SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 17, 1999
UACSC 1999-B OWNER TRUST
(Exact name of registrant as specified in its charter)
NEW YORK
(State or other jurisdiction of incorporation)
333-77535-01 35-1937340
(Registration Number) (IRS Employer Identification No.)
9240 Bonita Beach Road
Suite 1109-A
Bonita Springs, Florida 34135
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (941) 948-1850
<PAGE>
Item 5. Other Events.
Trust and Servicing Agreement
-----------------------------
The definitive Trust and Servicing Agreement for the UACSC 1999-B
Owner Trust, dated as of May 1, 1999, among First Union Trust Company,
National Association, as Owner Trustee, UAC Securitization
Corporation, as seller, and Union Acceptance Corporation, as servicer,
is filed herewith.
Indenture
---------
The definitive Indenture between the UACSC 1999-B Owner Trust and
Harris Trust and Savings Bank, as indenture trustee, is filed
herewith.
Item 7. Financial Statements and Exhibits.
Exhibit
Number Description
------ -----------
4.1 Definitive copy of the Trust and Servicing Agreement dated as
of May 1, 1999 for the UACSC 1999-B Owner Trust
4.2 Definitive copy of the Indenture dated as of May 1, 1999 for
the UACSC 1999-B Owner Trust
24 Consent of PricewaterhouseCoopers LLP to the incorporation by
reference of their audit report on the financial statements of
MBIA Insurance Corporation and Subsidiaries in the Form 8-K
for the UACSC 1999-B Owner Trust and to being named as
"Experts" in the Prospectus Supplement for the UACSC 1999-B
Owner Trust
-2-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized in the City of Bonita Springs, State of
Florida, on May 26, 1999.
UAC SECURITIZATION CORPORATION
as Seller (Registrant)
/s/ Leeanne Graziani
----------------------------------------
By: Leeanne Graziani,
President
UAC SECURITIZATION CORPORATION
Seller
UNION ACCEPTANCE CORPORATION
Servicer
and
FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION
Owner Trustee
TRUST AND SERVICING AGREEMENT,
Dated as of May 1, 1999
UACSC 1999-B Owner Trust
-1-
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Creation of Trust........................................1
SECTION 1.01. Name....................................................1
SECTION 1.02. Office..................................................1
SECTION 1.03. Purposes and Powers....................................1
SECTION 1.04. Appointment of Owner Trustee............................2
SECTION 1.05. Initial Capital Contribution of Trust Estate............2
SECTION 1.06. Declaration of Trust....................................2
SECTION 1.07. Title to Trust Property.................................3
SECTION 1.08. Situs of Trust..........................................3
ARTICLE II Definitions..............................................3
SECTION 2.01. Definitions............................................3
SECTION 2.02. Usage of Terms........................................14
SECTION 2.03. Cutoff Date and Record Date...........................14
SECTION 2.04. Section References....................................14
ARTICLE III Conveyance of Receivables...............................14
ARTICLE IV Acceptance by Trustee...................................15
ARTICLE V Information Delivered to the Rating Agencies............16
ARTICLE VI Agent for Service.......................................17
ARTICLE VII The Receivables.........................................17
SECTION 7.01. Representations and Warranties of Seller..............17
SECTION 7.02. Repurchase Upon Breach................................18
SECTION 7.03. Custody of Receivable Files...........................18
SECTION 7.04. Duties of Servicer as Custodian.......................18
SECTION 7.05. Instructions; Authority to Act........................19
SECTION 7.06. Custodian's Indemnification...........................19
SECTION 7.07. Effective Period and Termination......................19
ARTICLE VIII Administration and Servicing of Receivables.............20
SECTION 8.01. Duties of Servicer....................................20
SECTION 8.02. Collection of Receivable Payments.....................20
SECTION 8.03. Realization Upon Receivables..........................21
SECTION 8.04. Physical Damage Insurance.............................22
SECTION 8.05. Maintenance of Security Interests in
Financed Vehicles...............................22
SECTION 8.06. Covenants of Servicer.................................22
-i-
<PAGE>
SECTION 8.07. Purchase of Receivables Upon Breach...................22
SECTION 8.08. Servicing Fee.........................................23
SECTION 8.09. Servicer's Certificate................................23
SECTION 8.10. Annual Statement as to Compliance;
Notice of Default...............................24
SECTION 8.11. Annual Independent Certified
Public Accountant's Report......................24
SECTION 8.12. Access to Certain Documentation and
Information Regarding Receivables...............24
SECTION 8.13. Servicer Expenses.....................................25
SECTION 8.14. Reports to Noteholders................................25
ARTICLE IX Collections; Distributions to Noteholders
and Certificateholder................................25
SECTION 9.01. Collection Account....................................25
SECTION 9.02. Collections...........................................25
SECTION 9.03. Purchase Amounts......................................26
SECTION 9.04. Application of Funds..................................26
SECTION 9.05. Advances..............................................28
SECTION 9.06. Net Deposits..........................................28
SECTION 9.07. No Segregation of Moneys; No Interest.................28
SECTION 9.08. Accounting and Reports to the Certificateholder,
the Internal Revenue
Service and Others........................28
SECTION 9.09. Payahead Account. ...................................29
ARTICLE X Intentionally Blank.....................................29
ARTICLE XI The Certificate.........................................29
SECTION 11.01. The Certificate......................................29
SECTION 11.02. Authentication of Certificate........................30
SECTION 11.03. Registration of Transfer and Exchange
of Certificate..................................30
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificate....31
ARTICLE XII The Seller..............................................31
SECTION 12.01. Representations and Undertakings of Seller...........31
SECTION 12.02. Liability of Seller; Indemnities.....................33
SECTION 12.03. Merger or Consolidation of, or Assumption
of the Obligations of Seller....................34
SECTION 12.04. Limitation on Liability of Seller and Others.........35
ARTICLE XIII The Servicer............................................35
SECTION 13.01. Representations of Servicer..........................35
SECTION 13.02. Indemnities of Servicer..............................36
SECTION 13.03. Merger or Consolidation of, or Assumption
of the Obligations of Servicer..................37
SECTION 13.04. Limitation on Liability of Servicer and Others.......38
-ii-
<PAGE>
SECTION 13.05. Servicer Not to Resign...............................38
SECTION 13.06. Delegation of Duties.................................39
ARTICLE XIV Servicer Default........................................39
SECTION 14.01. Events of Servicer Default...........................39
SECTION 14.02. Appointment of Successor.............................40
SECTION 14.03. Notice of Events of Servicer Default.................41
SECTION 14.04. Waiver of Past Defaults..............................41
ARTICLE XV The Owner Trustee.......................................42
SECTION 15.01. Duties of Owner Trustee..............................42
SECTION 15.02. Owner Trustee's Certificate..........................44
SECTION 15.03. Trust's Assignment of Purchased Receivables..........44
SECTION 15.04. Certain Matters Affecting the Owner Trustee..........45
SECTION 15.05. Owner Trustee Not Liable for Certificate
or Receivables..................................46
SECTION 15.06. Owner Trustee May Own Notes..........................47
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees
and Expenses; Indemnification...................47
SECTION 15.08. Eligibility Requirements for Owner Trustee...........48
SECTION 15.09. Resignation or Removal of Owner Trustee..............48
SECTION 15.10. Successor Owner Trustee..............................49
SECTION 15.11. Merger or Consolidation of Owner Trustee.............49
SECTION 15.12. Appointment of Co-Trustee or Separate Owner Trustee..50
SECTION 15.13. Representations and Warranties of Owner Trustee......51
ARTICLE XVI Termination.............................................51
SECTION 16.01. Termination of the Trust.............................51
SECTION 16.02. Optional Disposition of All Receivables..............52
ARTICLE XVII Miscellaneous Provisions................................53
SECTION 17.01. Amendment............................................53
SECTION 17.02. Protection of Title to Trust.........................53
SECTION 17.03. Limitation on Rights of Certificateholder............55
SECTION 17.04. Governing Law........................................56
SECTION 17.05. Notices..............................................56
SECTION 17.06. Severability of Provisions...........................56
SECTION 17.07. Assignment...........................................56
SECTION 17.08. Certificate Nonassessable and Fully Paid.............56
SECTION 17.09. Nonpetition Covenant.................................57
SECTION 17.10. Counterparts.........................................57
SECTION 17.11. Third Party Beneficiary. ...........................57
-iii-
<PAGE>
EXHIBIT 1 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 2 - Owner Trustee's Certificate Pursuant to Section 15.02
EXHIBIT 3 - Servicer's Certificate
EXHIBIT A - Form of Certificate of Trust
EXHIBIT B - Form of Certificate
SCHEDULE A - Schedule of Receivables
SCHEDULE B - Location of Receivables
-iv-
<PAGE>
This TRUST AND SERVICING AGREEMENT, dated as of May 1, 1999, is made
with respect to the formation of the UACSC 1999-B Owner Trust, among UAC
SECURITIZATION CORPORATION, a Delaware corporation, as depositor (the "Seller"),
UNION ACCEPTANCE CORPORATION, an Indiana corporation, as servicer (the
"Servicer"), and FIRST UNION TRUST COMPANY, NATIONAL ASSOCIATION, a national
banking corporation with its principal place of business in the State of
Delaware, as owner trustee (in such capacity the "Owner Trustee").
WITNESSETH THAT: In consideration of the premises and of the mutual
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
Creation of Trust
Upon the execution of this Agreement by the parties hereto and the
prompt filing thereafter of the Certificate of Trust in the State of Delaware,
there is hereby created the UACSC 1999-B Owner Trust.
SECTION 1.01. Name. The Trust created hereby shall be known as "UACSC
1999-B Owner Trust", in which name the Owner Trustee may conduct the business
and affairs of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued on behalf of the Trust. The Trust shall
constitute a business trust within the meaning of Section 3801(a) of the
Delaware Business Trust Act for which the Owner Trustee has filed a certificate
of trust with the Secretary of State of the State of Delaware pursuant to
Section 3810(a) of the Delaware Business Trust Act.
SECTION 1.02. Office. The office of the Trust shall be in care of the
Owner Trustee at its Corporate Trust Office or at such other address as the
Owner Trustee may designate by written notice to the Certificateholder, the
Servicer, the Seller, the Insurer and the Indenture Trustee.
SECTION 1.03. Purposes and Powers. The purpose of the Trust is to
engage in the following activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificate pursuant to this Agreement and to sell or transfer the
Notes and the Certificate in one or more transactions;
(ii) with the proceeds of the sale of the Notes and the
Certificate, to purchase the Receivables pursuant to this Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
the Trust estate pursuant to the Indenture and to hold, manage and
distribute to the Certificateholder pursuant to the terms of this
Agreement any portion of the Trust estate released from the Lien of,
and remitted to the Trust pursuant to, the Indenture;
1
<PAGE>
(iv) to enter into and perform its obligations under the
related documents to which it is to be a party;
(v) to engage in those activities, including entering into
agreements, that are necessary, suitable or convenient to accomplish
the foregoing or are incidental thereto or connected therewith; and
(vi) subject to compliance with the related documents, to
engage in such other activities as may be required in connection with
conservation of the Trust estate and the making of distributions to the
Certificateholder, the Noteholders and the others specified in this
Agreement.
The Trust is hereby authorized to engage in the foregoing activities.
The Trust shall not engage in any activity other than in connection
with the foregoing or other than as required or authorized by the terms
of this Agreement or the other Basic Documents.
SECTION 1.04. Appointment of Owner Trustee. The Seller hereby appoints
the Owner Trustee as trustee of the Trust effective as of the date hereof, to
have all the rights, powers and duties set forth herein and in the Delaware
Business Trust Act.
SECTION 1.05. Initial Capital Contribution of Trust Estate. The Seller
hereby sells, assigns, transfers, conveys and sets over to the Trust, as of the
date hereof, the Trust estate. The Owner Trustee on behalf of the Trust hereby
acknowledges receipt in trust from the Seller, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust estate. The
Seller shall pay the organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee, promptly reimburse the Owner
Trustee for any such expenses paid by the Owner Trustee.
SECTION 1.06. Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust estate in trust upon and subject to the conditions
set forth herein for the use and benefit of the Certificateholder, subject to
the obligations of the Trust under the other related documents. It is the
intention of the parties hereto that the Trust constitute a business trust under
the Delaware Business Trust Act and that this Agreement constitute the governing
instrument of such Trust. Furthermore, it is the intention of the parties hereto
that, solely for federal, state and local income and franchise tax purposes (i)
so long as there is a sole Certificateholder, the Trust shall be treated as a
security arrangement, with the assets of the Trust being the Trust estate, and
the Notes being non-recourse debt of the sole Certificateholder, and (ii) if
there is more than one Certificateholder, the Trust shall be treated as a
partnership, with the assets of the partnership being the Trust estate, the
partners of the partnership being the Certificateholder and the Notes being
non-recourse debt of the partnership. The Trust shall not elect to be treated as
an association under Treasury Regulations Section 301.7701-3(a) for federal
income tax purposes. The parties agree that, unless otherwise required by
appropriate tax authorities, the sole Certificateholder or the Administrator on
behalf of the Trust will file or cause to be filed annual or other necessary
returns, reports and other forms
2
<PAGE>
consistent with the characterization of the Trust as provided in the second
preceding sentence for such tax purposes. The Owner Trustee, the Seller as the
initial Certificateholder and each successor Certificateholder (as a condition
to acquiring its Certificate) agree to disregard the trust as a separate entity
and to treat the Notes as indebtedness for purposes of federal, state, and local
income or franchise taxes.
SECTION 1.07. Title to Trust Property. Legal title to all of the Trust
estate shall be vested at all times in the Trust as a separate legal entity
except where applicable law in any jurisdiction requires title to any part of
the Trust estate to be vested in a trustee or trustees, in which case title
shall be deemed to be vested in the Owner Trustee, a co-trustee and/or a
separate trustee, as the case may be.
SECTION 1.08. Situs of Trust. The Trust will be located and
administered in the State of Delaware. Any bank accounts maintained by the Owner
Trustee on behalf of the Trust shall be located in the State of Delaware. The
Trust shall not have any employees in any state other than Delaware; provided,
however, that nothing herein shall restrict or prohibit the Owner Trustee from
having employees within or without the State of Delaware. Payments, if any, will
be received by the Trust only in Delaware, and payments, if any, will be made by
the Trust only from Delaware. The only office of the Trust will be at the
Corporate Trust Office in Delaware.
ARTICLE II
Definitions
SECTION 2.01. Definitions. Capitalized terms which are used in this
Agreement but are not defined herein shall have the meanings provided in the
Indenture. Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"Accrued Interest" means all interest accrued on the Receivables prior
to the opening of business on the day following the Cutoff Date.
