time, the Initial Class
A-4 Certificate Balance minus all distributions of Monthly Principal to Class
A-4 Certificateholders made up to such time.
"Class A-4 Certificate Factor" means a seven digit decimal number
computed by the Servicer and stated in the Servicer's Certificate which is
computed by dividing the Class A-4 Certificate Balance (after giving effect to
any prior distribution of Monthly Principal to the Class A-4 Certificateholders)
by the Initial Class A-4 Certificate Balance.
"Class A-4 Certificateholder" means the Person in whose name the
respective Class A-4 Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request, or demand pursuant to this Agreement, the interest evidenced by any
Class A-4 Certificate registered in the name of the Depositor, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Class A-4 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-4 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-4 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-4 Pass- Through Rate and the Class A-4 Certificate
Balance as of the immediately preceding Distribution Date (after giving effect
to any distribution of Monthly Principal made on such immediately preceding
Distribution Date).
"Class A-4 Monthly Principal" means that portion of Monthly Principal
to be distributed to Class A-4 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-4 Pass-Through Rate" means _____% per annum.
"Class A-4 Stated Final Distribution Date" means _______________.
"Class A-5 Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit A-5.
"Class A-5 Certificate Balance" means, at any time, the Initial Class
A-5 Certificate Balance minus all distributions of Monthly Principal to Class
A-5 Certificateholders made up to such time.
"Class A-5 Certificate Factor" means a seven digit decimal number
computed by the Servicer and stated in the Servicer's Certificate which is
computed by dividing the Class A-5 Certificate
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Balance (after giving effect to any prior distribution of Monthly Principal to
the Class A-5 Certificateholders) by the Initial Class A-5 Certificate Balance.
"Class A-5 Certificateholder" means the Person in whose name the
respective Class A-5 Certificate shall be registered in the Certificate
Register, except that, solely for the purposes of giving any consent, waiver,
request, or demand pursuant to this Agreement, the interest evidenced by any
Class A-5 Certificate registered in the name of the Depositor, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Depositor or the Servicer, shall not be taken into account in determining
whether the requisite percentage necessary to effect any such consent, waiver,
request, or demand shall have been obtained.
"Class A-5 Monthly Interest" means, (i) for the first Distribution
Date, the product of the following: (one twelfth of the Class A-5 Pass-Through
Rate) multiplied by (the number of days from the Closing Date (assuming the
month of the Closing Date has 30 days) through the day before the first
Distribution Date divided by 30) multiplied by the Class A-5 Certificate Balance
at the Closing Date and (ii) for any subsequent Distribution Date, one-twelfth
of the product of the Class A-5 Pass- Through Rate (as adjusted after the
Clean-Up Call Date) and the Class A-5 Certificate Balance as of the immediately
preceding Distribution Date (after giving effect to any distribution of Monthly
Principal made on such immediately preceding Distribution Date).
"Class A-5 Monthly Principal" means that portion of Monthly Principal
to be distributed to Class A-5 Certificateholders on each Distribution Date in
accordance with Section 9.04.
"Class A-5 Pass-Through Rate" means ______% per annum; provided,
however, the per annum rate shall be increased by 0.50% beginning on the first
Distribution Date after the Clean-Up Call Date, if the Class IC
Certificateholder does not exercise its right to purchase the corpus of the
Trust on the Clean-Up Call Date as described in Section 16.02.
"Class A-5 Stated Final Distribution Date" means the Stated Final
Distribution Date.
"Class I Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit B.
"Class I Certificateholder" means the Person in whose name the
respective Class I Certificate shall be registered in the Certificate Register,
except that solely for the purposes of giving any consent, waiver, request, or
demand pursuant to the Agreement, the interest evidenced by any Class I
Certificate registered in the name of the Depositor, the Servicer or UAC, or any
Person controlling, controlled by, or under common control with the Depositor or
the Servicer, shall not be taken into account in determining whether the
requisite percentage necessary to effect any such consent, waiver, request, or
demand shall have been obtained.
"Class I Monthly Interest" means (i) for the first Distribution Date,
the product of the following: (one-twelfth of the Class I Pass-Through Rate)
multiplied by (the number of days from
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the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Distribution Date divided by 30) multiplied by the
Notional Principal Amount of the Class I Certificates at the Closing Date, and
(ii) for any subsequent Distribution Date, one-twelfth of the product of the
Class I Pass-Through Rate and the Notional Principal Amount as of the
immediately preceding Distribution Date (after giving effect to any application
of Monthly Principal on such preceding Distribution Date); provided, however,
that after the Class I Stated Final Distribution Date, the Class I Monthly
Interest shall be zero.
"Class I Pass-Through Rate" means ________% per annum.
"Class I Stated Final Distribution Date" means the Stated Final
Distribution Date.
"Class IC Certificate" means a certificate executed on behalf of the
Trust and authenticated by the Trustee substantially in the form attached hereto
as Exhibit C.
"Class IC Certificateholder" means the Depositor or any Person in whose
name the Class IC Certificate shall be registered in the Certificate Register.
"Clean-Up Call Date" means the first Distribution Date on which the
Class IC Certificateholder is permitted to purchase the corpus of the Trust
pursuant to Section 16.02.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means ______________.
"Collected Interest" on a Receivable, as of the last day of a
Collection Period, means the portion of all payments received by the Servicer
allocable to interest relating to such Collection Period.
"Collected Principal" on a Receivable, as of the last day of a
Collection Period, means the portion of all payments received by the Servicer
allocable to principal relating to such Collection Period.
"Collection Period" means (i) initially, the period from the day after
the Cutoff Date to the end of the calendar month of ______, 199__ and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article 16.
"Companion Component" means, for each respective Distribution Date, the
difference between the Certificate Balance and the PAC Component.
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"Corporate Trust Office" means the office of the Trustee at which its
corporate trust business shall, at any particular time, be administered, which
office at the date of the execution of this Agreement is located at 311 West
Monroe Street, 12th Floor, Chicago, Illinois 60606; Attention: Corporate Trust
Department; Telecopy (312) 461-3525 or at such other address as the Trustee may
designate from time to time by notice to the Certificateholders, the Depositor
and the Servicer.
"Cutoff Date" means ______________________.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to UAC, UAC Finance Corporation or the
Predecessor under an existing agreement with UAC, UAC Finance Corporation or the
Predecessor or who arranged for a loan from UAC or the Predecessor to the
purchaser of a Financed Vehicle under an existing agreement with UAC or the
Predecessor.
"Defaulted Receivable" means, for any Collection Period, a Receivable
as to which any of the following has occurred: (i) any payment was delinquent
120 days or more as of the last day of such Collection Period, (ii) the Financed
Vehicle that secures the Receivable has been repossessed, or (iii) the Servicer
has determined that the Receivable is uncollectible in accordance with the
Servicer's customary practices on or before the last day of such Collection
Period; provided, however, that "Defaulted Receivable" shall not include any
Receivable that is to be repurchased pursuant to Section 7.02 or purchased
pursuant to Section 8.07; provided further, that any Advances made with respect
to a Receivable shall not be considered in the determination of the delinquency
status of such Receivable.
"Definitive Certificate" means a Certificate defined as such in Section
11.08.
"Depositor" means UAC Securitization Corporation, a Delaware
corporation, in its capacity as the depositor of the Receivables under this
Agreement, and each successor to UAC Securitization Corporation (in the same
capacity) pursuant to Section 12.03.
"Depository Agreement" means the agreement among the Depositor, the
Trustee and the initial Clearing Agency in the form attached hereto as Exhibit
D.
"Determination Date" means, for each Collection Period, the fifth day
of the following month.
"Dissolution Distribution Date" means the Distribution Date following
the liquidation of the trust corpus pursuant to Section 16.02.
"Distribution Date" means, for each Collection Period, the third
Business Day after the Determination Date. The first Distribution Date shall be
_____________.
"Eligible Bank" means any depository institution with trust powers
(including the Trustee), organized under the laws of the United States or any
State having a net worth in excess of $50,000,000, the deposits of which are
insured to the full extent permitted by law by the Federal Deposit Insurance
Corporation, which is subject to supervision and examination by Federal or State
authorities and which (i) has a long-term unsecured debt rating of at least Baa3
from Moody's or (ii) is approved by each Rating Agency.
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"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and
timely payment of principal and interest on which is fully guaranteed
by, the United States of America, the Federal National Mortgage
Association, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Trustee or any agent of the
Trustee, acting in their respective commercial capacities) incorporated
under the laws of the United States of America, any State thereof or
the District of Columbia or any foreign depository institution with a
branch or agency licensed under the laws of the United States of
America or any State, in each case subject to supervision and
examination by Federal and/or State banking authorities and having an
Approved Rating at the time of such investment or contractual
commitment providing for such investment or (B) any other demand or
time deposit or certificate of deposit which is fully insured by the
Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) (A) above;
(iv) short-term securities bearing interest or sold at a
discount issued by any corporation incorporated under the laws of the
United States of America or any State the short-term unsecured
obligations of which have an Approved Rating, or higher, at the time of
such investment; provided, however, that securities issued by any
particular corporation will not be Eligible Investments to the extent
that investment therein will cause the then outstanding principal
amount of securities issued by such corporation and held as part of the
corpus of the Trust to exceed 10% of amounts held in the Certificate
Account;
(v) commercial paper having an Approved Rating at the time of
such investment;
(vi) a guaranteed investment contract issued by any insurance
company or other corporation acceptable to the Rating Agency, provided
that the Trustee shall have received written notice from the Rating
Agency to the effect that the investment of funds in such a contract
will not result in the reduction or withdrawal of any rating on the
Certificates;
(vii) interests in any money market fund having a rating of
Aaa by Moody's or AAAm by Standard & Poor's; and
(viii) any other investment approved in advance in writing by
the Rating Agencies and the Insurer.
"Event of Default" means an event specified in Section 14.01.
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"Excess Yield Requirement" has the meaning specified in Section 1.01 of
the Insurance Agreement.
"Financed Vehicle" means a new or used automobile, light truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Fiscal Agent" means the party designated as such under the Policy. The
initial Fiscal Agent is State Street Bank and Trust Company, N.A. and its
address for purposes of notice hereunder is 61 Broadway, 15th Floor, New York,
New York 10006, Fax: (212) 612-3203, Attention: Municipal Registrar and Paying
Agency.
"Holder" -- see "Certificateholder."
"Initial Certificate Balance" means $_______________.
"Initial Class A-1 Certificate Balance" means $_______________.
"Initial Class A-2 Certificate Balance" means $_______________.
"Initial Class A-3 Certificate Balance" means $_______________.
"Initial Class A-4 Certificate Balance" means $_______________.
"Initial Class A-5 Certificate Balance" means $_____________.
"Insolvency Event" with respect to a party means (i) the entry of a
decree or order by a court or agency or supervisory authority having
jurisdiction in the premises for the appointment of a trustee-in-bankruptcy or
similar official for such party in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings, or for the
winding up or liquidation of their respective affairs, and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or (ii) the consent by such party to the appointment of a trustee-in-
bankruptcy or similar official in any insolvency, readjustment of debt,
marshalling of assets and liabilities, or similar proceedings of or relating to
such party or of or relating to substantially all of its property; or (iii) such
party shall admit in writing its inability to pay its debts generally as they
become due, file a petition to take advantage of any applicable insolvency or
reorganization statute, make an assignment for the benefit of its creditors, or
voluntarily suspend payment of its obligations.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of ________________, among the Depositor, UAC individually and as
Servicer, UAFC and the Insurer pursuant to which the Insurer issued the Policy.
"Insurance Premium" means for any Distribution Date, an amount equal to
the product of (i) the Policy per annum fee rate set forth in paragraph 1 of the
Premium Side Letter Agreement calculated for the actual number of days elapsed
during the Collection Period on the basis of a 360 day year and (ii) the
Certificate Balance calculated as of the Record Date to which such Distribution
Date relates, payable monthly in arrears.
"Insurer" means MBIA Insurance Corporation, a New York domiciled
insurance company.
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"Interest Advance Amount" with respect to a simple interest Receivable
as to which an Advance is required to be made on the last day of a Collection
Period, shall mean an amount equal to 30 days of interest upon the Principal
Balance of such Receivable as of such date; and, with respect to a Precomputed
Receivable as to which an Advance is required to be made on the last day of a
Collection Period, shall mean an amount equal to that portion of the earliest
delinquent Scheduled Payment allocable to interest (using the actuarial or
constant yield method).
"Interest Shortfall" means, as to any simple interest Receivable as of
the last day of any Collection Period, the amount, if any, by which (a) interest
due on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method except that the amount of Collected
Interest in respect of Precomputed Receivables shall be increased by giving
effect to the withdrawal for the related Distribution Date of any previously
received Scheduled Payments in respect of such Receivable from the Payahead
Account in accordance with Sections 8.02(b) and 9.09 hereof).
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable or related Financed Vehicle by
operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Distribution Date means such monies collected during the preceding
Collection Period. In no event shall Liquidation Proceeds be less than zero.
"Monthly Interest" means the sum of Class A Monthly Interest and Class
I Monthly Interest.
"Monthly Principal" means, for any Distribution Date, an amount equal
to (i) the Certificate Balance as of the prior Distribution Date (after giving
effect to the distribution of Monthly Principal on such date) (or, in the case
of the first Distribution Date, the Original Pool Balance), less (ii) the Pool
Balance at the close of business on the last day of the preceding Collection
Period; provided, however, that: (i) Monthly Principal will be increased by the
amount, if any, which is necessary to reduce the Class A-1 Certificate Balance
to zero on the Class A-1 Stated Final Distribution Date; (ii) Monthly Principal
will be increased by the amount, if any, which is necessary to reduce the Class
A-2 Certificate Balance to zero on the Class A-2 Stated Final Distribution Date;
(iii) Monthly Principal will be increased by the amount, if any, which is
necessary to reduce the Class A-3 Certificate Balance to zero on the Class A-3
Stated Final Distribution Date; (iv) Monthly Principal will be increased by the
amount, if any, which is necessary to reduce the Class A-4 Certificate Balance
to zero on the Class A-4 Stated Final Distribution Date; and (v) Monthly
Principal will be increased by the amount, if any, which is necessary to reduce
the Class A-5 Certificate Balance to zero on the Stated Final Distribution Date.
Monthly Principal will not exceed the Certificate Balance.
"Monthly Servicing Fee" means, (i) for the first Distribution Date, the
product of the following: the monthly Servicing Rate multiplied by (the number
of days remaining in the month of the Closing Date from and including the
Closing Date, assuming a 30-day month, divided by 30)
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multiplied by the Initial Certificate Balance and (ii) for any subsequent
Distribution Date, the product of (a) the Certificate Balance on the preceding
Distribution Date (after giving effect to any distribution of Monthly Principal
made on that such Distribution Date) and (b) the monthly Servicing Rate.
"Moody's" means Moody's Investors Service, Inc.
"Net Cumulative Loss Percentage" means, for any Distribution Date, the
fraction (expressed as a percentage) of which (i) the numerator is the aggregate
principal balance of all Defaulted Receivables as of such Distribution Date less
the aggregate amount of Liquidation Proceeds received after the Cutoff Date as
of such Distribution Date and (ii) the denominator is the Initial Certificate
Balance.
"Net Principal Policy Amount" means the Certificate Balance as of the
first Distribution Date minus all amounts previously drawn on the Policy or from
the Spread Account with respect to Monthly Principal.
"Note Rate" means, with respect to a Receivable, the contract rate of
interest on such Receivable, exclusive of prepaid finance charges.
"Notional Principal Amount" means, for the purpose of calculating the
Class I Monthly Interest at any time, the Original Notional Principal Amount
minus all allocations of Monthly Principal to the PAC Component made up to such
time pursuant to Section 9.10 of this Agreement.
"Obligor" on a Receivable means the purchaser or the co-purchasers of
the Financed Vehicle or any other Person who owes payments under the Receivable.
The phrase "payment made on behalf of an Obligor" shall mean all payments made
with respect to a Receivable except payments made by UAC, the Depositor or the
Servicer.
"Officers' Certificate" means a certificate signed by any two of the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, or the controller of UAC, the Depositor or the
Servicer, as the case may be; provided that no individual shall sign in a dual
capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Depositor and/or Servicer, which counsel shall be acceptable to
the Trustee.
"Optional Disposition Price" means the amount specified as such in
Section 16.02.
"Original Notional Principal Amount" shall be $_______________.
"Original Pool Balance" means $_______________.
"Outstanding Advances" as of any date, with respect to a Receivable,
means the total amount of Advances made on such Receivable for which the
Servicer has not been reimbursed.
"PAC Component" has the meaning set forth in Section 9.10.
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"Payahead" on a Precomputed Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Planned Notional Principal Amount" means, for each respective
Distribution Date, the corresponding amount specified in the Planned Notional
Principal Amount Schedule.
"Planned Notional Principal Amount Schedule" means, the amortization
schedule of Planned Notional Principal Amount for each respective Distribution
Date, attached hereto as Schedule C.
"Policy" means the irrevocable Financial Guaranty Insurance Policy
dated March 12, 1998 issued by the Insurer to the Trustee for the benefit of the
Class A Certificateholders and the Class I Certificateholders and having a
maximum amount available to be drawn in respect of Class A Monthly Interest,
Class I Monthly Interest and Monthly Principal equal to the Policy Amount.
"Policy Amount" means with respect to any Distribution Date:
(x) the sum of (A) the lesser of (i) the Certificate Balance
(after giving effect to any distribution of Available Funds and any
funds withdrawn from the Spread Account to pay Monthly Principal on
such Distribution Date) and (ii) the Net Principal Policy Amount, plus
(B) Class A Monthly Interest, plus (C) Class I Monthly Interest, plus
(D) the Monthly Servicing Fee; less
(y) all amounts on deposit in the Spread Account on such
Distribution Date.
"Pool Balance" as of any date means the aggregate Principal Balance of
the Receivables as of such date; provided, however, that for purposes of
determining Monthly Principal, the Principal Balance of a Defaulted Receivable
or a Purchased Receivable (if actually purchased by the Servicer or repurchased
by UAC) shall be deemed to be zero on and after the close of business on the
last day of the Collection Period in which the Receivable becomes a Defaulted
Receivable or a Purchased Receivable that is actually purchased or repurchased.
"Precomputed Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related contract as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances, the sum
of monthly balances, the rule of 78's or any equivalent method.
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"Predecessor" means Union Federal Savings Bank of Indianapolis, a
federally chartered stock savings bank.
"Premium Side Letter Agreement" means the letter dated the Closing Date
as defined in the Insurance Agreement.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
"Principal Balance" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
"Principal Distribution Sequence" means that order in which Monthly
Principal shall be distributed among the Class A Certificateholders as follows:
(i) to the Class A-1 Certificateholders until the Class A-1 Certificate Balance
has been reduced to zero; (ii) to the Class A-2 Certificateholders until the
Class A-2 Certificate Balance has been reduced to zero; (iii) to the Class A-3
Certificateholders until the Class A-3 Certificate Balance has been reduced to
zero; (iv) to the Class A-4 Certificateholders until the Class A-4 Certificate
Balance has been reduced to zero; and (v) to the Class A-5 Certificateholders
until the Class A-5 Certificate Balance has been reduced to zero.
"Purchase Agreement" means the Purchase Agreement, dated as of March 1,
1998, by and between the Depositor, UAC and UAFC, as amended, supplemented or
modified from time to time.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased not later than the
Determination Date of the month immediately following the respective Collection
Period by the Servicer pursuant to Section 8.07 or repurchased not later than
the Determination Date of the month immediately following the respective
Collection Period by UAC pursuant to Section 7.02.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns.
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"Rating Agency Condition" means, with respect to any action, that each
Rating Agency shall have been given 10 days' (or such shorter period as shall be
acceptable to each Rating Agency) prior notice thereof and that, within 7 days
of receipt of such notice, none of the Rating Agencies shall have notified the
Depositor, the Servicer or the Trustee in writing that such action will result
in a reduction or withdrawal of the then current ratings of the Certificates.
"Receivable" means any simple interest or pre-computed (add-on)
interest installment sales contract or installment loan and security agreement
which shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means those Receivables conveyed to
the Trust by the Depositor listed as of the Cutoff Date in Schedule A.
"Record Date" means, for any Distribution Date, the last day of the
preceding Collection Period.
"Recoveries of Advances" means, for any Collection Period, all payments
received by the Servicer by or on behalf of Obligors (other than Obligors with
respect to Defaulted Receivables and excluding reimbursements of Outstanding
Advances on Defaulted Receivables pursuant to Sections 9.04(a)(i) and 9.05)
during such Collection Period representing recoveries of Interest Shortfalls for
which Advances were made for prior Collection Periods.
"Required Spread Amount" means on each Distribution Date, ____% of the
Initial Certificate Balance; provided, that on any Distribution Date on which
(or after the first Distribution Date on which) the Excess Yield Requirement is
not met, the Required Spread Amount shall be equal to ___% of the Certificate
Balance (after giving effect to any payment of Monthly Principal on such
Distribution Date). On any Distribution Date following such first Distribution
Date on which the Excess Yield Requirement is not met, the Required Spread
Amount shall be reduced below ____% beginning on the twelfth Distribution Date,
as follows:
(i) on and after the twelfth (12th) Distribution Date, if the
Net Cumulative Loss Percentage is less than or equal to 1.2% on the
twelfth Distribution Date, then the Required Spread Amount shall be
____% of the Certificate Balance;
(ii) on and after the twenty fourth (24th) Distribution Date,
if the Net Cumulative Loss Percentage is less than or equal to 2.5% on
the 24th Distribution Date, then the Required Spread Amount shall be
_____% of the Certificate Balance; and
(iii) on and after the thirty sixth (36th) Distribution Date,
if the Net Cumulative Loss Percentage is less than or equal to 3.75% on
the twelfth Distribution Date, then the Required Spread Amount shall be
_____% of the Certificate Balance.
Notwithstanding any of the foregoing, upon and during the continuance of an
Event of Default or a Trigger Event, the Required Spread Amount shall be equal
to the Policy Amount as of such Distribution Date after giving effect to any
draws on the Policy, draws on the Spread Account and other distributions
pursuant to Section 9.04 on such Distribution Date. Once such Event of Default
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or Trigger Event has been cured or discontinued, the Required Spread Amount
shall be determined as set forth above.
"Responsible Officer" means, when used with respect to the Trustee, any
officer within the Corporate Trust Office (or any successor group of the
Trustee) including any managing director, vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance and to provide interest at the Note
Rate.
"Servicer" means Union Acceptance Corporation, an Indiana corporation,
in its capacity as the servicer of the Receivables and each successor to Union
Acceptance Corporation (in the same capacity) pursuant to Section 13.03 or
14.02.
"Servicer's Certificate" means a certificate completed and executed by
an officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 1.00% per annum, payable monthly at one-twelfth
of the annual rate, subject to adjustment with respect to a successor Servicer
pursuant to Section 14.02.
"Spread Account" means, the account designated as such, established and
maintained pursuant to Section 10.02.
"Spread Account Facility" means any liquidity facility or similar
arrangement established pursuant to Section 10.02.
"Spread Account Surplus" means, on any Distribution Date, the excess,
if any, of the Available Spread Amount on such Distribution Date, after giving
effect to deposits into and withdrawals from the Spread Account pursuant to
Article 9 on such Distribution Date, over the Required Spread Amount on such
Distribution Date (after giving effect to any payments of Monthly Principal and
Monthly Interest and all amounts owing to the Insurer on such Distribution
Date).
"Standard & Poor's" means Standard & Poor's Ratings Group, a division
of The McGraw- Hill Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
"Stated Final Distribution Date" means _______________.
"Trigger Event" means any of the events identified as such in Section
6.01 of the Insurance Agreement.
"Trust" means the trust created by the Agreement, the estate of which
shall generally comprise the Receivables (other than Purchased Receivables) and
all monies paid thereon, and all monies due
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thereon, including Accrued Interest, as of and after the Cutoff Date (but
excluding Accrued Interest paid on or prior to the Closing Date); security
interests in the Financed Vehicles; funds deposited in the Certificate Account;
all documents contained in the Receivable Files; any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Trust; any Liquidation Proceeds and any rights of the Depositor in proceeds from
claims or refunds of premiums on any physical damage, lender's single interest,
credit life, disability, and hospitalization insurance policies covering
Financed Vehicles or Obligors; the interest of the Depositor in recourse to
Dealers relating to certain of the Receivables; the proceeds of the foregoing;
amounts on deposit from time to time in the Spread Account; and certain rights
of the Depositor under the Purchase Agreement, including, without limitation,
Section 3.04 thereof.
"Trustee" means Harris Trust and Savings Bank, a banking corporation
organized under the laws of the State of Illinois and its successors or any
corporation resulting from or surviving any merger or consolidation to which it
or its successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"Trustee's Certificate" means a certificate completed and executed by
the Trustee by a Responsible Officer pursuant to Section 15.02, substantially in
the form of, in the case of an assignment to UAC, Exhibit 1, and in the case of
an assignment to the Servicer, Exhibit 2.
"UAC" means Union Acceptance Corporation, an Indiana corporation, and
its successors and assigns, other than in its capacity as Servicer.
"UAC Finance Corporation" means UAC Finance Corporation, an Indiana
corporation, and its successors and assigns.
"UAFC" means Union Acceptance Funding Corporation, a Delaware
corporation, and its successors and assigns.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
SECTION 2.02. Usage of Terms. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "writing" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
subsequent amendments thereto or changes therein entered into in accordance with
their respective terms and not prohibited by this Agreement; references to
Persons include their permitted successors and assigns; and the term "including"
means "including without limitation."
SECTION 2.03. Cutoff Date and Record Date. All references to the Record
Date prior to the first Record Date in the life of the Trust shall be to the
Closing Date.
SECTION 2.04. Section References. All section references in this
Agreement shall be to Sections in this Agreement unless otherwise specified.
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ARTICLE III
Conveyance of Receivables
In consideration of the Trustee's delivery to or upon the order of the
Depositor of Class A Certificates with a Certificate Balance equal to the
Original Pool Balance, Class I Certificates representing in the aggregate the
Original Notional Principal Amount and the Class IC Certificate the Depositor
does hereby sell, transfer, assign, and otherwise convey to the Trustee, in
trust for the benefit of the Certificateholders and the Insurer, without
recourse (subject to the obligations herein):
(i) all right, title, and interest of the Depositor in and to
the Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims or
refunds of premiums on any physical damage, lender's single interest,
credit life, disability and hospitalization insurance policies covering
Financed Vehicles or Obligors;
(iv) funds deposited in the Certificate Account;
(v) the interest of the Depositor in any proceeds from
recourse to Dealers relating to the Receivables;
(vi) all documents contained in the Receivable Files;
(vii) all monies paid and all monies due, including Accrued
Interest, after the Cutoff Date, with respect to the Receivables held
by the Servicer or Depositor (but excluding Accrued Interest paid prior
to the Closing Date);
(viii) the rights of the Depositor pursuant to the Purchase
Agreement to require UAC to repurchase any Receivables as to which
there has been a breach of the representations and warranties contained
therein;
(ix) the benefits of the Policy; and
(x) all proceeds of the foregoing.
The Depositor does hereby further assign, convey, pledge and grant a
security interest in (i) the funds on deposit from time to time in the Spread
Account; (ii) all Eligible Investments purchased with funds deposited in the
Spread Account; (iii) any and all other right, title and interest, including any
beneficial interest the Depositor may have in the Certificate Account, the
Spread Account and the funds deposited therein, and (iv) any proceeds of any of
the foregoing, to the Trustee and for the benefit of the Certificateholders to
secure amounts payable to Certificateholders as provided under this Agreement.
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The Depositor does not convey to the Trustee any interest in any
contracts with Dealers related to any "dealer reserve" or any rights to the
recapture of any dealer reserve.
ARTICLE IV
Acceptance by Trustee
The Trustee does hereby accept all consideration conveyed by the
Depositor pursuant to Article III, and declares that the Trustee shall hold such
consideration upon the trusts herein set forth for the benefit of all present
and future Certificateholders and the Insurer, subject to the terms and
provisions of this Agreement.
ARTICLE V
Information Delivered to the Rating Agencies
(a) The Servicer hereby expresses its intention to deliver
promptly to each Rating Agency (i) a copy of each Servicer's Certificate that it
delivers to the Trustee and the Insurer pursuant to Section 8.09, (ii) a copy of
each annual Officers' Certificate as to compliance and any notice of Default
that it delivers to the Trustee pursuant to Section 8.10, (iii) delinquency and
loss information for the Receivables, the amount of any draws on the Policy,
written notice of any merger, consolidation, or other succession of the
Servicer, pursuant to Section 13.03, or the Depositor, pursuant to Section
12.03, (iv) a copy of each amendment to this Agreement and (v) any Opinion of
Counsel delivered to the Trustee pursuant to Section 17.02(i).