"Administration Agreement" means the Administration Agreement dated as
of May 1, 1999, between the Trust and the Administrator and acknowledged by the
Indenture Trustee.
"Administrator" means the Administrator under the Administration
Agreement, which is initially UAC, and its successors and assigns thereunder.
"Advance" means, with respect to a Receivable and with respect to a
Collection Period, the amount that the Servicer is required to advance pursuant
to Section 9.05.
"Agreement" means this Trust and Servicing Agreement executed by the
Seller, the Servicer and the Owner Trustee, and all amendments and supplements
thereto.
3
<PAGE>
"Amount Financed" means, with respect to a Receivable, the amount
advanced under the Receivable toward the purchase price of the Financed Vehicle
and any related costs.
"Approved Rating" means a 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.
"Available Spread Amount" means, on any Payment Date, the amount on
deposit in the Spread Account, including any income or gain from any investment
of funds in the Spread Account, net of any losses from such investment before
giving effect to deposits into or withdrawals from the Spread Account pursuant
to Article IX of the Indenture.
"Available Funds" means the amount defined as such in Section
9.04(a)(i).
"Basic Documents" has the meaning provided in the Indenture.
"Business Day" means, unless otherwise specified, any day other than a
Saturday, a Sunday or a day on which banking institutions in Wilmington,
Delaware, Chicago, Illinois or New York, New York (or, if the Servicer has
provided prior written notice to each of the Owner Trustee and the Insurer that
such day is not a Business Day, in Little Rock, Arkansas or Indianapolis,
Indiana) shall be authorized or obligated by law, executive order, or
governmental decree to be closed.
"Certificate" means a certificate executed on behalf of the Trust and
authenticated by the Owner Trustee substantially in the form attached hereto as
Exhibit B, which represents ownership of a 100% interest in the Trust.
"Certificate of Trust" means the Certificate of Trust of the Trust in
substantially the form of Exhibit A hereto.
"Certificate Register" means the register maintained by the Owner
Trustee pursuant to Section 11.03.
"Certificateholder" or "Holder" means the Person in whose name the
Certificate shall be registered in the Certificate Register.
"Closing Date" means May 26, 1999.
"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.
4
<PAGE>
"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 Account" means the account designated as such, established
and maintained pursuant to Section 9.01.
"Collection Period" means (i) initially, the period from the day after
the Cutoff Date to the end of the calendar month of June, 1999, and (ii)
thereafter, each calendar month, until the Trust shall terminate pursuant to
Article XVI.
"Consolidated Net Income" means, for any period, the consolidated net
income of UAC and its subsidiaries determined in accordance with GAAP and, with
respect to Consolidated Net Income for any fiscal year, as reported in UAC's
audited consolidated financial statements.
"Consolidated Tangible Net Worth" means the excess, if any, of the
consolidated assets of UAC and its subsidiaries over the consolidated
liabilities of UAC and its subsidiaries less any goodwill, trade names,
trademarks, patents, unamortized debt discount and expense, and other
intangibles, except that dealer premium rebates and excess servicing shall not
be so deducted, determined in accordance with GAAP.
"Contract Rate" means, with respect to a Receivable, the contract rate
of interest on such Receivable, exclusive of prepaid finance charges.
"Corporate Trust Office" means the office of the Owner Trustee at which
its corporate trust business shall, at any particular time, be administered,
which office at the date of the execution of this Agreement is located at One
Rodney Square, Suite 102, 902 King Street, Wilmington, DE 19801; Attention:
Corporate Trust Administration; Telecopy (302) 888-7544 or at such other address
as the Owner Trustee may designate from time to time by notice to the
Certificateholder, the Seller, the Servicer and the Indenture Trustee.
"Cutoff Date" means April 30, 1999.
"Dealer" means the seller of a Financed Vehicle, who originated and
assigned the related Receivable to UAC, UAC Finance Corporation, PAC or the
Predecessor under an existing agreement with UAC, UAC Finance Corporation, PAC
or the Predecessor or who arranged for a loan from UAC, PAC or the Predecessor
to the purchaser of a Financed Vehicle under an existing agreement with UAC, PAC
or the Predecessor.
"Defaulted Receivable" means, for any Collection Period, a Receivable
as to which any of the following has occurred: (i) any payment, or part thereof,
in excess of $10.00 was delinquent 120 days or more as of the last day of such
Collection Period, (ii) the Financed Vehicle that secures the Receivable has
been repossessed, or (iii) the Servicer has determined that the Receivable is
5
<PAGE>
uncollectible in accordance with the Servicer's customary practices on or before
the last day of such Collection Period; provided, however, that "Defaulted
Receivable" shall not include any Receivable that is to be repurchased pursuant
to Section 7.02 or purchased pursuant to Section 8.07; provided further, that
any Advances made with respect to a Receivable shall not be considered in the
determination of the delinquency status of such Receivable.
"Delaware Business Trust Act" means the Delaware Business Trust Act, 12
Del. C. ss.3801 et seq.
"Determination Date" means, for each Collection Period, the second
Business Day prior to the related Payment Date.
"Dissolution Payment Date" means the Payment Date following the
liquidation of the Trust corpus pursuant to Section 16.02.
"Eligible Bank" means any depository institution with trust powers
(including the Owner Trustee and the Indenture Trustee), organized under the
laws of the United States or any State having a net worth in excess of
$50,000,000, the deposits of which are insured to the full extent permitted by
law by the Federal Deposit Insurance Corporation, which is subject to
supervision and examination by Federal or State authorities and which (i) has a
long-term unsecured debt rating of at least Baa3 from Moody's or (ii) is
approved by each Rating Agency.
"Eligible Investment" means any of the following:
(i) direct obligations of, and obligations the full and
timely payment of principal and interest on which is fully guaranteed
by, the United States of America, the Federal National Mortgage
Association, or any agency or instrumentality of the United States of
America the obligations of which are backed by the full faith and
credit of the United States of America;
(ii) (A) demand and time deposits in, certificates of deposits of,
bankers' acceptances issued by, or federal funds sold by any depository
institution or trust company (including the Owner Trustee, the
Indenture Trustee or any of their agents, acting in their respective
commercial capacities) incorporated under the laws of the United States
of America, any State thereof or the District of Columbia or any
foreign depository institution with a branch or agency licensed under
the laws of the United States of America or any State, in each case
subject to supervision and examination by Federal and/or State banking
authorities and having an Approved Rating at the time of such
investment or contractual commitment providing for such investment or
(B) any other demand or time deposit or certificate of deposit which is
fully insured by the Federal Deposit Insurance Corporation;
(iii) repurchase obligations with respect to (A) any security
described in clause (i) above or (B) any other security issued or
guaranteed by an agency or instrumentality of the
6
<PAGE>
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 Collection
Account;
(v) commercial paper having an Approved Rating at the time of
such investment;
(vi) a guaranteed investment contract issued by any insurance
company or other corporation acceptable to the Rating Agency, provided
that the Owner Trustee or the Indenture 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 Notes;
(vii) interests in any money market fund having a rating of Aaa
by Moody's or AAAm by Standard & Poor's (including the money market
funds of the Owner Trustee and the Indenture Trustee in their
commercial capacities); and
(viii) any other investment approved in advance in writing by
the Rating Agencies and the Insurer.
"Event of Servicer Default" means an event specified in Section 14.01.
"Financed Vehicle" means a new or used automobile, light truck or van,
together with all accessions thereto, securing an Obligor's indebtedness under
the respective Receivable.
"GAAP" means generally accepted accounting principles set forth in the
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board, or in such other statements that are
described in Statement on Auditing Standards No. 69 "The Meaning of Present
Fairly in Conformity With Generally Accepted Accounting Principles in the
Independent Auditor's Report" that are applicable to the circumstances as of the
date of determination, applied on a consistent basis.
"Holder" -- see "Certificateholder."
"Indenture" means the Indenture dated as of May 1, 1999, between the
Trust and Harris Trust and Savings Bank as Indenture Trustee, which provides for
the issuance of the Notes.
7
<PAGE>
"Indenture Trustee" means Harris Trust and Savings Bank, an Illinois
banking corporation, in its role as Indenture Trustee under the Indenture and
its permitted successors and assigns.
"Indenture Trustee Office" means the office of the Indenture Trustee at
which its business as Indenture Trustee under the Indenture shall be
administered, which office is presently located at 311 West Monroe Street, 12th
Floor, Chicago, Illinois 60606, Attention: Indenture Trust Administration;
telecopy (312) 461-3525 or at such other address as the Indenture Trustee may
designate from time to time by notice to the Owner Trustee, the Servicer and the
Noteholders.
"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.
"Insolvency Proceeding" means the commencement, after the date hereof,
of any bankruptcy, insolvency, readjustment of debt, reorganization, marshaling
of assets and liabilities or similar proceedings by or against UAC, UAFC or the
Seller, the commencement, after the date hereof, of any proceedings by or
against UAC, UAFC or the Seller for the winding up or liquidation of its affairs
or the consent, after the date hereof, to the appointment of a trustee,
conservator, receiver, or liquidator in any bankruptcy, insolvency, readjustment
of debt, reorganization, marshaling of assets and liabilities or similar
proceedings of or relating to UAC, UAFC or the Seller.
"Insurance Agreement" means the Insurance and Reimbursement Agreement,
dated as of the Closing Date, among the Trust, the Seller, UAC individually and
as Servicer, UAFC and the Insurer pursuant to which the Insurer issued the
Policy.
"Insurer" means MBIA Insurance Corporation, a New York domiciled
insurance company.
"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).
8
<PAGE>
"Interest Shortfall" means, as to any simple interest Receivable as of
the last day of any Collection Period, the amount, if any, by which (a) interest
due on such Receivable exceeds (b) the Collected Interest on such Receivable.
"Interest Shortfall" with respect to a Precomputed Receivable as of the last day
of any Collection Period means the amount, if any, by which the portion of the
Scheduled Payment due during such Collection Period allocable to interest (using
the actuarial or constant yield method) exceeds the Collected Interest on such
Receivable (computed using the same method except that the amount of Collected
Interest in respect of Precomputed Receivables shall be increased by giving
effect to the withdrawal for the related Payment Date of any previously received
Scheduled Payments in respect of such Receivable from the Payahead Account in
accordance with Sections 8.02(b) hereof and Section 9.09 of the Indenture).
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
which attach to the respective Receivable or related Financed Vehicle by
operation of law.
"Liquidation Proceeds" means the monies collected from whatever source,
including insurance proceeds, on Defaulted Receivables, net of the sum of any
amounts expended by the Servicer for the account of the Obligor plus any amounts
required by law to be remitted to the Obligor. "Liquidation Proceeds" with
respect to a Payment Date means such monies collected during the preceding
Collection Period. In no event shall Liquidation Proceeds be less than zero.
"Monthly Interest" means the amount of interest which is payable to the
Noteholders on any Payment Date pursuant to the terms of the Indenture.
"Monthly Principal" means the amount of principal which is payable to
the Noteholders on any Payment Date pursuant to the terms of the Indenture.
"Monthly Servicing Fee" means, (i) for the first Payment Date, the
product of the following: the (a) monthly Servicing Rate (b) the number of days
from and including the Closing Date to the end of the first Collection Period,
assuming the month of the Closing Date is a 30-day month, divided by 30 and (c)
the Original Pool Balance and (ii) for any subsequent Payment Date, the product
of (a) the Pool Balance as of the beginning of the related Collection Period and
(b) the monthly Servicing Rate.
"Moody's" means Moody's Investors Service, Inc.
"Notes" has the meaning specified in the Indenture.
"Noteholders" has the meaning specified in the Indenture.
"Obligor" on a Receivable means the purchaser or the co-purchasers of
the Financed Vehicle or any other Person who owes payments under the Receivable.
The phrase "payment made on behalf
9
<PAGE>
of an Obligor" shall mean all payments made with respect to a Receivable except
payments made by UAC, the Seller or the Servicer.
"Officers' Certificate" means a certificate signed by any two of the
chairman of the board, the president, any vice chairman of the board, any vice
president, the treasurer, or the controller of UAC, the Seller or the Servicer,
as the case may be; provided that no individual shall sign in a dual capacity.
"Opinion of Counsel" means a written opinion of counsel, who may be
counsel to the Seller and/or Servicer, which counsel shall be acceptable to the
Owner Trustee.
"Optional Disposition Price" means the amount specified as such in
Section 16.02.
"Original Pool Balance" means $340,232,904.32.
"Outstanding Advances" as of any date, with respect to a Receivable,
means the total amount of Advances made on such Receivable for which the
Servicer has not been reimbursed.
"Owner Trustee" means First Union Trust Company, National Association,
a national banking association with its principal place of business in the State
of Delaware, acting not in its individual capacity but solely as trustee under
this Agreement and its successors or any corporation resulting from or surviving
any merger or consolidation to which it or its successors may be a party or any
successor trustee at the time serving as successor trustee hereunder.
"Owner Trustee's Certificate" means a certificate completed and
executed by the Owner Trustee by a Responsible Officer pursuant to Section
15.02, substantially in the form of, in the case of an assignment to UAC,
Exhibit 1, and in the case of an assignment to the Servicer, Exhibit 2.
"PAC" means Performance Acceptance Corporation, a subsidiary of UAC
which was merged into UAC, and/or UAC doing business as Performance Acceptance
Corporation.
"Payahead" on a Precomputed Receivable means the amount, as of the
close of business on the last day of a Collection Period, computed in accordance
with Section 8.02(b) with respect to such Receivable.
"Payahead Account" means the account designated as such, established
and maintained pursuant to Section 9.09.
"Payahead Balance" on a Precomputed Receivable means the sum, as of the
close of business on the last day of a Collection Period, of all Payaheads made
by or on behalf of the Obligor with respect to such Precomputed Receivable, as
reduced by applications of previous Payaheads with respect to such Precomputed
Receivable, pursuant to Sections 8.02(b) and 9.09 hereof and Section 9.09 of the
Indenture.
10
<PAGE>
"Payment Date" means, for each Collection Period, the eighth calendar
day of the month following the end of the related Collection Period or, if such
day is not a Business Day, the first Business Day thereafter. The first Payment
Date shall be July 8, 1999.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
or government or any agency or political subdivision thereof.
"Policy" means the irrevocable Financial Guaranty Insurance Policy
dated as of the Closing Date issued by the Insurer to the Indenture Trustee for
the benefit of the Noteholders as required under the Indenture.
"Pool Balance" as of any date means the aggregate Principal Balance of
the Receivables 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.
"Predecessor" means Union Federal Savings Bank of Indianapolis, a
federally chartered stock savings bank.