(b) The Trustee hereby expresses its intention to deliver
promptly to each Rating Agency (i) a copy of each statement or notification to
Certificateholders delivered pursuant to Section 9.07, 14.03 or 15.10, (ii) a
copy of each annual certified public accountant's report received by the Trustee
pursuant to Section 8.11, (iii) a copy of each amendment to this Agreement and
(iv) a copy of the notice of termination of the Trust provided to
Certificateholders pursuant to Section 16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and (b)
of this Article VIII, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
26 Broadway, 15th Floor
New York, New York 10004
Moody's Investors Service, Inc.
Attention: ABS Monitoring Department
4th Floor
99 Church Street
New York, New York 10007
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(d) The provisions of this Article V are included herein for
convenience of reference only and shall not be construed to be contractual
undertakings or obligations. The failure of the Servicer or the Trustee to
comply with any or all of the provisions of this Article V shall not constitute
an Event of Default or a default of any kind under this Agreement or make any
remedy available to any Person.
ARTICLE VI
Agent for Service
The agent for service for the Depositor shall be Thomas W. West,
President of the Depositor. Any and all service on the agent for service of the
Depositor shall be sent to UAC Securitization Corporation, 9240 Bonita Beach
Road, Suite 1109-A, Bonita Springs, Florida 34135 or such other address as the
Depositor shall provide notice thereof pursuant to Sections 17.02(c) or 17.05.
The agent for service for the Servicer shall be John M. Stainbrook,
President of the Servicer. Any and all service on the agent for service of the
Servicer shall be sent to Union Acceptance Corporation, 250 North Shadeland
Avenue, Indianapolis, Indiana 46204.
ARTICLE VII
The Receivables
SECTION 7.01. Representations and Warranties of Depositor. Pursuant to
Article III, the Depositor has assigned to the Trust the benefit of, and its
rights respecting, the representations and warranties made to the Depositor in
the Purchase Agreement as to the Receivables on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. Such representations and warranties speak as of the execution and
delivery of the Purchase Agreement but shall survive the sale, transfer, and
assignment of the Receivables to the Trustee.
(a) The Depositor hereby represents and warrants to the Trustee that it
has entered into the Purchase Agreement with UAC and UAFC, that UAC and UAFC
have made the representations and warranties set forth therein, that such
representations and warranties run to and are for the benefit of the Depositor,
and that pursuant to Article III of this Agreement the Depositor has transferred
and assigned to the Trustee all rights of the Depositor to cause UAC under the
Purchase Agreement to repurchase Receivables in the event of a breach of such
representations and warranties.
(b) It is the intention of the Depositor that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Depositor to the Trust and that the beneficial interest in
and title to the Receivables not be part of the receivership estate in the event
of the appointment of a receiver for the Depositor. No Receivable has been sold,
transferred, assigned, or pledged by the Depositor to any Person other than the
Trustee. Immediately prior to the transfer and assignment herein contemplated,
the Depositor had good and marketable title to each Receivable free and clear of
all liens, and, immediately upon the transfer thereof, the Trustee (for the
benefit of the Certificateholders and the Insurer) shall have good and
marketable title to each Receivable, free and clear of all liens and rights of
others, except for the rights of the Certificateholders and the Insurer; and the
transfer has been perfected under the UCC. On or prior
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to the Closing Date, all filings (including, without limitation, UCC filings)
necessary in any jurisdiction to give the Trustee a first perfected ownership
interest in the Receivables shall have been made.
SECTION 7.02. Repurchase Upon Breach. The Depositor, UAC, the Servicer,
or the Trustee, as the case may be, shall inform the Insurer and the other
parties promptly, in writing, upon the discovery of any breach of the
representations and warranties contained in the Purchase Agreement. This
obligation shall not constitute an obligation on the part of the Trustee to
actively seek to discover any such breaches. Unless the breach shall have been
cured by the second Record Date following the discovery, UAC, pursuant to its
obligations under the Purchase Agreement, shall repurchase any Receivable
materially and adversely affected by the breach as of such Record Date (or, at
UAC's option, the first Record Date following the discovery). In consideration
of the purchase of the Receivable, UAC shall remit the Purchase Amount, in the
manner specified in Section 9.03. The sole remedy of the Trustee, the Trust, or
the Certificateholders with respect to a breach of the representations and
warranties referred to in Section 7.01 shall be to require UAC to repurchase
Receivables pursuant to the Purchase Agreement and this Section 7.02.
SECTION 7.03. Custody of Receivable Files. To assure uniform quality in
servicing the Receivables and to reduce administrative costs, the Trustee, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Certificateholders, to act as the agent of the Trustee as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trustee with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title or such documents that
the Depositor or Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Depositor
in the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the
Depositor shall keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor, or a Financed
Vehicle.
SECTION 7.04. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files on behalf of the Trustee for the use and benefit of all
present and future Certificateholders, and maintain such accurate and complete
accounts, records, and computer systems pertaining to each Receivable File as
shall enable the Trustee to comply with this Agreement. In performing its duties
as custodian the Servicer shall act with reasonable care, using that degree of
skill and attention that the Servicer exercises with respect to the receivable
files relating to all comparable automotive receivables that the Servicer
services for itself. The Servicer shall conduct, or cause to be conducted,
periodic audits of the Receivable Files held by it under this Agreement, and of
the related accounts, records, and computer systems, in such a manner as shall
enable the Trustee to verify the accuracy of the Servicer's record keeping. The
Servicer shall promptly report to the Trustee any failure on its part to hold
the Receivable Files and maintain its accounts, records, and computer systems as
herein
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provided and promptly take appropriate action to remedy any such failure;
provided, however, notwithstanding anything to the contrary in Section 7.03 or
this Section 7.04, the Servicer shall not be required to possess the original of
Receivables representing less than 2% of the Original Pool Balance until 30 days
following the Closing Date.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Trustee by prior
written notice. The Servicer shall make available to the Trustee or its duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Trustee shall
instruct.
(c) Release of Documents. Upon instruction from the Trustee, the
Servicer shall release any document in a Receivable File to the Trustee, the
Trustee's agent, or the Trustee's designee, as the case may be, at such place or
places as the Trustee may designate, as soon as practicable.
SECTION 7.05. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Trustee.
SECTION 7.06. Custodian's Indemnification. The Servicer, shall
indemnify the Trust and the Trustee (which shall include, for purposes of this
Section 7.06, its directors, officers, employees and agents) for any and all
liabilities, obligations, losses, compensatory damages, payments, costs, or
expenses of any kind whatsoever that may be imposed on, incurred, or asserted
against the Trust or the Trustee as the result of any improper act or omission
in any way relating to the maintenance and custody by the Servicer of the
Receivable Files; provided, however, that the Servicer shall not be liable for
any portion of any such amount resulting from the willful misfeasance, bad
faith, or negligence of the Trustee. This indemnity shall survive the
termination of this Agreement and the resignation or removal of the Trustee.
SECTION 7.07. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under Section 14.01, the appointment of the Servicer as
custodian may be terminated (i) by the Holders of Certificates evidencing not
less than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates with the consent of the Insurer, which
consent shall not be unreasonably withheld, or (ii) by the Insurer, without the
consent of the Holders of the Certificates (and, as to the rights of the Insurer
under (i) or (ii), so long as the Insurer is not in default of its obligations
under the Policy). The Trustee may terminate the Servicer's appointment as
custodian with cause at any time upon written notification to the Servicer. As
soon as practicable after any termination of such appointment, the Servicer
shall deliver the Receivable Files to the Trustee or the Trustee's agent at such
place or places as the Trustee, with the consent of the Insurer, may reasonably
designate.
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ARTICLE VIII
Administration and Servicing of Receivables
SECTION 8.01. Duties of Servicer. The Servicer, for the benefit of the
Trust and the Certificateholders, shall manage, service, administer, and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in the
Servicer's sole discretion), responding to inquiries of Obligors or of federal,
state or local governmental authorities with respect to the Receivables,
investigating delinquencies, sending payment coupons to Obligors, accounting for
collections, and furnishing monthly and annual statements to the Trustee with
respect to distributions. The Servicer shall follow its customary standards,
policies, and procedures in performing its duties as Servicer. Without limiting
the generality of the foregoing, the Servicer is authorized and empowered by the
Trustee to execute and deliver, on behalf of itself, the Trust, the
Certificateholders, or the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to such Receivables or to the
Financed Vehicles securing such Receivables. If the Servicer shall commence a
legal proceeding to enforce a Receivable or a Defaulted Receivable, the Trustee
shall thereupon be deemed to have automatically assigned, solely for the purpose
of collection, such Receivable to the Servicer. The Trustee shall execute any
documents prepared by the Servicer and delivered to the Trustee for execution
that are necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties hereunder.
SECTION 8.02. Collection of Receivable Payments (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself. If payments are extended in
the ordinary course of the Servicer's collection procedures, and, as a result,
any Receivable would be outstanding at the Stated Final Distribution Date, then
the Servicer shall be obligated to purchase such Receivable pursuant to Section
8.07 (unless such Receivable is otherwise being purchased pursuant to Section
16.02) as of the last day of the Collection Period immediately preceding the
Stated Final Distribution Date. The Servicer may in its discretion waive any
late payment charge or any other fees that it is entitled to retain under
Section 8.08, or other fee (to the extent consistent with its credit and
collection policy on the Closing Date) that may be collected in the ordinary
course of servicing a Receivable.
(b) All allocations of payments with respect to a simple-interest
Receivable to principal and interest and determinations of periodic charges and
the like shall be made using the simple interest method, based on either the
actual number of days elapsed and the actual number of days in the calendar year
or on the basis of a thirty-day month and a 360-day calendar year, as specified
in the related installment sales contract or installment loan and security
agreement. Each payment on a simple interest Receivable shall be applied first
to the amount of interest accrued on such Receivable to the date of receipt;
second, to principal due on such Receivable; third, to late charges, if any,
accrued on such Receivable; and last, to reduce the remaining principal amount
outstanding on such Receivable. Payments made by or on behalf of an Obligor
including any Payaheads previously made and added to the Payahead Balance with
respect to a Precomputed Receivable shall be applied first to overdue Scheduled
Payments (including reduction of Outstanding Advances as provided in Section
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9.04). Next, any excess shall be applied to the Scheduled Payment and any
remaining excess shall be added to the Payahead Balance, and shall be applied to
prepay the Precomputed Receivable, but only if such Payahead Balance shall be
sufficient to prepay the Receivable in full. Otherwise, any such remaining
excess payments shall constitute a Payahead and shall increase the Payahead
Balance.
SECTION 8.03. Realization Upon Receivables. (a) On behalf of the Trust
the Servicer shall use its best efforts, consistent with its customary servicing
procedures, to repossess or otherwise convert the ownership of the Financed
Vehicle securing any Receivable as to which the Servicer shall have determined
that eventual payment in full is unlikely. The Servicer shall follow such
customary and usual practices and procedures as it shall deem necessary or
advisable in its servicing of automotive receivables, which may include
reasonable efforts to realize upon any recourse to Dealers and selling the
Financed Vehicle at public or private sale. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds. After appropriate disposition of the Financed Vehicle, the
Servicer shall also take such measures as it deems reasonable and appropriate to
realize value in respect of any deficiency balance of the Receivable including
pursuit of action on behalf of the Trust against the Obligor or public or
private sale of the Trust's remaining interest in such Receivable.
(b) Unless otherwise stated in this Agreement, the Servicer shall
either purchase or liquidate each Financed Vehicle that has not previously been
liquidated and that secures, or previously secured, a Defaulted Receivable
either (i) by the end of the Collection Period preceding the final scheduled
Distribution Date during the life of the Trust or (ii) if earlier, by the end of
the ninth Collection Period following the Collection Period during which such
Receivable became a Defaulted Receivable. Any purchase of a Financed Vehicle by
the Servicer shall be made at a price equal to the fair market value of the
Financed Vehicle as determined by the Servicer in accordance with the Servicer's
normal servicing standards.
SECTION 8.04. Physical Damage Insurance. The Servicer, in accordance
with its customary servicing procedures and underwriting standards, shall
require that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle.
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trustee hereby authorizes the
Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Trust in the event of the relocation of a Financed
Vehicle or for any other reason.
SECTION 8.06. Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholders in the Receivables, nor shall the Servicer change the
amount of the Scheduled Payment under a Receivable or change the Amount Financed
under a Receivable or reduce the Note Rate of a Receivable (except if so ordered
by a bankruptcy court in a proceeding concerning the Obligor or otherwise
mandated by law).
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SECTION 8.07. Purchase of Receivables Upon Breach. The Servicer or the
Trustee shall inform the other party and the Insurer promptly, in writing, upon
the discovery of any breach by the Servicer of its obligations under Section
8.06. This obligation shall not constitute an obligation on the part of the
Trustee to discover any such breaches. Unless the breach shall have been cured
by the last day of the Collection Period following the Collection Period during
which such breach was discovered, the Servicer shall purchase any Receivable
materially and adversely affected by such breach as of such day (or, at the
Servicer's election, as of the last day of the Collection Period during which
such breach was discovered). In consideration of the purchase of such
Receivable, the Servicer shall remit the Purchase Amount with respect to such
Receivable in the manner specified in Section 9.03. The sole remedy of the
Trustee, the Trust, or the Certificateholders with respect to a breach pursuant
to Section 8.06 shall be to require the Servicer to purchase Receivables
pursuant to this Section 8.07, except as provided in Section 13.02.
SECTION 8.08. Servicing Fee. The servicing fee for a Collection Period
shall equal the Monthly Servicing Fee (except that in the case of a successor
Servicer, the servicing fee shall equal such amount as is arranged in accordance
with Section 14.02). The Servicer shall be entitled to retain from payments of
interest on the Receivables collected during a Collection Period an amount equal
to the Monthly Servicing Fee due the Servicer in respect of such Collection
Period and need not deposit such amount in the Certificate Account. The Servicer
shall also be entitled to retain, and need not deposit in the Certificate
Account, all late fees, Prepayment Charges, other administrative fees or similar
charges allowed by applicable law with respect to Receivables, if any, collected
(from whatever source) on the Receivables. The Monthly Servicing Fee will be
paid only out of the funds of the Trust and not from the Trustee's own funds. So
long as Union Acceptance Corporation is the Servicer, if the Servicer fails to
pay the Trustee's fees and expenses pursuant to Section 15.07, the Trustee shall
be entitled to receive such amount from the Monthly Servicing Fee prior to
payment thereof to the Servicer and the Servicer shall not retain from
collections that portion of the Monthly Servicing Fee equal to any fees of the
Trustee that are due and payable and any unpaid amount that the Servicer has
received notice is due the Trustee as reimbursement for expenses.
SECTION 8.09. Servicer's Certificate. On or before the Determination
Date following each Collection Period, the Servicer shall deliver to the Trustee
and the Insurer a Servicer's Certificate in substantially the form of Exhibit 3
attached hereto containing all information necessary to make the distributions
pursuant to Section 9.04 for the Collection Period preceding the date of such
Servicer's Certificate and all information necessary for the Trustee to send
statements to Certificateholders pursuant to Section 9.07, including (A) the
amount of aggregate collections on the Receivables, (B) the aggregate Purchase
Amount of the Receivables repurchased by UAC and purchased by the Servicer, (C)
with respect to Precomputed Receivables the net deposit from the Certificate
Account to the Payahead Account or the net withdrawal from the Payahead Account
to the Certificate Account required for the Collection Period in accordance with
Section 9.09, and in the case of a net withdrawal, the Monthly Interest and
Monthly Principal reported on such Servicer's Certificate shall reflect the
portions of such withdrawal allocable to interest and principal, respectively,
in accordance with this Agreement, (D) information respecting (i) delinquent
Receivables that are 30, 60 and 90 days past due, and (ii) the number of
repossessions of Financed Vehicles during the preceding Collection Period,
number of unliquidated repossessed Financed Vehicles, gross and net losses on
the Receivables, and recoveries on charged off Receivables; and (E) each other
item listed in Section 9.04 hereof reasonably requested by the Rating Agency or
the Insurer in order to monitor the performance of the Receivables. Receivables
purchased by UAC as of the last day of such Collection Period shall
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be identified by the UAC account number with respect to such Receivable (as
specified in Schedule A to this Agreement).
SECTION 8.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Trustee and the Insurer, on or before April 30
of each year, beginning on the first April 30 that is at least six months after
the Closing Date, an Officers' Certificate, dated as of December 31 of the
preceding year, stating that (i) a review of the activities of the Servicer
during the preceding 12-month period (or in the case of the initial Officer's
Certificate, the period from the Closing Date to and including the date of such
Officer's Certificate) and of its performance under this Agreement has been made
under such officer's supervision and (ii) to the best of such officer's
knowledge, based on such review, the Servicer has fulfilled all its obligations
under this Agreement throughout such year, or, if there has been a default in
the fulfillment of any such obligation, specifying each such default known to
such officer and the nature and status thereof. A copy of such certificate and
the report referred to in Section 8.11 may be obtained by any Certificateholder
at its own expense by a request in writing to the Trustee addressed to the
Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Trustee
and the Insurer, promptly after having obtained knowledge thereof, but in no
event later than 5 Business Days thereafter, written notice in an Officers'
Certificate of any event which with the giving of notice or lapse of time, or
both, would become an Event of Default under Section 14.01. The Depositor or UAC
shall deliver to a Responsible Officer of the Trustee and the Insurer, promptly
after having obtained knowledge thereof, but in no event later than 5 Business
Days thereafter, written notice in an Officers' Certificate of any event which
with the giving of notice or lapse of time, or both, would become an Event of
Default under clause (ii) of Section 14.01.
SECTION 8.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer, to deliver to the Trustee and
the Insurer on or before September 30 of each year concerning the 12-month
period ended June 30 of such year (or shorter period since the date of this
Agreement), beginning on the first September 30 following the first June 30
after the Closing Date, a report addressed to the Board of Directors of the
Servicer to the effect that such firm has reviewed the servicing of the
Receivables by the Servicer and that such review (1) included tests relating to
new or used automobile, van and light truck loans serviced for others in
accordance with the requirements of the Uniform Single Audit Program for
Mortgage Bankers, to the extent the procedures in such program are applicable to
the servicing obligations set forth in the Agreement, and (2) except as
described in the report, disclosed no exceptions or errors in the records
relating to automobile, van or light truck loans serviced for others that, in
the firm's opinion, paragraph four of such program requires such firm to report.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 8.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Certificateholders access to the
Receivables Files in such cases where the Certificateholder shall be required by
applicable statutes or regulations to review such documentation. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of
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information regarding the Obligors, and the failure of the Servicer to provide
access to information as a result of such obligation shall not constitute a
breach of this Section 8.12.
SECTION 8.13. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with distributions and reports
to Certificateholders.
SECTION 8.14. Reports to Certificateholders. The Trustee shall provide
to any Certificateholder who so requests in writing (addressed to the Corporate
Trust Office) a copy of any certificate described in Section 8.09, or the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Trustee may require the Certificateholder to pay a reasonable sum to
cover the cost of the Trustee's complying with such request.
ARTICLE IX
Distributions; Statements to Certificateholders
SECTION 9.01. Certificate Account. The Servicer, on behalf of the
Trust, shall establish the Certificate Account with an Eligible Bank as a
segregated trust account in the name of the Trust for the benefit of
Certificateholders with the Corporate Trust Office of the Trustee. The Servicer
shall direct the Trustee to invest the amounts in the Certificate Account in
Eligible Investments that mature not later than the Business Day prior to the
next succeeding Distribution Date and to hold such Eligible Investments to
maturity. The Trustee (or its custodian) shall (i) maintain possession of any
negotiable instruments or securities evidencing Eligible Investments until the
time of sale or maturity and each certificated security or negotiable instrument
evidencing an Eligible Investment shall be endorsed in blank or to the Trustee
or registered in the name of the Trustee and (ii) cause any Eligible Investment
represented by an uncertificated security to be registered in the name of the
Trustee.
SECTION 9.02. Collections. The Servicer shall remit to the Certificate
Account all payments by or on behalf of the Obligors on the Receivables and all
Liquidation Proceeds, both as collected during the Collection Period net of
Monthly Servicing Fees and administrative fees allowed to be retained by the
Servicer pursuant to Section 8.08 and net of charge backs (attributable to
errors in posting, returned checks, or rights of offset for amounts that should
not have been paid or that must be refunded as the result of a successful claim
or defense under bankruptcy or similar laws) not later than the second Business
Day following the Business Day on which such amounts are received by the
Servicer. Notwithstanding the foregoing, for so long as (a) UAC remains the
Servicer, (b) no Event of Default shall have occurred and be continuing and
(c)(1) UAC maintains a short-term rating of at least A-1 by Standard & Poor's
and P-l by Moody's (and for five Business Days following a reduction in either
such rating) or (2) prior to ceasing daily remittances, the Rating Agency
Condition shall have been satisfied (and any conditions or limitations imposed
by the Rating Agencies in connection therewith are complied with) and the prior
written consent of the Insurer (not to be unreasonably withheld) shall have been
obtained, the Servicer may remit all such payments and Liquidation Proceeds with
respect to any Collection Period to the Certificate Account on a less frequent
basis, but in no event later than the Determination Date immediately preceding
each Distribution Date. The Servicer shall remit any Advances with respect to a
Collection Period to the Certificate Account on or before the Determination
Date.
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On each Determination Date, the Servicer shall determine (a) the amount
of payments on all Receivables and all Liquidation Proceeds received during such
Collection Period, the amount of Advances for such Collection Period, and the
Purchase Amount for all Receivables purchased or repurchased with respect to
such Collection Period which have been deposited in the Certificate Account (net
of amounts required to be paid pursuant to Section 9.04(d), excluding investment
income on all such amounts, and not including amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Certificate Account to the Payahead Account or from
the Payahead Account to the Certificate Account as provided in Section 9.09,
(the "Available Funds"), and (b) the amount of funds necessary to make the
distributions required pursuant to Sections 9.04(a) (i) through (vii),
inclusive, on the next Distribution Date. The Servicer shall by a Servicer's
Certificate notify the Trustee of such amounts by telecopy to the Corporate
Trust Office at the number specified in this Agreement (or such other number as
the Trustee may from time to time provide), followed promptly by mailing such
notice to the Trustee at the Corporate Trust Office and to the Insurer. On each
Distribution Date, the Trustee, or the Servicer on its behalf, shall effect the
net transfer between the Certificate Account and the Payahead Account as
required by Section 9.09 for such Distribution Date.
On any Distribution Date on which there are not sufficient Available
Funds to make the distributions required pursuant to Sections 9.04(a)(i) through
(iii) the Trustee, or the Servicer on its behalf, shall withdraw from the Spread
Account, to the extent of the Available Spread Amount, an amount equal to such
deficiency and promptly deposit such amount in the Certificate Account. If such
deficiency exceeds the Available Spread Amount, the Servicer shall
simultaneously and in the same manner also notify the Trustee and the Insurer of
the amount of such excess deficiency. The Trustee shall promptly (and in any
event not later than 1:00 p.m. New York City time on the Business Day preceding
the Distribution Date) deliver a Notice for Payment as defined in the Policy
(appropriately completed) to the Fiscal Agent with respect to the Policy. The
Insurer is required pursuant to Section 10.03 and the terms of the Policy to pay
the amount of such excess deficiency of Monthly Interest and Monthly Principal,
up to the Policy Amount.
The Trustee shall deposit in the Certificate Account any funds received
by the Trustee in respect of funds drawn under the Policy from the Insurer.
If the Available Funds for a Distribution Date are insufficient to pay
current and past due Insurance Premiums, or any amounts owing to the Insurer
pursuant to the Insurance Agreement including, without limitation,
reimbursements, indemnities, fees and expenses, plus accrued interest thereon,
to the Insurer, the Servicer shall notify the Trustee of such deficiency, and
the Available Spread Amount, if any, then on deposit in the Spread Account
(after giving effect to any withdrawal to satisfy a deficiency in Monthly
Interest or Monthly Principal) shall be available to cover such deficiency.
SECTION 9.03. Purchase Amounts. Not later than the Determination Date,
the Servicer or UAC shall remit to the Certificate Account the aggregate
Purchase Amount for such Collection Period pursuant to Sections 7.02 and 8.07.
SECTION 9.04. Distributions to Parties. (a) On each Distribution Date,
the Trustee shall apply or cause to be applied the Available Funds in the
Certificate Account for the prior Collection Period, (plus any amounts withdrawn
from the Spread Account or drawn on the Policy pursuant to Section 9.02), to
make the following distributions in the listed order of priority:
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(i) Without duplication, an amount equal to the sum of (y)
Outstanding Advances on all Receivables that became Defaulted
Receivables during the prior Collection Period, plus (z) Outstanding
Advances which the Servicer determines to be unrecoverable pursuant to
Section 9.05, to the Servicer;
(ii) To the extent not previously distributed to the Servicer,
the Monthly Servicing Fee, including any overdue Monthly Servicing Fee,
to the Servicer;
(iii) Pro rata, (in accordance with Section 9.04(b)(i)), (y)
the Monthly Principal (in accordance with the Principal Distribution
Sequence) and Class A Monthly Interest, including any overdue Monthly
Principal and Class A Monthly Interest, to the Class A
Certificateholders, and (z) Class I Monthly Interest, including any
overdue Class I Monthly Interest, to the Class I Certificateholders;
(iv) The Insurance Premium, including any overdue Insurance
Premium, plus accrued interest thereon at the rate provided in the
Insurance Agreement, to the Insurer;
(v) The amount of Recoveries of Advances, to the Servicer (to
the extent not applied pursuant to (i) above on or prior to such
Distribution Date);
(vi) The aggregate amount of all unreimbursed draws made on
the Policy in respect of Class A Monthly Interest, Class I Monthly
Interest and Monthly Principal and any other amounts payable to the
Insurer under the Insurance Agreement, plus accrued interest thereon at
the rate provided in the Insurance Agreement, to the Insurer;
(vii) The balance for deposit in the Spread Account. The
rights of the Class IC Certificateholder to receive distributions from
the Spread Account are described in Sections 10.02(e) and (f).
(b)(i) If on any Distribution Date there are not sufficient Available
Funds (together with amounts withdrawn from the Spread Account and/or the
Policy) to pay the distribution required by Section 9.04(a)(iii), the Available
Funds distributable under Section 9.04(a)(iii) shall be distributed
proportionately on the basis of the ratio of the required distribution due each
of the Class A Certificateholders and the Class I Certificateholders,
respectively, to the sum of the distributions required by Section 9.04(a)(iii)
to the Class A Certificateholders and the Class I Certificateholders. The amount
so distributed to the Class A Certificateholders hereunder shall be allocated
first to Class A Monthly Interest, and second to Monthly Principal and shall be
distributed pro rata among the Class A Certificateholders.
(ii) Notwithstanding the foregoing, the Class I
Certificateholders will not be entitled to any distributions after the
Notional Principal Amount of the Class I Certificates has been reduced
to zero.
(iii) Notwithstanding the foregoing, if the Class IC
Certificateholder exercises its option to cause a disposition of the
remaining corpus of the Trust on any Distribution Date pursuant to
Section 16.02: (a) the Available Funds and amounts withdrawn from the
Spread Account or drawn on the Policy in respect only of Monthly
Interest and Monthly Principal with respect to the immediately
preceding Distribution Date as determined
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in accordance with Section 9.02 and 9.04 shall be distributed to
Certificateholders on such Distribution Date; (b) the Policy will not
be available to pay any shortfall of Monthly Interest or Monthly
Principal after a disposition of the Receivables pursuant to Section
16.02; and (c) the Optional Disposition Price and any remaining assets
of the Trust (including the remaining Available Spread Amount) shall be
distributed to Certificateholders on such Distribution Date based on
their Adjusted Capital Accounts (as defined in Section 6(c)(iv) of
Annex A attached hereto) in accordance with Section 6(b)(iii) and
Section 9 of Annex A attached hereto.
(iv) In making such distributions the Trustee shall be
entitled to rely upon (without investigation, confirmation or
recalculation) all information and calculations contained in the
Servicer's Certificate delivered to the Trustee pursuant to Section
8.09 hereof.
(v) All monthly distributions shall be made by wire
transfer of immediately available funds to each Certificateholder of
record on the preceding Record Date. Notwithstanding the foregoing, the
final payment on each Certificate shall be made only against
presentation and surrender of the Certificate at the office or agency
then maintained by the Trustee in accordance with Section 11.07.