"Prepayment Charges," as used in the Agreement, shall be interpreted to
include, without limitation, in the case of a Precomputed Receivable that is
prepaid in full, the difference between the Principal Balance of such Receivable
(plus accrued interest to the date of prepayment) and the Principal Balance of
such Receivable computed in accordance with the method provided for in the
contract governing such Receivable, such as the rule of 78's.
"Principal Balance" of a simple interest Receivable, as of the close of
business on the last day of a Collection Period, means the Amount Financed minus
that portion of all payments received on or before the close of business on such
last day allocable to principal of such Receivable. "Principal Balance" with
respect to a Precomputed Receivable, as of the close of business on the Cutoff
Date, means the gross principal balance of such Receivable on the records of the
Servicer, net of unearned or accrued interest reflected therein, and as of the
close of business on the last day of a Collection Period, means the Principal
Balance as of the Cutoff Date minus that portion of all Scheduled Payments
received with respect to such Receivable in respect of such Collection Period
and all prior Collection Periods allocable to principal of such Receivable using
the actuarial or constant yield method.
11
<PAGE>
"Purchase Agreement" means the Purchase Agreement dated as of the date
hereof by and among the Seller, UAC and UAFC, as amended, supplemented or
modified from time to time pursuant to which the Seller purchases Receivables
which have been or shall be transferred to the Trust.
"Purchase Amount" of any Receivable, as of the close of business on the
last day of any Collection Period, means the amount equal to the sum of the
Principal Balance of such Receivable plus any unpaid interest accrued and due
during or prior to such Collection Period on such Receivable.
"Purchased Receivable" means a Receivable purchased by the Servicer
pursuant to Section 8.07 or repurchased by UAC pursuant to Section 7.02 not
later than the respective dates required thereby.
"Rating Agency" means each of Moody's and Standard & Poor's and their
successors and assigns.
"Rating Agency Condition" has the meaning specified in the Indenture.
"Receivable" means any simple interest or pre-computed (add-on)
interest installment sales contract or installment loan and security agreement
which shall appear on Schedule A to the Agreement.
"Receivable Files" means the documents specified in Section 7.03.
"Receivables" or "Receivables Pool" means those Receivables conveyed to
the Trust by the Seller listed as of the Cutoff Date in Schedule A.
"Record Date" has the meaning specified in the Indenture.
"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 Section 9.05 hereof and Section
9.04(a)(i) of the Indenture) during such Collection Period representing
recoveries of Interest Shortfalls for which Advances were made for prior
Collection Periods.
"Responsible Officer" means, when used with respect to the Owner
Trustee, any officer within the Corporate Trust Office (or any successor group
of the Owner Trustee) including any managing director, vice president, assistant
vice president, assistant treasurer, assistant secretary or any other officer of
the Owner Trustee customarily performing functions similar to those performed by
the persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and familiarity
with the particular subject.
12
<PAGE>
"Scheduled Payment" on a Receivable means that portion of the payment
required to be made by the Obligor during the respective Collection Period
sufficient to amortize the Principal Balance and to provide interest at the
Contract Rate.
"Secured Parties" means each of the Indenture Trustee, the Noteholders
and the Insurer pursuant to the Indenture.
"Seller" means UAC Securitization Corporation, a Delaware corporation,
in its capacity as the seller of the Receivables under this Agreement, and each
successor to UAC Securitization Corporation (in the same capacity) pursuant to
Section 12.03.
"Servicer" means Union Acceptance Corporation, an Indiana corporation,
in its capacity as the servicer of the Receivables and each successor to Union
Acceptance Corporation (in the same capacity) pursuant to Section 13.03 or
14.02.
"Servicer's Certificate" means a certificate completed and executed by
an officer of the Servicer pursuant to Section 8.09.
"Servicing Rate" means 1.00% per annum, payable monthly at one-twelfth
of the annual rate, subject to adjustment with respect to a successor Servicer
pursuant to Section 14.02.
"Spread Account" means the account designated as such, established and
maintained pursuant to the Indenture.
"Standard & Poor's" means Standard & Poor's Ratings Services, a
division of The McGraw- Hill Companies, Inc.
"State" means (i) any state of the United States of America or (ii) the
District of Columbia.
"Stated Final Payment Date" means December 8, 2006.
"Trigger Event" means any of the events identified as such in Section
6.01 of the Insurance Agreement.
"Trust" means the Delaware business trust created by the Agreement, the
estate of which shall generally comprise the Receivables (other than Purchased
Receivables) and all monies paid thereon, and all monies due 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 Collection 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 Seller 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 Seller in recourse to
13
<PAGE>
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 Seller under the Purchase Agreement, including, without limitation,
Section 3.04 thereof.
"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.
ARTICLE III
Conveyance of Receivables
In consideration of the Trust's issuance of, and the Owner Trustee's
delivery to the Seller of, the Certificate and the proceeds to be realized by
the Trust from the issuance of the Notes pursuant to the Indenture, the Seller
does hereby sell, transfer, assign, and otherwise convey to the Trust, without
recourse (subject to the obligations herein):
(i) all right, title, and interest of the Seller in and to the
Receivables listed in Schedule A hereto;
(ii) the security interests in the Financed Vehicles granted
by Obligors pursuant to the Receivables;
14
<PAGE>
(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 Collection Account;
(v) the interest of the Seller 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, as of and after the Cutoff Date, with respect to the
Receivables held by the Servicer or Seller (but excluding Accrued
Interest paid on or prior to the Closing Date);
(viii) the rights of the Seller 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 Seller does hereby further assign, convey, pledge and grant a
security interest in (i) any and all other right, title and interest, including
any beneficial interest the Seller may have in the Collection Account, the
Spread Account and the funds deposited therein, and (ii) any proceeds of any of
the foregoing, to the Owner Trustee and for the benefit of the Noteholders to
secure amounts payable to Noteholders as provided under this Agreement. The
Seller acknowledges that all of the foregoing shall constitute the "Pledged
Assets" pursuant to the terms of the Indenture and the Seller hereby consents to
the pledge of all of such assets to the Indenture Trustee for the benefit of the
Secured Parties pursuant to the Indenture.
The Seller does not convey to the Trust any interest in any contracts
with Dealers related to any "dealer reserve" or any rights to the recapture of
any dealer reserve.
ARTICLE IV
Acceptance by Trustee
The Owner Trustee does hereby accept on behalf of the Trust all
consideration conveyed by the Seller pursuant to Article III, and declares that
the Owner Trustee shall hold such consideration upon the trusts herein set forth
for the benefit of all present and future Certificateholders, subject to the
terms and provisions of this Agreement.
15
<PAGE>
ARTICLE V
Information Delivered to the Rating Agencies
(a) The Servicer hereby expresses its intention to deliver promptly to
each Rating Agency (i) a copy of each Servicer's Certificate that it delivers to
the Owner Trustee, the Indenture Trustee and the Insurer pursuant to Section
8.09, (ii) a copy of each annual Officers' Certificate as to compliance and any
notice of default that it delivers to the Indenture Trustee or the Owner Trustee
pursuant to Section 8.10, (iii) delinquency and loss information for the
Receivables, the amount of any draws on the Policy, written notice of any
merger, consolidation, or other succession of the Servicer, pursuant to Section
13.03, or the Seller, pursuant to Section 12.03, (iv) a copy of each amendment
to this Agreement and (v) any Opinion of Counsel delivered to the Owner Trustee
pursuant to Section 17.02(i).
(b) The Owner Trustee hereby expresses its intention to deliver
promptly to each Rating Agency (i) a copy of each annual certified public
accountant's report received by the Owner Trustee pursuant to Section 8.11, (ii)
a copy of each amendment to this Agreement and (iii) a copy of the notice of
termination of the Trust provided to the Certificateholder pursuant to Section
16.01.
(c) For purposes of delivery pursuant to paragraphs (a) and (b) of this
Article V, the addresses for the Rating Agencies are:
Structured Finance/Asset Backed Surveillance Group
Standard & Poor's Ratings Services, a division of The
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
(d) The provisions of this Article V are included herein for
convenience of reference only and shall not be construed to be contractual
undertakings or obligations. The failure of the Servicer or the Owner Trustee to
comply with any or all of the provisions of this Article V shall not constitute
an Event of Servicer Default or a default of any kind under this Agreement or
make any remedy available to any Person.
16
<PAGE>
ARTICLE VI
Agent for Service
The agent for service for the Seller shall be The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801.
The agent for service for the Servicer shall be The Corporation Trust
Company, 1209 Orange Street, Wilmington, Delaware 19801.
A copy of any service of process served on the Seller or the Servicer
hereunder shall also be sent to the parties to receive notices on behalf of the
Seller or Servicer, as the case may be, under Section 17.05 of this Agreement.
ARTICLE VII
The Receivables
SECTION 7.01. Representations and Warranties of Seller. Pursuant to
Article III, the Seller has assigned to the Trust the benefit of, and its rights
respecting, the representations and warranties made to the Seller in the
Purchase Agreement as to the Receivables on which the Trust relies in accepting
the Receivables, issuing the Certificate and executing and delivering the
Indenture. The Seller agrees that the representations shall also be for the
benefit of the Secured Parties. Such representations and warranties speak as of
the execution and delivery of the Purchase Agreement but shall survive the sale,
transfer, and assignment of the Receivables to the Trust.
(a) The Seller hereby represents and warrants to the Trust 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 Seller, and
that pursuant to Article III of this Agreement the Seller has transferred and
assigned to the Trust all rights of the Seller to cause UAC under the Purchase
Agreement to repurchase Receivables in the event of a breach of such
representations and warranties.
(b) 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 Trust and that the beneficial interest in and title to the
Receivables not be part of the receivership estate in the event of the
appointment of a receiver for the Seller. No Receivable has been sold,
transferred, assigned, or pledged by the Seller to any Person other than the
Trust. Immediately prior to the transfer and assignment herein contemplated, the
Seller had good and marketable title to each Receivable free and clear of all
liens, and, immediately upon the transfer thereof, the Trust (for the benefit of
the Certificateholder and the Secured Parties pursuant to the Indenture) shall
have good and marketable title to each Receivable, free and clear of all liens
and rights of others, except for the rights of the Certificateholder and the
Insurer; and the transfer has been perfected under the UCC. On or prior
17
<PAGE>
to the Closing Date, all filings (including, without limitation, UCC filings)
necessary in any jurisdiction to give the Trust a first perfected ownership
interest in the Receivables shall have been made.
SECTION 7.02. Repurchase Upon Breach. The Seller, UAC, the Servicer, or
the Owner Trustee, as the case may be, shall inform the Indenture Trustee, the
Insurer and the other parties promptly, in writing, upon the discovery of any
breach of the representations and warranties contained in the Purchase
Agreement. This obligation shall not constitute an obligation on the part of the
Owner Trustee to actively seek to discover any such breaches. Unless the breach
shall have been cured by the second Record Date following the discovery, UAC,
pursuant to its obligations under the Purchase 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 Owner
Trustee, the Trust, or the Indenture Trustee with respect to a breach of the
representations and warranties referred to in Section 7.01 shall be to require
UAC to repurchase Receivables pursuant to the Purchase 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 Trust, upon
the execution and delivery of the Agreement, hereby revocably appoints the
Servicer, and the Servicer hereby accepts such appointment, for the benefit of
the Trust and the Indenture Trustee, to act as the agent of the Trust as
custodian of the following documents or instruments which are hereby
constructively delivered to the Trust with respect to each Receivable:
(i) The original of the Receivable.
(ii) The original credit application fully executed by the
Obligor.
(iii) The original certificate of title or such documents that
the Seller or Servicer shall keep on file, in accordance with its
customary procedures, evidencing the security interest of the Seller in
the Financed Vehicle.
(iv) Any and all other documents that the Servicer or the
Seller shall keep on file, in accordance with its customary procedures,
relating to a Receivable, an Obligor, or a Financed Vehicle.
SECTION 7.04. Duties of Servicer as Custodian.
(a) Safekeeping. The Servicer, in its capacity as custodian, shall hold
the Receivable Files on behalf of the Trust for the use and benefit of the
Trust, and maintain such accurate and complete accounts, records, and computer
systems pertaining to each Receivable File as shall enable the Trust to comply
with this Agreement and the other Basic Documents to which it is a party. In
performing its duties as custodian the Servicer shall act with reasonable care,
using that degree of skill and
18
<PAGE>
attention that the Servicer exercises with respect to the receivable files
relating to all comparable automotive receivables that the Servicer services for
itself. The Servicer shall conduct, or cause to be conducted, periodic audits of
the Receivable Files held by it under this Agreement, and of the related
accounts, records, and computer systems, in such a manner as shall enable the
Trust to verify the accuracy of the Servicer's record keeping. The Servicer
shall promptly report to the Owner Trustee and the Indenture Trustee any failure
on its part to hold the Receivable Files and maintain its accounts, records, and
computer systems as herein provided and promptly take appropriate action to
remedy any such failure; provided, however, notwithstanding anything to the
contrary in Section 7.03 or this Section 7.04, the Servicer shall not be
required to possess the original of Receivables representing less than 2% of the
Original Pool Balance until 30 days following the Closing Date.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Receivable File at one of its offices specified in Schedule B to this
Agreement, or at such other office as shall be specified to the Owner Trustee
and the Indenture Trustee by prior written notice. The Servicer shall make
available to the Owner Trustee and the Indenture Trustee and their duly
authorized representatives, attorneys, or auditors a list of locations of the
Receivable Files, the Receivable Files, and the related accounts, records, and
computer systems maintained by the Servicer at such times as the Owner Trustee
shall instruct.
(c) Release of Documents. Upon instruction from the Owner Trustee, the
Servicer shall release any document in a Receivable File to the Owner Trustee,
the Owner Trustee's agent, or the Owner Trustee's designee, as the case may be,
at such place or places as the Owner Trustee may designate, as soon as
practicable.
SECTION 7.05. Instructions; Authority to Act. The Servicer shall be
deemed to have received proper instructions with respect to the Receivable Files
upon its receipt of written instructions signed by a Responsible Officer of the
Owner Trustee on behalf of the Trust.
SECTION 7.06. Custodian's Indemnification. The Servicer, shall
indemnify the Trust, the Owner Trustee and the Indenture Trustee (which shall
include, for purposes of this Section 7.06, their directors, officers, employees
and agents) for any and all liabilities, obligations, losses, compensatory
damages, payments, costs, or expenses of any kind whatsoever that may be imposed
on, incurred, or asserted against the Trust, the Owner Trustee or the Indenture
Trustee as the result of any improper act or omission in any way relating to the
maintenance and custody by the Servicer of the Receivable Files; provided,
however, that the Servicer shall not be liable for any portion of any such
amount resulting from the willful misfeasance, bad faith, or negligence of the
Owner Trustee or the Indenture Trustee. This indemnity shall survive the
termination of this Agreement and the resignation or removal of the Owner
Trustee or the Indenture Trustee.