(c) On each Distribution Date, the Trustee shall remit to the Servicer
all investment income earned through the last day of the preceding Collection
Period on amounts held from time to time in the Certificate Account.
(d) On each Distribution Date, if the Servicer has reported to the
Trustee in the Servicer's Certificate for any Collection Period that an Obligor
or an Obligor's representative or successor successfully shall have asserted a
claim or defense under bankruptcy law or similar laws for the protection of
creditors generally (including the avoidance of a preferential transfer under
bankruptcy law) that results in a liability of the Trust to such Obligor for
monies previously collected and remitted to the Trustee and not otherwise netted
against collections pursuant to Section 9.02, the Trustee shall make all
payments in respect of such claims or defenses out of the amounts on deposit in
the Certificate Account with respect to such Collection Period before making the
distributions required by paragraph (a) of this Section 9.04.
(e) If the Servicer has failed to provide the Trustee with the notice
required pursuant to Section 9.02, the Trustee may calculate Monthly Interest
and Monthly Principal and apply funds, if any, in the Certificate Account as of
the last day of the Collection Period, to make a distribution of Monthly
Interest and Monthly Principal to the Certificateholders.
SECTION 9.05. Advances. (a) As of the last day of the initial
Collection Period, the Servicer shall advance funds equal to the excess, if any,
of Monthly Interest due in respect of the initial Collection Period, over the
Collected Interest for such Collection Period; and (b) as of the last day of
each Collection Period, the Servicer shall advance funds in the amount of the
Interest Advance Amount (or such other amount as the Servicer shall reasonably
determine to cover an Interest Shortfall) with respect to each Receivable that
is delinquent for more than 30 days, in each such case, to the extent that the
Servicer, in its sole discretion, determines that the Advance will be
recoverable from payments by or on behalf of the Obligor, the Purchase Amount,
or Liquidation Proceeds. With respect to each Receivable, the Advance paid
pursuant to this Section 9.05 shall increase Outstanding Advances. Outstanding
Advances shall be reduced by subsequent payments by or on behalf of the
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Obligor, collections of Liquidation Proceeds, or payments of the Purchase
Amount. The Servicer shall remit any Advances with respect to a Collection
Period to the Certificate Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with
respect to any Receivable shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables in the Trust, and
Outstanding Advances with respect to such Receivable shall be reduced
accordingly.
SECTION 9.06. Net Deposits. For so long as Union Acceptance Corporation
is the Servicer, Union Acceptance Corporation (in whatever capacity) may make
the remittances with respect to any Distribution Date pursuant to Section 9.02
above, net of amounts to be distributed to itself or its delegee under Section
13.06 (also in whatever capacity) pursuant to Section 9.04, if it determines
pursuant to Section 9.02 that there is no deficiency in Available Funds for such
Distribution Date. Nonetheless, the Servicer shall account for all of the above
described amounts as if such amounts were deposited and distributed.
SECTION 9.07. Statements to Certificateholders. On each Distribution
Date, the Trustee shall include with each distribution to the Certificateholders
and shall mail to the Rating Agency a statement, based on information in the
Servicer's Certificate furnished to the Trustee by the Servicer pursuant to
Section 8.09, setting forth for the Collection Period relating to such
Distribution Date the following information (which in the case of items (i)
through (v), inclusive, shall be based on a Certificate in a principal amount of
$1,000):
(i) the amount of the aggregate distribution that constitutes Class A
Monthly Interest (including the amount thereof which constitutes Class A-1
Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly Interest, Class
A-4 Monthly Interest and Class A-5 Monthly Interest);
(ii) the amount of the aggregate distribution that constitutes Class I
Monthly Interest and the Notional Principal Amount (after giving effect to any
application of Monthly Principal required to be made on such date) on which
Class I Monthly Interest will be calculated on that next succeeding Distribution
Date;
(iii) the amount of the aggregate distribution that constitutes Monthly
Principal (including the amount thereof which constitutes Class A-1 Monthly
Principal, Class A-2 Monthly Principal, Class A-3 Monthly Principal, Class A-4
Monthly Principal and Class A-5 Monthly Principal);
(iv) the Certificate Balance (after giving effect to any distribution
of Monthly Principal made on such Distribution Date) and the Class A-1
Certificate Balance, the Class A-2 Certificate Balance, the Class A-3
Certificate Balance, the Class A-4 Certificate Balance and the Class A-5
Certificate Balance comprising the Certificate Balance on which Class A-1
Monthly Interest, Class A-2 Monthly Interest, Class A-3 Monthly Interest, Class
A-4 Monthly Interest and Class A-5 Monthly Interest will be calculated on the
next succeeding Distribution Date;
(v) the Certificate Factor (after giving effect to any distribution of
Monthly Principal made on such Distribution Date) and the Class A-1 Certificate
Factor, the Class A-2 Certificate Factor, the Class A-3 Certificate Factor, the
Class A-4 Certificate Factor and the Class A-5 Certificate Factor;
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(vi) the amount on deposit in the Spread Account after giving effect to
distributions made on such Distribution Date;
(vi) the Monthly Servicing Fee for such Distribution Date.
(vii) the Insurance Premium for such Distribution Date;
(viii) the Policy Amount (after giving effect to any draw on the Policy
or the Spread Account on such Distribution Date).
Within the prescribed period of time for tax reporting purposes after
the end of each calendar year during the term of the Agreement, the Trustee
shall mail, to each Person who at any time during such calendar year shall have
been a Certificateholder, a statement containing the annual sum of the
respective amounts determined in clauses (i) through (v) for such calendar year,
as applicable to such Person, or, in the event such Person shall have been a
Certificateholder during a portion of such calendar year, for the applicable
portion of such year, unless substantially comparable information has been
provided to such Certificateholder, for the purposes of such Certificateholder's
preparation of federal income tax returns pursuant to Section 5(b) of Annex A
hereto. To the extent required by applicable law, the Servicer shall prepare or
cause to be prepared and the Class IC Certificateholder or the Trustee shall
sign the tax returns of the Trust and shall file such returns and such of the
above information with the Internal Revenue Service.
SECTION 9.08. Intentionally Blank.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account in the name of the Trustee on behalf of the Obligors and the
Certificateholders as their interests may appear. The Payahead Account shall be
a segregated interest bearing trust account established with the Trustee or an
Eligible Bank. Amounts in the Payahead Account shall be invested in Eligible
Investments that mature not later than the Business Day prior to the next
succeeding Distribution Date. The Payahead Account is not property of the Trust.
Investment income or interest earned on the Payahead Account shall be remitted
to the Servicer at least monthly, or as frequently as the Servicer may
reasonably request. On or prior to each Distribution Date, the Servicer shall
transfer or the Trustee (as instructed in the Servicer's Certificate) shall
transfer (a) from the Certificate Account to the Payahead Account, in
immediately available funds, all Payaheads received by the Servicer and
previously deposited to the Certificate Account during the Collection Period as
described in Section 8.02(b); and (b) from the Payahead Account to the
Certificate Account, in immediately available funds, the aggregate amount of
previously deposited Payaheads to be applied to Scheduled Payments on
Precomputed Receivables for the related Collection Period or prepayments for the
related Collection Period, pursuant to Section 8.02(b), each in the amounts set
forth in the Servicer's Certificate delivered on the related Determination Date.
A single, net transfer between the Payahead Account and the Certificate Account
may be made. Any amount deposited in the Payahead Account shall not constitute
Available Funds under Section 9.02. Any amount deposited to the Certificate
Account from the Payahead Account pursuant to Section 9.09(b) shall be included
in Available Funds under Section 9.02.
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SECTION 9.10. Calculation of Notional Principal Amount.
(a) Solely for the purpose of calculating the Class I Monthly Interest,
the Certificate Balance will be divided into, and equal the sum of, two
principal components: (i) the "PAC Component" and (ii) the "Companion
Component." The PAC Component shall initially equal the Original Notional
Principal Amount and will equal the Notional Principal Amount on each
Distribution Date thereafter.
(b) On each Distribution Date, solely for the purposes of calculating
the Notional Principal Amount, the amount of Monthly Principal distributed to
Class A Certificateholders will be allocated (i) first, to the PAC Component up
to the amount necessary to reduce the PAC Component to its Planned Notional
Principal Amount for such Distribution Date, (ii) second, to the Companion
Component until the balance thereof is reduced to zero, and (iii) third, to the
PAC Component without regard to the Planned Notional Principal Amount for such
Distribution Date.
ARTICLE X
Credit Enhancement
SECTION 10.01. Subordination. The rights of the Class IC
Certificateholder shall be subordinated to the rights of the Class A
Certificateholders and the Class I Certificateholders to the extent described in
Section 9.04.
SECTION 10.02. Spread Account.
(a) On or prior to the Closing Date, the Trustee shall establish and
maintain a segregated trust account with the Trustee or in the corporate trust
department of another Eligible Bank referred to herein as the "Spread Account."
The Spread Account shall be maintained in the name of the Trustee. The Spread
Account and any amounts on deposit therein shall be part of the Trust and shall
be for the benefit of the Certificateholders and the Insurer, as their
respective interests may appear herein; provided, however, that the interest of
the Insurer and the Class IC Certificateholder shall be subordinated to the
interests of the other Certificateholders as provided herein.
(b) Funds on deposit in the Spread Account shall be invested in
Eligible Investments in the same manner and subject to the same requirements and
limitations as the investment of funds in the Certificate Account pursuant to
Section 9.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Distribution Date;
provided, however, no such limitation on the maturity of Eligible Investments
shall apply if the Trust obtains the benefit of a liquidity facility or similar
arrangement from a commercial bank with an Approved Rating or other provider
approved in advance in writing by the Insurer, with respect to funds in the
Spread Account (a "Spread Account Facility") and Standard & Poor's and Moody's
confirm in writing that the rating of the Certificates will not be lowered or
withdrawn as a result of eliminating or modifying the limitation on the maturity
of Permitted Investments in respect of the Spread Account. For purposes of
determining the availability of funds or the balance in the Spread Account for
any reason under this Agreement, investment earnings on such funds shall be
deemed to be available or on deposit only to the extent that the aggregate of
such amounts, plus the funds on deposit in the Spread Account, do not exceed the
Required Spread Amount.
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(c) If on any Distribution Date the amount of Available Funds is
insufficient to make the distributions required by Sections 9.04(a)(i) through
(iii), the Trustee shall withdraw or cause to be withdrawn from the Spread
Account and deposited in the Certificate Account the lesser of (i) the entire
Available Spread Amount and (ii) the amount necessary to make up such deficiency
to pay any deficiency in permitted reimbursements of Outstanding Advances
pursuant to Section 9.04(a)(i), the Monthly Servicing Fee, Monthly Interest and
Monthly Principal (prior to making any draw on the Policy), all as provided in
Sections 9.02 and 9.04 and the Policy.
(d) On each Distribution Date, all distributions made pursuant to
Section 9.04(a) (vii) shall be deposited into the Spread Account.
(e) If the amount on deposit in the Spread Account, after giving effect
to the distributions set forth in Section 9.04 (including, without limitation,
payment of amounts due and owing to the Insurer) is greater than the Required
Spread Amount on such Distribution Date, the amount of such excess shall be
distributed to the Class IC Certificateholder. Amounts properly distributed to
the Class IC Certificateholder pursuant to this Section, either directly without
deposit in the Spread Account or from excess amounts in the Spread Account shall
be deemed released from the Trust and from any security interest of the Trustee
or the Insurer.
(f) Upon the termination of this Agreement, amounts remaining in the
Spread Account, after payment of any amounts due and owing to the Class A
Certificateholders and the Class I Certificateholders and to the Insurer, shall
be distributed to the Class IC Certificateholder and such amounts shall not be
subject to any claims or rights of the other Certificateholders to the extent
that such action is not inconsistent with Section 6(b)(ii) and Section 9 of
Annex A hereto.
(g) On the Closing Date, the Depositor shall deposit an amount equal to
one percent (1%) of the Initial Certificate Balance into the Spread Account.
SECTION 10.03. Policy. The Insurer is required under the terms of the
Policy to pay Class I Monthly Interest, Class A Monthly Interest and Monthly
Principal up to the Policy Amount in the event of any deficiency of Available
Funds to pay such amounts (after permitted reimbursements of Outstanding
Advances and payment of the Monthly Servicing Fee) not covered by amounts
withdrawn from the Spread Account, as determined pursuant to Section 9.02 to the
Trustee for credit to the Certificate Account on the later of (a) 12:00 noon,
New York City time, on the Distribution Date and (b) 12:00 noon, New York City
time, on the Business Day immediately succeeding presentation to the Fiscal
Agent of the Trustee's demand therefor. Any demand for payment pursuant to
Section 9.02 to the Fiscal Agent received by the Fiscal Agent on a Business Day
after 1:00 p.m., New York City time, or on any day that is not a Business Day,
will be deemed to be received by the Fiscal Agent at 9:00 a.m., New York City
time, on the next Business Day. Notwithstanding the forgoing, on a Dissolution
Distribution Date, the obligations of the Insurer under the Policy shall be
limited in accordance with Section 9.04(b)(iii). The Trustee hereby agrees on
behalf of each Class A Certificateholder and each Class I Certificateholder (and
each Class A Certificateholder and each Class I Certificateholder, by its
acceptance of its Certificates, hereby agrees) for the benefit of the Insurer
that the Trustee shall recognize that to the extent the Insurer makes a payment
under the Policy, either directly or indirectly (as by paying through the
Trustee), to the Class A Certificateholders or the Class I Certificateholders,
the Insurer will be entitled to be subrogated to the rights of the Class A
Certificateholders and the Class I Certificateholders to the extent of such
payments. Any rights of subrogation acquired by the Insurer as a result of any
payment made under
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the Policy shall, in all respects, be subordinate and junior in right of payment
to the prior indefeasible payment in full of all amounts due the Trustee on
account of payments due under the Class A Certificates and the Class I
Certificates pursuant to Section 9.04 hereof.
ARTICLE XI
The Certificates
SECTION 11.01. The Certificates. The Class A Certificates shall be
issued in denominations of $1,000 and integral multiples thereof; provided,
however, that one Class A-1 Certificate, one Class A-2 Certificate, one Class
A-3 Certificate, one Class A-4 Certificate and one Class A-5 Certificate may be
issued in a denomination that represents any residual amount of such class and
that such residual amount Certificates shall be retained by the Depositor. The
Class I Certificates shall be issued in one or more whole dollar denominations
which in the aggregate do not exceed the Original Notional Principal Amount. The
Class IC Certificate shall be issued in the form of one or more Certificates and
shall initially be issued to the Depositor. The Certificates shall be executed
on behalf of the Trust by manual or facsimile signature of a Responsible Officer
of the Trustee. Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures shall have been affixed,
authorized to sign on behalf of the Trust, shall be valid and binding
obligations of the Trust, notwithstanding that such individuals or any of them
shall have ceased to be so authorized prior to the authentication and delivery
of such Certificates or did not hold such offices at the date of such
Certificates.
SECTION 11.02. Authentication of Certificates. The Trustee shall cause
the Certificates to be executed on behalf of the Trust, authenticated, and
delivered to or upon the written order of the Depositor, signed by its chairman
of the board, its president, or any vice president, without further corporate
action by the Depositor, in authorized denominations, pursuant to this
Agreement. No Certificate shall entitle its holder to any benefit under this
Agreement, or shall be valid for any purpose, unless there shall appear on such
Certificate a certificate of authentication, substantially as set forth in the
forms of Certificate attached as exhibits to this Agreement, executed by a
Responsible Officer of the Trustee by manual signature; such authentication
shall constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication.
SECTION 11.03. Registration of Transfer and Exchange of Certificates.
The Certificate Registrar shall keep or cause to be kept, at the office or
agency maintained pursuant to Section 11.07, a Certificate Register in which,
subject to such reasonable regulations as it may prescribe, the Trustee shall
provide for the registration of Certificates and of transfers and exchanges of
Certificates as herein provided. The Trustee shall be the initial Certificate
Registrar.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Trustee shall execute, authenticate, and deliver, in
the name of the designated transferee or transferees, one or more new
Certificates in authorized denominations of a like aggregate amount dated the
date of authentication by the Trustee, provided, however, that registration of
transfer of the Class IC Certificate may not be effected unless (A) the Trustee
receives an Opinion of Counsel, satisfactory to it, to the effect that (i) such
transfer may be made in reliance upon an exemption from the registration
requirements of the Securities Act of 1933, as amended, and (ii) such transfer
will not adversely affect the tax treatment of the Trust or the Certificates;
(B) the Insurer has consented to
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such transfer and (C) the Rating Agency Condition shall have been satisfied with
respect to such transfer. At the option of a Holder, Certificates may be
exchanged for other Certificates of authorized denominations of a like aggregate
amount upon surrender of the Certificates to be exchanged at the Corporate Trust
Office.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder or his attorney duly authorized in writing. Each Certificate surrendered
for registration of transfer and exchange shall be canceled and subsequently
destroyed by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificates. If
(a) any mutilated Certificate shall be surrendered to the Certificate Registrar,
or if the Certificate Registrar shall receive evidence to its satisfaction of
the destruction, loss, or theft of any Certificate and (b) there shall be
delivered to the Certificate Registrar or the Trustee such security or indemnity
as may be required by them to save each of them harmless, then in the absence of
notice that such Certificate shall have been acquired by a bona fide purchaser,
the Trustee on behalf of the Trust shall execute and the Trustee shall
authenticate and deliver, in exchange for or in lieu of any such mutilated,
destroyed, lost, or stolen Certificate, a new Certificate of like tenor and
denomination. In connection with the issuance of any new Certificate under this
Section 11.04, the Trustee and the Certificate Registrar may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 11.04 shall constitute conclusive evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
SECTION 11.05. Persons Deemed Owners. Prior to registration of
transfer, the Trustee or the Certificate Registrar may treat the Person in whose
name any Certificate shall be registered as the owner of such Certificate for
the purpose of receiving distributions pursuant to Section 9.04 and for all
other purposes whatsoever, and neither the Trustee nor the Certificate Registrar
shall be bound by any notice to the contrary.
SECTION 11.06. Access to Agreement and List of Certificateholders'
Names and Addresses. The Trustee shall furnish or cause to be furnished to the
Servicer, within 15 days after receipt by the Trustee of a request therefor from
the Servicer in writing, a list, in such form as the Servicer may reasonably
require, of the names and addresses of the Certificateholders as of the most
recent Record Date. If three or more Certificateholders, or one or more Holders
of Certificates aggregating not less than 25% of the Certificate Balance or not
less than 25% of the Notional Principal Amount of the Class I Certificates,
apply in writing to the Trustee, and such application states that the applicants
desire to communicate with other Certificateholders with respect to their rights
under this Agreement or under the Certificates and such application shall be
accompanied by a copy of the communication that such applicants propose to
transmit, then the Trustee shall, within five Business Days after the receipt of
such application, afford such applicants access during normal business hours to
the current list of Certificateholders. The Trustee shall also allow any
Certificateholder, upon request, to examine a copy of this Agreement at its
Corporate Trust Office during regular business hours. Each
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Holder, by receiving and holding a Certificate, shall be deemed to have agreed
to hold neither the Servicer nor the Trustee accountable by reason of the
disclosure of its name and address, regardless of the source from which such
information was derived.
SECTION 11.07. Maintenance of Office or Agency. The Trustee shall
maintain in the Borough of Manhattan, The City of New York, an office or offices
or agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designates its office at 77 Water Street, 4th Floor, New York, New
York 10005, telephone (212) 701-7602 as its office for such purposes. The
Trustee shall give prompt written notice to the Servicer and to
Certificateholders of any change in the location of the Certificate Register or
any such office or agency.
SECTION 11.08. Book-Entry Certificates. The Class A Certificates and
Class I Certificates, upon original issuance, shall be issued in the form of one
or more typewritten Certificates representing the Book-Entry Certificates, to be
delivered to The Depository Trust Company, the initial Clearing Agency, by, or
on behalf of, the Depositor, except for the residual amount Certificates
described in Section 11.01. The Class A Certificates and Class I Certificates
shall initially be registered on the Certificate Register in the name of CEDE &
Co., the nominee of the Clearing Agency, and no Certificate Owner will receive a
definitive Certificate representing such Certificate Owner's interest in the
Certificates, except as provided in Section 11.10. Unless and until definitive,
fully registered Certificates ("Definitive Certificates") have been issued to
Certificate Owners pursuant to Section 11.10:
(i) the provisions of this Section 11.08 shall be in full
force and effect;
(ii) the Depositor, the Servicer and the Trustee may deal with
the Clearing Agency and the Clearing Agency Participants for all
purposes (including the making of distributions on the Certificates) as
the authorized representatives of the Certificate Owners (requests and
directions from, and votes of, such representatives shall not be
considered inconsistent if they are made with respect to different
Certificate Owners);
(iii) to the extent that the provisions of this Section 11.08
conflict with any other provisions of this Agreement, the provisions of
this Section 11.08 shall control; and
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency and the Clearing Agency Participants and
shall be limited to those established by law and agreements between
such Certificate Owners and the Clearing Agency and/or the Clearing
Agency Participants. Pursuant to the Depository Agreement, unless and
until Definitive Certificates are issued pursuant to Section 11.10, the
initial Clearing Agency will make book-entry transfers among the
Clearing Agency Participants and receive and transmit distributions of
principal and interest on the Certificates to such Clearing Agency
Participants.
SECTION 11.09. Notices to Clearing Agency. Whenever notice or other
communication to the Class A Certificateholders or Class I Certificateholders is
required under this Agreement, unless and until Definitive Certificates shall
have been issued to Certificate Owners pursuant to Section
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11.10, the Trustee shall give all such notices and communications specified
herein to be given to such Certificateholders to the Clearing Agency.
SECTION 11.10. Definitive Certificates. The Class IC Certificate and
any residual amount Certificates described in Section 11.01 will be issued
initially in fully registered, certificated form. If (i)(A) the Depositor
advises the Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities under the Depository Agreement,
and (B) the Trustee or the Depositor is unable to locate a qualified successor,
(ii) the Depositor, at its option, advises the Trustee in writing that it elects
to terminate the book-entry system through the Clearing Agency or (iii) after
the occurrence of an Event of Default, Certificate Owners representing
beneficial interests aggregating not less than 50% of the Certificate Balance
advise the Trustee and the Clearing Agency in writing that the continuation of a
book-entry system through the Clearing Agency is no longer in the best interests
of the Certificate Owners, the Trustee shall notify the Clearing Agency of the
occurrence of any such event and of the availability of Definitive Certificates
to Certificate Owners requesting the same. Upon surrender to the Trustee of the
Certificates by the Clearing Agency, accompanied by registration instructions
from the Clearing Agency for registration, the Trustee shall issue the
Definitive Certificates. Neither the Depositor nor the Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Certificates all references herein to obligations imposed on or to be
performed by the Clearing Agency shall be deemed to be imposed upon and
performed by the Trustee, to the extent applicable with respect to such
Definitive Certificates and the Trustee shall recognize the Holders of the
Definitive Certificates as Certificateholders hereunder.
SECTION 11.11. The Tax Partnership Agreement. Each of the
Certificateholders agrees to be bound by the terms of the Tax Partnership
Agreement attached hereto as Annex A.
ARTICLE XII
The Depositor
SECTION 12.01. Representations and Undertakings of Depositor. (a) The
Depositor makes the following representations on which the Trustee relies in
accepting the Receivables in trust and executing and authenticating the
Certificates. The representations speak as of the execution and delivery of this
Agreement and shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The
Depositor shall have been duly organized and shall be validly
existing as a corporation in good standing under the laws of
the State of Delaware, with power and authority to own its
properties and to conduct its business as such properties
shall be currently owned and such business is presently
conducted, and had at all relevant times, and shall have,
power, authority, and legal right to acquire and own the
Receivables.
(ii) Due Qualification. The Depositor shall be
duly qualified to do business as a foreign corporation in good
standing, and shall have obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business shall require such
qualifications.
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(iii) Power and Authority. The Depositor shall
have the power and authority to execute and deliver this
Agreement and to carry out its terms, the Depositor shall have
full power and authority to sell and assign the property to be
sold and assigned to and deposited with the Trustee as part of
the Trust and shall have duly authorized such sale and
assignment to the Trustee by all necessary corporate action;
and the execution, delivery, and performance of the Agreement
shall have been duly authorized by the Depositor by all
necessary corporate action.
(iv) Valid Sale; Binding Obligations. This
Agreement shall evidence a valid sale, transfer, and
assignment of the Receivables, enforceable against creditors
of and purchasers from the Depositor; and shall evidence a
legal, valid, and binding obligation of the Depositor
enforceable in accordance with its terms.
(v) No Violation. The consummation of the
transactions contemplated by the Agreement and the fulfillment
of the terms hereof shall not conflict with, result in any
breach of any of the terms and provisions of, nor constitute
(with or without notice or lapse of time) a default under, the
charter or by-laws of the Depositor, or any indenture,
agreement, or other instrument to which the Depositor is a
party or by which it shall be bound; nor result in the
creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or
other instrument (other than this Agreement); nor violate any
law or, to the best of the Depositor's knowledge, any order,
rule, or regulation applicable to the Depositor of any court
or of any federal or State regulatory body, administrative
agency, or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(vi) No Proceedings. There are no proceedings
or investigations pending, or, to the Depositor's best
knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality
having jurisdiction over the Depositor or its properties: (A)
asserting the invalidity of this Agreement or the
Certificates, (B) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination
or ruling that might materially and adversely affect the
performance by the Depositor of its obligations under, or the
validity or enforceability of, this Agreement or the
Certificates, or (D) which might adversely affect the federal
income tax attributes of the Certificates.
(b) The Depositor further covenants that, prior to termination
of the Trust:
(i) It will not engage at any time in any
business or business activity other than such activities
expressly set forth in its Certificate of Incorporation
delivered to the Insurer on or prior to the Closing Date, and
will not amend its Certificate of Incorporation without the
prior written consent of the Insurer.
(ii) It will not, without the consent of the
Insurer (not to be unreasonably withheld), sell, assign,
pledge or otherwise transfer, in whole, or in part or in any
series of related or unrelated transactions any of its right,
title or interest in or to the IC Certificate.
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(iii) It will not:
(A) Fail to do all things necessary
to maintain its corporate existence separate and
apart from UAC and any other Person, including,
without limitation, holding regular meetings of its
stockholders and board of directors and maintaining
appropriate corporate books and records (including a
current minute book);
(B) Suffer any limitation on the
authority of its own directors and officers to
conduct its business and affairs in accordance with
their independent business judgment or authorize or
suffer any Person other than its own officers and
directors to customarily delegated to others under
powers of attorney) for which a corporation's own
Officers and directors would customarily be
responsible;
(C) Fail to (I) maintain or cause to
be maintained by an agent of the Depositor under the
Depositor's control physical possession of all its
books and records, (II) maintain capitalization
adequate for the conduct of its business, (III)
account for and manage all its liabilities separately
from those of any other Person, including payment by
it of all payroll, administrative expenses and taxes,
if any, from its own assets, (IV) segregate and
identify separately all of its assets from those of
any other Person, (V) to the extent any such payments
are made, pay its employees, officers and agents for
services performed for the Depositor or (VI) maintain
a separate office address with a separate telephone
number from those of UAC or any other affiliate
thereof; or
(D) Except as may be provided in
this Agreement, or a similar agreement relating to
other securitizations in which the Depositor has
similar rights and/or obligations, commingle its
funds with those of UAC or any affiliate thereof or
use its funds for other than the Depositor's uses.
SECTION 12.02. Liability of Depositor; Indemnities. The Depositor shall
be liable in accordance herewith only to the extent of the obligations
specifically undertaken by the Depositor under this Agreement.
(i) The Depositor shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents and
the Trust from and against any taxes that may at any time be asserted
against the Trustee, its officers, directors, employees or agents or
the Trust with respect to, and as of the date of, the sale of the
Receivables to the Trustee or the issuance and original sale of the
Certificates, including any sales, gross receipts, general corporation,
tangible or intangible personal property, privilege, or license taxes
(but, in the case of the Trust, not including any taxes asserted with
respect to ownership of the Receivables or federal or other income
taxes arising out of distributions on the Certificates) and costs and
expenses in defending against the same.
(ii) The Depositor shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents and
the Trust from and against any loss, liability,
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or expense incurred by reason of (a) the Depositor's willful
misfeasance, bad faith, or negligence in the performance of its duties
under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (b) the Depositor's
violation of federal or State securities laws in connection with the
registration of the sale of the Certificates.
Indemnification under this Section 12.02 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Depositor shall have made any indemnity payments to the Trustee or the
Trust pursuant to this Section and the Trustee or the Trust thereafter shall
collect any of such amounts from others, the Trustee or the Trust, as the case
may be, shall repay such amounts to the Depositor, without interest. This
indemnification shall survive the termination of this Agreement and the
resignation or removal of the Trustee.
SECTION 12.03. Merger or Consolidation of, or Assumption of the
Obligations of Depositor. Any Person (a) into which the Depositor may be merged
or consolidated, (b) which may result from any merger or consolidation to which
the Depositor shall be a party, or (c) which may succeed to all or substantially
all of the properties and assets of the Depositor's business, which Person in
any of the foregoing cases executes an agreement of assumption to perform every
obligation of the Depositor under this Agreement, shall be the successor to the
Depositor hereunder without the execution or filing of any document or any
further act by any of the parties to this Agreement; provided, however, that (i)
immediately after giving effect to such transaction, no representation or
warranty made pursuant to Section 7.01 shall have been breached and no Event of
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Default shall have happened and be continuing, (ii) the Depositor
shall have delivered to the Trustee an Officers' Certificate and an Opinion of
Counsel each stating that such consolidation, merger, or succession and such
agreement of assumption comply with this Section 12.03 and that all conditions
precedent, if any, provided for in this Agreement relating to such transaction
have been complied with and (iii) the Depositor shall have delivered an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of such
filings, or (B) stating that, in the opinion of such Counsel, no such action
shall be necessary to preserve and protect such interest. Notwithstanding the
forgoing, the Depositor shall not engage in any merger or consolidation with any
Person, or a disposition of all or substantially all of its assets without the
prior written consent of the Insurer, not to be unreasonably withheld.
SECTION 12.04. Limitation on Liability of Depositor and Others. The
Depositor and any director or officer or employee or agent of the Depositor may
rely in good faith on the advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising hereunder. The Depositor shall not be under any obligation to appear in,
prosecute, or defend any legal action that shall not be incidental to its
obligations under this Agreement, and that in its opinion may involve it in any
expense or liability.
SECTION 12.05. Depositor May Own Certificates. The Depositor and any
Person controlling, controlled by, or under common control with the Depositor
may in its individual or any other capacity become the owner or pledgee of
Certificates with the same rights as it would have if it were not the Depositor
or an affiliate thereof, except as otherwise provided in the definition of
"Certificateholder", "Class A Certificateholder" and "Class I
Certificateholder." Certificates so owned
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by or pledged to the Depositor or such controlling or commonly controlled Person
shall have an equal and proportionate benefit under the provisions of this
Agreement, without preference, priority, or distinction as among all of the
Certificates.
ARTICLE XIII
The Servicer
SECTION 13.01. Representations of Servicer. The Servicer makes the
following representations on which the Trustee relies in accepting the
Receivables in trust and executing and authenticating the Certificates. The
representations speak as of the execution and delivery of this Agreement and
shall survive the sale of the Receivables to the Trustee.
(i) Organization and Good Standing. The Servicer shall
have been duly organized and shall be validly existing as a corporation
under the laws of the State of Indiana, with power and authority to own
its properties and to conduct its business as such properties shall be
currently owned and such business is presently conducted, and had at
all relevant times, and shall have, power, authority, and legal right
to acquire, own, sell, and service the Receivables and to hold the
Receivable Files as custodian on behalf of the Trustee.
(ii) Due Qualification. The Servicer shall be duly
qualified to do business as a foreign corporation in good standing, and
shall have obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of property or the
conduct of its business (including the servicing of the Receivables as
required by this Agreement) shall require such qualifications.
(iii) Power and Authority. The Servicer shall have the
power and authority to execute and deliver this Agreement and to carry
out its terms; and the execution, delivery, and performance of this
Agreement shall have been duly authorized by the Servicer by all
necessary corporate action.
(iv) Binding Obligations. This Agreement shall
constitute a legal, valid, and binding obligation of the Servicer
enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy, insolvency, reorganization, or other similar
laws affecting the enforcement of creditors' rights in general and by
general principles of equity, regardless of whether such enforceability
shall be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time)
a default under, the charter or by-laws of the Servicer, or any
indenture, agreement, or other instrument to which the Servicer is a
party or by which it shall be bound; nor result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms
of any such indenture, agreement, or other instrument (other than this
Agreement); nor violate any law or, to the best of the Servicer's
knowledge, any order, rule, or regulation applicable to the Servicer of
any court or of any federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
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(vi) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or
its properties: (A) asserting the invalidity of this Agreement or the
Certificates, (B) seeking to prevent the issuance of the Certificates
or the consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Servicer of its
obligations under, or the validity or enforceability of, this Agreement
or the Certificates, or (D) which might adversely affect the federal
income tax attributes of the Certificates.
SECTION 13.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(i) The Servicer shall defend, indemnify, and hold
harmless the Trustee, its officers, directors, employees and agents,
the Trust and the Certificateholders from and against any and all
costs, expenses, losses, damages, claims, and liabilities, arising out
of or resulting from the use, ownership, or operation by the Servicer
or any affiliate thereof of a Financed Vehicle.
(ii) The Servicer shall indemnify, defend and hold
harmless the Trustee, its officers, directors, employees and agents and
the Trust from and against any taxes that may at any time be asserted
against the Trustee, its officers, directors, employees or agents or
the Trust with respect to the transactions contemplated herein,
including, without limitation, any sales, gross receipts, general
corporation, tangible or intangible personal property, privilege, or
license taxes (but, in the case of the Trust, not including any taxes
asserted with respect to, and as of the date of, the sale of the
Receivables to the Trust or the issuance and original sale of the
Certificates, or asserted with respect to ownership of the Receivables,
or federal or other income taxes arising out of distributions on the
Certificates) and costs and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents,
the Trust and the Certificateholders from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent
that such cost, expense, loss, claim, damage, or liability arose out
of, or was imposed upon the Trustee, the Trust or the
Certificateholders through, the negligence, willful misfeasance, or bad
faith of the Servicer in the performance of its duties under this
Agreement, or by reason of reckless disregard of its obligations and
duties under this Agreement. This indemnity shall survive the
termination of this Agreement or the Trust and the resignation or
removal of the Trustee.
(iv) The Servicer shall indemnify, defend, and hold
harmless the Trustee, its officers, directors, employees and agents,
and the Trust from and against all costs, expenses, losses, claims,
damages, and liabilities arising out of or incurred in connection with
the acceptance or performance of the trusts and duties herein
contained, except to the extent that such cost, expense, loss, claim,
damage or liability: (a) shall be due to the willful misfeasance, bad
faith, or negligence of the Trustee; (b) relates to any tax other than
the taxes with respect to which either the Depositor or Servicer shall
be required to indemnify the
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Trustee; (c) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 15.13; (d) shall be
one as to which the Depositor is required to indemnify the Trustee; or
(e) shall arise out of or be incurred in connection with the acceptance
or performance by the Trustee of the duties of successor Servicer
hereunder.
Indemnification under this Section 13.02 shall include reasonable fees
and expenses of counsel and expenses of litigation. If the Servicer shall have
made any indemnity payments pursuant to this Section and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts to the Servicer, without interest. This
indemnification shall survive the termination of this Agreement and the removal
of the Servicer.
SECTION 13.03. Merger or Consolidation of, or Assumption of the
Obligations of Servicer. Any Person (a) into which the Servicer may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Servicer shall be a party, or (c) which may succeed to all or substantially all
of the properties and assets of the Servicer's indirect automobile financing and
receivables servicing business, which Person in any of the foregoing cases
executes an agreement of assumption to perform every obligation of the Servicer
hereunder, shall be the successor to the Servicer under this Agreement without
further act on the part of any of the parties to this Agreement; provided,
however, that (i) immediately after giving effect to such transaction, no Event
of Default, and no event which, after notice or lapse of time, or both, would
become an Event of Default shall have happened and be continuing, (ii) the
Servicer shall have delivered to the Trustee an Officers' Certificate and an
Opinion of Counsel each stating that such consolidation, merger or succession
and such agreement of assumption comply with this Section 13.03 and that all
conditions precedent provided for in this Agreement relating to such transaction
have been complied with and (iii) the Servicer shall have delivered an Opinion
of Counsel either (A) stating that, in the opinion of such counsel, all
financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trustee and the Insurer in the Receivables, and reciting the
details of such filings, or (B) stating that, in the opinion of such Counsel, no
such action shall be necessary to preserve and protect such interest.
Notwithstanding the forgoing, the Servicer shall not engage in any merger or
consolidation in which it is not the surviving corporation without the prior
written consent of the Insurer, not to be unreasonably withheld.
SECTION 13.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement; provided, however,
that this provision shall not protect the Servicer or any such person against
any liability that would otherwise be imposed by reason of willful misfeasance,
bad faith, or negligence in the performance of duties or by reason of reckless
disregard of obligations and duties under this Agreement. The Servicer and any
director or officer or employee or agent of the Servicer may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement (collection actions with respect to Defaulted
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Receivables are understood to be incidental to the Servicer's duties to service
the Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 13.05. Servicer Not to Resign. The Servicer shall not resign
from its obligations and duties under this Agreement except upon determination
that the performance of its duties shall no longer be permissible under
applicable law or otherwise with the consent of the Trustee and the Insurer. Any
determination described above permitting the resignation of the Servicer shall
be evidenced by an Opinion of Counsel to such effect delivered to the Trustee.
No such resignation shall become effective until the Trustee or a successor
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 14.02.
SECTION 13.06. Delegation of Duties. Except as provided in Section
13.03 hereof, it is understood and agreed by the parties hereto that the
Servicer or the Depositor may at any time delegate any duties including duties
as custodian to any Person willing to accept such delegation and to perform such
duties (including any affiliate of the Servicer) in accordance with the
customary procedures of the Servicer. In connection with such delegation, the
Servicer or the Depositor may assign rights to the delegee or direct the payment
to the delegee of benefits or amounts otherwise inuring to the benefit of, or
payable to, the Depositor or the Servicer hereunder. Any such delegation shall
not relieve the Servicer or the Depositor of their respective liability and
responsibility with respect to such duties, and shall not constitute a
resignation within Section 13.05 hereof. The Servicer shall give written notice
to the Rating Agency, the Insurer and the Trustee of any such delegation.
ARTICLE XIV
Default
SECTION 14.01. Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(i) Any failure by the Servicer or UAC to deliver to
the Trustee for distribution to Certificateholders any proceeds or
payment required to be so delivered under the terms of the Certificates
and this Agreement or the Purchase Agreement or any failure by the
Servicer to deliver any Servicer's Certificate pursuant to Section 8.09
that, in either case, shall continue unremedied for a period of two
Business Days (A) after written notice from either the Trustee, the
Insurer (so long as the Insurer is not in default of its obligations
under the Policy) or the Holders of Certificates evidencing not less
than 25% of the Certificate Balance and 25% of the Notional Principal
Amount of the Class I Certificates is received by the Servicer or UAC
as specified in this Agreement or (B) after discovery by an officer of
the Servicer; or
(ii) Failure on the part of the Servicer, the Depositor
or UAC duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer, the Depositor or UAC, as the
case may be, set forth in the Certificates or in this Agreement or the
Purchase Agreement, which failure shall (a) materially and adversely
affect the rights of Certificateholders or the Insurer and (b) continue
unremedied for a period of 60 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have
been given (1) to the Servicer, UAC or the Depositor, as the case may
be, by the
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Trustee, or (2) to the Servicer or the Depositor, as the case may be,
and to the Trustee, by the Insurer (so long as the Insurer is not in
default of its obligations under the Policy) or by the Holders of
Certificates evidencing not less than 25% of the Certificate Balance
and 25% of the Notional Principal Amount of the Class I Certificates;
or
(iii) The occurrence of an Insolvency Event with respect to
the Servicer;
then, and in each and every case, so long as an Event of Default shall not have
been remedied, the Trustee, upon direction to do so by the Holders of
Certificates evidencing not less than 25% of the Certificate Balance and 25% of
the Notional Principal Amount of the Class I Certificates, by notice then given
in writing to the Servicer (and to the Trustee if given by the
Certificateholders) may, with the consent of the Insurer (so long as the Insurer
is not in default of its obligations under the Policy) terminate all of the
rights and obligations of the Servicer under this Agreement. In addition, if a
Trigger Event (as defined in the Insurance Agreement) shall have occurred, the
Insurer may (A) require that the Trustee deliver a notice of termination to the
Servicer and appoint a successor Servicer designated by the Insurer in such
notice pursuant to Section 14.02; (B) require that the Trustee amend
certificates of title relating to the Financed Vehicles and take other actions
to identify the Trust as the new secured party on such certificates of title;
(C) as provided in the Insurance Agreement, require that the Servicer or
successor Servicer or the Trustee instruct Obligors in respect of the
Receivables to remit payment on the Receivable directly to the Trustee or a
separate account established exclusively for the Trust; and (D) as provided in
the Insurance Agreement, compel transfer by the Servicer of all Receivables
files and, if applicable, certain rights in respect of servicing systems assets
to the Insurer or to the successor Servicer designated by the Insurer. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Certificates or the Receivables or otherwise, shall, without further action,
pass to and be vested in the Trustee (except that the Trustee may but shall not
be required to make Advances) or such successor Servicer as may be appointed
under Section 14.02 pursuant to and under this Section 14.01; and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the predecessor Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and endorsement of the
Receivables and related documents, or otherwise. The predecessor Servicer shall
cooperate with the successor Servicer and the Trustee in effecting the
termination of the responsibilities and rights of the predecessor Servicer under
this Agreement, including the transfer to the successor Servicer of electronic
records related to the Receivables in such form as the successor Servicer may
reasonably request and the transfer to the successor Servicer for administration
by it of all cash amounts that shall at the time be held by the predecessor
Servicer for deposit, or shall thereafter be received with respect to a
Receivable. All reasonable costs and expenses (including attorneys' fees)
incurred in connection with transferring the Receivable Files to the successor
Servicer and amending this Agreement to reflect such succession as Servicer
pursuant to this Section 14.01 shall be paid by the predecessor Servicer upon
presentation of reasonable documentation of such costs and expenses.
SECTION 14.02. Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 14.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of
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resignation, until the later of (x) the date 45 days from the delivery to the
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's resignation or termination hereunder, the Trustee
shall appoint a successor Servicer, which successor Servicer shall be reasonably
acceptable to the Insurer (so long as the Insurer is not in default of its
obligations under the Policy), and the successor Servicer shall accept its
appointment by a written assumption in form acceptable to the Trustee. In the
event that a successor Servicer has not been appointed at the time when the
predecessor Servicer has ceased to act as Servicer in accordance with this
Section 14.02, the Trustee without further action shall automatically be
appointed the successor Servicer. Notwithstanding the above, the Trustee shall,
if it shall be legally unable or unwilling so to act, appoint, or petition a
court of competent jurisdiction to appoint, any established financial
institution, having a net worth of not less than $50,000,000 and whose regular
business shall include the servicing of automotive receivables, as the successor
to the Servicer under this Agreement and which financial institution is, in the
case of appointment by the Trustee, reasonably acceptable to the Insurer.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Servicing Fee
and all of the rights granted to the predecessor Servicer, by the terms and
provisions of this Agreement. The predecessor Servicer shall be entitled to be
reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Trustee may make such
arrangements for the successor Servicer out of payments on Receivables it and
such successor Servicer shall agree; provided, however, that no such
compensation shall be in excess of that permitted the original Servicer under
this Agreement. The Trustee and such successor Servicer shall take such action,
consistent with this Agreement, as shall be necessary to effectuate any such
succession.
SECTION 14.03. Notification to Certificateholders. Upon any notice of
an Event of Default or upon any termination of, or appointment of a successor
to, the Servicer pursuant to this Article XIV, the Trustee shall give prompt
written notice thereof to Certificateholders at their respective addresses
appearing in the Certificate Register.
SECTION 14.04. Waiver of Past Defaults. The Holders of Certificates
evidencing not less than 51% of the Certificate Balance and 51% of the Notional
Principal Amount of the Class I Certificates, may, on behalf of all Holders of
Certificates, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences, except a default in making any
required deposits to or payments from the Certificate Account in accordance with
this Agreement; provided, that no waiver of any default or provision of this
Agreement shall become effective without the consent of the Insurer (unless the
Insurer is in default of its obligations under the Policy). Upon any such waiver
of a past default, such default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereon.
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ARTICLE XV
The Trustee
SECTION 15.01. Duties of Trustee. The Trustee, both prior to and after
the occurrence of an Event of Default, shall undertake to perform such duties as
are specifically set forth in this Agreement. If an Event of Default shall have
occurred and shall not have been cured and, in the case of an Event of Default
described in clause (i) of Section 14.01, the Trustee has received notice of
such Event of Default, the Trustee shall exercise such of the rights and powers
vested in it by this Agreement, and shall use the same degree of care and skill
in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs; provided, however, that if the
Trustee shall assume the duties of the Servicer pursuant to Section 14.02, the
Trustee in performing such duties shall use the degree of skill and attention
customarily exercised by a servicer with respect to automobile receivables that
it services for itself or others.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Default, and
after the curing of all such Events of Default that may have occurred,
the duties and obligations of the Trustee shall be determined solely by
the express provisions of this Agreement, the Trustee shall not be
liable except for the performance of such duties and obligations as
shall be specifically set forth in this Agreement, no implied covenants
or obligations shall be read into this Agreement against the Trustee
and, in the absence of bad faith on the part of the Trustee, or
manifest error, the Trustee may conclusively rely on the truth of the
statements and the correctness of the opinions expressed in any
certificates or opinions furnished to the Trustee and conforming to the
requirements of this Agreement;
(ii) The Trustee shall not be liable for an error of
judgment made in good faith by a Responsible Officer, including its
actions pursuant to Section 9.04(e), unless it shall be proved that the
Trustee shall have been negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be liable with respect to any
action taken, suffered, or omitted to be taken in good faith in
accordance with this Agreement or at the direction of the Holders of
Certificates evidencing not less than 25% of the Certificate Balance
relating to the time, method, and place of conducting any proceeding
for any remedy available to the Trustee, or exercising any trust or
power conferred upon the Trustee, under this Agreement;
(iv) The Trustee shall not be charged with knowledge of
any failure by the Servicer to comply with the obligations of the
Servicer referred to in clauses (i) or (ii) of Section 14.01, or of any
failure by the Depositor to comply with the obligations of the
Depositor referred to in clause (ii) of Section 14.01, unless a
Responsible Officer of the
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Trustee receives written notice of such failure (it being understood
that knowledge of the Servicer or the Servicer as custodian, in its
capacity as agent for the Trustee, is not attributable to the Trustee)
from the Servicer or the Depositor, as the case may be, or the Holders
of Certificates evidencing not less than 25% of the Certificate
Balance; and
(v) Without limiting the generality of this Section or
Section 15.04, the Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any agreement
referred to therein or any financing statement evidencing a security
interest in the Receivables or the Financed Vehicles, or to see to the
maintenance of any such recording or filing or depositing or to any
rerecording, refiling or redepositing of any thereof, (B) to see to any
insurance of the Financed Vehicles or Obligors or to effect or maintain
any such insurance, (C) to see to the payment or discharge of any tax,
assessment, or other governmental charge or any Lien or encumbrance of
any kind owing with respect to, assessed, or levied against, any part
of the Trust, (D) to confirm or verify the contents of any reports or
certificates of the Servicer delivered to the Trustee pursuant to this
Agreement believed by the Trustee to be genuine and to have been signed
or presented by the proper party or parties, or (E) to inspect the
Financed Vehicles at any time or ascertain or inquire as to the
performance or observance of any of the Depositor's or the Servicer's
representations, warranties or covenants or the Servicer's duties and
obligations as Servicer and as custodian of the Receivable Files under
this Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement except during
such time, if any, as the Trustee shall be the successor to, and be vested with
the rights, duties, powers, and privileges of, the Servicer in accordance with
the terms of this Agreement. Except for actions expressly authorized by this
Agreement, the Trustee shall take no action reasonably likely to impair the
security interests created or existing under any Receivable or to impair the
value of any Receivable.
SECTION 15.02. Trustee's Certificate. On or as soon as practicable
after each Distribution Date on which Receivables shall be (i) assigned to UAC
pursuant to Section 7.02 or deemed to be assigned to the Depositor as a result
of the application of Available Funds in respect of Defaulted Receivables
pursuant to Sections 9.04 and 9.05 or (ii) assigned to the Servicer pursuant to
Section 8.07 or to the Class IC Certificateholder pursuant to Section 16.02, the
Trustee shall, at the written request of the Servicer, execute a Trustee's
Certificate, substantially in the form of, in the case of an assignment to UAC,
Exhibit 1, or, in the case of an assignment to the Servicer, Exhibit 2, based on
the information contained in the Servicer's Certificate for the related
Collection Period, amounts deposited to the Certificate Account, and notices
received pursuant to this Agreement, identifying the Receivables repurchased or
deemed to be repurchased by UAC pursuant to Section 7.02 or 9.02 or purchased by
the Servicer pursuant to Section 8.07 or 16.02 during such Collection Period,
and shall deliver such Trustee's Certificate, accompanied by a copy of the
Servicer's Certificate for such Collection Period to UAC or the Servicer, as the
case may be. The Trustee's Certificate shall be an assignment pursuant to
Section 15.03.
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SECTION 15.03. Trustee's Assignment of Purchased Receivables. With
respect to each Receivable repurchased by UAC pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 9.02 or purchased by the
Servicer pursuant to Section 8.07 or 16.02, the Trustee shall assign, as of the
last day of the Collection Period during which such Receivable became a
Defaulted Receivable or became subject to repurchase by UAC or purchase by the
Servicer, without recourse, representation, or warranty, to UAC or the Servicer
(as the case may be) all the Trustee's right, title, and interest in and to such
Receivables, and all security and documents relating thereto, such assignment
being an assignment outright and not for security. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a Receivable
on the ground that it shall not be a real party in interest or a holder entitled
to enforce the Receivable, the Trustee shall, at the Servicer's expense, take
such steps as the Trustee deems necessary to enforce the Receivable, including
bringing suit in its name or the name of the Certificateholders.
SECTION 15.04. Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 15.01:
(i) The Trustee may rely and shall be protected in
acting or refraining from acting upon any resolution, Officers'
Certificate, Servicer's Certificate, certificate of auditors, or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(ii) The Trustee may consult with counsel and any
written advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it under this Agreement in good faith and in accordance
with such written advice or Opinion of Counsel.
(iii) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct, or defend any litigation under this Agreement or
in relation to this Agreement, at the request, order, or direction of
any of the Certificateholders pursuant to the provisions of this
Agreement, unless such Certificateholders shall have offered to the
Trustee reasonable security or indemnity reasonably satisfactory to the
Trustee against the costs, expenses, and liabilities that may be
incurred therein or thereby. Nothing contained in this Agreement,
however, shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Default (that shall not have been cured), to
exercise such of the rights and powers vested in it by this Agreement,
and to use the same degree of care and skill in their exercise as a
prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(iv) The Trustee shall not be liable for any action
taken, suffered, or omitted by it in good faith and believed by it to
be authorized or within the discretion or rights or powers conferred
upon it by this Agreement.
(v) Prior to the occurrence of an Event of Default and
after the curing of all Events of Default that may have occurred, the
Trustee shall not be bound to make any investigation into the facts of
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, approval, bond, or
other paper or document, unless requested in writing so to do by
Holders of Certificates evidencing not
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less than 25% of the Certificate Balance or not less than 25% of the
Notional Principal Amount of the Class I Certificates; provided,
however, that if the payment within a reasonable time to the Trustee of
the costs, expenses, or liabilities likely to be incurred by it in the
making of such investigation shall be, in the opinion of the Trustee,
not reasonably assured to the Trustee by the security afforded to it by
the terms of this Agreement, the Trustee may require reasonable
indemnity against such cost, expense, or liability as a condition to so
proceeding. The reasonable expense of every such examination shall be
paid by the Servicer or, if paid by the Trustee, shall be reimbursed by
the Servicer upon demand. Nothing in this clause (v) shall affect the
obligation of the Servicer to observe any applicable law prohibiting
disclosure of information regarding the Obligors.
(vi) The Trustee may execute any of the trusts or powers
hereunder or perform any duties under this Agreement either directly or
by or through agents or attorneys or a custodian. The Trustee shall not
be responsible for any misconduct or negligence solely attributable to
the acts or omissions of the Servicer in its capacity as Servicer or
custodian.
(vii) Subsequent to the sale of the Receivables by the
Depositor to the Trustee, the Trustee shall have no duty of independent
inquiry, except as may be required by Section 15.01, and the Trustee
may rely upon the representations and warranties and covenants of the
Depositor and the Servicer contained in this Agreement with respect to
the Receivables and the Receivable Files.
SECTION 15.05. Trustee Not Liable for Certificates or Receivables. The
recitals contained herein and in the Certificates (other than the certificate of
authentication on the Certificates) shall be taken as the statements of the
Depositor or the Servicer, as the case may be, and the Trustee assumes no
responsibility for the correctness thereof. The Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificates (other than the certificate of authentication on the Certificates),
or of any Receivable or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any
Receivable, or the perfection and priority of such a security interest or the
maintenance of any such perfection and priority, or for or with respect to the
efficacy of the Trust or its ability to generate the payments to be distributed
to Certificateholders under this Agreement, including, without limitation: the
existence, condition, location, and ownership of any Financed Vehicle; the
existence and enforceability of any physical damage insurance, lender's single
interest insurance, or credit life or disability and hospitalization insurance
with respect to any Receivable; the existence and contents of any Receivable or
any computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Depositor or the Servicer with any warranty or representation made under
this Agreement or in any related document and the accuracy of any such warranty
or representation prior to the Trustee's receipt of notice or other discovery of
any noncompliance therewith or any breach thereof; any investment of monies by
the Servicer or any loss resulting therefrom (it being understood that the
Trustee shall remain responsible for any Trust property that it may hold); the
acts or omissions of the Depositor, the Servicer, or any Obligor; an action of
the Servicer taken in the name of the Trustee; or any action by the Trustee
taken at the instruction of the Servicer; provided, however, that the foregoing
shall not relieve the Trustee of its obligation to perform its duties under this
Agreement. Except with respect to a claim based on the failure of the Trustee to
perform its duties under this Agreement or based on the Trustee's negligence or
willful
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misconduct, no recourse shall be had for any claim based on any provision of
this Agreement, the Certificates, or any Receivable or assignment thereof
against the Trustee in its individual capacity, the Trustee shall not have any
personal obligation, liability, or duty whatsoever to any Certificateholder or
any other Person with respect to any such claim, and any such claim shall be
asserted solely against the Trust or any indemnitor who shall furnish indemnity
as provided in this Agreement. The Trustee shall not be accountable for the use
or application by the Depositor of any of the Certificates or of the proceeds of
such Certificates, or for the use or application of any funds paid to the
Depositor or the Servicer in respect of the Receivables.
SECTION 15.06. Trustee May Own Certificates. The Trustee in its
individual or any other capacity may become the owner or pledgee of Certificates
with the same rights as it would have if it were not Trustee.
SECTION 15.07. Trustee's Fees and Expenses. The Servicer shall pay to
the Trustee, and the Trustee shall be entitled to, reasonable compensation
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust) for all services rendered by it
in the execution of the trusts created by this Agreement and in the exercise and
performance of any of the Trustee's powers and duties under this Agreement, and
the Servicer shall pay or reimburse the Trustee upon its request for all
reasonable expenses, disbursements, and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Trustee in
accordance with any provisions of this Agreement, except any such expense,
disbursement, or advance as may be attributable to its willful misfeasance,
negligence, or bad faith, and the Servicer shall indemnify the Trustee (which,
for purposes of this section, shall include its directors, officers, employees,
and agents) for and hold it harmless against any loss, liability, or expense
incurred without willful misfeasance, negligence, or bad faith on its part,
arising out of or in connection with the acceptance or administration of the
Trust, including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties under this Agreement. Additionally, the Depositor, pursuant to Section
12.02, and the Servicer, pursuant to Section 13.02, respectively, shall
indemnify the Trustee with respect to certain matters. This indemnity shall
survive the termination of this Agreement or the Trust and the resignation or
removal of the Trustee.
SECTION 15.08. Eligibility Requirements for Trustee. The Trustee under
this Agreement shall at all times be a corporation having an office in the same
State as the location of the Corporate Trust Office as specified in this
Agreement; and organized and doing business under the laws of such State or the
United States of America; authorized under such laws to exercise corporate trust
powers; and having a net worth of at least $50,000,000 and subject to
supervision or examination by federal or State authorities and the long-term
unsecured debt of which is rated at least Baa3 or which is approved by the
Insurer and each Rating Agency. If such corporation shall publish reports of
condition at least annually, pursuant to law or to the requirements of the
aforesaid supervising or examining authority, then for the purpose of this
Section 15.08, the combined capital and surplus of such corporation shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section 15.08, the Trustee
shall resign immediately in the manner and with the effect specified in Section
15.09.