SECTION 7.07. Effective Period and Termination. The Servicer's
appointment as custodian shall become effective as of the Cutoff Date and shall
continue in full force and effect until terminated pursuant to this Section
7.07. If the Servicer shall resign in accordance with the provisions of this
Agreement or if all of the rights and obligations of the Servicer shall have
been terminated under
19
<PAGE>
Section 14.01, the appointment of the Servicer as custodian may be terminated by
the Trust with the consent of the Indenture Trustee and the Insurer (so long as
the Insurer is not in default of its obligations under the Policy). In addition,
the Trust may terminate the Servicer's appointment as custodian with cause at
any time upon written notification to the Servicer and the Indenture Trustee. As
soon as practicable after any termination of such appointment, the Servicer
shall deliver the Receivable Files to the Indenture Trustee or the Trust's agent
at such place or places as the Owner Trustee on behalf of the Trust, with the
consent of the Insurer and the Indenture Trustee, may reasonably designate.
ARTICLE VIII
Administration and Servicing of Receivables
SECTION 8.01. Duties of Servicer. The Servicer, for the benefit of the
Trust and the Secured Parties, shall manage, service, administer, and make
collections on the Receivables with reasonable care, using that degree of skill
and attention that the Servicer exercises with respect to all comparable
automotive receivables that it services for itself. The Servicer's duties shall
include collection and posting of all payments, making Advances (in the
Servicer's sole discretion), responding to inquiries of Obligors or of federal,
state or local governmental authorities with respect to the Receivables,
investigating delinquencies, sending payment coupons to Obligors, accounting for
collections, and furnishing monthly and annual statements to the Owner Trustee
and the Indenture Trustee with respect to distributions. The Servicer shall
follow its customary standards, policies, and procedures in performing its
duties as Servicer. Without limiting the generality of the foregoing, the
Servicer is authorized and empowered by the Trust to execute and deliver, on
behalf of itself, the Trust, the Owner Trustee, the Indenture Trustee or any of
them, any and all instruments of satisfaction or cancellation, or partial or
full release or discharge, and all other comparable instruments, with respect to
such Receivables or to the Financed Vehicles securing such Receivables. If the
Servicer shall commence a legal proceeding to enforce a Receivable or a
Defaulted Receivable, the Trust and the Indenture Trustee shall thereupon be
deemed to have automatically assigned, solely for the purpose of collection,
such Receivable to the Servicer. The Owner Trustee and the Indenture Trustee
shall execute any documents prepared by the Servicer and delivered to the Trust
for execution that are necessary or appropriate to enable the Servicer to carry
out its servicing and administrative duties hereunder.
SECTION 8.02. Collection of Receivable Payments (a) The Servicer shall
make reasonable efforts to collect all payments called for under the terms and
provisions of such Receivables as and when the same shall become due and shall
follow such collection procedures as it follows with respect to all comparable
automotive receivables that it services for itself. If payments are extended in
the ordinary course of the Servicer's collection procedures, and, as a result,
any Receivable would be outstanding at the Stated Final Payment Date, then the
Servicer shall be obligated to purchase such Receivable pursuant to Section 8.07
(unless such Receivable is otherwise being purchased pursuant to Section 16.02)
as of the last day of the Collection Period immediately preceding the Stated
Final Payment Date. The Servicer may in its discretion waive any late payment
charge or any other fees
20
<PAGE>
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
9.05). Next, any excess shall be applied to the Scheduled Payment and any
remaining excess shall be added to the Payahead Balance, and shall be applied to
prepay the Precomputed Receivable, but only if such Payahead Balance shall be
sufficient to prepay the Receivable in full. Otherwise, any such remaining
excess payments shall constitute a Payahead and shall increase the Payahead
Balance.
SECTION 8.03. Realization Upon Receivables. (a) On behalf of the Trust
and the Secured Parties the Servicer shall use its best efforts, consistent with
its customary servicing procedures, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Receivable as to which the
Servicer shall have determined that eventual payment in full is unlikely. The
Servicer shall follow such customary and usual practices and procedures as it
shall deem necessary or advisable in its servicing of automotive receivables,
which may include reasonable efforts to realize upon any recourse to Dealers and
selling the Financed Vehicle at public or private sale. The foregoing shall be
subject to the provision that, in any case in which the Financed Vehicle shall
have suffered damage, the Servicer shall not expend funds in connection with the
repair or the repossession of such Financed Vehicle unless it shall determine in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds. After appropriate disposition of the Financed Vehicle, the
Servicer shall also take such measures as it deems reasonable and appropriate to
realize value in respect of any deficiency balance of the Receivable including
pursuit of action on behalf of the Trust and/or the Secured Parties against the
Obligor or public or private sale of the remaining interest of the Trust and/or
the Secured Parties 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
Payment 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
21
<PAGE>
value of the Financed Vehicle as determined by the Servicer in accordance with
the Servicer's normal servicing standards.
SECTION 8.04. Physical Damage Insurance. The Servicer, in accordance
with its customary servicing procedures and underwriting standards, shall
require that each Obligor shall have obtained and shall maintain physical damage
insurance covering the Financed Vehicle.
SECTION 8.05. Maintenance of Security Interests in Financed Vehicles.
The Servicer shall, in accordance with its customary servicing procedures, take
such steps as are necessary to ensure that perfection of the security interest
created by each Receivable in the related Financed Vehicle has been obtained,
and to maintain such security interest. The Trust hereby authorizes the Servicer
to take such steps as are necessary to re-perfect such security interest on
behalf of the Trust in the event of the relocation of a Financed Vehicle or for
any other reason. Without limiting the forgoing, in the event that the Servicer
consigns a repossessed Financed Vehicle to an affiliate for liquidation, it
shall take such measures as are necessary or appropriate to maintain the
security interest in the Financed Vehicle in the hands of the consignee until
such Financed Vehicle is liquidated, including appropriate precautionary UCC-1
filings. In addition, UAC and/or such affiliate will notify the creditors, if
any, of such affiliate that have entered into a consignment arrangement on or
before such arrangements are made.
SECTION 8.06. Covenants of Servicer. The Servicer shall not release the
Financed Vehicle securing any Receivable from the security interest granted by
such Receivable in whole or in part except in the event of payment in full by
the Obligor thereunder or repossession, nor shall the Servicer impair the rights
of the Certificateholder or the Secured Parties in the Receivables, nor shall
the Servicer change the amount of the Scheduled Payment under a Receivable or
change the Amount Financed under a Receivable or reduce the Contract Rate of a
Receivable (except if so ordered by a bankruptcy court in a proceeding
concerning the Obligor or otherwise mandated by law).
SECTION 8.07. Purchase of Receivables Upon Breach. The Servicer, the
Indenture Trustee or the Owner Trustee shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
(i) any breach by the Servicer of its obligations under Section 8.06 or (ii) the
existence of the Servicer's obligation to purchase a Receivable pursuant to
Section 8.02(a). This obligation shall not constitute an obligation on the part
of the Owner Trustee or the Indenture Trustee to discover any such breaches or
circumstances. Unless the breach under Section 8.06 shall have been cured by the
second Record Date following the discovery, the Servicer shall purchase any
Receivable materially and adversely affected by such breach as of such day (or,
at the Servicer's election, as of the first Record Date following the
discovery). In consideration of the purchase of such Receivable, the Servicer
shall remit the Purchase Amount with respect to such Receivable in the manner
specified in Section 9.03. The sole remedy of the Owner Trustee, the Trust, or
the Secured Parties with respect to a breach pursuant to Section 8.06 or the
grant of an extension which triggers an obligation of the Servicer under Section
8.02(a) shall be to require the Servicer to purchase Receivables pursuant to
this Section 8.07, except as provided in Section 13.02.
22
<PAGE>
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 Collection Account. The Servicer
shall also be entitled to retain, and need not deposit in the Collection
Account, all late fees, Prepayment Charges, other administrative fees or similar
charges allowed by applicable law with respect to Receivables, if any, collected
(from whatever source) on the Receivables. The Monthly Servicing Fee will be
paid only out of the funds of the Trust and not from the Owner Trustee's own
funds. So long as Union Acceptance Corporation is the Servicer, if the Servicer
fails to pay the fees and expenses of the Owner Trustee or the Indenture Trustee
pursuant to Section 15.07 hereof or pursuant to the Indenture, the Owner Trustee
and Indenture Trustee shall be entitled to receive such amount from the Monthly
Servicing Fee prior to payment thereof to the Servicer and the Servicer shall
not retain from collections that portion of the Monthly Servicing Fee equal to
any fees of the Owner Trustee and Indenture Trustee that are due and payable and
any unpaid amount that the Servicer has received notice is due the Owner Trustee
or the Indenture Trustee as reimbursement for expenses.
SECTION 8.09. Servicer's Certificate. On or before the Determination
Date following each Collection Period, the Servicer shall deliver to the Owner
Trustee, the Indenture Trustee and the Insurer a Servicer's Certificate in
substantially the form of Exhibit 3 attached hereto containing all information
necessary to make the distributions pursuant to Section 9.04 of the Indenture
(so long as the Notes remain outstanding) for the Collection Period preceding
the date of such Servicer's Certificate and all information necessary for the
Indenture Trustee to send statements to the Noteholders and the Owner Trustee to
send statements to the Certificateholder, including (A) the amount of aggregate
collections on the Receivables, (B) the aggregate Purchase Amount of the
Receivables repurchased by UAC and purchased by the Servicer, (C) with respect
to Precomputed Receivables the net deposit from the Collection Account to the
Payahead Account or the net withdrawal from the Payahead Account to the
Collection Account required for the Collection Period in accordance with Section
9.09 of the Indenture, and in the case of a net withdrawal, the Monthly Interest
and Monthly Principal reported on such Servicer's Certificate shall reflect the
portions of such withdrawal allocable to interest and principal, respectively,
in accordance with this Agreement, (D) the amount, if any, to be withdrawn from
the Spread Account and the amount, if any, to be drawn on the Policy, (E)
information respecting (i) delinquent Receivables that are 30, 60 and 90 days
past due, and (ii) the number of repossessions of Financed Vehicles during the
preceding Collection Period, number of unliquidated repossessed Financed
Vehicles, gross and net losses on the Receivables, and recoveries on charged off
Receivables; and (F) each other item listed in Section 9.04 of the Indenture
reasonably requested by a Rating Agency, the Indenture Trustee or the Insurer in
order to monitor the performance of the Receivables. Receivables purchased by
UAC as of the last day of such Collection Period shall be identified by the UAC
account number with respect to such Receivable (as specified in Schedule A to
this Agreement).
23
<PAGE>
SECTION 8.10. Annual Statement as to Compliance; Notice of Default. (a)
The Servicer shall deliver to the Owner Trustee, the Indenture Trustee and the
Insurer, on or before April 30 of each year, beginning on the first April 30
that is at least six months after the Closing Date, an Officers' Certificate,
dated as of December 31 of the preceding year, stating that (i) a review of the
activities of the Servicer during the preceding 12-month period (or in the case
of the initial Officer's Certificate, the period from the Closing Date to and
including the date of such Officer's Certificate) and of its performance under
this Agreement has been made under such officer's supervision and (ii) to the
best of such officer's knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof. A
copy of such certificate and the report referred to in Section 8.11 may be
obtained by any Certificateholder at its own expense by a request in writing to
the Owner Trustee addressed to the Corporate Trust Office.
(b) The Servicer shall deliver to a Responsible Officer of the Owner
Trustee, the Indenture Trustee and the Insurer, promptly after having obtained
knowledge thereof, but in no event later than 5 Business Days thereafter,
written notice in an Officers' Certificate of any event which with the giving of
notice or lapse of time, or both, would become an Event of Servicer Default
under Section 14.01. The Seller or UAC shall deliver to a Responsible Officer of
the Owner Trustee, the Indenture Trustee and the Insurer, promptly after having
obtained knowledge thereof, but in no event later than 5 Business Days
thereafter, written notice in an Officers' Certificate of any event which with
the giving of notice or lapse of time, or both, would become an Event of
Servicer Default under clause (ii) of Section 14.01.
SECTION 8.11. Annual Independent Certified Public Accountant's Report.
The Servicer shall cause a firm of independent certified public accountants, who
may also render other services to the Servicer, to deliver to the Owner Trustee,
the Indenture Trustee and the Insurer on or before September 30 of each year
concerning the 12-month period ended June 30 of such year (or shorter period
since the date of this Agreement), beginning on the first September 30 following
the first June 30 after the Closing Date, a report addressed to the Board of
Directors of the Servicer to the effect that such firm has reviewed the
servicing of the Receivables by the Servicer and that such review (1) included
tests relating to new or used automobile, van and light truck loans serviced for
others in accordance with the requirements of the Uniform Single Audit Program
for Mortgage Bankers, to the extent the procedures in such program are
applicable to the servicing obligations set forth in the Agreement, and (2)
except as described in the report, disclosed no exceptions or errors in the
records relating to automobile, van or light truck loans serviced for others
that, in the firm's opinion, paragraph four of such program requires such firm
to report.
The report will also indicate that the firm is independent of the
Servicer within the meaning of the Code of Professional Ethics of the American
Institute of Certified Public Accountants.
SECTION 8.12. Access to Certain Documentation and Information Regarding
Receivables. The Servicer shall provide to the Owner Trustee, Indenture Trustee
and the Insurer access to the
24
<PAGE>
Receivables Files in such cases where such parties shall be required by
applicable statutes or regulations to review such documentation. Access shall be
afforded without charge, but only upon reasonable request and during the normal
business hours at the respective offices of the Servicer. Nothing in this
Section shall affect the obligation of the Servicer to observe any applicable
law prohibiting disclosure of information regarding the Obligors, and the
failure of the Servicer to provide access to information as a result of such
obligation shall not constitute a breach of this Section 8.12.
SECTION 8.13. Servicer Expenses. The Servicer shall be required to pay
all expenses incurred by it in connection with its activities hereunder,
including fees and disbursements of independent accountants, taxes imposed on
the Servicer, and expenses incurred in connection with regular payments and
reports to Noteholders.
SECTION 8.14. Reports to Noteholders. The Owner Trustee shall provide
to any Noteholder who so requests in writing (addressed to the Corporate Trust
Office) a copy of any certificate described in Section 8.09, the annual
statement described in Section 8.10, or the annual report described in Section
8.11. The Owner Trustee may require the requesting party to pay a reasonable sum
to cover the cost of the Owner Trustee complying with such request.