SECTION 15.09. Resignation or Removal of Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Servicer.
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Upon receiving such notice of resignation, the Servicer, with the prior written
consent of the Insurer, shall promptly appoint a successor Trustee, by written
instrument, in duplicate, one copy of which instrument shall be delivered to the
resigning Trustee and one copy to the successor Trustee. If no successor Trustee
shall have been so appointed and have accepted appointment within 30 days after
the giving of such notice of resignation, the resigning Trustee may petition any
court of competent jurisdiction for the appointment of a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance
with the provisions of Section 15.08 and shall fail to resign after written
request therefor by the Servicer, or if at any time the Trustee shall be legally
unable to act, or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trustee or of its property shall be appointed, or any public officer shall
take charge or control of the Trustee or of its property or affairs for the
purpose of rehabilitation, conservation, or liquidation, then the Servicer may
remove the Trustee. If it shall remove the Trustee under the authority of the
immediately preceding sentence, the Servicer shall promptly appoint a successor
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Trustee so removed and one copy to the successor Trustee.
Any resignation or removal of the Trustee and appointment of a
successor Trustee pursuant to any of the provisions of this Section 15.09 shall
not become effective until acceptance of appointment by the successor Trustee
pursuant to Section 15.10.
SECTION 15.10. Successor Trustee. Any successor Trustee appointed
pursuant to Section 15.09 shall execute, acknowledge, and deliver to the
Servicer and to its predecessor Trustee an instrument accepting such appointment
under this Agreement, and thereupon the resignation or removal of the
predecessor Trustee shall become effective and such successor Trustee, without
any further act, deed, or conveyance, shall become fully vested with all the
rights, powers, duties, and obligations of its predecessor under this Agreement,
with like effect as if originally named as Trustee. The predecessor Trustee
shall deliver to the successor Trustee all documents and statements held by it
under this Agreement; and the Servicer and the predecessor Trustee shall execute
and deliver such instruments and do such other things as may reasonably be
required for fully and certainly vesting and confirming in the successor Trustee
all such rights, powers, duties, and obligations.
No successor Trustee shall accept appointment as provided in this
Section 15.10 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 15.10, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
SECTION 15.11. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion, or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided such
corporation shall be eligible pursuant to Section 15.08, without the execution
or filing of any instrument or any further act on the part of any of the parties
hereto, anything herein to the contrary notwithstanding.
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SECTION 15.12. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 15.12,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a request
so to do, or in the case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor Trustee pursuant to Section 15.08 and no
notice to Certificateholders of the appointment of any co-trustee or separate
trustee shall be required pursuant to Section 15.10.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Trustee shall be conferred upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as
Trustee under this Agreement or as successor to the Servicer under this
Agreement), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Trustee;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) The Servicer and the Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request, or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article XV. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under
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or in respect of this Agreement on its behalf and in its name. If any separate
trustee or co-trustee shall die, become incapable of acting, resign, or be
removed, all of its estates, properties, rights, remedies, and trusts shall vest
in and be exercised by the Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee.
SECTION 15.13. Representations and Warranties of Trustee. The Trustee
shall make the following representations and warranties on which the Depositor
and Certificateholders may rely:
(i) Organization and Existence. The Trustee is an
Illinois banking corporation duly organized and validly existing under
the laws of the State of Illinois and authorized to engage in a banking
and trust business under such laws.
(ii) Power and Authority. The Trustee has full power,
authority, and legal right to execute, deliver, and perform this
Agreement, and shall have taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.
(iii) Duly Executed. This Agreement shall have been duly
executed and delivered by the Trustee and shall constitute the legal,
valid, and binding agreement of the Trustee, enforceable in accordance
with its terms, except as such enforceability may be limited by (i)
bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereinafter
in effect relating to the enforcement of creditors' rights in general,
as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership
or similar occurrence affecting the Trustee, and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as well as concepts of
reasonableness, good faith and fair dealing.
ARTICLE XVI
Termination
SECTION 16.01. Termination of the Trust. The respective obligations and
responsibilities of the Depositor, the Servicer and the Trustee created hereby
and the Trust created by this Agreement shall terminate upon (i) the disposition
of the Trust corpus as of the last day of any Collection Period at the direction
of the Class IC Certificateholder, at its option, pursuant to Section 16.02, or
(ii) the payment to Certificateholders and the Insurer of all amounts required
to be paid to them pursuant to this Agreement and the Insurance Agreement (as
set forth in writing by the Insurer) and the disposition of all property held as
part of the Trust; provided, however, that in no event shall the trust created
by this Agreement continue beyond the expiration of 21 years from the date as of
which this Agreement is executed. The Servicer shall promptly notify the Trustee
of any prospective termination pursuant to this Section 16.01.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee to Certificateholders immediately following the Trustee's receipt of
notice thereof from the Class IC Certificateholder but not later than the
Distribution Date that such payment shall be made stating (A) the final payment
of the Certificates shall be made upon presentation and surrender of the
Certificates at the office of the Trustee therein designated, (B) the
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amount of any such final payment, and (C) if applicable, that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Trustee therein specified. The Trustee shall give such notice to the
Certificate Registrar (if other than the Trustee) at the time such notice is
given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 9.04 and, in
the event of a termination pursuant to clause (i) or (ii) of the preceding
paragraph, the provisions of Section 9 of Annex A hereto shall govern the
remaining distributions to Certificateholders.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trustee shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall, upon notice to the Trustee, be distributed by the Trustee
to the United Way of Central Indiana or its successor, and upon such
distribution the Certificateholders' rights to any amounts so distributed will
be extinguished.
SECTION 16.02. Optional Disposition of All Receivables. On the last day
of any Collection Period following which (i) the Notional Principal Amount will
have been reduced to zero on or before the related Distribution Date, and (ii)
the Pool Balance is equal to or less than 10% of the Initial Certificate
Balance, the holder of the Class IC Certificate shall have the option to cause
the Trustee to sell (to the Class IC Certificateholder or any other person) the
corpus of the Trust at a price (the "Optional Disposition Price") equal to the
fair market value of the Receivables, but not less than (i) the sum of (x) 100%
of the Certificate Balance, (y) accrued and unpaid interest on such amount
computed at a rate equal to the weighted average Note Rate, and (z) all amounts
due and owing to the Insurer under the Agreement and the Insurance Agreement
minus any amounts representing payments received on the Receivables not yet
applied to the interest related thereto or to reduce the principal balance
thereof. The proceeds of such sale will be deposited into the Certificate
Account for distribution to the Certificateholders (and, to the extent
applicable, the Insurer) on the next succeeding Distribution Date. In connection
with such disposition, the Class IC Certificateholder is required to pay any
unpaid fees and expenses of the Trustee that it would otherwise have been
entitled to pursuant to this Agreement. The Servicer shall notify the Trustee
and the Class IC Certificateholder on or before the Determination Date if the
Pool Balance as of the end of the related Collection Period will be less than or
equal to 10% of the Original Certificate Balance. The Class IC Certificateholder
shall notify the Trustee on or before the Determination Date if the Class IC
Certificateholder intends to exercise its option to purchase the corpus of the
Trust pursuant to this Section 16.02. Such price shall be deposited to the
Certificate Account in immediately available funds by 12:00 noon, New York City
time, on the Distribution Date and, upon notice to the Trustee of such deposit,
the Trustee shall transfer the Receivables and the Receivable Files to the
purchaser, whereupon the Certificates shall no longer evidence any right or
interest in the Receivables or any proceeds thereof.
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ARTICLE XVII
Miscellaneous Provisions
SECTION 17.01. Amendment. This Agreement may be amended by the
Depositor, the Servicer and the Trustee, without the consent of any of the
Certificateholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of any Certificateholder.
This Agreement may also be amended from time to time by the Depositor,
the Servicer, and the Trustee with the consent of the Class IC
Certificateholder, Holders of Certificates evidencing not less than 51% of the
Certificate Balance and 51% of the Notional Principal Amount of the Class I
Certificates for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Holders of Certificates; provided, however, that
no such amendment shall, without the consent of the Holders of all Certificates
then outstanding, reduce the aforesaid percentage required to consent to any
such amendment. In no case may any such amendment increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Receivables or distributions that shall be required to be made on
any Certificate.
Notwithstanding anything to the contrary in this Agreement, no Opinion
of Counsel or consent of Certificateholders shall be required in connection with
any amendment of this Agreement to provide for a Spread Account Facility;
provided that prior to the effectiveness of any such amendment Standard & Poor's
and Moody's shall confirm in writing that the rating of the Certificates will
not be lowered or withdrawn as a result of such amendment.
Notwithstanding anything to the contrary in this Agreement (i) no
amendment of this Agreement shall be effective without the prior written consent
of the Insurer and (ii) except as provided in the third paragraph of this
Section 17.01, no amendment to this Agreement shall be recognized or be
effective without the written consent of the Trustee and receipt by the Trustee
of an Opinion of Counsel to the effect that such amendment will not cause the
Trust to be treated as an association taxable as a corporation or as a
publicly-traded partnership.
Promptly after the execution of any amendment or consent, the Trustee
shall furnish written notification of the substance of such amendment or consent
to each Certificateholder.
It shall not be necessary for the consent of Certificateholders
pursuant to this Section 17.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by Certificateholders shall be
subject to such reasonable requirements as the Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Trustee
shall be entitled to receive and rely upon an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by this Agreement and
the Opinion of Counsel referred to in Section
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17.02(i)(1). The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties, or immunities under
this Agreement.
SECTION 17.02. Protection of Title to Trust.
(a) The Depositor shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders and the Trustee under this
Agreement in the Receivables and in the proceeds thereof. The Depositor shall
deliver (or cause to be delivered) to the Trustee file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Depositor nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Depositor in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Trustee at least 60
days' prior written notice thereof.
(c) The Depositor and the Servicer shall give the Trustee at least 60
days' prior written notice of any relocation of its principal executive office
if, as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement (in which case the
Servicer shall file or cause to be filed such amendment or continuation
statement or new financing statement). The Trustee shall be permitted to waive
the 60 day notice period to any shorter period; provided that such UCC financing
statements or amendments have been filed on or before the effective date of any
such waiver. The Servicer shall at all times maintain each office from which it
shall service Receivables, and its principal executive office, within the United
States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Certificate
Account in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Trustee,
the Servicer's master computer records (including any back-up archives) that
refer to a Receivable shall indicate clearly with reference to the particular
trust that such Receivable is owned by the Trustee. Indication of the Trustee's
ownership of a Receivable shall be deleted from or modified on the Servicer's
computer systems when, and only when, the Receivable shall have been paid in
full or repurchased.
(f) If at any time the Depositor or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trustee.
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(g) The Servicer shall permit the Trustee and its agents at any time
during normal business hours to inspect, audit, and make copies of and abstracts
from the Servicer's records regarding any Receivable.
(h) Upon request, the Servicer shall furnish to the Trustee, within
five Business Days, a list of all Receivables (by contract number and name of
Obligor) then held as part of the Trust, together with a reconciliation of such
list to the Schedule of Receivables and to each of the Servicer's Certificates
furnished before such request indicating removal of Receivables from the Trust.
(i) The Servicer shall deliver to the Trustee:
(1) promptly after the execution and delivery of this
Agreement and of each amendment thereto, an Opinion of Counsel either
(a) stating that, in the opinion of such counsel, all financing
statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the
Trustee in the Receivables and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given,
or (b) stating that, in the opinion of such counsel, no such action
shall be necessary to preserve and protect such interest; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cutoff Date, an Opinion of Counsel, dated as of a date during
such 90-day period, either (a) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Receivables, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given, or (b) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such
interest.
SECTION 17.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided
in Section 14.04, 17.01, 17.03 or 17.07) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement except as expressly set forth herein, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificates, be construed
so as to constitute the Certificateholders from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing not less than 25% of the Certificate
Balance or not less than 25% of the Notional Principal Amount of the Class I
Certificates shall have made written request upon the
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Trustee to institute such action, suit, or proceeding in its own name as Trustee
under this Agreement and shall have offered to the Trustee such reasonable
indemnity as it may require against the costs, expenses, and liabilities to be
incurred therein or thereby, and the Trustee, for 30 days after its receipt of
such notice, request, and offer of indemnity, shall have neglected or refused to
institute any such action, suit, or proceeding and during such 30-day period no
direction inconsistent with such written request has been given to the Trustee
pursuant to Section 14.04; no one or more Holders of Certificates shall have any
right in any manner whatever by virtue or by availing itself or themselves of
any provisions of this Agreement to affect, disturb, or prejudice the rights of
the Holders of any other of the Certificates, or to obtain or seek to obtain
priority over or preference to any other such Holder, or to enforce any right,
under this Agreement except in the manner provided in this Agreement and for the
equal, ratable, and common benefit of all Certificateholders. For the protection
and enforcement of the provisions of this Section 17.03, each Certificateholder
and the Trustee shall be entitled to such relief as can be given either at law
or in equity.
SECTION 17.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of New York applicable to agreements made
and to be performed within the State of New York, and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 17.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Depositor to the agent for service as specified
in this Agreement, at the following address: UAC Securitization Corporation,
9240 Bonita Beach Road, Suite 1109-A, Bonita Springs, Florida 34135, or at such
other address as shall be designated by the Depositor in a written notice to the
Servicer or Trustee; (b) in the case of the Servicer to the agent for service as
specified in this Agreement, at the following address, Union Acceptance
Corporation, 250 North Shadeland Avenue, Indianapolis, Indiana 46219, (c) in the
case of the Trustee, at the Corporate Trust Office, (d) in the case of the
Insurer, at MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504,
Fax (914) 765-3163, Attention: Managing Director, Credit Enhancement. Any notice
required or permitted to be mailed to a Certificateholder shall be given by
first class mail, postage prepaid, at the address of such Holder as shown in the
Certificate Register unless otherwise provided herein. Unless otherwise provided
herein, any notice so mailed within the time prescribed in this Agreement shall
be conclusively presumed to have been duly given, whether or not the
Certificateholder shall receive such notice.
SECTION 17.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement or of the
Certificates or the rights of the Holders thereof.
SECTION 17.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Depositor or the Servicer
without the prior written consent of the Trustee, the Class IC
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Certificateholder, and the Holders of Certificates evidencing not less than 66%
of the Certificate Balance and 66% of the Notional Principal Amount of the Class
I Certificates.
SECTION 17.08. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 11.02, Certificates
shall be deemed fully paid.
SECTION 17.09. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, UAC and the Trustee shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Trust or the Depositor, acquiesce, petition or
otherwise invoke or cause the Trust or the Depositor to invoke the process of
any court or government authority for the purpose of commencing or sustaining a
case against the Trust or the Depositor under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Depositor or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Depositor.
SECTION 17.10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 17.11. Third Party Beneficiary. This Agreement shall inure to
the benefit of the Insurer and its successors and assigns.
[Next page is signature page]
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IN WITNESS WHEREOF, the parties hereto have caused this Pooling and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
UAC SECURITIZATION CORPORATION,
as Depositor
By
TITLE: Vice President
UNION ACCEPTANCE CORPORATION,
as Servicer
By
TITLE: Vice President
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
TITLE: Trust Officer
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<PAGE>
Exhibit 1
Trustee's Certificate
pursuant to Section 15.02
of the Pooling and Servicing
Agreement
Harris Trust and Savings Bank, as trustee (the "Trustee") of the UACSC
1998-__ Auto Trust created pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of __________, 199__ among UAC
Securitization Corporation, as depositor (the "Depositor"), Union Acceptance
Corporation, as servicer (the "Servicer") and the Trustee, does hereby sell,
transfer, assign, and otherwise convey to Union Acceptance Corporation without
recourse, representation, or warranty, all of the Trustee's right, title, and
interest in and to all of the Receivables (as defined in the Pooling and
Servicing Agreement) identified in the attached Servicer's Certificate as
"Purchased Receivables," which have been repurchased by the Depositor pursuant
to Section 7.02 and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
- -----------------, -------.
------------------------------------
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<PAGE>
Exhibit 2
Trustee's Certificate
pursuant to Section 15.02
of the Pooling and Servicing
Agreement
Harris Trust and Savings Bank, as trustee (the "Trustee") of the UACSC
1998-__ Auto Trust created pursuant to the Pooling and Servicing Agreement (the
"Pooling and Servicing Agreement") dated as of _________, 199__ among UAC
Securitization Corporation, as depositor (the "Depositor"), Union Acceptance
Corporation, as servicer (the "Servicer") and the Trustee, does hereby sell,
transfer, assign, and otherwise convey to the Servicer, without recourse,
representation, or warranty, all of the Trustee's right, title, and interest in
and to all of the Receivables (as defined in the Pooling and Servicing
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which have been purchased by the Servicer pursuant to Section 8.07
or 16.02, and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
- -----------------, --------.
------------------------------------------
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<PAGE>
Exhibit 3
Form of Servicer's Certificate
to the Trustee pursuant to
Sections 8.09 and 9.02
of the Pooling and Servicing
Agreement
SERVICER'S CERTIFICATE TO THE TRUSTEE
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<PAGE>
EXHIBIT A-1
[Form of Class A-1 Certificate]
PRINCIPAL IN RESPECT OF THIS CLASS A-1 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-__ AUTO TRUST
______% CLASS A-1 MONEY MARKET AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans.
The contracts were sold to the Trustee by UAC Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER CUSIP _________
R-A1-___
$-------------
THIS CERTIFIES THAT ____________ is the registered owner of a
_____________ dollars nonassessable, fully-paid, fractional undivided interest
in the UACSC 1998-__ Auto Trust (the "Trust") formed by UAC Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of __________, 199__ (the
"Agreement") among UAC Securitization Corporation as Depositor, Union Acceptance
Corporation, as Servicer and Harris Trust and Savings Bank (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "______% Class A-1 Money Market
Automobile Receivable Backed Certificates" (the "Class A-1 Certificates"). This
Certificate is issued under and is subject to the terms, provisions, and
conditions of the Agreement, to which Agreement the holder of this Certificate
by virtue of the acceptance hereof assents and by which such holder is bound.
The property of the Trust includes a pool of simple and precomputed interest
loan and security agreements and installment sales contracts for new and used
automobiles, light trucks, vans and van conversions (the "Receivables"), all
monies paid thereon, and all monies due thereon, including Accrued Interest,
after _________, 199__ (but excluding Accrued Interest paid or due prior to the
Closing Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage, lender's single interest, credit life, disability and hospitalization
insurance policies, if any, covering vehicles financed thereby and the obligors
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thereunder, the interest of the Depositor in recourse to dealers relating to
certain of the Receivables, the proceeds of all of the foregoing and amounts on
deposit from time to time in the Spread Account for the benefit of the Class I
Certificateholders and the Class A Certificateholders, and the Policy for the
benefit of the Class I Certificateholders and the Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the
Trust. The Class A Certificates are comprised of "Class A-1 Certificates,"
"Class A-2 Certificates,"Class A-3 Certificates," "Class A-4 Certificates" and
"Class A-5 Certificates." In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in the
Trust (the "Class I Certificates" and together with the Class A Certificates,
the "Certificates") and a Class IC Certificate (the "Class IC Certificate")
shall be issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A
Certificateholders and the Class I Certificateholders in full, they shall share
pro rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing
_______, 199__, to the person in whose name this Class A-1 Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A-1 Monthly Interest and
Monthly Principal. Each Class A-1 Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A-1 Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate Initial
Class A-1 Certificate Balance.
Distributions on this Class A-1 Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-1 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class
A-1 Certificate will be made only upon presentation and surrender of this Class
A-1 Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A-1 Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A-1 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-1
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-1 Certificates,
the Trustee will draw on the Policy up to the Policy Amount to pay such
deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-1 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-1 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-1 Certificate and of any Class
A-1 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-1
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class
A-1 Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A-1 Certificate is registrable in the
Certificate Register upon surrender of this Class A-1 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly
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<PAGE>
authorized in writing, and thereupon one or more new Class A-1 Certificates of
authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
The Class A-1 Certificates are issuable only as registered Class A-1
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-1 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-1
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-1 Certificates are
exchangeable for new Class A-1 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A-1
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-1
Certificateholders created by the Agreement and the Trust created thereby shall
terminate upon the payment to Class A-1 Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust. The holder of the Class IC Certificate may
at its option cause the Trustee to sell the corpus of the Trust at a price not
to be less than the price specified in the Agreement, and such sale of the
Receivables and other property of the Trust may effect early retirement of the
Class A-1 Certificates; however, such right is exercisable only as of a Record
Date as of which the Pool Balance is less than or equal to 10% of the Initial
Certificate Balance and the Notional Principal Amount has been reduced to zero.
Although this Class A-1 Certificate summarizes certain provisions of
the Agreement, this Class A-1 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-1 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder agrees to be bound by the terms of
the Tax Partnership Agreement included as an annex to the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-1 Certificate to be duly executed.
Dated: _______________
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in
its capacity as Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-1 Certificates
referred to in the within-mentioned
Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
Signatory
Dated: _______________
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<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Class A-1 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Class A-1 Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-1 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
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<PAGE>
EXHIBIT A-2
[Form of Class A-2 Certificate]
PRINCIPAL IN RESPECT OF THIS CLASS A-2 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-__ AUTO TRUST
______% CLASS A-2 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans.
The contracts were sold to the Trustee by UAC Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER CUSIP__________
R-A2-___
$--------------
THIS CERTIFIES THAT ____________ is the registered owner of a
_____________ dollars nonassessable, fully-paid, fractional undivided interest
in the UACSC 1998-__ Auto Trust (the "Trust") formed by UAC Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______, 199__ (the
"Agreement") among UAC Securitization Corporation as Depositor, Union Acceptance
Corporation, as Servicer and Harris Trust and Savings Bank (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "_____% Class A-2 Automobile
Receivable Backed Certificates" (the "Class A-2 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ___________, 199__
(but excluding Accrued Interest paid or due prior to the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any property
that shall have secured a Receivable and that shall have been acquired by or on
behalf of the Trust, any Liquidation Proceeds, any rights of the Depositor in
proceeds from claims or refunds of premiums on physical damage, lender's single
interest, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest
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<PAGE>
of the Depositor in recourse to dealers relating to certain of the Receivables,
the proceeds of all of the foregoing and amounts on deposit from time to time in
the Spread Account for the benefit of the Class I Certificateholders and the
Class A Certificateholders, and the Policy for the benefit of the Class I
Certificateholders and the Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the
Trust. The Class A Certificates are comprised of "Class A-1 Certificates,"
"Class A-2 Certificates," "Class A-3 Certificates," "Class A-4 Certificates" and
"Class A-5 Certificates." In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in the
Trust (the "Class I Certificates" and together with the Class A Certificates,
the "Certificates") and a Class IC Certificate (the "Class IC Certificate")
shall be issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A
Certificateholders and the Class I Certificateholders in full, they shall share
pro rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing
_________, 199__, to the person in whose name this Class A-2 Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A-2 Monthly Interest and
Monthly Principal. Each Class A-2 Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A-2 Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate Initial
Class A-2 Certificate Balance.
Distributions on this Class A-2 Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-2 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class
A-2 Certificate will be made only upon presentation and surrender of this Class
A-2 Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A-2 Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A-2 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-2
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-2 Certificates,
the Trustee will draw on the Policy up to the Policy Amount to pay such
deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-2 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-2 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-2 Certificate and of any Class
A-2 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-2
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class
A-2 Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A-2 Certificate is registrable in the
Certificate Register upon surrender of this Class A-2 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Class A-2
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
73
<PAGE>
The Class A-2 Certificates are issuable only as registered Class A-2
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-2 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-2
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-2 Certificates are
exchangeable for new Class A-2 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A-2
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-2
Certificateholders created by the Agreement and the Trust created thereby shall
terminate upon the payment to Class A-2 Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust. The holder of the Class IC Certificate may
at its option cause the Trustee to sell the corpus of the Trust at a price not
to be less than the price specified in the Agreement, and such sale of the
Receivables and other property of the Trust may effect early retirement of the
Class A-2 Certificates; however, such right is exercisable only as of a Record
Date as of which the Pool Balance is less than or equal to 10% of the Initial
Certificate Balance and the Notional Principal Amount has been reduced to zero.
Although this Class A-2 Certificate summarizes certain provisions of
the Agreement, this Class A-2 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-2 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder agrees to be bound by the terms of
the Tax Partnership Agreement included as an annex to the Agreement.
74
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-2 Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in
its capacity as Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-2 Certificates
referred to in the within-mentioned
Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
Signatory
Dated:
75
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Class A-2 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Class A-2 Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-2 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
76
<PAGE>
EXHIBIT A-3
[Form of Class A-3 Certificate]
PRINCIPAL IN RESPECT OF THIS CLASS A-3 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-__ AUTO TRUST
_____% CLASS A-3 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans.
The contracts were sold to the Trustee by UAC Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER CUSIP _________
R-A3-___
$--------------
THIS CERTIFIES THAT ____________ is the registered owner of a
_____________ dollars nonassessable, fully-paid, fractional undivided interest
in the UACSC 1998-__ Auto Trust (the "Trust") formed by UAC Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______, 199__ (the
"Agreement") among UAC Securitization Corporation as Depositor, Union Acceptance
Corporation, as Servicer and Harris Trust and Savings Bank (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class A-3 Automobile
Receivable Backed Certificates" (the "Class A-3 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ___________, 199__
(but excluding Accrued Interest paid or due prior to the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any property
that shall have secured a Receivable and that shall have been acquired by or on
behalf of the Trust, any Liquidation Proceeds, any rights of the Depositor in
proceeds from claims or refunds of premiums on physical damage, lender's single
interest, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest
77
<PAGE>
of the Depositor in recourse to dealers relating to certain of the Receivables,
the proceeds of all of the foregoing and amounts on deposit from time to time in
the Spread Account for the benefit of the Class I Certificateholders and the
Class A Certificateholders, and the Policy for the benefit of the Class I
Certificateholders and the Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the
Trust. The Class A Certificates are comprised of "Class A-1 Certificates,"
"Class A-2 Certificates," "Class A-3 Certificates," "Class A-4 Certificates" and
"Class A-5 Certificates." In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in the
Trust (the "Class I Certificates" and together with the Class A Certificates,
the "Certificates") and a Class IC Certificate (the "Class IC Certificate")
shall be issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A
Certificateholders and the Class I Certificateholders in full, they shall share
pro rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing
_______, 199__, to the person in whose name this Class A-3 Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A-3 Monthly Interest and
Monthly Principal. Each Class A-3 Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A-3 Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate Initial
Class A-3 Certificate Balance.
Distributions on this Class A-3 Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-3 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class
A-3 Certificate will be made only upon presentation and surrender of this Class
A-3 Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A-3 Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A-3 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-3
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-3 Certificates,
the Trustee will draw on the Policy up to the Policy Amount to pay such
deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-3 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-3 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-3 Certificate and of any Class
A-3 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-3
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class
A-3 Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A-3 Certificate is registrable in the
Certificate Register upon surrender of this Class A-3 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Class A-3
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
78
<PAGE>
The Class A-3 Certificates are issuable only as registered Class A-3
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-3 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-3
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-3 Certificates are
exchangeable for new Class A-3 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A-3
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-3
Certificateholders created by the Agreement and the Trust created thereby shall
terminate upon the payment to Class A-3 Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust. The holder of the Class IC Certificate may
at its option cause the Trustee to sell the corpus of the Trust at a price not
to be less than the price specified in the Agreement, and such sale of the
Receivables and other property of the Trust may effect early retirement of the
Class A-3 Certificates; however, such right is exercisable only as of a Record
Date as of which the Pool Balance is less than or equal to 10% of the Initial
Certificate Balance and the Notional Principal Amount has been reduced to zero.
Although this Class A-3 Certificate summarizes certain provisions of
the Agreement, this Class A-3 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-3 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder agrees to be bound by the terms of
the Tax Partnership Agreement included as an annex to the Agreement.
79
<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-3 Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in
its capacity as Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-3 Certificates
referred to in the within-mentioned
Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
Signatory
Dated:
80
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Class A-3 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Class A-3 Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-3 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
81
<PAGE>
EXHIBIT A-4
[Form of Class A-4 Certificate]
PRINCIPAL IN RESPECT OF THIS CLASS A-4 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-__UTO TRUST
_____% CLASS A-4 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans.
The contracts were sold to the Trustee by UAC Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER CUSIP __________
R-A4-___
$--------------
THIS CERTIFIES THAT ____________ is the registered owner of a
_____________ dollars nonassessable, fully-paid, fractional undivided interest
in the UACSC 1998-__ Auto Trust (the "Trust") formed by UAC Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______, 199__ (the
"Agreement") among UAC Securitization Corporation as Depositor, Union Acceptance
Corporation, as Servicer and Harris Trust and Savings Bank (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class A-4 Automobile
Receivable Backed Certificates" (the "Class A-4 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ___________, 199__
(but excluding Accrued Interest paid or due prior to the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any property
that shall have secured a Receivable and that shall have been acquired by or on
behalf of the Trust, any Liquidation Proceeds, any rights of the Depositor in
proceeds from claims or refunds of premiums on physical damage, lender's single
interest, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest
82
<PAGE>
of the Depositor in recourse to dealers relating to certain of the Receivables,
the proceeds of all of the foregoing and amounts on deposit from time to time in
the Spread Account for the benefit of the Class I Certificateholders and the
Class A Certificateholders, and the Policy for the benefit of the Class I
Certificateholders and the Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the
Trust. The Class A Certificates are comprised of "Class A-1 Certificates,"
"Class A-2 Certificates," "Class A-3 Certificates," "Class A-4 Certificates" and
"Class A-5 Certificates." In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in the
Trust (the "Class I Certificates" and together with the Class A Certificates,
the "Certificates") and a Class IC Certificate (the "Class IC Certificate")
shall be issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A
Certificateholders and the Class I Certificateholders in full, they shall share
pro rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing
_______, 199__, to the person in whose name this Class A-4 Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A-4 Monthly Interest and
Monthly Principal. Each Class A-4 Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A-4 Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate Initial
Class A-4 Certificate Balance.
Distributions on this Class A-4 Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-4 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class
A-4 Certificate will be made only upon presentation and surrender of this Class
A-4 Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A-4 Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A-4 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-4
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-4 Certificates,
the Trustee will draw on the Policy up to the Policy Amount to pay such
deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-4 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-4 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-4 Certificate and of any Class
A-4 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-4
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class
A-4 Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A-4 Certificate is registrable in the
Certificate Register upon surrender of this Class A-4 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly authorized in writing, and thereupon one or more new Class A-4
Certificates of authorized denominations evidencing the same aggregate interest
in the Trust will be issued to the designated transferee.
83
<PAGE>
The Class A-4 Certificates are issuable only as registered Class A-4
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-4 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-4
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-4 Certificates are
exchangeable for new Class A-4 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A-4
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-4
Certificateholders created by the Agreement and the Trust created thereby shall
terminate upon the payment to Class A-4 Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust. The holder of the Class IC Certificate may
at its option cause the Trustee to sell the corpus of the Trust at a price not
to be less than the price specified in the Agreement, and such sale of the
Receivables and other property of the Trust may effect early retirement of the
Class A-4 Certificates; however, such right is exercisable only as of a Record
Date as of which the Pool Balance is less than or equal to 10% of the Initial
Certificate Balance and the Notional Principal Amount has been reduced to zero.
Although this Class A-4 Certificate summarizes certain provisions of
the Agreement, this Class A-4 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-4 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder agrees to be bound by the terms of
the Tax Partnership Agreement included as an annex to the Agreement.
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IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-4 Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in
its capacity as Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-4 Certificates
referred to in the within-mentioned
Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
Signatory
Dated:
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Class A-4 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Class A-4 Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-4 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
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<PAGE>
EXHIBIT A-5
[Form of Class A-5 Certificate]
PRINCIPAL IN RESPECT OF THIS Class A-5 CERTIFICATE IS DISTRIBUTABLE AS SET FORTH
HEREIN. ACCORDINGLY, THE UNPAID PRINCIPAL AMOUNT OF THE FRACTIONAL INTEREST
EVIDENCED HEREBY AT ANY TIME MAY BE LESS THAN THE ORIGINAL PRINCIPAL AMOUNT SET
FORTH HEREIN.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-___ AUTO TRUST
____% Class A-5 AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional undivided interest in the Trust, as defined
below, the property of which includes a pool of simple and precomputed
interest installment loan and security agreements and installment sales
contracts secured by new and used automobiles, light trucks and vans.
The contracts were sold to the Trustee by UAC Securitization
Corporation.
(This Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this
Certificate nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER CUSIP __________
R-A5-____
$--------------
THIS CERTIFIES THAT ___________ is the registered owner of a
______________ dollars nonassessable, fully-paid, fractional undivided interest
in the UACSC 1998-__Auto Trust (the "Trust") formed by UAC Securitization
Corporation, a Delaware corporation (the "Depositor"). The Trust was created
pursuant to a Pooling and Servicing Agreement dated as of _______, 199__ (the
"Agreement") among UAC Securitization Corporation as Depositor, Union Acceptance
Corporation, as Servicer and Harris Trust and Savings Bank (the "Trustee"), a
summary of certain of the pertinent provisions of which is set forth below. A
copy of the Agreement may be examined during normal business hours at the
Corporate Trust Office of the Trustee by any Certificateholder upon request. To
the extent not otherwise defined herein, the capitalized terms used herein have
the meanings assigned to them in the Agreement. This Certificate is one of the
duly authorized Certificates designated as "____% Class A-5 Automobile
Receivable Backed Certificates" (the "Class A-5 Certificates"). This Certificate
is issued under and is subject to the terms, provisions, and conditions of the
Agreement, to which Agreement the holder of this Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), all monies paid thereon,
and all monies due thereon, including Accrued Interest, after ___________, 199__
(but excluding Accrued Interest paid or due prior to the Closing Date), security
interests in the vehicles financed thereby, certain bank accounts and the
proceeds thereof, all documents contained in the Receivable Files, any property
that shall have secured a Receivable and that shall have been acquired by or on
behalf of the Trust, any Liquidation Proceeds, any rights of the Depositor in
proceeds from claims or refunds of premiums on physical damage, lender's single
interest, credit life, disability and hospitalization insurance policies, if
any, covering vehicles financed thereby and the obligors thereunder, the
interest
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of the Depositor in recourse to dealers relating to certain of the Receivables,
the proceeds of all of the foregoing and amounts on deposit from time to time in
the Spread Account for the benefit of the Class I Certificateholders and the
Class A Certificateholders, and the Policy for the benefit of the Class I
Certificateholders and the Class A Certificateholders.
This Certificate is one of the "Class A Certificates" issued by the
Trust. The Class A Certificates are comprised of "Class A-1 Certificates,"
"Class A-2 Certificates," "Class A-3 Certificates," "Class A-4 Certificates" and
"Class A-5 Certificates." In addition to the Class A Certificates, a class of
interest-only planned amortization Certificates representing an interest in the
Trust (the "Class I Certificates" and together with the Class A Certificates,
the "Certificates") and a Class IC Certificate (the "Class IC Certificate")
shall be issued pursuant to the Agreement. The Class A Certificates and Class I
Certificates are senior in right and interest to the Class IC Certificate. In
the event that the funds available are not sufficient to pay the Class A
Certificateholders and the Class I Certificateholders in full, they shall share
pro rata in the amounts available based upon the total amounts they are due. The
Class I Certificates will receive monthly interest payments based on their
Notional Principal Amount and will receive no distributions after the date on
which the Notional Principal Amount of the Class I Certificates has been reduced
to zero. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing
___________, 199__, to the person in whose name this Class A-5 Certificate is
registered at the close of business on the last Business Day of the month
immediately preceding the month of such distribution (the "Record Date"), such
Certificateholder's fractional interest in Class A-5 Monthly Interest and
Monthly Principal. Each Class A-5 Certificateholder's "fractional interest" is
equal to the original principal amount of such Class A-5 Certificateholder's
Certificate, as set forth on the face thereof, divided by the aggregate Initial
Class A-5 Certificate Balance.
Distributions on this Class A-5 Certificate will be made by the Trustee
by check mailed to the Person entitled thereto without the presentation or
surrender of this Class A-5 Certificate or the making of any notation hereon,
except that with respect to Certificates registered in the name of CEDE & Co.,
the nominee registrant for The Depository Trust Company, payments will be made
in the form of immediately available funds. Except as otherwise provided in the
Agreement and notwithstanding the above, the final distribution on this Class
A-5 Certificate will be made only upon presentation and surrender of this Class
A-5 Certificate at the office or agency maintained for that purpose by the
Trustee in the Borough of Manhattan, The City of New York.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class A-5 Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Class A-5 Certificates do not represent an obligation of, or an
interest in, the Depositor or any affiliate of the Depositor. The Class A-5
Certificates are limited in right of payment to certain collections and
recoveries respecting the Receivables, all as more specifically set forth in the
Agreement. The Agreement provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are insufficient to make distributions on the Class A-5 Certificates,
the Trustee will draw on the Policy up to the Policy Amount to pay such
deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Class A-5 Certificateholders under the Agreement
at any time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class A-5 Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class A-5 Certificate and of any Class
A-5 Certificate issued upon the transfer hereof or in exchange hereof or in lieu
hereof whether or not notation of such consent is made upon this Class A-5
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the Class
A-5 Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Class A-5 Certificate is registrable in the
Certificate Register upon surrender of this Class A-5 Certificate for
registration of transfer at the offices or agencies maintained by the Trustee in
its capacity as Certificate Registrar, or by any successor Certificate
Registrar, in the Borough of Manhattan, The City of New York, accompanied by a
written instrument of transfer in form satisfactory to the Trustee and the
Certificate Registrar duly executed by the holder hereof or such holder's
attorney duly
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<PAGE>
authorized in writing, and thereupon one or more new Class A-5 Certificates of
authorized denominations evidencing the same aggregate interest in the Trust
will be issued to the designated transferee.
The Class A-5 Certificates are issuable only as registered Class A-5
Certificates without coupons in denominations of $1,000 and integral multiples
thereof; provided, however, that one Class A-5 Certificate may be issued in a
denomination that represents any residual amount and that such Class A-5
Certificate shall be retained by the Depositor. As provided in the Agreement and
subject to certain limitations therein set forth, Class A-5 Certificates are
exchangeable for new Class A-5 Certificates of authorized denominations
evidencing the same aggregate denomination, as requested by the holder
surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class A-5
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class A-5
Certificateholders created by the Agreement and the Trust created thereby shall
terminate upon the payment to Class A-5 Certificateholders of all amounts
required to be paid to them pursuant to the Agreement and the disposition of all
property held as part of the Trust. The holder of the Class IC Certificate may
at its option cause the Trustee to sell the corpus of the Trust at a price not
to be less than the price specified in the Agreement, and such sale of the
Receivables and other property of the Trust may effect early retirement of the
Class A-5 Certificates; however, such right is exercisable only as of a Record
Date as of which the Pool Balance is less than or equal to 10% of the Initial
Certificate Balance and the Notional Principal Amount has been reduced to zero.
Although this Class A-5 Certificate summarizes certain provisions of
the Agreement, this Class A-5 Certificate does not purport to summarize the
Agreement and reference is made to the Agreement for information with respect to
the interests, rights, benefits, obligations, proceeds and duties evidenced
hereby and the rights, duties and obligations of the Trustee. In the event of
any inconsistency or conflict between the terms of this Class A-5 Certificate
and the terms of the Agreement, the terms of the Agreement shall control. By
acceptance of this Certificate, the holder agrees to be bound by the terms of
the Tax Partnership Agreement included as an annex to the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Class A-5 Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in
its capacity as Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class A-5 Certificates
referred to in the within-mentioned
Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By
Signatory
Dated:
90
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Class A-5 Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Class A-5 Certificate on the books of the Certificate
Registrar, with full power of substitution in the premises.
Dated:
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Class A-5 Certificate in every particular,
without alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
91
<PAGE>
EXHIBIT B
[Form of Class I Certificate]
THIS CERTIFICATE DOES NOT ENTITLE THE HOLDER TO RECEIVE ANY PRINCIPAL BUT ONLY
INTEREST ON THE NOTIONAL PRINCIPAL AMOUNT DISTRIBUTABLE MONTHLY AS SET FORTH
HEREIN. THE NOTIONAL PRINCIPAL AMOUNT WILL DECREASE MONTHLY AS SET FORTH HEREIN.
ACCORDINGLY, THE NOTIONAL PRINCIPAL AMOUNT OF THE INTEREST EVIDENCED HEREBY AT
ANY TIME MAY BE LESS THAN THE INITIAL NOTIONAL PRINCIPAL AMOUNT SET FORTH BELOW.
Unless this Certificate is presented by an authorized representative of The
Depository Trust Company, a New York corporation ("DTC"), to the issuer or its
agent for registration of transfer, exchange or payment, and any Certificate
issued is registered in the name of Cede & Co. or in such other name as
requested by an authorized representative of DTC (and any payment is made to
Cede & Co. or to such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
thereof, Cede & Co., has an interest herein.
UACSC 1998-__ AUTO TRUST
CLASS I INTEREST ONLY AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing a fractional interest in the Trust, as defined below, the property of
which includes a pool of simple and precomputed interest installment loan and
security agreements and installment sales contracts secured by new and used
automobiles, light trucks and vans. The contracts were sold to the Trustee by
UAC Securitization Corporation.
(This Certificate does not represent an interest in or obligation of UAC
Securitization Corporation or any of its affiliates. Neither this Certificate
nor the underlying Receivables, as defined below, are insured or guaranteed by
any government agency).
NUMBER CUSIP ____________
R-I-____
$------------
THIS CERTIFIES THAT ______________ is the registered owner of a
designated initial notional principal amount of ___________ dollars
nonassessable, fully-paid interest in the UACSC 1998-__ Auto Trust (the "Trust")
formed by UAC Securitization Corporation, a Delaware corporation (the
"Depositor"). The Trust was created pursuant to a Pooling and Servicing
Agreement dated as of _______, 199__ (the "Agreement") among UAC Securitization
Corporation as Depositor, Union Acceptance Corporation, as Servicer and Harris
Trust and Savings Bank (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. A copy of the Agreement may be examined
during normal business hours at the Corporate Trust Office of the Trustee by any
Certificateholder upon request. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Certificate is one of the duly authorized Class I Certificates
designated as " Class I Interest Only Automobile Receivable Backed
Certificates", (the "Class I Certificates"). This Certificate is issued under
and is subject to the terms, provisions, and conditions of the Agreement, to
which Agreement the holder of this Class I Certificate by virtue of the
acceptance hereof assents and by which such holder is bound. The property of the
Trust includes a pool of simple and precomputed interest loan and security
agreements and installment sales contracts for new and used automobiles, light
trucks, vans and van conversions (the "Receivables"), generally all monies paid
thereon, and all monies due thereon, including Accrued Interest, after
______________, 199__ (but excluding Accrued Interest paid or due prior to the
Closing Date), security interests in the vehicles financed thereby, certain bank
accounts and the proceeds thereof, all documents contained in the Receivable
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<PAGE>
Files, any property that shall have secured a Receivable and that shall have
been acquired by or on behalf of the Trust, any Liquidation Proceeds, any rights
of the Depositor in proceeds from claims or refunds of premiums on physical
damage, lender's single interest, credit life, disability and hospitalization
insurance policies, if any, covering vehicles financed thereby and the obligors
thereunder, the interest of the Depositor in recourse to dealers relating to
certain of the Receivables, the proceeds of all of the foregoing and amounts on
deposit from time to time in the Spread Account for the benefit of the Class I
Certificateholders and the Class A Certificateholders, and the Policy for the
benefit of the Class I Certificateholders and the Class A Certificateholders.
In addition to the Class I Certificates, a class of Certificates
representing interests in the Trust (the "Class A Certificates," (which consist
of the "Class A-1 Certificates," the "Class A-2 Certificates," the "Class A-3
Certificates," the "Class A-4 Certificates" and the "Class A-5 Certificates")
together with the Class I Certificates, the "Certificates") and a Class IC
Certificate (the "Class IC Certificate") shall be issued pursuant to the
Agreement. The Class A Certificates will receive monthly payments of principal
and interest in accordance with the Agreement. The Class A Certificateholders
and the Class I Certificates are senior in right and interest to the Class IC
Certificates. In the event that the funds available are not sufficient to pay
the Class A Certificateholders and the Class I Certificateholders in full, they
shall share pro rata in the amounts available based upon the total amounts they
are due. The Class IC Certificate initially will be issued to the Depositor and
it shall represent the interest in the Receivables not represented by the
Certificates.
Under the Agreement, there will be distributed on the third Business
Day after the 5th day of each month (the "Distribution Date"), commencing on
_________, 199__, to the person in whose name this Certificate is registered at
the close of business on the last Business Day of the month immediately
preceding the month of such distribution (the "Record Date"), such Class I
Certificateholder's fractional interest in Class I Monthly Interest. Each Class
I Certificateholder's "fractional interest" is equal to the original notional
principal amount of such Class I Certificateholder's Class I Certificate, as set
forth on the face thereof, divided by the aggregate original notional principal
amount of all of the Class I Certificates. The Class I Monthly Interest as of
any Distribution Date (except the first Distribution Date) will be the product
of one-twelfth (1/12) of the Class I Pass-Through Rate of _____% per annum and
the Notional Principal Amount, which shall be reduced on each Distribution Date
as more fully described in the Agreement.
Distributions on this Certificate will be made by the Trustee by check
mailed to the Person entitled thereto without the presentation or surrender of
this Certificate or the making of any notation hereon, except that with respect
to Class I Certificates registered in the name of CEDE & Co., the nominee
registrant for The Depository Trust Company, payments will be made in the form
of immediately available funds. Except as otherwise provided in the Agreement
and notwithstanding the above, the final distribution on this Certificate will
be made only upon presentation and surrender of this Certificate at the office
or agency maintained for that purpose by the Trustee in the Borough of
Manhattan, The City of New York. The Class I Certificateholders will not be
entitled to any distributions after the Notional Principal Amount of the Class I
Certificates has been reduced to zero.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class I Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose.
The Certificates do not represent an obligation of, or an interest in,
the Depositor or any affiliate of the Depositor. The Certificates are limited in
right of payment to certain collections and recoveries respecting the
Receivables, all as more specifically set forth in the Agreement. The Agreement
provides for certain amounts to be deposited into the Spread Account. In the
event amounts available for withdrawal from the Spread Account are insufficient
to make distributions on the Class I Certificates, the Trustee will draw on the
Policy to pay such deficiency.
The Agreement permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Depositor and the rights of the Certificateholders under the Agreement at any
time by the Depositor and the Trustee with the consent of the Holders of
Certificates evidencing not less than 51% of the Certificate Balance and 51% of
the Notional Principal Amount of the Class I Certificates. Any such consent by
the Holder of this Class I Certificate shall be conclusive and binding on such
Holder and on all future Holders of this Class I Certificate and of any
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<PAGE>
Class I Certificate issued upon the transfer hereof or in exchange hereof or in
lieu hereof whether or not notation of such consent is made upon this Class I
Certificate. The Agreement also permits the amendment thereof, in certain
limited circumstances, without the consent of the Holders of any of the
Certificates.
As provided in the Agreement and subject to certain limitations therein
set forth, the transfer of this Certificate is registrable in the Certificate
Register upon surrender of this Certificate for registration of transfer at the
offices or agencies maintained by the Trustee in its capacity as Certificate
Registrar, or by any successor Certificate Registrar, in the Borough of
Manhattan, The City of New York, accompanied by a written instrument of transfer
in form satisfactory to the Trustee and the Certificate Registrar duly executed
by the holder hereof or such holder's attorney duly authorized in writing, and
thereupon one or more new Class I Certificates of authorized denominations
evidencing the same aggregate interest in the Trust will be issued to the
designated transferee.
The Class I Certificates are issuable only as registered Class I
Certificates without coupons in denominations representing a minimum of $1,000
of Original Notional Principal Amount. As provided in the Agreement and subject
to certain limitations therein set forth, Class I Certificates are exchangeable
for new Class I Certificates of authorized denominations evidencing the same
aggregate denomination, as requested by the holder surrendering the same.
No service charge will be made for any such registration of transfer or
exchange, but the Trustee may require payment of a sum sufficient to cover any
tax or governmental charges payable in connection therewith.
The Trustee, the Certificate Registrar, and any agent of the Trustee or
the Certificate Registrar may treat the person in whose name this Class I
Certificate is registered as the owner hereof for all purposes, and neither the
Trustee, the Certificate Registrar, nor any such agent shall be affected by any
notice to the contrary.
The obligations and responsibilities to the Class I Certificateholders
created by the Agreement and the Trust created thereby shall terminate upon the
payment to Class I Certificateholders of all amounts required to be paid to them
pursuant to the Agreement and the disposition of all property held as part of
the Trust. The holder of the Class IC Certificate may at its option cause the
Trustee to sell the corpus of the Trust at a price not less than the price
specified in the Agreement; however, such right is exercisable only as of a
Record Date as of which the Pool Balance is less than or equal to 10% of the
Initial Certificate Balance of the Receivables and the Notional Principal Amount
has been reduced to zero.
Although this Certificate summarizes certain provisions of the
Agreement, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. In the event of any
inconsistency or conflict between the terms of this Certificate and the terms of
the Agreement, the terms of the Agreement shall control. By acceptance of this
Certificate, the holder agrees to be bound by the terms of the Tax Partnership
Agreement included as an annex to the Agreement.
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<PAGE>
IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in its
capacity as Trustee
By _______________________________
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is one of the Class I Certificates referred to in the
within-mentioned Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By _______________________________
Signatory
Dated:
95
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company, savings bank or other savings and loan institution.
96
<PAGE>
EXHIBIT C
[Form of Class IC Certificate]
THIS CLASS IC CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. NEITHER THIS CLASS IC CERTIFICATE NOR ANY PORTION HEREOF MAY
BE TRANSFERRED, ASSIGNED, EXCHANGED OR OTHERWISE PLEDGED OR CONVEYED EXCEPT (1)
IN COMPLIANCE WITH THE REGISTRATION PROVISIONS OF SUCH ACT OR PURSUANT TO AN
AVAILABLE EXEMPTION FROM SUCH REGISTRATION PROVISIONS AND (2) IN COMPLIANCE WITH
THE RESTRICTIONS OF THE POOLING AND SERVICING AGREEMENT REFERRED TO HEREIN.
UACSC 1998-__ AUTO TRUST
CLASS IC AUTOMOBILE RECEIVABLE
BACKED CERTIFICATE
evidencing an undivided interest in the Trust, as defined below, the property of
which includes a pool of simple interest installment loan and security
agreements and installment sales contracts secured by new and used automobiles,
light trucks and vans. The contracts were sold to the Trustee by UAC
Securitization Corporation.
(This Class IC Certificate does not represent an interest in or obligation of
UAC Securitization Corporation or any of its affiliates. Neither this Class IC
Certificate nor the underlying Receivables, as defined below, are insured or
guaranteed by any other government agency).
NUMBER One Unit
R-IC-1
THIS CERTIFIES THAT UAC Securitization Corporation, a Delaware
corporation, is the registered owner of a nonassessable, fully-paid interest in
the UACSC 1998-__ Auto Trust (the "Trust") formed by UAC Securitization
Corporation. The Trust was created pursuant to a Pooling and Servicing Agreement
dated as of _______, 199__ (the "Agreement") among UAC Securitization
Corporation as Depositor, Union Acceptance Corporation, as Servicer and Harris
Trust and Savings Bank (the "Trustee"), a summary of certain of the pertinent
provisions of which is set forth below. A copy of the Agreement may be examined
during normal business hours at the Corporate Trust Office of the Trustee by any
Certificateholder upon request. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in the
Agreement. This Class IC Certificate is issued under and is subject to the
terms, provisions, and conditions of the Agreement, to which Agreement the
holder of this Class IC Certificate by virtue of the acceptance hereof assents
and by which such holder is bound. The property of the Trust includes a pool of
simple and precomputed interest loan and security agreements and installment
sales contracts for new and used automobiles, light trucks, vans and van
conversions (the "Receivables"), all monies paid thereon, and all monies due
thereon, including Accrued Interest, after ___________, 199__ (but excluding
Accrued Interest paid or due before the Closing Date), security interests in the
vehicles financed thereby, certain bank accounts and the proceeds thereof, all
documents contained in the Receivable Files, any property that shall have
secured a Receivable and that shall have been acquired by or on behalf of the
Trust, any Liquidation Proceeds, proceeds from claims or refunds of premiums on
physical damage, lender's single interest, credit life, disability and
hospitalization insurance policies, if any, covering vehicles financed thereby
and the obligors thereunder, certain interests of the Depositor in recourse to
dealers relating to certain of the Receivables and amounts on deposit from time
to time in the Spread Account for the benefit of the Class I Certificateholders
and the Class A Certificateholders and the Policy for the benefit of the Class I
Certificateholders and the Class A Certificateholders.
This Class IC Certificate represents an interest in certain assets of
the Trust, including the right to receive a portion of the Collections and other
amounts at the times and in the amounts specified in the Agreement. In addition
to the Class IC Certificates, two classes of Certificates representing undivided
interests in the Trust, the Class A Certificates (which consist of the "Class
A-1 Certificates," the "Class A-2 Certificates," the "Class A-3 Certificates,"
the "Class A-4 Certificates" and the "Class A-5 Certificates") and the Class I
Certificates (collectively, the "Certificates") shall be issued
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pursuant to the Agreement. The Class A Certificates and the Class I Certificates
are senior in right and interest to the Class IC Certificates. In the event that
the funds available are not sufficient to pay the Class A Certificateholders and
the Class I Certificateholders in full, they shall share pro rata in the amounts
available based upon the total amounts they are due. The Class A Certificates
will receive monthly payments of principal and interest in accordance with the
Agreement. The Class I Certificates will receive monthly interest payments based
on their Notional Principal Amount and will receive no distributions after the
date on which the Notional Principal Amount of the Class I Certificates has been
reduced to zero.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Trustee, by manual or facsimile
signature, this Class IC Certificate shall not entitle the holder hereof to any
benefit under the Agreement or be valid for any purpose. Registration of
transfer of the Class IC Certificate to a person may not be effected unless (a)
the Insurer consents to such transfer, (b) the Trustee receives an Opinion of
Counsel, satisfactory to it, to the effect that such transfer may be made in
reliance upon an exemption from the registration requirements of the Securities
Act of 1933, as amended, and (ii) such transfer will not adversely affect the
tax treatment of the Trust or the Certificates, and (c) the Rating Agency
Condition has been satisfied with respect to such transfer. Notwithstanding the
foregoing, the Depositor shall have no obligation to register this Class IC
Certificate under the Securities Act of 1933, as amended.
The obligations and responsibilities created by the Agreement and the
Trust created thereby shall terminate upon the payment to Certificateholders of
all amounts required to be paid to them pursuant to the Agreement and the
disposition of all property held as part of the Trust. The holder of this Class
IC Certificate may at its option cause the Trustee to sell the corpus of the
Trust at a price not to be less than the price specified in the Agreement, and
such sale of the Receivables and other property of the Trust will effect early
retirement of the Certificates; however, such right is exercisable only as of a
Record Date as of which the Pool Balance is less than or equal to 10% of the
Initial Certificate Balance and the Notional Principal Amount has been reduced
to zero. The Class IC Certificateholder is required to pay any unpaid fees and
expenses of the Trustee and in connection with such disposition.
Although this Certificate summarizes certain provisions of the
Agreement, this Certificate does not purport to summarize the Agreement and
reference is made to the Agreement for information with respect to the
interests, rights, benefits, obligations, proceeds and duties evidenced hereby
and the rights, duties and obligations of the Trustee. In the event of any
inconsistency or conflict between the terms of this Certificate and the terms of
the Agreement, the terms of the Agreement shall control. By acceptance of this
Certificate, the holder agrees to be bound by the terms of the Tax Partnership
Agreement included as an annex to the Agreement.
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IN WITNESS WHEREOF, the Trustee on behalf of the Trust and not in its
individual capacity has caused this Certificate to be duly executed.
Dated:
UACSC 1998-__ AUTO TRUST
By HARRIS TRUST AND SAVINGS BANK, solely in its
capacity as Trustee
By _______________________________
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is the Class IC Certificate referred to in the
within-mentioned Agreement.
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By _______________________________
Signatory
Dated:
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ASSIGNMENT
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers unto
PLEASE INSERT SOCIAL SECURITY
OR OTHER IDENTIFYING NUMBER
OF ASSIGNEE
(Please print or typewrite name and address, including postal zip code, of
assignee)
the within Certificate, and all rights thereunder, hereby irrevocably
constituting and appointing
Attorney
to transfer said Certificate on the books of the Certificate Registrar, with
full power of substitution in the premises.