ARTICLE IX
Collections; Distributions to Noteholders and Certificateholder
SECTION 9.01. Collection Account. The Seller shall establish the
Collection Account as a segregated trust account in the name of the Trust for
the benefit of the Secured Parties with the Indenture Trustee (at the Indenture
Trustee Office) or another Eligible Bank. The Servicer shall direct the
Indenture Trustee to invest the amounts in the Collection Account in Eligible
Investments that mature not later than the Business Day prior to the next
succeeding Payment Date and to hold such Eligible Investments to maturity. The
Servicer shall instruct the Indenture Trustee (or its custodian) to and the
Indenture Trustee shall at all times (i) maintain possession of any negotiable
instruments or securities evidencing Eligible Investments until the time of sale
or maturity and each certificated security or negotiable instrument evidencing
an Eligible Investment shall be endorsed in blank or to the Indenture Trustee or
registered in the name of the Owner Trustee and (ii) cause any Eligible
Investment represented by an uncertificated security to be registered in the
name of the Indenture Trustee.
SECTION 9.02. Collections. (a) The Servicer shall remit to the
Collection Account all payments by or on behalf of the Obligors on the
Receivables and all Liquidation Proceeds, both as collected during the
Collection Period net of Monthly Servicing Fees and administrative fees allowed
to be retained by the Servicer pursuant to Section 8.08 and net of charge backs
(attributable to errors in posting, returned checks, or rights of offset for
amounts that should not have been paid or that must be refunded as the result of
a successful claim or defense under bankruptcy or similar laws) not later than
the second Business Day following the Business Day on which such amounts are
received by the Servicer. Notwithstanding the foregoing, for so long as (a) UAC
remains the Servicer, (b) no
25
<PAGE>
Event of Servicer Default shall have occurred and be continuing and (c)(1) UAC
maintains a short-term rating of at least A-1 by Standard & Poor's and P-l by
Moody's (and for five Business Days following a reduction in either such rating)
or (2) prior to ceasing daily remittances, the Rating Agency Condition shall
have been satisfied (and any conditions or limitations imposed by the Rating
Agencies in connection therewith are complied with) and the prior written
consent of the Insurer (not to be unreasonably withheld) shall have been
obtained, the Servicer may remit all such payments and Liquidation Proceeds with
respect to any Collection Period to the Collection Account on a less frequent
basis, but in no event later than the Determination Date immediately preceding
each Payment Date. The Servicer shall remit any Advances with respect to a
Collection Period to the Collection Account on or before the Determination Date.
(b) The Servicer, the Owner Trustee and/or Indenture Trustee shall
deposit in the Collection Account any funds received by such parties in respect
of funds drawn under the Policy from the Insurer.
(c) If the Available Funds for a Payment Date are insufficient to pay
current and past due Insurance Premiums, or 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 Owner Trustee and the Indenture
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 Collection Account the aggregate Purchase
Amount for such Collection Period pursuant to Sections 7.02 and 8.07.
SECTION 9.04. Application of Funds. (a) On each Determination Date, the
Servicer shall determine (i) the amount of payments on all Receivables and all
Liquidation Proceeds received during such Collection Period, the amount of
Advances for such Collection Period, and the Purchase Amount for all Receivables
purchased or repurchased with respect to such Collection Period which have been
deposited in the Collection Account (excluding amounts required to be paid
pursuant to Sections 7.02, 8.07, and 9.05 but not so paid) after giving effect
to the net transfer from the Collection Account to the Payahead Account or from
the Payahead Account to the Collection Account as provided in Section 9.09 of
the Indenture, (the "Available Funds"), and (ii) the amount of funds necessary
to make the distributions required pursuant to Section 9.04(a) (i) through (xi)
of the Indenture, inclusive, on the next Payment Date. The Servicer shall by a
Servicer's Certificate on or before the Determination Date notify the Owner
Trustee and the Indenture Trustee of such amounts by telecopy to the Corporate
Trust Office and the Indenture Trustee Office or to such numbers as the Owner
Trustee or Indenture Trustee may from time to time provide, followed promptly by
mailing such notice to the Owner Trustee and the Indenture Trustee and to the
Insurer.
26
<PAGE>
(b) On any Payment Date on which there are not sufficient Available
Funds to make the distributions required pursuant to Section 9.04(a) (i) through
(vi) of the Indenture (after reducing the amount of Monthly Principal which is
payable on such date pursuant to Section 9.04(b)(i) of the Indenture), if
necessary, the Indenture Trustee may, or the Servicer on its behalf shall,
withdraw from the Spread Account, to the extent of the Available Spread Amount,
an amount equal to such deficiency and promptly deposit such amount in the
Collection Account. If such deficiency exceeds the Available Spread Amount, the
Servicer shall simultaneously and in the same manner also notify the Owner
Trustee, the Indenture Trustee and the Insurer of the amount of such excess
deficiency.
(c) On each Payment Date, the Owner Trustee shall distribute to the
Certificateholder the amount of funds on deposit in the Spread Account in excess
of the Required Spread Amount, if any, for such Payment Date, as received from
the Indenture Trustee pursuant to Section 9.04 of the Indenture on such Payment
Date.
(d) On each Payment Date, the Owner Trustee shall send to the
Certificateholder the Servicer's Report provided to the Owner Trustee by the
Servicer for such Payment Date.
(e) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to the Certificateholder, such tax shall
reduce the amount otherwise distributable to the Certificateholder in accordance
with this Section 9.04. The Owner Trustee is hereby authorized and directed to
retain from amounts otherwise distributable to the Certificateholder sufficient
funds for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Owner Trustee from contesting any such tax
in appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to a Certificateholder shall be treated as cash distributed
to such Certificateholder at the time it is withheld by the Trust to be remitted
to the appropriate taxing authority. If there is a possibility that withholding
tax is payable with respect to a distribution (such as a distribution to a
non-U.S. Certificateholder), the Owner Trustee in its sole discretion may (but
unless otherwise required by law shall not be obligated to) withhold such
amounts in accordance with this paragraph (e). Upon request, any
Certificateholder shall provide its federal employer identification number or
any other information or tax forms the Owner Trustee or the Administrator may
reasonably request. In the event that a Certificateholder wishes to apply for a
refund of any such withholding tax, the Owner Trustee shall reasonably cooperate
with such Certificateholder in making such claim so long as such
Certificateholder agrees to reimburse the Owner Trustee for any out-of-pocket
expenses incurred.
(f) Distributions required to be made to the Certificateholder on any
Payment Date shall be made to each Certificateholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Certificateholder at a bank or other entity having appropriate
facilities therefor, or by check mailed to such Certificateholder at the address
of such Certificateholder appearing in the Certificate Register.
27
<PAGE>
SECTION 9.05. Advances. (a) As of the last day of the initial
Collection Period, the Servicer shall advance funds equal to the excess, if any,
of Monthly Interest due in respect of the initial Collection Period, over the
Collected Interest for such Collection Period; and (b) as of the last day of
each subsequent Collection Period, the Servicer shall advance funds in the
amount of the Interest Advance Amount (or such other amount as the Servicer
shall reasonably determine to cover an Interest Shortfall) with respect to each
Receivable that is delinquent for more than 30 days, in each such case, to the
extent that the Servicer, in its sole discretion, determines that the Advance
will be recoverable from payments by or on behalf of the Obligor, the Purchase
Amount, or Liquidation Proceeds. With respect to each Receivable, the Advance
paid pursuant to this Section 9.05 shall increase Outstanding Advances.
Outstanding Advances shall be reduced by subsequent payments by or on behalf of
the Obligor, collections of Liquidation Proceeds, or payments of the Purchase
Amount. The Servicer shall remit any Advances with respect to a Collection
Period to the Collection Account by the related Determination Date.
If the Servicer shall determine that an Outstanding Advance with
respect to any Receivable shall not be recoverable, the Servicer shall be
reimbursed from any collections made on other Receivables in the Trust, and
Outstanding Advances with respect to such Receivable shall be reduced
accordingly.
SECTION 9.06. Net Deposits. For so long as Union Acceptance Corporation
is the Servicer, Union Acceptance Corporation (in whatever capacity) may make
the remittances with respect to any Payment Date pursuant to Section 9.02 above,
net of amounts to be distributed to itself or its delegee under Section 13.06
(also in whatever capacity), if it determines pursuant to Section 9.02 that
there is no deficiency in Available Funds for such Payment Date. Nonetheless,
the Servicer shall account for all of the above described amounts as if such
amounts were deposited and distributed.
SECTION 9.07. No Segregation of Moneys; No Interest. Subject to Section
9.04, moneys received by the Owner Trustee hereunder need not be segregated in
any manner except to the extent required by law or this Agreement and may be
deposited under such general conditions as may be prescribed by law, and the
Owner Trustee shall not be liable for any interest thereon.
SECTION 9.08. Accounting and Reports to the Certificateholder, the
Internal Revenue Service and Others. The Owner Trustee shall deliver to the
Certificateholder, as may be required by the Code and applicable Treasury
Regulations, or as may be requested by such Certificateholder, such information,
reports or statements as may be necessary to enable the Certificateholder to
prepare its federal and state income tax returns. Consistent with the Trust's
characterization for tax purposes as a security arrangement for the issuance of
non-recourse debt so long as the Seller or any other Person is the sole
beneficial owner of the Trust, no federal income tax return shall be filed on
behalf of the Trust unless either (i) the Owner Trustee shall receive an Opinion
of Counsel that, based on a change in applicable law occurring after the date
hereof, or as a result of a transfer by a selling Certificateholder permitted by
Section 11.03, the Code requires such a filing or (ii) the Internal Revenue
Service shall determine that the Trust is required to file such a return. In the
event that there shall be two or more beneficial owners of the Trust, the Owner
Trustee shall inform the Indenture
28
<PAGE>
Trustee in writing of such event, (x) the Administrator, on behalf of the Trust
shall prepare or shall cause to be prepared federal and, if applicable, state or
local partnership tax returns required to be filed by the Trust and shall remit
such returns to the Seller for signature (or if the Seller no longer owns the
Certificate, to the Seller to the extent its tax liability is affected thereby
and otherwise to the successor Certificateholder) at least (5) days before such
returns are due to be filed, and (y) capital accounts shall be maintained for
each beneficial owner in accordance with the Treasury Regulations under Section
704(b) of the Code reflecting each such beneficial owner's share of the income,
gains, deductions, and losses of the Trust and/or guaranteed payments made by
the Trust and contributions to, and distributions from, the Trust. The Seller
(or such successor Certificateholder, as applicable) shall promptly sign such
returns and deliver such returns after signature to the Administrator, on behalf
of the Trust and such returns shall be filed by the Administrator, on behalf of
the Trust with the appropriate tax authorities. In the event that a "tax matters
partner" (within the meaning of Code Section 6231(a)(7)) is required to be
appointed with respect to the Trust, the Seller is hereby designated as tax
matters partner or, if the Seller is not the Certificateholder, the Seller to
the extent its tax liability is affected thereby and otherwise the successor
Certificateholder, shall be designated as tax matters partner. In no event shall
the Owner Trustee, the Administrator or the Seller (or such designee
Certificateholder, as applicable) be liable for any liabilities, costs or
expenses of the Trust or the Noteholders arising out of the application of any
tax law, including federal, state, foreign or local income or excise taxes or
any other tax imposed on or measured by income (or any interest, penalty or
addition with respect thereto or arising from a failure to comply therewith)
except for any such liability, cost or expense attributable to any act or
omission by the Owner Trustee, the Administrator or the Seller (or such designee
Certificateholder as applicable), as the case may be, in breach of its
obligations under this Agreement.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account in the name of the Trust on behalf of the Obligors and the
Noteholder as their interests may appear. The Servicer shall maintain the
Payahead Account pursuant to Section 9.09 of the Indenture.
ARTICLE X
Intentionally Blank
ARTICLE XI
The Certificate
SECTION 11.01. The Certificate. The Certificate shall be issued in the
form of one or more certificates and shall initially be issued to the Seller.
The Certificate shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Owner Trustee. Certificate bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures
29
<PAGE>
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 Certificate or did not hold such offices at
the date of such Certificate.
SECTION 11.02. Authentication of Certificate. The Owner Trustee shall
cause the Certificate to be executed on behalf of the Trust, authenticated and
delivered to or upon the written order of the Seller, signed by its chairman of
the board, its president, or any vice president, without further corporate
action by the Seller, in authorized denominations, pursuant to this Agreement.
No Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication, substantially as set forth in the forms of
Certificate attached as exhibits to this Agreement, executed by a Responsible
Officer of the Owner Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificate shall be dated the date
of their authentication.
SECTION 11.03. Registration of Transfer and Exchange of Certificate.
The Owner Trustee shall keep or cause to be kept, at the Corporate Trust Office,
a Certificate Register in which, subject to such reasonable regulations as it
may prescribe, the Owner Trustee shall provide for the registration of
Certificate and of transfers and exchanges of Certificate subject to the
restrictions provided herein.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Owner Trustee shall execute, authenticate, and
deliver, in the name of the designated transferee or transferees, one or more
new Certificate in authorized denominations of a like aggregate amount dated the
date of authentication by the Owner Trustee, provided, however, that
registration of transfer of the Certificate may not be effected unless (A) the
Owner Trustee receives an Opinion of Counsel, satisfactory to it, to the effect
that (i) such transfer may be made in reliance upon an exemption from the
registration requirements of the Securities Act of 1933, as amended, and (ii)
such transfer will not adversely affect the tax treatment of the Trust or the
Notes; (B) the Insurer has consented to such transfer and (C) the Rating Agency
Condition shall have been satisfied with respect to such transfer.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Owner Trustee duly executed by the Holder or his attorney
duly authorized in writing. Each Certificate surrendered for registration of
transfer and exchange shall be canceled and subsequently destroyed by the Owner
Trustee.
The Seller, as the initial Certificateholder, and each subsequent
Certificateholder by its acceptance of its Certificate, represents and warrants
to the Trust, the Owner Trustee and the Secured Parties that it is not a
"Benefit Plan" (as such term is defined in the Employee Retirement Income
Security Act of 1974, as amended) and agrees to indemnify and hold harmless the
Trust, the
30
<PAGE>
Owner Trustee and the Secured Parties in respect of any tax, loss, liability or
expense incurred as a result of the breach of such representation and warranty
by such Certificateholder.
No service charge shall be made for any registration of transfer or
exchange of Certificate, but the Owner Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificate.