Dated:
_____________________________*
Signature Guaranteed:
_____________________________*
* NOTICE: The signature to this assignment must correspond with the name as it
appears upon the face of the within Certificate in every particular, without
alteration, enlargement or any change whatever. Such signature must be
guaranteed by a member of the New York Stock Exchange or a commercial bank,
trust company savings bank or other savings and loan institution.
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EXHIBIT D
Form of Letter of Representations
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Schedule A
to the Pooling and
Servicing Agreement
SCHEDULE OF RECEIVABLES
Depositor Name of
Account Number Obligor Amount Financed
(as of the Cutoff Date)
$
A COPY OF THE SCHEDULE OF RECEIVABLES, INCLUDING THE
ABOVE CAPTIONED INFORMATION WITH RESPECT TO EACH
RECEIVABLE, WAS DELIVERED TO THE TRUSTEE WITH A
COUNTERPART OF THE POOLING AND SERVICING AGREEMENT.
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Schedule B
to the Pooling and
Servicing Agreement
1. Location of Receivables:
Union Acceptance Corporation
250 N. Shadeland Avenue
Indianapolis, IN 46219
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Schedule C
Planned Notional Principal Amount Schedule
Planned Notional
Distribution Date in Principal Amount
Initial
The Class I Certificates will not be entitled to any distributions after the
Notional Principal Amount has been reduced to zero.
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ANNEX A
TAX PARTNERSHIP AGREEMENT
1. Characterization for Tax Purposes. For United States federal and
state income tax purposes, the Depositor's contribution of the Receivables to
the Trust in exchange for interests in the Trust, and the sale by the Depositor
of Class A Certificates (which includes Class A-1 Certificates, Class A-2
Certificates, Class A-3 Certificates, Class A-4 Certificates and Class A-5
Certificates) and Class I Certificates and the retention by the Depositor of the
Class IC Certificate is intended to constitute the formation of a partnership
(the "Tax Partnership") whose partners are the Class A Certificateholders, the
Class I Certificateholders and the Class IC Certificateholder (which are
hereinafter collectively referred to as the "Tax Partners"). This Tax
Partnership shall continue in effect as provided in Paragraph 3 below. Pursuant
to the final regulations adopting the "check-the-box" classification system for
unincorporated organizations, the Servicer on behalf of the Tax Partners shall
elect, in such manner as provided in such regulations, to treat the Trust as a
partnership for federal income tax purposes, and each Tax Partner irrevocably
agrees to be bound by such election. The Tax Partnership shall not be a
partnership to any other extent or for any other purpose.
2. Election with Respect to Subchapter K. Notwithstanding anything to
the contrary, each Tax Partner agrees: (a) not to elect to be excluded from the
application of Subchapter K of Chapter 1 of Subtitle A of the Code, or any
comparable provisions of applicable state laws; and (b) to join in the execution
of such additional documents and elections as may be required in order to
effectuate the foregoing.
3. Term. The provisions of this Tax Partnership Agreement shall be
effective as of the effective date of the sale by the Depositor of the Class A
Certificates and Class I Certificates and the issuance to the Depositor of the
Class IC Certificate (the "Effective Date") and shall continue in full force and
effect from and after such date until the earliest of: (a) the termination of
the Agreement pursuant to its terms; or (b) the mutual agreement of all of the
Tax Partners to terminate the Trust.
4. Capital Contributions and Capital Accounts.
(a) The value of the interests contributed by the Class A
Certificateholders and the Class I Certificateholders shall equal the amount
paid by such Certificateholders for such interests, respectively, and such
amounts shall constitute the opening balance in their Capital Accounts (as
hereinafter defined). The value of the interests contributed by the Class IC
Certificateholder shall equal the fair market value of the Receivables
contributed to the Tax Partnership less the value attributed to the Class A
Certificateholders and the Class I Certificateholders, as described above. Such
amount shall constitute the opening balance in the Class IC Certificateholder's
Capital Account.
(b) An individual capital account (a "Capital Account") shall be
maintained for each Tax Partner in compliance with Treasury Regulation Sections
1.704-1(b)(2)(iv) and 1.704-2 and accordingly, except as otherwise provided
herein:
(i) The Capital Account of each Tax Partner shall be
credited by (A) the amount of cash and the fair market value
of property other than cash contributed (or deemed contributed
pursuant to Code Section 708) by such Tax Partner to the Tax
Partnership (net of any liabilities assumed by the Tax
Partnership upon such contribution or to which such property
is subject at the time of such contribution); and (B) the
amount of any item of taxable income or gain and the amount of
any item of income or gain exempt from tax allocated to such
Tax Partner.
(ii) The Capital Account of each Tax Partner shall be
debited by (A) the amount of any item of tax deduction or loss
allocated to such Tax Partner; (B) such Tax Partner's
allocable share, of expenditures not deductible in computing
taxable income and not properly chargeable as capital
expenditures; and (C) the amount of cash and the fair market
value of any property other than cash (net of any liabilities
assumed by such Tax Partner or to which such property is
subject at the time of distribution) distributed to such Tax
Partner.
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(iii) Immediately prior to any distribution of
property in kind, the Tax Partners' Capital Accounts shall be
adjusted by assuming that the distributed properties were sold
for cash at their respective fair market values as of the date
of distribution and crediting or debiting each Tax Partner's
Capital Account with its respective share of the hypothetical
gains or losses resulting from such assumed sales in the same
manner as gains or losses on actual sales of such properties
would be allocated under Paragraph 6 below.
(iv) Any adjustments of basis of property provided
for under Code Section 734 and 733 and comparable provisions
of state law (resulting from an election under Code Section
754 or comparable provisions of state law) shall not affect
the Capital Accounts of the Tax Partners, except as provided
in Treasury Regulation Section 1.704-1(b)(2)(iv)(m)(5).
5. Federal and State Income Tax Returns and Elections.
(a) The Tax Partners agree that the holder of the Class IC
Certificate shall serve as the "tax matters partner" (as such term is
defined in Code Section 6231(a)(7) (the "Tax Matters Partner") of the
Tax Partnership. The Tax Matters Partner shall (i) apply to the
Internal Revenue Service for a taxpayer identification number for the
Tax Partnership, (ii) elect to adopt the accrual method of accounting
and, if permitted by applicable federal tax law, the calendar year as
the Tax Partnership's fiscal year, (iv) make such other elections as it
deems proper, (v) prepare, execute and file the necessary federal and
state partnership income tax returns for the Tax Partnership and (vi)
keep the other Tax Partners informed of all material matters that may
come to its attention in its capacity as Tax Matters Partner. Each Tax
Partner agrees to furnish the Tax Matters Partner with all pertinent
information relating to activities under the Agreement and this Annex A
which is necessary for the Tax Matters Partner to prepare and file
federal and state partnership returns. In acting as Tax Matters
Partner, the Tax Matters Partner shall use its best efforts, but shall
incur no liability to the other Tax Partners.
(b) Within 60 days after the end of each of the Tax
Partnership's taxable years, the Tax Matters Partner shall send to each
Tax Partner who has been a Tax Partner at any time during the taxable
year then ended such tax information as shall be necessary for the
preparation by such Tax Partner of its Federal income tax return and
state income and other tax returns, if any, in states where the Tax
Partnership is organized or is qualified to do business.
6. Allocations.
(a)(i) "Net Income" and "Net Loss" respectively, for any
period, means the income or losses of the Tax Partnership as determined
in accordance with the method of accounting followed by the Tax
Partnership for Federal income tax purposes, including, for all
purposes, any income exempt from tax and any expenditures of the Tax
Partnership described in Code Section 705(a)(2)(B); provided, however,
(i) that any item allocated under Paragraphs 6(b)(iii) or 6(c) shall be
excluded from the computation of Net Income and Net Loss and (ii) that
if, as a result of the contribution of an asset whose fair market value
differs from its adjusted basis for Federal income tax purposes or as a
result of the revaluation of the Tax Partnership's assets, the book
value of any Tax Partnership asset differs from its adjusted basis for
Federal income tax purposes, gain, loss, depreciation and amortization
with respect to such asset shall be computed using the asset's book
value consistently with the requirements of Treasury Regulation Section
1.704-1(b)(2)(iv)(g).
(ii) "Period" shall mean the calendar month; provided
that as to the month in which the Closing Date occurs, Period
shall mean the period commencing on the Closing Date and
ending on the last day of that calendar month, and as to the
month in which the Tax Partnership terminates, Period shall
mean the period beginning on the first day of such month and
ending on the date of the Tax Partnership's termination.
(b) The Tax Partners agree that the Tax Partnership's Net
Income and Net Loss and each item of income, gain, loss, or deduction
entering into the computation thereof for any Fiscal Year shall be
allocated by first allocating the Tax Partnership's Net Income and Net
Loss (and each item of income, gain, loss, or deduction entering into
the computation thereof) for each Period within such Fiscal Year (as if
such Period were a complete fiscal year) and then aggregating the
allocations for each Period within the Fiscal Year. In the case of the
transfer of any interest in the Tax Partnership, the items of Net
Income and Net Loss allocated for any Period with respect to the
transferred interest shall be allocated to the holder of that interest
on the first business day of the month
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following the end of such Period (or in the case of the Period in which
the Tax Partnership terminates, the last day of such Period). If the
Tax Matters Partner determines that this method of allocation of items
of Net Income and Net Loss is not consistent with the requirements of
the Code and applicable Treasury Regulations, it may revise such method
of allocation to conform with such requirements. The Tax Partnership's
Net Income and Net Loss for each Period within a Fiscal Year shall be
allocated as follows:
(i) Net Income for such Period shall be allocated as
follows:
(A)(I) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of (1) the product of the Class A-1
Pass-Through Rate and (2) the Class A-1 Certificate
Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously
allocated to the Class A-1 Certificateholders
pursuant to this Paragraph 6(b)(i)(A)(I) shall be
allocated 100% to the Class A-1 Certificateholders,
in proportion to their holdings of Class A-1
Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a
360 day year and the actual number of days elapsed
from the day before the previous Distribution Date
through the day before the related Distribution Date,
and that any such product shall be appropriately
prorated for any Period that is not a full calendar
month in a manner consistent with the computation of
cash distributions with respect to such Periods as
provided by the Agreement.
(II) An amount of Net Income equal to the
excess of (x) the sum for such Period and
each preceding Period up to the Period
beginning with the Closing Date, of that
portion of any excess of the principal
amount of the Class A-1 Certificates over
their initial issue price (disregarding
accrued interest) that would have accrued
with respect to such Periods if the Class
A-1 Certificates were indebtedness and such
excess were original issue discount over (y)
all amounts previously allocated to the
Class A-1 Certificateholders pursuant to
this Paragraph 6(b)(i)(A)(II) shall be
allocated 100% to the Class A-1
Certificateholders, in proportion to their
holdings of Class A-1 Certificates.
(B)(I) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of (1) the product of the Class A-2
Pass-Through Rate and (2) the Class A-2 Certificate
Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously
allocated to the Class A-2 Certificateholders
pursuant to this Paragraph 6(b)(i)(B)(I) shall be
allocated 100% to the Class A-2 Certificateholders,
in proportion to their holdings of Class A-2
Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a
360 day year consisting of twelve 30 day months, and
that any such product shall be appropriately prorated
for any Period that is not a full calendar month in a
manner consistent with the computation of cash
distributions with respect to such Periods as
provided by the Agreement.
(II) An amount of Net Income equal to the
excess of (x) the sum for such Period and
each preceding Period up to the Period
beginning with the Closing Date, of that
portion of any excess of the principal
amount of the Class A-2 Certificates over
their initial issue price (disregarding
accrued interest) that would have accrued
with respect to such Periods if the Class
A-2 Certificates were indebtedness and such
excess were original issue discount over (y)
all amounts previously allocated to the
Class A-2 Certificateholders pursuant to
this Paragraph 6(b)(i)(B)(II) shall be
allocated 100% to the Class A-2
Certificateholders, in proportion to their
holdings of Class A-2 Certificates.
(C)(I) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of (1) the product of the Class A-3
Pass-Through Rate and (2) the Class A-3 Certificate
Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously
allocated to the Class A-3 Certificateholders
pursuant to this Paragraph 6(b)(i)(C)(I) shall be
allocated 100% to the Class A-3 Certificateholders,
in proportion to their holdings of Class A-3
Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a
360 day year
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consisting of twelve 30 day months, and that any such
product shall be appropriately prorated for any
Period that is not a full calendar month in a manner
consistent with the computation of cash distributions
with respect to such Periods as provided by the
Agreement.
(II) An amount of Net Income equal to the
excess of (x) the sum for such Period and
each preceding Period up to the Period
beginning with the Closing Date, of that
portion of any excess of the principal
amount of the Class A-3 Certificates over
their initial issue price (disregarding
accrued interest) that would have accrued
with respect to such Periods if the Class
A-3 Certificates were indebtedness and such
excess were original issue discount over (y)
all amounts previously allocated to the
Class A-3 Certificateholders pursuant to
this Paragraph 6(b)(i)(C)(II) shall be
allocated 100% to the Class A-3
Certificateholders, in proportion to their
holdings of Class A-3 Certificates.
(D)(I) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of (1) the product of the Class A-4
Pass-Through Rate and (2) the Class A-4 Certificate
Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously
allocated to the Class A-4 Certificateholders
pursuant to this Paragraph 6(b)(i)(D)(I) shall be
allocated 100% to the Class A-4 Certificateholders,
in proportion to their holdings of Class A-4
Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a
360 day year consisting of twelve 30 day months, and
that any such product shall be appropriately prorated
for any Period that is not a full calendar month in a
manner consistent with the computation of cash
distributions with respect to such Periods as
provided by the Agreement.
(II) An amount of Net Income equal to the
excess of (x) the sum for such Period and
each preceding Period up to the Period
beginning with the Closing Date, of that
portion of any excess of the principal
amount of the Class A-4 Certificates over
their initial issue price (disregarding
accrued interest) that would have accrued
with respect to such Periods if the Class
A-4 Certificates were indebtedness and such
excess were original issue discount over (y)
all amounts previously allocated to the
Class A-4 Certificateholders pursuant to
this Paragraph 6(b)(i)(D)(II) shall be
allocated 100% to the Class A-4
Certificateholders, in proportion to their
holdings of Class A-4 Certificates.
(E)(I) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of (1) the product of the Class A-5
Pass-Through Rate and (2) the Class A-5 Certificate
Balance amount for such Period (and each such
preceding Period) over (y) all amounts previously
allocated to the Class A-5 Certificateholders
pursuant to this Paragraph 6(b)(i)(E)(I) shall be
allocated 100% to the Class A-5 Certificateholders,
in proportion to their holdings of Class A-5
Certificates; provided that the product of (1) and
(2) in clause (x) shall be computed on the basis of a
360 day year consisting of twelve 30 day months, and
that any such product shall be appropriately prorated
for any Period that is not a full calendar month in a
manner consistent with the computation of cash
distributions with respect to such Periods as
provided by the Agreement.
(II) An amount of Net Income equal to the
excess of (x) the sum for such Period and
each preceding Period up to the Period
beginning with the Closing Date, of that
portion of any excess of the principal
amount of the Class A-5 Certificates over
their initial issue price (disregarding
accrued interest) that would have accrued
with respect to such Periods if the Class
A-5 Certificates were indebtedness and such
excess were original issue discount over (y)
all amounts previously allocated to the
Class A-5 Certificateholders pursuant to
this Paragraph 6(b)(i)(E)(II) shall be
allocated 100% to the Class A-5
Certificateholders, in proportion to their
holdings of Class A-5 Certificates.
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(F) An amount of Net Income equal to the
excess of (x) the sum for such Period and each
preceding Period up to the Period beginning with the
Closing Date, of the Periodic Allocation (as
hereinafter defined) over (y) all amounts previously
allocated to the Class I Certificateholders pursuant
to this Paragraph 6(b)(i)(F), shall be allocated 100%
to the Class I Certificateholders, in proportion to
their holdings of Class I Certificates. The "Periodic
Allocation" for any Period shall equal the excess of
(i) the product of (1) the Class I Pass- Through Rate
and (2) the Notional Principal Amount for such Period
over (ii) the portion of the amount distributable
with respect to the Class I Certificates with respect
to such Period that would constitute a return of
basis for an initial holder if the Class I
Certificates constituted an instrument described in
Code Section 860G(a)(1)(B)(ii), employing the
principles of Code Section 1272(a)(6) and the
constant yield method of accrual; provided that the
product of (1) and (2) in clause (i) shall be
computed on the basis of a 360 day year consisting of
twelve 30 days months, and that such product shall be
appropriately prorated for any Period that is not a
full calendar month in a manner consistent with the
computation of cash distributions with respect to
such Periods as provided by the Agreement.
(G) Notwithstanding the foregoing Paragraphs
(A) through (F), if the actual Net Income for such
Period is less than the Net Income allocable under
the sum of the amounts described in such Paragraphs
(A) through (F), the actual Net Income for such
Period shall be allocable to the Class A
Certificateholders and the Class I Certificateholders
in proportion to the allocations that would have been
made to such Certificateholders with respect to such
Period under such foregoing Paragraphs (A) through
(F) if sufficient Net Income for such period had
existed and the amount distributable hereunder to
Class A Certificateholders shall be distributed pro
rata. For the purposes of applying the foregoing
Paragraphs (A) through (F), in such periods, any
amounts allocated pursuant to this Paragraph (G)
shall be treated as allocated pursuant to Paragraphs
(A) through (F), as the case may be, to the extent
the allocation was related thereto.
(H) Any remaining Net Income shall be
allocated 100% to the Class IC Certificateholder.
(ii) Net Losses for such Periods shall be allocated
as follows:
(A) 100% to the Class IC Certificateholder
until the Adjusted Capital Account (as hereinafter
defined) balance of the Class IC Certificateholders
equals zero.
(B) 100% pro rata:
(I) to the Class I
Certificateholders, in proportion to their
holdings of Class I Certificates, until the
Adjusted Capital Account balances of the
Class I Certificateholders equal zero; and
(II) to the Class A
Certificateholders, in proportion to their
holdings of Class A Certificates, until the
Adjusted Capital Account balances of the
Class A Certificateholders equal zero.
(C) Any remaining Net Losses shall be
allocated 100% to the Class IC Certificateholder.
(iii) Any provision of this Agreement to the contrary
notwithstanding, any payment of amounts due and owing the
Insurer from time to time or in connection with an optional
disposition of all Receivables pursuant to Section 16.02 of
the Agreement shall be treated as a loss of the Tax
Partnership and shall be allocated in the same manner as the
Net Loss would be allocated under paragraph 6(b)(ii).
(c) (i) In the taxable year in which the final redemption of
the Class I Certificates occurs, a portion of the premium and other
deductions derived by the Trust up to an amount equal to the aggregate
remaining Capital Account balances of the Class I Certificateholders
shall be allocated to the Class I Certificateholders in proportion to
their respective Capital Account balances.
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(ii) Any deductions not allocated pursuant to
Paragraph 6(c)(i) and attributable to (w) the amortization of
premium on the Receivables, (x) payments to the Trustee and
(y) payments to the Servicer shall be specially allocated to
the Class IC Certificateholder.
(iii) If there is a net decrease in "partnership
minimum gain" (within the meaning of Treasury Regulation
Section 1.704-2(d)) for a Fiscal Year, then there shall be
allocated to each Tax Partner items of income and gain for
that year equal to that Tax Partner's share of the net
decrease in partnership minimum gain (within the meaning of
Treasury Regulation Section 1.704-2(g)(2)), subject to the
exceptions set forth in Treasury Regulation Sections
1.704-2(f)(2), (3) and (5), provided, that if the Tax
Partnership has any discretion as to an exception set forth
pursuant to Treasury Regulation Section 1.704-2(f)(5), the Tax
Matters Partner may exercise such discretion on behalf of the
Tax Partnership. In the event the application of the minimum
gain chargeback requirement would cause a distortion in the
economic arrangement among the Tax Partners, the Tax Matters
Partner shall request the Commissioner to waive the minimum
gain chargeback requirement pursuant to Treasury Regulation
Section 1.704-2(f)(4). The foregoing is intended to be a
"minimum gain chargeback" provision as described in Treasury
Regulation Section 1.704-2(f) and shall be interpreted and
applied in all respects in accordance with that Treasury
Regulation.
If during a Fiscal Year there is a net decrease in partner nonrecourse
debt minimum gain (as determined in accordance with Treasury Regulation
Section 1.704-2(i)(3)), then, in addition to the amounts, if any,
allocated pursuant to the preceding paragraph, any Tax Partner with a
share of that partner nonrecourse debt minimum gain (determined in
accordance with Treasury Regulation Section 1.704-2(i)(5)) as of the
beginning of the Fiscal Year shall, subject to the exceptions set forth
in Treasury Regulation Section 1.704-2(i)(4), including exceptions
analogous to those provided pursuant to Treasury Regulation Sections
1.704-2(f)(2), (3) and (5) (provided, that if the Tax Partnership has
any discretion as to an exception set forth pursuant to Treasury
Regulation Section 1.704-2(f)(5) as made applicable by Treasury
Regulation Section 1.704-2(i)(4), the Tax Matters Partner may exercise
such discretion on behalf of the Tax Partnership) be allocated items of
income and gain for the year (and, if necessary, for succeeding years)
equal to that Tax Partner's share of the net decrease in the partner
nonrecourse minimum gain. In the event the application of the minimum
gain chargeback requirement would cause a distortion in the economic
arrangement among the Tax Partners, the Tax Matters Partner shall
request the Commissioner to waive the minimum gain chargeback
requirement pursuant to Treasury Regulation Sections 1.704-2(i)(4) and
1.704-2(f)(4). The foregoing is intended to be the "chargeback of
partner nonrecourse debt minimum gain" required by Treasury Regulation
Section 1.704-2(i)(4) and shall be interpreted and applied in all
respects in accordance with that Treasury Regulation.
(iv) If during any Fiscal Year of the Tax Partnership
a Tax Partner unexpectedly receives an adjustment, allocation
or distribution described in Treasury Regulation Sections
1.704- 1(b)(2)(ii)(d)(4), (5) or (6), which causes or
increases a deficit balance in the Tax Partner's Adjusted
Capital Account (as defined below), there shall be allocated
to the Tax Partner items of income and gain (consisting of a
pro rata portion of each item of Tax Partnership income,
including gross income, and gain for such year) in an amount
and manner sufficient to eliminate such deficit as quickly as
possible. The foregoing is intended to be a "qualified income
offset" provision as described in Treasury Regulation Section
1.704-1(b)(2)(ii)(d) and shall be interpreted and applied in
all respects in accordance with the Treasury Regulation.
A Tax Partner's "Adjusted Capital Account", at any time, shall
equal the Tax Partner's Capital Account at such time (x) increased by
the sum of (A) the amount of the Tax Partner's share of partnership
minimum gain (as defined in Treasury Regulation Section 1.704-2(g)(1)
and (3)), (B) the amount of the Tax Partner's share of partner
nonrecourse debt minimum gain (as defined in Treasury Regulation
Section 1.704-2(i)(5)), and (C) any amount of the deficit balance in
its Capital Account and Tax Partner is obligated to restore on
liquidation of the Tax Partnership and (y) decreased by reasonably
expected adjustments, allocations and distributions described in
Treasury Regulation Sections 1.704-1(b)(2)(ii)(d)(4), (5) and (6).
(v) Notwithstanding anything to the contrary in this
Paragraph 6, Tax Partnership losses, deductions, or Code
Section 705(a)(2)(B) expenditures that are attributable to a
particular partner nonrecourse liability shall be allocated to
the Tax Partner that bears the economic risk of loss for the
liability in accordance with the rules of Treasury Regulation
Section 1.704-2(i).
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(vi) Notwithstanding any provision of Paragraphs 6(b)
and 6(c)(ii), no allocation of items of loss or deduction
shall be made to a Tax Partner if it would cause the Tax
Partner to have a negative balance in its Adjusted Capital
Account. Allocations of items of loss or deduction that would
be made to a Tax Partner but for this Paragraph 6(c)(vi) shall
instead be made first to the Class IC Certificateholder to the
extent not inconsistent with this Paragraph 6(c)(vi), and
second, to the Class A and Class I Certificateholders in
proportion to the amounts distributable for the related Period
pursuant to Sections 9.04(a)(iii) of the Agreement. To the
extent allocations of items of loss or deduction cannot be
made to any Tax Partner because of this Paragraph 6(c)(vi),
such allocations shall be made to the Tax Partners in
accordance with Paragraphs 6(b) and 6(c)(ii) notwithstanding
this Paragraph 6(c)(vi).
(vii) To the extent that any item of income, gain,
loss or deduction has been specially allocated pursuant to
Paragraphs 6(c)(iv) and (vi) and such allocation is
inconsistent with the way in which the same amount otherwise
would have been allocated under Paragraphs 6(b) and 6(c)(ii),
subsequent allocations under Paragraph 6(b) and 6(c)(ii) shall
be made, to the extent possible and without duplication, in a
manner consistent with Paragraphs 6(c)(iii), (iv), (v) and
(vi) which negate as rapidly as possible the effect of all
such inconsistent allocations.
(viii) Any allocations made pursuant to this
Paragraph 6 shall be made in the following order:
(i) Paragraph 6(c)(iii)
(ii) Paragraph 6(c)(iv)
(iii) Paragraph 6(c)(v)
(iv) Paragraph 6(c)(vii)
(v) Paragraph 6(c)(i)
(vi) Paragraph 6(c)(ii)
(vii) Paragraph 6(b)(iii)
(viii) Paragraph 6(b)(i) and (ii)
These provisions shall be applied as if all distributions and
allocations were made at the end of the Fiscal Year. Where any
provision depends on the Capital Account of any Partner, that
Capital Account shall be determined after the operation of all
preceding provisions for the year. These allocations shall be
made consistently with the requirements of Treasury Regulation
Section 1.704-2(j).
(d) The income, gains, losses, deductions and credits of the
Tax Partnership for Federal, state and local income tax purposes shall
be allocated in the same manner as the corresponding items entering
into the computation of Net Income and Net Losses were allocated
pursuant to Paragraphs 6(b) and (c) provided that solely for Federal,
local and state income and franchise tax purposes and not for book or
Capital Account purposes, income, gain, loss and deduction with respect
to property properly carried on the Tax Partnership's books at a value
other than its tax basis shall be allocated (i) in the case of property
contributed in kind, in accordance with the requirements of Code
Section 704(c) and such Treasury Regulations as may be promulgated
thereunder from time to time, and (ii) in the case of other property,
in accordance with the principles of Code Section 704(c) and the
Treasury Regulations thereunder as incorporated among the requirements
of the relevant provisions of the Treasury Regulations under Code
Section 704(b).
(e) The Tax Partnership shall comply with all withholding
requirements under Federal, state and local law and shall remit amounts
withheld to and file required forms with the applicable jurisdictions.
To the extent the Tax Partnership is required to withhold and pay over
any amounts with respect to distributions or allocations to any Tax
Partner, the amount withheld shall be treated as a distribution to that
Tax Partner. In the event of any claimed over withholding, Tax Partners
shall have no claim for recovery against the Tax Partnership or other
Tax Partners. If the amount withheld was not withheld from actual
distributions, the Tax Partnership, may at its option, (i) require the
Tax Partner to reimburse the Tax Partnership for such withholding (and
each Tax Partner agrees to reimburse the Tax Partnership promptly
following such request) or (ii) reduce any subsequent distributions by
the amount of such withholding. If there is a possibility that
withholding tax is payable with respect to a distribution (such as a
distribution to a non-U.S. Tax Partner), the Tax Partnership may in its
sole discretion withhold such amounts in accordance with this Paragraph
6(e). Each Tax Partner agrees to furnish the Tax Partnership with any
representations and forms as shall reasonably be requested by the Tax
Partnership to assist it in determining the extent of, and in
fulfilling, its withholding obligations. If a Tax Partner wishes to
apply for
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a refund of any such withholding tax, the Trustee shall reasonably
cooperate with such Tax Partner in making such claim as long as the Tax
Partner agrees to reimburse the Tax Partnership for any out-of-pocket
expenses incurred.
7. Sale of Interests. The Tax Partners agree that any sale by a Tax
Partner of any ownership interest in a Certificate shall be deemed to be a sale
of all or a portion of such Tax Partner's interest in the Tax Partnership.
8. Termination of a Tax Partner's Interest. Any distribution by the Tax
Partnership in termination of any Tax Partner's interest in the Tax Partnership
other than pursuant to Paragraph 9 below shall be in an amount of cash or
property other than cash having a net fair market value equal to the positive
Capital Account balance of such Tax Partner at the time such interest is
terminated, after such Capital Account balance has been adjusted in accordance
with Paragraphs 4 and 6 above for all operations preceding such distribution and
the applicable Treasury Regulations under Code Section 704(b), and shall be made
by the later of: (a) the end of the Tax Partnership's taxable year in which such
termination occurs; or (b) within 90 days after the date of such termination.