SECTION 11.04. Mutilated, Destroyed, Lost, or Stolen Certificate. If
(a) any mutilated Certificate shall be surrendered to the Owner Trustee, or if
the Owner Trustee shall receive evidence to its satisfaction of the destruction,
loss, or theft of any Certificate and (b) there shall be delivered to the Owner
Trustee such security or indemnity as may be required by it to save it harmless,
then in the absence of notice that such Certificate shall have been acquired by
a bona fide purchaser, the Owner Trustee on behalf of the Trust shall execute
and the Owner Trustee shall authenticate and deliver, in exchange for or in lieu
of any such mutilated, destroyed, lost, or stolen Certificate, a new Certificate
of like tenor and denomination. In connection with the issuance of any new
Certificate under this Section 11.04, the Owner Trustee may require the payment
of a sum sufficient to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate issued pursuant to
this Section 11.04 shall constitute conclusive evidence of ownership in the
Trust, as if originally issued, whether or not the lost, stolen, or destroyed
Certificate shall be found at any time.
ARTICLE XII
The Seller
SECTION 12.01. Representations and Undertakings of Seller. (a) The
Seller makes the following representations on which the Trust relies in
accepting the Receivables and executing and authenticating the Certificate and
undertaking its obligations under the Indenture. The Seller agrees that the
representations and undertakings shall also be for the benefit of the Owner
Trustee and the Secured Parties. The representations speak as of the execution
and delivery of this Agreement and shall survive the sale of the Receivables to
the Trust.
(i) Organization and Good Standing. The Seller
has been duly organized and is validly existing as a
corporation in good standing under the laws of the State of
Delaware, with power and authority to own its properties and
to conduct its business as such properties shall be currently
owned and such business is presently conducted, and had at all
relevant times, and has, power, authority, and legal right to
acquire and own the Receivables.
(ii) Due Qualification. The Seller is duly
qualified to do business as a foreign corporation in good
standing, and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease
of property or the conduct of its business requires such
qualifications.
31
<PAGE>
(iii) Power and Authority. The Seller has the
power and authority to execute and deliver this Agreement and
to carry out its terms; the Seller has full power and
authority to sell and assign the property to be sold and
assigned to and deposited with the Trust and has duly
authorized such sale and assignment to the Trust by all
necessary corporate action; and the execution, delivery, and
performance of the Agreement has been duly authorized by the
Seller by all necessary corporate action.
(iv) Valid Sale; Binding Obligations. This
Agreement evidences a valid sale, transfer, and assignment of
the Receivables, enforceable against creditors of and
purchasers from the Seller; and evidences a legal, valid, and
binding obligation of the Seller enforceable in accordance
with its terms.
(v) No Violation. The consummation of the
transactions contemplated by the Agreement and the fulfillment
of the terms hereof do not conflict with, result in any breach
of any of the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the charter
or by-laws of the Seller, or any indenture, agreement, or
other instrument to which the Seller is a party or by which it
shall be bound; nor result in the creation or imposition of
any Lien upon any of its properties pursuant to the terms of
any such indenture, agreement, or other instrument (other than
this Agreement); nor violate any law or, to the best of the
Seller's knowledge, any order, rule, or regulation applicable
to the Seller of any court or of any federal or State
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its
properties.
(vi) No Proceedings. There are no proceedings
or investigations pending, or, to the Seller's best knowledge,
threatened, before any court, regulatory body, administrative
agency, or other governmental instrumentality having
jurisdiction over the Seller or its properties: (A) asserting
the invalidity of this Agreement, (B) seeking to prevent the
consummation of any of the transactions contemplated by this
Agreement, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Seller
of its obligations under, or the validity or enforceability
of, this Agreement, or (D) which might adversely affect the
federal income tax attributes of the Trust.
(b) The Seller further covenants that, prior to termination of the
Trust:
(i) It will not engage at any time in any
business or business activity other than such activities
expressly set forth in its Certificate of Incorporation
delivered to the Insurer on or prior to the Closing Date, and
will not amend its Certificate of Incorporation without the
prior written consent of the Insurer.
32
<PAGE>
(ii) It will not, without the consent of the
Insurer (not to be unreasonably withheld), sell, assign,
pledge or otherwise transfer, in whole, or in part or in any
series of related or unrelated transactions any of its right,
title or interest in or to the Certificate.
(iii) It will not:
(A) Fail to do all things necessary
to maintain its corporate existence separate and
apart from UAC and any other Person, including,
without limitation, holding regular meetings of its
stockholders and board of directors and maintaining
appropriate corporate books and records (including a
current minute book);
(B) Suffer any limitation on the
authority of its own directors and officers to
conduct its business and affairs in accordance with
their independent business judgment or authorize or
suffer any Person other than its own officers and
directors to customarily delegated to others under
powers of attorney for which a corporation's own
Officers and directors would customarily be
responsible;
(C) Fail to (I) maintain or cause to
be maintained by an agent of the Seller under the
Seller's control physical possession of all its books
and records, (II) maintain capitalization adequate
for the conduct of its business, (III) account for
and manage all its liabilities separately from those
of any other Person, including payment by it of all
payroll, administrative expenses and taxes, if any,
from its own assets, (IV) segregate and identify
separately all of its assets from those of any other
Person, (V) to the extent any such payments are made,
pay its employees, officers and agents for services
performed for the Seller or (VI) maintain a separate
office address with a separate telephone number from
those of UAC or any other affiliate thereof; or
(D) Except as may be provided in
this Agreement, or a similar agreement relating to
other securitizations in which the Seller has similar
rights and/or obligations, commingle its funds with
those of UAC or any affiliate thereof or use its
funds for other than the Seller's uses.
SECTION 12.02. Liability of Seller; Indemnities. The Seller shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
(i) The Seller shall indemnify, defend, and hold
harmless the Owner Trustee in its individual and trust capacities, the
Indenture Trustee, their respective officers,
33
<PAGE>
directors, employees and agents, the Trust and the Noteholders from and
against any taxes that may at any time be asserted against such parties
with respect to, and as of the date of, the sale of the Receivables to
the Trust or the issuance and original sale of the Certificate and the
Notes, including any sales, gross receipts, general corporation,
tangible or intangible personal property, privilege, or license taxes
(but, in the case of the Trust, not including any taxes asserted with
respect to ownership of the Receivables or federal or other income
taxes arising out of distributions on the Certificate or the Notes) and
costs and expenses in defending against the same.
(ii) The Seller shall indemnify, defend, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their officers, directors, employees and agents
and the Trust from and against any loss, liability, or expense incurred
by reason of (a) the Seller's willful misfeasance, bad faith, or
negligence in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this
Agreement and (b) the Seller's violation of federal or State securities
laws in connection with the registration of the sale of the
Certificate.
Indemnification under this Section 12.02 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation.
If the Seller shall have made any indemnity payments to the Owner Trustee, the
Indenture Trustee or the Trust pursuant to this Section and the Owner Trustee,
the Indenture Trustee or the Trust thereafter shall collect any of such amounts
from others, the Owner Trustee, the Indenture Trustee or the Trust, as the case
may be, shall repay such amounts to the Seller, without interest. This
indemnification shall survive the termination of this Agreement and the
resignation or removal of the Owner Trustee or the Indenture Trustee.
SECTION 12.03. Merger or Consolidation of, or Assumption of the
Obligations of Seller. Any Person (a) into which the Seller may be merged or
consolidated, (b) which may result from any merger or consolidation to which the
Seller shall be a party, or (c) which may succeed to all or substantially all of
the properties and assets of the Seller's business, which Person in any of the
foregoing cases executes an agreement of assumption to perform every obligation
of the Seller under this Agreement, shall be the successor to the Seller
hereunder without the execution or filing of any document or any further act by
any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no representation or warranty made
pursuant to Section 7.01 shall have been breached and no Event of Servicer
Default, and no event that, after notice or lapse of time, or both, would become
an Event of Servicer Default shall have happened and be continuing, (ii) the
Seller shall have delivered to the Owner Trustee and the Indenture Trustee an
Officers' Certificate and an Opinion of Counsel each stating that such
consolidation, merger, or succession and such agreement of assumption comply
with this Section 12.03 and that all conditions precedent, if any, provided for
in this Agreement relating to such transaction have been complied with and (iii)
the Seller shall have delivered an Opinion of Counsel to the Owner Trustee and
the Indenture Trustee either (A) stating that, in the opinion of such counsel,
all financing statements and continuation statements and amendments thereto have
been executed and filed that are necessary fully to preserve and protect the
interest of the Trust and the Indenture Trustee in the Receivables, and
34
<PAGE>
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 Seller shall not engage in any
merger or consolidation with any Person, or a disposition of all or
substantially all of its assets without providing advance written notice thereof
to the Owner Trustee and the Indenture Trustee and without obtaining the prior
written consent of the Insurer, not to be unreasonably withheld.
SECTION 12.04. Limitation on Liability of Seller and Others. The Seller
and any director or officer or employee or agent of the Seller may rely in good
faith on the advice of counsel or on any document of any kind, prima facie
properly executed and submitted by any Person respecting any matters arising
hereunder. The Seller shall not be under any obligation to appear in, prosecute,
or defend any legal action that shall not be incidental to its obligations under
this Agreement, and that in its opinion may involve it in any expense or
liability.
ARTICLE XIII
The Servicer
SECTION 13.01. Representations of Servicer. The Servicer makes the
following representations on which the Trust relies in accepting the Receivables
and issuing the Certificate and executing and delivering the Indenture. The
Servicer agrees that the representations shall also be for the benefit of the
Owner Trustee and the Secured Parties. The representations speak as of the
execution and delivery of this Agreement and shall survive the sale of the
Receivables to the Owner Trustee and the pledge to the Secured Parties pursuant
to the Indenture.
(i) Organization and Good Standing. The Servicer is
duly organized and validly existing as a corporation under the laws of
the State of Indiana, with power and authority to own its properties
and to conduct its business as such properties are currently owned and
such business is presently conducted, and had at all relevant times,
and has, power, authority, and legal right to acquire, own, sell, and
service the Receivables and to hold the Receivable Files as custodian
on behalf of the Trust.
(ii) Due Qualification. The Servicer is duly qualified
to do business as a foreign corporation in good standing, and has
obtained all necessary licenses and approvals in all jurisdictions in
which the ownership or lease of property or the conduct of its business
(including the servicing of the Receivables as required by this
Agreement) requires such qualifications.
(iii) Power and Authority. The Servicer has the power and
authority to execute and deliver this Agreement and to carry out its
terms; and the execution, delivery, and performance of this Agreement
has been duly authorized by the Servicer by all necessary corporate
action.
35
<PAGE>
(iv) Binding Obligations. This Agreement constitutes a
legal, valid, and binding obligation of the Servicer enforceable in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, or other similar laws affecting
the enforcement of creditors' rights in general and by general
principles of equity, regardless of whether such enforceability shall
be considered in a proceeding in equity or at law.
(v) No Violation. The consummation of the transactions
contemplated by this Agreement and the fulfillment of the terms hereof
does not conflict with, result in any breach of any of the terms and
provisions of, nor constitute (with or without notice or lapse of time)
a default under, the charter or by-laws of the Servicer, or any
indenture, agreement, or other instrument to which the Servicer is a
party or by which it is bound; nor result in the creation or imposition
of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, or other instrument (other than this
Agreement); nor violate any law or, to the best of the Servicer's
knowledge, any order, rule, or regulation applicable to the Servicer of
any court or of any federal or State regulatory body, administrative
agency, or other governmental instrumentality having jurisdiction over
the Servicer or its properties.
(vi) No Proceedings. There are no proceedings or
investigations pending, or, to the Servicer's knowledge, threatened,
before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or
its properties: (A) asserting the invalidity of this Agreement, (B)
seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, (C) seeking any determination or ruling
that might materially and adversely affect the performance by the
Servicer of its obligations under, or the validity or enforceability
of, this Agreement, or (D) which might adversely affect the federal
income tax attributes of the Trust.
SECTION 13.02. Indemnities of Servicer. The Servicer shall be liable in
accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
(i) The Servicer shall defend, indemnify, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, and their officers, directors, employees and
agents, the Trust, the Certificateholder and the Noteholders from and
against any and all costs, expenses, losses, damages, claims, and
liabilities, arising out of or resulting from the use, ownership, or
operation by the Servicer or any affiliate thereof of a Financed
Vehicle.
(ii) The Servicer shall indemnify, defend and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their officers, directors, employees and agents
and the Trust from and against any taxes that may at any time be
asserted against such parties with respect to the transactions
contemplated herein, including, without limitation, any sales, gross
receipts, general corporation, tangible or intangible
36
<PAGE>
personal property, privilege, or license taxes (but, in the case of the
Trust, not including any taxes asserted with respect to, and as of the
date of, the sale of the Receivables to the Trust or the issuance and
original sale of the Certificate, the Notes, or asserted with respect
to ownership of the Receivables, or federal or other income taxes
arising out of distributions on the Certificate or the Notes) and costs
and expenses in defending against the same.
(iii) The Servicer shall indemnify, defend, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, the Insurer, their officers, directors,
employees and agents, and the Trust, the Certificateholder and the
Noteholders from and against any and all costs, expenses, losses,
claims, actions, suits, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or
was imposed upon such parties through, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement. This indemnity shall
survive the termination of this Agreement or the Trust and the
resignation or removal of the Owner Trustee.
(iv) The Servicer shall indemnify, defend, and hold
harmless the Owner Trustee (in its individual and trust capacities),
the Indenture Trustee, their respective officers, directors, employees
and agents and the Trust from and against all costs, expenses, losses,
claims, damages, and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties
herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (a) shall be due to the willful
misfeasance, bad faith, or negligence of the Owner Trustee or the
Indenture Trustee; (b) relates to any tax other than the taxes with
respect to which either the Seller or Servicer shall be required to
indemnify the Owner Trustee or the Indenture Trustee; (c) shall arise
from the breach of any of representations or warranties of the Owner
Trustee set forth in Section 15.13 or by the Indenture Trustee set
forth in Section 6.13 of the Indenture; (d) shall be one as to which
the Seller is required to indemnify the Owner Trustee or the Indenture
Trustee under the Agreement; or (e) shall arise out of or be incurred
in connection with the acceptance or performance by the Owner Trustee
of the duties of successor Servicer.