9. Distributions upon Termination. Upon termination of the Agreement
pursuant to its terms, the activities of the Tax Partners under this Annex A
shall be concluded and the assets subject to the Agreement and this Annex A
shall be distributed to the Tax Partners in the manner and in the order set
forth below:
(a) Debts of the Tax Partnership created pursuant to the
Agreement, other than to Tax Partners, including, except as provided in
Paragraph 9(e), all amounts due and owing to the Insurer, shall be
paid.
(b) Debts owed among the Tax Partners created pursuant to the
Agreement shall be paid.
(c) All cash on hand representing unexpended contributions by
any Tax Partner shall be returned to the contributor.
(d) The Tax Partners' Capital Accounts shall be adjusted by:
(i) assuming the sale of all remaining assets at their fair market
values as of the date of termination of the Agreement; and (ii)
debiting or crediting each Tax Partner's Capital Account with the Tax
Partner's respective share of the hypothetical gains or losses
resulting from such assumed sales in the same manner as such Tax
Partner's Capital Account would be debited or credited under Paragraph
6 above for gains or losses on actual sales of such properties.
(e) All Tax Partnership assets shall be distributed to the Tax
Partners in accordance with their respective Capital Account balances
as so adjusted by the later of: (i) the end of the Tax Partnership's
taxable year in which the termination occurs; or (ii) within 90 days
after the date of such termination, in the following order or priority:
(i) to the Class A and Class I Certificateholders, pro rata;
and
(ii) to the Class IC Certificateholder; provided, that in the
event of an optional termination of the Trust under Section 16.02 of
the Agreement, all amounts due and owing to the Insurer shall be paid
to the Insurer after the distribution to the Class A and Class I
Certificateholders pursuant to clause (i) of this Paragraph 9(e) and
prior to the distribution to the Class IC Certificateholder pursuant to
clause (ii) of this Paragraph 9(e).
If property subject to the Agreement is distributed pursuant to this paragraph,
the amount of the distribution shall be equal to the net fair market value of
the distributed property.
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EXHIBIT 10
PURCHASE AGREEMENT
This PURCHASE AGREEMENT is made as of this 1st day of _______, 199__,
by and among UAC SECURITIZATION CORPORATION, a Delaware corporation (the
"Purchaser"), UNION ACCEPTANCE FUNDING CORPORATION, a Delaware corporation (the
"Seller") and UNION ACCEPTANCE CORPORATION, an Indiana corporation ("UAC").
WHEREAS, the Purchaser desires to purchase certain Receivables from the
Seller and the Seller desires to sell such Receivables to the Purchaser.
WHEREAS, the Seller purchased Receivables from UAC, and UAC has certain
obligations related to the representations and warranties made to the Seller in
conjunction with such sales. UAC services the Receivables on behalf of UAFC and
expects to service the Receivables on behalf of the UACSC 1998-__ Auto Trust and
to receive the benefits of acting as servicer in such capacities.
NOW, THEREFORE, in consideration of the foregoing, other good and
valuable consideration and the mutual terms and covenants contained herein, the
parties hereto agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall, unless the
context otherwise requires, have the following meanings (such meanings to be
equally applicable to the singular and plural forms of the terms defined):
"Agreement" means this Purchase Agreement and all amendments hereof and
supplements hereto.
"Assignment" means the document of assignment attached to this
Agreement as Annex A.
"Business Day" means any day other than a Saturday, a Sunday or a day
on which banking institutions in Chicago, Illinois or New York, New York (or, if
the Servicer has previously provided notice to the Trustee that such day is not
a Business Day, Little Rock, Arkansas or Indianapolis, Indiana) shall be
authorized or obligated by law, executive order or governmental decree to be
closed.
"Closing Date" means the date specified as such in Article II of the
Pooling and Servicing Agreement.
"Cutoff Date" means the date specified as such in the Pooling and
Servicing Agreement.
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"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to UAC, its subsidiary or the Predecessor under
an existing agreement with UAC, its subsidiary or the Predecessor or who
arranged for a loan from UAC or the Predecessor to the purchaser of a Financed
Vehicle under an existing agreement with UAC or the Predecessor.
"Distribution Date" means, for each Collection Period, the third
Business Day after the 5th day of the following month.
"Financed Vehicle" means a new or used automobile, light truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"Lien" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable by operation of law.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Depositor, which counsel shall be acceptable to the Purchaser and
the Trustee.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Pooling and Servicing Agreement" means the Pooling and Servicing
Agreement by and between the Purchaser as Depositor and Servicer and Harris
Trust and Savings Bank as Trustee dated as of _______, 199__, providing for the
issuance of Automobile Receivable Pass-Through Certificates.
"Precomputed Receivable" means any Receivable under which the portion
of a payment allocable to earned interest (which may be referred to in the
related contract as an add-on finance charge) and the portion allocable to the
Amount Financed is determined according to the sum of periodic balances, the sum
of monthly balances, the rule of 78's or any equivalent method.
"Predecessor" means Union Federal Savings Bank of Indianapolis, a
federally chartered savings bank.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Receivable" means any simple or precomputed interest installment sales
contract or installment loan and security agreement which shall appear on
Schedule A to this Agreement.
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"Receivable Files" means the following documents or instruments with
respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title or such documents
that the Seller or UAC shall keep on file, in
accordance with its customary procedures, evidencing
the security interest of the Seller in the Financed
Vehicle.
(iv) Any and all other documents that the Seller shall
keep on file, in accordance with its customary
procedures, relating to a Receivable, an Obligor, or
a Financed Vehicle.
"Servicer" means initially the UAC and thereafter any Person appointed
as the successor Servicer as provided in Section 14.02 of the Pooling and
Servicing Agreement.
"Trust" means the trust created by the Pooling and Servicing Agreement.
"Trustee" means Harris Trust and Savings Bank, a banking corporation
organized under the laws of the State of Illinois and its successors or any
corporation resulting from or surviving any merger or consolidation to which it
or its successors may be a party or any successor trustee at the time serving as
successor trustee hereunder.
"UCC" means the Uniform Commercial Code as in effect in the respective
jurisdiction.
Capitalized terms used herein but not defined herein have the meanings
assigned to them in the Pooling and Servicing Agreement.
ARTICLE II
PURCHASE AND SALE OF RECEIVABLES
Section 2.01 Purchase and Sale of Receivables.
(a) Purchase and Sale of Receivables. Simultaneously with the
transactions occurring on the Closing Date pursuant to the Pooling and Servicing
Agreement, the Seller shall sell, transfer, assign and otherwise convey to the
Purchaser, without recourse;
(i) all right, title, and interest of the Seller in and
to the Receivables listed in Schedule A hereto;
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(ii) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims
or refunds of premiums on any physical damage,
lender's single interest, credit life, disability and
hospitalization insurance policies covering Financed
Vehicles or Obligors;
(iv) the interest of the Seller in any proceeds from
recourse to Dealers relating to the Receivables;
(v) all documents contained in the Receivable Files;
(vi) all monies paid thereon, and all monies due thereon,
including Accrued Interest after the Cutoff Date (but
excluding interest paid prior to the Closing Date),
with respect to the Receivables held by the Servicer;
and
(vii) all proceeds of the foregoing.
The Seller does not convey to the Purchaser any interest in any
contracts with Dealers related to any "dealer reserve" or any rights to the
recapture of any dealer reserve.
(b) Receivables Purchase Price. In consideration for the Receivables,
the Purchaser shall on the Closing Date pay to the Seller the purchase price for
such Receivables, equal to the Principal Balance of such Receivables at the
Cutoff Date in the amount of $______________.
Section 2.02 Closing the Purchase and Sale.
(a) The Closing. The closing of the sale of Receivables (the "Closing")
shall take place at the offices of Barnes & Thornburg, 11 South Meridian Street,
Indianapolis, Indiana 46204, on the Closing Date, simultaneously with the
closing under the Pooling and Servicing Agreement.
(b) Documents to be Delivered at the Closing.
(i) The Assignment. On or prior to the Closing, the Seller will
execute and deliver the Assignment. The Assignment shall be in substantially the
form of Annex A hereto.
(ii) Evidence of UCC Filing. The Seller shall record and file, at
its own expense, one or more financing statements with respect to the
Receivables in such manner and in such places as required by law fully to
preserve, maintain and protect the interest of the Purchaser in the Receivables
and other property conveyed to the Purchaser hereunder, and shall deliver a
file-stamped copy of such financing statements or other evidence of such filings
to the Purchaser on or prior to the Closing Date.
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(iii) Schedule of Receivables. The Seller shall at its own
expense, on or prior to the Closing Date, indicate in its computer files those
Receivables that have been sold or otherwise conveyed to the Purchaser pursuant
to this Agreement and deliver to the Purchaser (or to the Trustee on the
Purchaser's behalf) a computer file, hard copy or microfiche list containing a
true and complete list of all such Receivables.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Section 3.01 Representations and Warranties Regarding the Seller. The
Seller hereby represents and warrants to the Purchaser as of the date hereof and
as of the Closing Date;
(a) Organization and Good Standing. The Seller has been duly
incorporated and is validly existing as a corporation and in good standing under
the laws of the State of Delaware, and has full corporate power, authority and
legal right to execute and deliver this Agreement and to perform the terms and
provisions hereof.
(b) Due Authorization. The execution, delivery and performance of this
Agreement by the Seller has been duly authorized by all necessary corporate
action, does not require any approval or consent of any governmental agency or
authority, does not and will not violate or result in a breach which would
constitute a material default under, any agreement for borrowed money binding
upon or applicable to it or such to its property which is material to it or its
subsidiaries (whether or not consolidated) taken as a whole, or to the best of
the Seller's knowledge, any law or governmental regulation or court decree
applicable to it or such material property, and this Agreement is the valid,
binding and enforceable obligation of the Seller except as the same may be
limited by insolvency, bankruptcy or other similar laws of general application
affecting the enforcement of creditors' rights or general equity principles.
(c) Accuracy of Information. All information heretofore furnished by
the Seller in writing to the Purchaser for purposes of or in connection with
this Agreement or any transaction contemplated hereby is true and accurate in
every material respect or based on reasonable estimates on the date as of which
such information is stated or certified.
(d) No Proceedings. There are no proceedings or investigations pending,
or, to the best knowledge of the Seller, threatened against the Seller before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality seeking any determination or ruling that, in the
reasonable judgment of the Seller, would have a material adverse effect on the
performance by the Seller of its obligations under this Agreement.
Section 3.02 Representations and Warranties Regarding UAC. UAC hereby
represents and warrants to the Purchaser as of the date hereof and as of the
Closing Date;
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(a) Organization and Good Standing. UAC has been duly incorporated and
is validly existing as a corporation under the laws of the State of Indiana and
has full corporate power, authority and legal right to execute and deliver this
Agreement and to perform the terms and provisions hereof.
(b) Due Authorization. The execution, delivery and performance of this
Agreement by UAC has been duly authorized by all necessary corporate action,
does not require any approval or consent of any governmental agency or
authority, does not and will not violate or result in a breach which would
constitute a material default under, any agreement for borrowed money binding
upon or applicable to it or such to its property which is material to it or its
subsidiaries (whether or not consolidated) taken as a whole, or to the best of
UAC's knowledge, any law or governmental regulation or court decree applicable
to it or such material property, and this Agreement is the valid, binding and
enforceable obligation of UAC except as the same may be limited by insolvency,
bankruptcy or other similar laws of general application affecting the
enforcement of creditors' rights or general equity principles.
(c) Accuracy of Information. All information heretofore furnished by
UAC in writing to the Purchaser for purposes of or in connection with this
Agreement or any transaction contemplated hereby is true and accurate in every
material respect or based on reasonable estimates on the date as of which such
information is stated or certified.
(d) No Proceedings. There are no proceedings or investigations pending,
or, to the best knowledge of UAC, threatened against UAC before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality seeking any determination or ruling that, in the reasonable
judgment of UAC, would have a material adverse effect on the performance by UAC
of its obligations under this Agreement.
Section 3.03 Representations and Warranties Regarding the Receivables.
The Seller and UAC make the following representations and warranties as to the
Receivables on which the Purchaser relies in purchasing the Receivables. Such
representations and warranties speak as of the execution and delivery of the
Agreement, but shall survive the sale, transfer, and assignment of the
Receivables by the Seller to the Purchaser hereunder and by the Purchaser to the
Trustee under the Pooling and Servicing Agreement.
(a) Characteristics of Receivables. Each Receivable (1) shall have been
either (A) originated in the United States of America by a Dealer for the retail
sale of a Financed Vehicle in the ordinary course of such Dealer's business,
shall have been purchased by UAC, its subsidiary or the Predecessor from such
Dealer and shall have been validly assigned by such Dealer to UAC (or to such
subsidiary or the Predecessor and by such subsidiary or the Predecessor to UAC)
in accordance with its terms and by UAC to the Seller and, pursuant to this
Agreement, by the Seller to the Purchaser or (B) shall have been originated in
the United States of America by UAC (or originated by the Predecessor and
validly sold and assigned by the Predecessor to UAC) and in either case, validly
sold and assigned by UAC to the Seller, and, pursuant to this Agreement, by the
Seller to the Purchaser
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(2) shall have been fully and properly executed by the parties thereto, (3)
shall have created or shall create a valid, subsisting, and enforceable first
priority perfected security interest in favor of UAC, its subsidiary, the
Predecessor or the Seller in the Financed Vehicle, which security interest shall
be assignable and shall have been validly assigned by the Seller to the
Purchaser, (4) 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, and (5) shall bear a
fixed rate of interest.
(b) Schedule of Receivables. The information set forth in Schedule A to
the Agreement shall be true and correct in all material respects as of the
closing of business on the Cutoff Date, and no selection procedures believed to
be adverse to the Certificateholders shall have been utilized in selecting the
Receivables.
(c) Compliance with Law. Each Receivable and each sale of the related
Financed Vehicle shall have complied at the time it was originated or made and
at the execution of the Agreement 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 Fair Credit Billing
Act, the Fair Credit Reporting Act, the Fair Debt Collection Practices Act, the
Federal Trade Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z, and State adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, and other applicable
consumer credit laws and equal credit opportunity and disclosure laws.
(d) Binding Obligation. Each Receivable shall represent the genuine,
legal, valid, and binding payment obligation in writing of the Obligor,
enforceable by the holder thereof in accordance with its terms.
(e) No Government Obligor. None of the Receivables shall be due from
the United States of America or any State or from any agency, department, or
instrumentality of the United States of America, any State or any local
government.
(f) Security Interest in Financed Vehicle. Immediately prior to the
sale, assignment, and transfer thereof, each Receivable shall be secured by a
validly perfected first priority security interest in the Financed Vehicle in
favor of UAC, the Predecessor or the Seller as secured party or all necessary
and appropriate actions with respect to such Receivable shall have been taken to
perfect a first priority security interest in the Financed Vehicle in favor of
UAC, the Predecessor or the Seller as secured party.
(g) Receivables in Force. No Receivable shall have been satisfied,
subordinated, or rescinded, nor shall any Financed Vehicle have been released
from the lien granted by the related Receivable in whole or in part.
(h) No Waiver. No provision of a Receivable shall have been waived.
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(i) No Defenses. No right of rescission, setoff, counterclaim, or
defense shall have been asserted or threatened with respect to any Receivable.
(j) No Liens. No liens or claims shall have been filed, including liens
for work, labor, or materials relating to a Financed Vehicle that shall be liens
prior to, or equal or coordinate with, the security interest in the Financed
Vehicle granted by the Receivable.
(k) No Default. Except for payment defaults continuing for a period of
not more than 30 days as of the Cutoff Date, no default, breach, violation, or
event permitting acceleration under the terms of any Receivable shall have
occurred; and no continuing condition that with notice or the lapse of time
would constitute a default, breach, violation, or event permitting acceleration
under the terms of any Receivable shall have arisen; and neither UAC, the Seller
nor the Predecessor shall have waived any of the foregoing.
(l) Insurance. Each Obligor has agreed to obtain physical damage
insurance covering the Financed Vehicle.
(m) Title. It is the intention of the Seller that the transfer and
assignment herein contemplated, taken as a whole, constitute a sale of the
Receivables from the Seller to the Purchaser and that the beneficial interest in
and title to the Receivables not be part of the receivership estate in the event
of the appointment of a receiver for the Seller. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Purchaser, except for pledges as shall have been duly and fully released.
Immediately prior to the transfer and assignment herein contemplated, the Seller
had good and marketable title to each Receivable free and clear of all liens,
and, immediately upon the transfer thereof, the Purchaser shall have good and
marketable title to each Receivable, free and clear of all liens and rights of
others and the transfer and assignment herein contemplated has been perfected
under the UCC.
(n) Lawful Assignment. No Receivable shall have been originated in, or
shall be subject to the laws of, any jurisdiction under which the sale,
transfer, and assignment of such Receivable under the Agreement or transfers of
the Certificates would be unlawful, void, or voidable.
(o) All Filings Made. All filings (including, without limitation, UCC
filings) necessary in any jurisdiction to give the Purchaser a first priority
perfected security interest in the Receivables shall have been made.
(p) One Original. There shall be only one original executed copy of
each Receivable.
(q) Original Number of Scheduled Payments. Each Receivable shall have
not less than 12 nor greater than 84 monthly payments scheduled at origination.
(r) Remaining Maturity of Receivables. Each Receivable shall have a
remaining maturity of not more than 84 months.
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(s) Minimum Note Rate. Each Receivable shall have a contract rate of
interest (exclusive of prepaid finance charges) equal to or greater than ____%
and less than or equal to _____%.
(t) Scheduled Payments. Each Receivable shall be not more than 30 days
overdue as of the Cutoff Date.
(u) Interest Method. Each Receivable shall provide for accrual of
interest according to the simple interest method or shall be a Precomputed
Receivable and shall provide for monthly payments of principal and interest that
fully amortize the Amount Financed by maturity and for a finance charge or yield
interest at its Note Rate. The Principal Balance of Precomputed Receivables (on
an actuarial basis) as of the Cutoff Date represents approximately ____% of the
Original Pool Balance.
(v) Latest First Payment Date. No Receivable shall have had a first
payment due after ---------------.
(w) Location of Receivable Files. The Receivable Files shall be kept at
one or more of the locations listed in Annex B hereto.
(x) Composition of Receivables. Each and every Receivable listed on
Schedule A hereto shall arise from loans originated only on automobiles, light
trucks, vans or van conversions, at least _____% of which (securing at least
____% of the Receivables by principal balance) are new vehicles.
(y) Marking Records. By the Closing Date, the Seller and UAC will have
caused the portions of the electronic ledger or similar computer records
relating to the Receivables conveyed to the Purchaser hereunder to be clearly
and unambiguously marked to show that such Receivables constitute property of
the Purchaser and/or have been conveyed by Purchaser to the Trust and constitute
part of the Trust in accordance with the terms of the Trust created under the
Pooling and Servicing Agreement.
(z) Precomputed Receivables. Each Precomputed Receivable shall provide
for, in the event that such a Receivable is prepaid, a prepayment that fully
pays the Principal Balance and includes accrued but unpaid interest in an amount
calculated using an interest rate at least equal to its Note Rate.
Section 3.04 Repurchase Upon Breach. The Purchaser, UAC or the Seller,
as the case may be, shall inform the other parties promptly, in writing, upon
the discovery of any breach of the representations and warranties under Section
3.03. Unless the breach shall have been cured by the second Record Date under
Section 3.03 (as described in the Pooling and Servicing Agreement), following
the discovery, UAC shall repurchase from the Purchaser any Receivable materially
and adversely affected by the breach as of such Record Date (or, at UAC's
option, the first Record Date following the discovery). In consideration of the
purchase of the Receivable, UAC shall remit the Purchase Amount to or for the
account of the Purchaser. The sole remedy of the Purchaser shall be
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to require UAC to repurchase Receivables pursuant to this Section 3.04. UAC
hereby consents to the assignment by the Purchaser of its rights under this
Section 3.04 to the Trust in the Pooling and Servicing Agreement and, in the
event of such assignment, agrees to remit the Purchase Amount in respect of any
repurchased Receivable directly to the Trust Certificate Account as provided for
in the Pooling and Servicing Agreement. Seller acknowledges that the Trust and
the Surety Bond Issuer shall be third party beneficiaries in respect of the
rights and benefits arising hereunder that are so assigned by Purchaser.
Moreover, the Seller and UAC each hereby authorizes the Purchaser and its
assignee on behalf of Seller or UAC, respectively, to execute and deliver
certificates of title for any Financed Vehicle securing a Receivable naming
Seller or UAC as secured party, and such other documents or certificates as may
be necessary in connection therewith, in order to identify the Purchaser or its
assignee, as appropriate, as the secured party with respect to such Financed
Vehicle.
ARTICLE IV
CONDITIONS PRECEDENT TO CLOSING
The obligation of the Purchaser to purchase Receivables on the Closing
Date is subject to the satisfaction of the following conditions:
(a) Representations and Warranties True. The representations and
warranties of the Seller or UAC hereunder shall be true and correct on the
Closing Date with the same effect as if then made.
(b) Documents, Other Obligations. The Seller shall have delivered the
documents and performed all other obligations to be performed by it hereunder.
ARTICLE V
ADDITIONAL AGREEMENTS
The Seller agrees with the Purchaser as follows:
Section 5.01 Conflicts with Pooling and Servicing Agreement. To the
extent that any provision of Sections 5.02 through 5.05 of this Agreement
conflicts with any provision of the Pooling and Servicing Agreement, the Pooling
and Servicing Agreement shall govern.
Section 5.02 Protection of Right, Title and Interest.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Purchaser and/or the Certificateholders and the
Trustee under the Pooling and Servicing Agreement in the Receivables and in the
proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
Purchaser and/or the Trustee file- stamped copies of, or filing receipts for,
any document filed as provided above, as soon as available following such
filing.
(b) The Seller shall not change its name, identity, or corporate
structure in any manner that would, could, or might make any financing statement
or continuation statement filed by the Seller in accordance with paragraph (a)
above seriously misleading within the meaning of 9-402(7) of the UCC, unless it
shall have given the Purchaser at least 60 days' prior written notice thereof.
(c) The Seller shall give the Purchaser at least 60 days' prior written
notice of any relocation of its principal executive office if, as a result of
such relocation, the applicable provisions of the UCC would require the filing
of any amendment of any previously filed financing or continuation statement or
of any new financing statement (in which case the Servicer shall file or cause
to be filed such amendment or continuation statement or new financing
statement).
(d) The Seller shall cause its computer systems to be maintained so
that, from and after the time of sale under this Agreement of the Receivables to
be maintained such that the master computer records (including any back-up
archives) that refer to a Receivable shall indicate clearly that such Receivable
is owned by the Purchaser or Trustee. Indication of the Trustee's ownership of a
Receivable shall be deleted from or modified on the Servicer's computer systems
when, and only when, the Receivable shall have been paid in full or repurchased.
(e) If at any time the Seller shall propose to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender, or other transferee, the Seller shall give to
such prospective purchaser, lender, or other transferee computer tapes, records,
or print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Receivable, shall indicate clearly that
such Receivable has been sold and is owned by the Purchaser or the Trustee.
(f) The Seller shall permit the Purchaser and its agents at any time
during normal business hours to inspect, audit, and make copies of and abstracts
from the Seller's records regarding any Receivable.
Section 5.03 Security Interests. The Seller shall defend the right,
title and interest of the Purchaser in, to and under the Receivables, against
all claims of third parties claiming through or under the Seller.
ARTICLE VI
MISCELLANEOUS PROVISIONS
Section 6.01 Obligations of the Seller. The obligations of the Seller
to the Purchaser under this Agreement shall not be affected by reason of any
invalidity, illegality or irregularity of any Receivable.
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Section 6.02 Amendment. This Agreement may be amended from time to time
by a written amendment duly executed and delivered by the parties hereto.
Section 6.03 Termination. This Agreement shall terminate upon the
termination of the Trust pursuant to the Pooling and Servicing Agreement.
Section 6.04 Waivers. No failure or delay on the part of the Purchaser
in exercising any power, right or remedy under this Agreement or the Assignment
shall operate as a waiver thereof, nor shall any single or partial exercise of
any such power, right or remedy preclude any other or further exercise thereof
or the exercise of any other power, right or remedy.
Section 6.05 Notices. All communications and notices pursuant hereto to
either party shall be in writing or by telegraph or telex and addressed or
delivered to it at its address (or in case of telex, at its telex number at such
address) shown below or at such other address as may be designated by it by
notice to the other party and, if mailed or sent by telegraph or telex, shall be
deemed given when mailed, communicated to the telegraph office or transmitted by
telex. Such notice shall be sent to (a) in the case of the Seller, Union
Acceptance Funding Corporation, 250 North Shadeland Avenue, Suite 220A,
Indianapolis, Indiana 46219, Attention: Thomas M. West (b) in the case of UAC,
Union Acceptance Corporation, 250 North Shadeland Avenue, Indianapolis, Indiana
46219, Attention: John M. Stainbrook and (c) in the case of the Purchaser, UAC
Securitization Corporation, 250 North Shadeland Avenue, Suite 210A,
Indianapolis, Indiana 46219, Attention: Leeanne Graziani, or at such other
address as shall be designated by Purchaser in a written notice to Seller.
Section 6.06 Headings and Cross-references. The various headings in
this Agreement are included for convenience only and shall not affect the
meaning or interpretation of any provision of this Agreement. References in this
Agreement to Section names or numbers are to such sections of this Agreement
unless otherwise specified.
Section 6.07 Governing Law. This Agreement and the Assignment shall be
governed by and construed in accordance with the internal laws of the State of
Indiana, without reference to its conflict of laws provisions, and the
obligations, rights and remedies of the parties hereunder shall be determined in
accordance with such laws.
Section 6.08 Nonpetition covenant. Seller shall not, prior to the date
which is one year and one day after the termination of this Agreement,
acquiesce, petition or otherwise invoke or cause the Trust or the Depositor to
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust or the Depositor under any
Federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Trust or the Depositor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Trust or the
Depositor.
[Next page is signature page]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first written above.
UNION ACCEPTANCE FUNDING
CORPORATION, Seller
By:
Its: President
UAC SECURITIZATION CORPORATION,
Purchaser
By:
Its: Vice President
UNION ACCEPTANCE CORPORATION,
UAC
By:
Its: Vice President
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ANNEX A
Assignment
FOR GOOD AND VALUABLE CONSIDERATION, the receipt and sufficiency are
hereby acknowledged, Union Acceptance Funding Corporation, a Delaware
corporation (the "Seller") does hereby sell, transfer, assign and otherwise
convey to UAC Securitization Corporation, a Delaware corporation (the
"Purchaser"), without recourse:
(i) all right, title, and interest of the Seller in and
to the Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles
granted by Obligors pursuant to the Receivables;
(iii) any Liquidation Proceeds and any proceeds from claims
or refunds of premiums on any physical damage,
lender's single interest, credit life, disability and
hospitalization insurance policies covering Financed
Vehicles or Obligors;
(iv) the interest of the Seller in any proceeds from
recourse to Dealers relating to the Receivables;
(v) all documents contained in the Receivable Files;
(vi) all monies paid thereon, and all monies due thereon,
including Accrued Interest after the Cutoff Date,
(but excluding interest paid or due prior to the
Closing Date) with respect to the Receivables held by
the Servicer; and
(vii) all proceeds of the foregoing.
The Seller does not convey to the Purchaser any interest in any
contracts with Dealers related to any "dealer reserve" or any rights to the
recapture of any dealer reserve.
Capitalized terms used but not defined in this Assignment have the
meanings assigned to them in the Purchase Agreement dated as of _____________
between the Purchaser and the Seller.
[signature page follows]
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IN WITNESS WHEREOF, the undersigned has executed this Assignment as of
the 1st day of __________, 199__.
UNION ACCEPTANCE FUNDING
CORPORATION, Seller
By:
Name:
Title:
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ANNEX B
Location of Receivables Files
Union Acceptance Corporation
250 N. Shadeland Avenue
Indianapolis, Indiana 46219
Union Acceptance Funding Corporation
9240 Bonita Beach Road, Suite 1109-C
Bonita Springs, Florida 34135
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SCHEDULE A
List of Receivables
The Receivables consisting of motor vehicle retail installment sale contracts
originated and booked on or before _________________, aggregating
$______________ in remaining principal amount as of the Cutoff Date are listed
on the attached pages.
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