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
37
<PAGE>
assumption to perform every obligation of the Servicer hereunder, shall be the
successor to the Servicer under this Agreement without further act on the part
of any of the parties to this Agreement; provided, however, that (i) immediately
after giving effect to such transaction, no Event of Servicer Default, and no
event which, after notice or lapse of time, or both, would become an Event of
Servicer Default shall have happened and be continuing, (ii) the Servicer shall
have delivered to the Owner Trustee and the Indenture Trustee an Officers'
Certificate and an Opinion of Counsel each stating that such consolidation,
merger or succession and such agreement of assumption comply with this Section
13.03 and that all conditions precedent provided for in this Agreement relating
to such transaction have been complied with and (iii) the Servicer shall have
delivered an Opinion of Counsel to the Owner Trustee and its Indenture Trustee
either (A) stating that, in the opinion of such counsel, all financing
statements and continuation statements and amendments thereto have been executed
and filed that are necessary fully to preserve and protect the interest of the
Trust and the Secured Parties in the Receivables, and reciting the details of
such filings, or (B) stating that, in the opinion of such Counsel, no such
action shall be necessary to preserve and protect such interest. Notwithstanding
the forgoing, the Servicer shall not engage in any merger or consolidation in
which it is not the surviving corporation without providing advance written
notice thereof to the Owner Trustee and the Indenture Trustee and without
obtaining the prior written consent of the Insurer, not to be unreasonably
withheld.
SECTION 13.04. Limitation on Liability of Servicer and Others. Neither
the Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust, the Indenture Trustee, the
Certificateholder or the Noteholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement; provided, however, that this provision shall not protect the
Servicer or any such person against any liability that would otherwise be
imposed by reason of willful misfeasance, bad faith, or negligence in the
performance of duties or by reason of reckless disregard of obligations and
duties under this Agreement. The Servicer and any director or officer or
employee or agent of the Servicer may rely in good faith on any document of any
kind prima facie properly executed and submitted by any Person respecting any
matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Receivables in accordance with
this Agreement (collection actions with respect to Defaulted Receivables are
understood to be incidental to the Servicer's duties to service the
Receivables), and that in its opinion may involve it in any expense or
liability.
SECTION 13.05. Servicer Not to Resign. The Servicer shall not resign
from its obligations and duties under this Agreement except upon determination
that the performance of its duties shall no longer be permissible under
applicable law or otherwise with the consent of the Owner Trustee, the Indenture
Trustee and the Insurer. Any determination described above permitting the
resignation of the Servicer shall be evidenced by an Opinion of Counsel to such
effect delivered to the Owner Trustee. No such resignation shall become
effective until the Indenture Trustee or a successor
38
<PAGE>
servicer shall have assumed the responsibilities and obligations of the Servicer
in accordance with Section 14.02.
SECTION 13.06. Delegation of Duties. Except as provided in Section
13.03 hereof, it is understood and agreed by the parties hereto that the
Servicer or the Seller may at any time delegate any duties including duties as
custodian to any Person willing to accept such delegation and to perform such
duties (including any affiliate of the Servicer) in accordance with the
customary procedures of the Servicer. In connection with such delegation, the
Servicer or the Seller may assign rights to the delegee or direct the payment to
the delegee of benefits or amounts otherwise inuring to the benefit of, or
payable to, the Seller or the Servicer hereunder. Any such delegation shall not
relieve the Servicer or the Seller of their respective liability and
responsibility with respect to such duties, and shall not constitute a
resignation within Section 13.05 hereof. The Servicer shall give written notice
to the Rating Agencies, the Owner Trustee, the Indenture Trustee and the Insurer
of any such delegation.
ARTICLE XIV
Servicer Default
SECTION 14.01. Events of Servicer Default. If any one of the following
events ("Events of Servicer Default") shall occur and be continuing:
(i) Any failure by the Servicer or UAC to deliver to
the Collection Account (or to the Indenture Trustee for distribution to
the Noteholders) any proceeds or payment required to be so delivered
under the terms of the Indenture, this Agreement or the Purchase
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 Owner Trustee, the Indenture Trustee or the
Insurer (so long as the Insurer is not in default of its obligations
under the Policy) or by the holders of Notes evidencing not less than
25% of the aggregate outstanding balance of the Notes is received by
the Servicer or UAC as specified in this Agreement or (B) after
discovery by an officer of the Servicer; or
(ii) Failure on the part of the Servicer, the Seller or
UAC duly to observe or to perform in any material respect any other
covenants or agreements of the Servicer, the Seller or UAC, as the case
may be, set forth in this Agreement or the Purchase Agreement, which
failure shall (a) materially and adversely affect the rights of the
Certificateholder or the Secured Parties and (b) continue unremedied
for a period of 60 days after the date on which written notice of such
failure, requiring the same to be remedied, shall have been given to
the Servicer, UAC or the Seller, as the case may be, by the Owner
Trustee, the Indenture Trustee or the Insurer (so long as the Insurer
is not in default of its obligations under the Policy) or by the
holders of Notes evidencing not less than 25% of the aggregate
outstanding balance of the Notes; or
39
<PAGE>
(iii) The occurrence of an Insolvency Event with respect to
the Servicer;
then, and in each and every case, so long as an Event of Servicer Default shall
not have been remedied, the Insurer (so long as the Insurer is not in default of
its obligations under the Policy), or the Indenture Trustee (upon direction to
do so by the holders of Notes evidencing not less than 25% of the outstanding
principal balance of the Notes if the Insurer is in default under the Policy),
by notice then given in writing to the Servicer may, terminate all of the rights
and obligations of the Servicer under this Agreement. In addition, if a Trigger
Event (as defined in the Insurance Agreement) shall have occurred, the Insurer
may (A) require that the Indenture Trustee or the Administrator, on behalf of
the Owner Trustee, deliver a notice of termination to the Servicer and appoint a
successor Servicer designated by the Insurer in such notice pursuant to Section
14.02; (B) require that the Indenture Trustee or the Administrator, on behalf of
the Owner Trustee, amend certificates of title relating to the Financed Vehicles
and take other actions to identify the Indenture Trustee (on behalf of the
Secured Parties) as the new secured party on such certificates of title; (C) as
provided in the Insurance Agreement, require that the Servicer or successor
Servicer or the Indenture Trustee instruct Obligors in respect of the
Receivables to remit payment on the Receivable directly to the Owner Trustee or
a separate account established exclusively for the Trust; and (D) as provided in
the Insurance Agreement, compel transfer by the Servicer of all Receivables
Files and, if applicable, certain rights in respect of servicing systems assets
to the Insurer or to the successor Servicer designated by the Insurer. On or
after the receipt by the Servicer of such written notice, all authority and
power of the Servicer under this Agreement, whether with respect to the
Certificate, the Notes or the Receivables or otherwise, shall, without further
action, pass to and be vested in the Indenture Trustee (except that the
Indenture Trustee may but shall not be required to make Advances) or such
successor Servicer as may be appointed under Section 14.02 pursuant to and under
this Section 14.01; and, without limitation, the Indenture Trustee is hereby
authorized and empowered to execute and deliver, on behalf of the predecessor
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments, and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and related documents,
or otherwise. The predecessor Servicer shall cooperate with the successor
Servicer and the Indenture Trustee in effecting the termination of the
responsibilities and rights of the predecessor Servicer under this Agreement,
including the transfer to the successor Servicer of electronic records related
to the Receivables in such form as the successor Servicer may reasonably request
and the transfer to the successor Servicer for administration by it of all cash
amounts that shall at the time be held by the predecessor Servicer for deposit,
or shall thereafter be received with respect to a Receivable. All reasonable
costs and expenses (including attorneys' fees) incurred in connection with
transferring the Receivable Files to the successor Servicer and amending this
Agreement to reflect such succession as Servicer pursuant to this Section 14.01
shall be paid by the predecessor Servicer upon presentation of reasonable
documentation of such costs and expenses.
SECTION 14.02. Appointment of Successor. (a) Upon the Servicer's
receipt of notice of termination pursuant to Section 14.01 or the Servicer's
resignation in accordance with the terms of this Agreement, the predecessor
Servicer shall continue to perform its functions as Servicer under this
40
<PAGE>
Agreement, in the case of termination, only until the date specified in such
termination notice or, if no such date is specified in a notice of termination,
until receipt of such notice and, in the case of resignation, until the later of
(x) the date 45 days from the delivery to the Owner Trustee and the Indenture
Trustee of written notice of such resignation (or written confirmation of such
notice) in accordance with the terms of this Agreement and (y) the date upon
which the predecessor Servicer shall become unable to act as Servicer, as
specified in the notice of resignation and accompanying Opinion of Counsel. In
the event of the Servicer's resignation or termination hereunder, the Indenture
Trustee shall appoint a successor Servicer, which successor Servicer shall be
reasonably acceptable to the Insurer (so long as the Insurer is not in default
of its obligations under the Policy), and the successor Servicer shall accept
its appointment by a written assumption in form acceptable to the Owner Trustee
and the Indenture Trustee. In the event that a successor Servicer has not been
appointed at the time when the predecessor Servicer has ceased to act as
Servicer in accordance with this Section 14.02, the Indenture Trustee without
further action shall automatically be appointed the successor Servicer.
Notwithstanding the above, the Indenture Trustee shall, if it shall be legally
unable or unwilling so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution, having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of automotive receivables, as the successor to the Servicer under this
Agreement and which financial institution is, in the case of appointment by the
Owner Trustee, reasonably acceptable to the Insurer and the Indenture Trustee.
(b) Upon appointment, the successor Servicer shall be the successor in
all respects to the predecessor Servicer and shall be subject to all the
responsibilities, duties, and liabilities arising thereafter relating thereto
placed on the predecessor Servicer, and shall be entitled to the Monthly
Servicing Fee and all of the rights granted to the predecessor Servicer, by the
terms and provisions of this Agreement. The predecessor Servicer shall be
entitled to be reimbursed for Outstanding Advances.
(c) In connection with such appointment, the Owner 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 Owner Trustee and such successor Servicer shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession.
SECTION 14.03. Notice of Events of Servicer Default. Upon any notice of
an Event of Servicer Default or upon any termination of, or appointment of a
successor to, the Servicer pursuant to this Article XIV, the Owner Trustee shall
give prompt written notice thereof to the Certificateholder at the address
appearing in the Certificate Register, to the Insurer and to the Indenture
Trustee for further notice thereof to the Noteholders.
SECTION 14.04. Waiver of Past Defaults. The Insurer (so long as the
Insurer is not in default of its obligations under the Policy) or (if the
Insurer is in default under the Policy) the Indenture Trustee upon direction
from holders of Notes evidencing not less than 51% of the
41
<PAGE>
outstanding principal balance of the Notes may 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 Collection
Account in accordance with this Agreement; provided, that no waiver of any
default or provision of this Agreement shall become effective without the
consent of the Insurer (unless the Insurer is in default of its obligations
under the Policy). Upon any such waiver of a past default, such default shall
cease to exist, and any Event of Servicer Default arising therefrom shall be
deemed to have been remedied for every purpose of this Agreement. No such waiver
shall extend to any subsequent or other default or impair any right consequent
thereon.
ARTICLE XV
The Owner Trustee
SECTION 15.01. Duties of Owner Trustee. The Owner Trustee, both prior
to and after the occurrence of an Event of Servicer Default, shall undertake to
perform such duties and only such duties as are specifically set forth in this
Agreement. If an Event of Servicer Default shall have occurred and shall not
have been cured and, in the case of an Event of Servicer Default described in
clause (i) of Section 14.01, the Owner Trustee has received notice of such Event
of Servicer Default, the Owner Trustee shall exercise such of the rights and
powers vested in it by this Agreement, and shall use the same degree of care and
skill in their exercise, as a prudent person would exercise or use under the
circumstances in the conduct of his own affairs.
The Owner Trustee shall execute and deliver, on behalf of the Trust,
each Basic Document to which the Trust is a party and all certificates,
instruments and agreements contemplated thereby. The Owner Trustee shall execute
and authenticate the Certificates in accordance with this Agreement and shall
execute the Notes in accordance with the Indenture.
It shall be the duty of the Owner Trustee to discharge (or cause to be
discharged) all its responsibilities pursuant to the terms of this Agreement and
to administer the Trust in the interest of the Certificateholder, subject to and
in accordance with the provisions of this Agreement and the other documents to
which the Trust is a party. Without limiting the foregoing, the Owner Trustee
shall, upon written direction of the Certificateholder and on behalf of the
Trust, file and prove any claim or claims that may exist on behalf of the Trust
against the Seller in connection with any claims paying procedure as part of an
insolvency or a receivership proceeding involving the Seller. Notwithstanding
the foregoing, the Owner Trustee shall be deemed to have discharged its duties
and responsibilities hereunder and under the other documents to which the Trust
is a party to the extent the Administrator has agreed in the Administration
Agreement to perform any act or to discharge any duty of the Trust or the Owner
Trustee hereunder or under any other document to which the Trust is a party, and
the Owner Trustee shall not be held liable for the default or failure of the
Administrator to carry out its obligations under the Administration Agreement.
Except as expressly provided in the documents to which the Trust is a party, the
Owner Trustee shall have no obligation to administer, service or collect the
Receivables or to maintain, monitor or otherwise supervise the administration,
servicing or collection of the Receivables.
42
<PAGE>
The Owner Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments furnished
to the Owner Trustee that shall be specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Owner
Trustee from liability for its own negligent action, its own negligent failure
to act, or its own bad faith; provided, however, that:
(i) Prior to the occurrence of an Event of Servicer
Default, and after the curing of all such Events of Servicer Default
that may have occurred, the duties and obligations of the Owner Trustee
shall be determined solely by the express provisions of this Agreement,
the Owner Trustee shall not be liable except for the performance of
such duties and obligations as shall be specifically set forth in this
Agreement, no implied covenants or obligations shall be read into this
Agreement against the Owner Trustee and, in the absence of bad faith on
the part of the Owner Trustee, or manifest error, the Owner Trustee may
conclusively rely on the truth of the statements and the correctness of
the opinions expressed in any certificates or opinions furnished to the
Owner Trustee and conforming to the requirements of this Agreement;
(ii) The Owner Trustee shall not be liable for an error
of judgment made in good faith by a Responsible Officer, unless it
shall be proved that the Owner Trustee shall have been negligent in
ascertaining the pertinent facts;
(iii) The Owner Trustee shall not be liable with respect
to any action taken, suffered, or omitted to be taken in good faith in
accordance with this Agreement or at the direction of the
Certificateholder relating to the time, method, and place of conducting
any proceeding for any remedy available to the Owner Trustee, or
exercising any trust or power conferred upon the Owner Trustee, under
this Agreement;
(iv) The Owner Trustee shall not be charged with
knowledge of any failure by the Servicer to comply with the obligations
of the Servicer referred to in clauses (i) or (ii) of Section 14.01, or
of any failure by the Seller to comply with the obligations of the
Seller referred to in clause (ii) of Section 14.01, unless a
Responsible Officer of the Owner Trustee receives written notice of
such failure (it being understood that knowledge of the Servicer or the
Servicer as custodian, in its capacity as agent for the Owner Trustee,
is not attributable to the Owner Trustee) from the Servicer or the
Seller, as the case may be; and
(v) Without limiting the generality of this Section or
Section 15.04, the Owner Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any agreement
referred to therein or any financing statement 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
43
<PAGE>
thereof, (B) to see to any insurance of the Financed Vehicles or
Obligors or to effect or maintain any such insurance, (C) to see to the
payment or discharge of any tax, assessment, or other governmental
charge or any Lien or encumbrance of any kind owing with respect to,
assessed, or levied against, any part of the Trust, (D) to confirm or
verify the contents of any reports or certificates of the Servicer
delivered to the Trust pursuant to this Agreement believed by the Owner
Trustee to be genuine and to have been signed or presented by the
proper party or parties, or (E) to inspect the Financed Vehicles at any
time or ascertain or inquire as to the performance or observance of any
of the Seller's or the Servicer's representations, warranties or
covenants or the Servicer's duties and obligations as Servicer and as
custodian of the Receivable Files under this Agreement.
The Owner Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or adequate
indemnity against such risk or liability shall not be reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Owner Trustee to perform, or be responsible for the manner of
performance of, any of the obligations of the Servicer under this Agreement
except during such time, if any, as the Owner Trustee shall be the successor to,
and be vested with the rights, duties, powers, and privileges of, the Servicer
in accordance with the terms of this Agreement. Except for actions expressly
authorized by this Agreement, the Owner Trustee shall take no action reasonably
likely to impair the security interests created or existing under any Receivable
or to impair the value of any Receivable.
SECTION 15.02. Owner Trustee's Certificate. On or as soon as
practicable after each Payment Date on which Receivables shall be (i) assigned
to UAC pursuant to Section 7.02 or deemed to be assigned to the Seller as a
result of the application of Available Funds in respect of Defaulted Receivables
pursuant to Sections 9.04 and 9.05 or (ii) assigned to the Servicer pursuant to
Section 8.07 or to the Certificateholder pursuant to Section 16.02, the Owner
Trustee shall, at the written request of the Servicer, execute an Owner
Trustee's Certificate, substantially in the form of, in the case of an
assignment to UAC, Exhibit 1, or, in the case of an assignment to the Servicer,
Exhibit 2, based on the information contained in the Servicer's Certificate for
the related Collection Period, amounts deposited to the Collection Account, and
notices received pursuant to this Agreement, identifying the Receivables
repurchased or deemed to be repurchased by UAC pursuant to Section 7.02 or 9.02
or purchased by the Servicer pursuant to Section 8.07 or the Certificateholder
pursuant to Section 16.02 during such Collection Period, and shall deliver such
Owner Trustee's Certificate, accompanied by a copy of the Servicer's Certificate
for such Collection Period to UAC or the Servicer, as the case may be with a
copy to the Indenture Trustee. The Owner Trustee's Certificate shall be an
assignment pursuant to Section 15.03.
SECTION 15.03. Trust's Assignment of Purchased Receivables. With
respect to each Receivable repurchased by UAC pursuant to Section 7.02, or
deemed to be so repurchased pursuant to Section 8.02, purchased by the Servicer
pursuant to Section 8.07 or the Certificateholder pursuant to Section 16.02, the
Trust shall assign, as of the last day of the Collection Period during which
such
44
<PAGE>
Receivable became a Defaulted Receivable or became subject to repurchase by UAC
or purchase by the Servicer or the Certificateholder, without recourse,
representation, or warranty, to UAC, the Servicer or the Certificateholder (as
the case may be) all the Trust's right, title, and interest in and to such
Receivables, and all security and documents relating thereto, such assignment
being an assignment outright and not for security. If in any enforcement suit or
legal proceeding it shall be held that the Servicer may not enforce a Receivable
on the ground that it shall not be a real party in interest or a holder entitled
to enforce the Receivable, the Owner Trustee shall, at the Servicer's expense,
take such steps as the Owner Trustee deems necessary to enforce the Receivable,
including bringing suit in its name and/or the name of the Indenture Trustee.
SECTION 15.04. Certain Matters Affecting the Owner Trustee. Except as
otherwise provided in Section 15.01:
(i) The Owner Trustee may rely and shall be protected
in acting or refraining from acting upon any resolution, Officers'
Certificate, Servicer's Certificate, certificate of auditors, or any
other certificate, statement, instrument, opinion, report, notice,
request, consent, order, appraisal, bond, or other paper or document
believed by it to be genuine and to have been signed or presented by
the proper party or parties.
(ii) The Owner Trustee may consult with counsel and any
written advice or Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken or suffered
or omitted by it under this Agreement in good faith and in accordance
with such written advice or Opinion of Counsel.
(iii) The Owner Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Agreement, or
to institute, conduct, or defend any litigation under this Agreement or
in relation to this Agreement, at the request, order, or direction of
the Certificateholder pursuant to the provisions of this Agreement,
unless the Certificateholder shall have offered to the Owner Trustee
reasonable security or indemnity reasonably satisfactory to the Owner
Trustee against the costs, expenses, and liabilities that may be
incurred therein or thereby. Nothing contained in this Agreement,
however, shall relieve the Owner Trustee of the obligations, upon the
occurrence of an Event of Servicer Default (that shall not have been
cured), to exercise such of the rights and powers vested in it by this
Agreement, and to use the same degree of care and skill in their
exercise as a prudent man would exercise or use under the circumstances
in the conduct of his own affairs.
(iv) The Owner Trustee shall not be liable for any
action taken, suffered, or omitted by it in good faith and believed by
it to be authorized or within the discretion or rights or powers
conferred upon it by this Agreement.
(v) Prior to the occurrence of an Event of Servicer
Default and after the curing of all Events of Servicer Default that may
have occurred, the Owner Trustee shall not be bound to make any
investigation into the facts of matters stated in any resolution,
45
<PAGE>
certificate, statement, instrument, opinion, report, notice, request,
consent, order, approval, bond, or other paper or document, unless
requested in writing to do so by the Insurer or the Indenture Trustee
or holders of Notes evidencing not less than 25% of the outstanding
principal balance of the Notes; provided, however, that if the payment
within a reasonable time to the Owner Trustee of the costs, expenses,
or liabilities likely to be incurred by it in the making of such
investigation shall be, in the opinion of the Owner Trustee, not
reasonably assured to the Owner Trustee by the security afforded to it
by the terms of this Agreement, the Owner Trustee may require
reasonable indemnity against such cost, expense, or liability as a
condition to so proceeding. The reasonable expense of every such
examination shall be paid by the Servicer or, if paid by the Owner
Trustee, shall be reimbursed by the Servicer upon demand. Nothing in
this clause (v) shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the
Obligors.
(vi) The Owner Trustee may execute any of the trusts or
powers hereunder or perform any duties under this Agreement either
directly or by or through agents or attorneys or a custodian. The Owner
Trustee shall not be responsible for any misconduct or negligence
solely attributable to the acts or omissions of the Servicer in its
capacity as Servicer or custodian or the Administrator.
(vii) Subsequent to the sale of the Receivables by the
Seller to the Trust, the Owner Trustee shall have no duty of
independent inquiry, except as may be required by Section 15.01, and
the Owner Trustee may rely upon the representations and warranties and
covenants of the Seller and the Servicer contained in this Agreement
with respect to the Receivables and the Receivable Files.
SECTION 15.05. Owner Trustee Not Liable for Certificate or Receivables.
The recitals contained herein and in the Certificate (other than the certificate
of authentication on the Certificate) shall be taken as the statements of the
Seller or the Servicer, as the case may be, and the Owner Trustee assumes no
responsibility for the correctness thereof. The Owner Trustee shall make no
representations as to the validity or sufficiency of this Agreement or of the
Certificate (other than the certificate of authentication on the Certificate),
or of any Receivable or related document. The Owner Trustee shall at no time
have any responsibility or liability for or with respect to the legality,
validity, and enforceability of any security interest in any Financed Vehicle or
any Receivable, or the perfection and priority of such a security interest or
the maintenance of any such perfection and priority, or for or with respect to
the efficacy of the Trust or its ability to generate the payments to be
distributed to the Certificateholder or the Noteholders under this Agreement or
the Indenture, including, without limitation: the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any physical damage insurance, lender's single interest
insurance, or credit life or disability and hospitalization insurance with
respect to any Receivable; the existence and contents of any Receivable or any
computer or other record thereof; the validity of the assignment of any
Receivable to the Trust or of any intervening assignment; the completeness of
any Receivable; the performance or enforcement of any Receivable; the compliance
by the Seller or the Servicer with any warranty or representation made under
this Agreement or in any related document
46
<PAGE>
and the accuracy of any such warranty or representation prior to the Owner
Trustee's receipt of notice or other discovery of any noncompliance therewith or
any breach thereof; any investment of monies by the Servicer or any loss
resulting therefrom (it being understood that the Owner Trustee shall remain
responsible for any Trust property that it may hold); the acts or omissions of
the Seller, the Servicer, or any Obligor; an action of the Servicer taken in the
name of the Owner Trustee; or any action by the Owner Trustee taken at the
instruction of the Servicer. Except with respect to a claim based on the failure
of the Owner Trustee to perform its duties under this Agreement or based on the
Owner Trustee's negligence or willful misconduct, no recourse shall be had for
any claim based on any provision of this Agreement, the Certificateholder or the
Noteholders, or any Receivable or assignment thereof against the Owner Trustee
in its individual capacity, the Owner Trustee shall not have any personal
obligation, liability, or duty whatsoever to any Certificateholder or the
Noteholders or any other Person with respect to any such claim, and any such
claim shall be asserted solely against the Trust or any indemnitor who shall
furnish indemnity as provided in this Agreement. The Owner Trustee shall not be
accountable for the use or application by the Seller of any of the Certificate
or Notes or of the proceeds thereof, or for the use or application of any funds
paid to the Seller or the Servicer in respect of the Receivables.
Notwithstanding the foregoing or any other provision in this Agreement
to the contrary, the Owner Trustee shall be liable in its commercial capacity
for losses attributable to its failure to make payments on Eligible Investments
issued by the Owner Trustee in its commercial capacity as principal obligor and
not as Owner Trustee hereunder, in accordance with the terms of the agreements
or instruments governing any such Eligible Investments.
SECTION 15.06. Owner Trustee May Own Notes. The Owner Trustee in its
individual or any other capacity may become the owner or pledgee of Notes with
the same rights as it would have if it were not Trustee.
SECTION 15.07. Owner Trustee's and Indenture Trustee's Fees and
Expenses; Indemnification. (a) The Servicer shall pay to the Owner Trustee, and
the Owner Trustee shall be entitled to, such reasonable compensation as shall
have been agreed to in writing on or prior to the date hereof (which shall not
be limited by any provision of law in regard to the compensation of a trustee of
an express trust) for all services rendered by it in the execution of the trusts
created by this Agreement and in the exercise and performance of any of the
Owner Trustee's powers and duties under this Agreement and the Indenture, and
the Servicer shall pay or reimburse the Owner Trustee upon its request for all
reasonable expenses, disbursements, and advances (including the reasonable
compensation and the expenses and disbursements of its counsel and of all
persons not regularly in its employ) incurred or made by the Owner Trustee in
accordance with any provisions of this Agreement and the Indenture, except any
such expense, disbursement, or advance as may be attributable to its willful
misfeasance, negligence, or bad faith, and the Servicer shall indemnify the
Owner Trustee (in its individual and trust capacities) (which, for purposes of
this section, shall include its directors, officers, employees, and agents) for
and hold it harmless against any loss, liability, claim, action, suit, cost,
disbursement, tax (other than taxes as or resulting from compensation received
for its services as Owner Trustee) or expense incurred without willful
misfeasance, negligence, or bad
47
<PAGE>
faith on its part, arising out of or in connection with the acceptance or
administration of the Trust, including the costs and expenses of defending
itself against any claim or liability in connection with the exercise or
performance of any of its powers or duties under this Agreement and the
Indenture. The Servicer shall pay the fees and expenses of the Administrator
under the Administration Agreement; provided, however, that the Servicer shall
only be required to pay the reasonable fees and expenses of any successor
Administrator or such other fees agreed to in writing by the Servicer.
Additionally, the Seller, pursuant to Section 12.02, and the Servicer, pursuant
to Section 13.02, respectively, shall indemnify the Owner Trustee with respect
to certain matters. This indemnity shall survive the termination of this
Agreement and the Indenture or the termination of the Trust and the resignation
or removal of the Owner Trustee.
(b) The Servicer hereby agrees to pay or reimburse the fees and
expenses of the Indenture Trustee as provided in Section 6.07 of the Indenture.
SECTION 15.08. Eligibility Requirements for Owner Trustee. The Owner
Trustee under this Agreement shall at all times be a corporation (i) having an
office in the same State as the location of the Corporate Trust Office as
specified in this Agreement; (ii) organized and doing business under the laws of
such State or the United States of America; (iii) authorized under such laws to
exercise corporate trust powers; (iv) having a net worth of at least
$50,000,000; (v) subject to supervision or examination by federal or State
authorities; and (vi) the long-term unsecured debt of which is rated at least
Baa3 or which is approved by the Insurer and each Rating Agency. If such
corporation shall publish reports of condition at least annually, pursuant to
law or to the requirements of the aforesaid supervising or examining authority,
then for the purpose of this Section 15.08, the combined capital and surplus of
such corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. In case at any time
the Owner Trustee shall cease to be eligible in accordance with the provisions
of this Section 15.08, the Owner Trustee shall resign immediately in the manner
and with the effect specified in Section 15.09.
SECTION 15.09. Resignation or Removal of Owner Trustee. The Owner
Trustee may at any time resign and be discharged from the trusts hereby created
by giving written notice thereof to the Servicer. Upon receiving such notice of
resignation, the Servicer, with the prior written consent of the Insurer, shall
promptly appoint a successor Owner Trustee, by written instrument, in duplicate,
one copy of which instrument shall be delivered to the resigning Trustee and one
copy to the successor Owner Trustee. If no successor Owner Trustee shall have
been so appointed and have accepted appointment within 30 days after the giving
of such notice of resignation, the resigning Owner Trustee may petition any
court of competent jurisdiction for the appointment of a successor Owner
Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 15.08 and shall fail to resign after
written request therefor by the Servicer, or if at any time the Owner Trustee
shall be legally unable to act, or shall be adjudged a bankrupt or insolvent, or
a receiver of the Owner Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Owner Trustee or of its
property or affairs for the purpose of rehabilitation,
48
<PAGE>
conservation, or liquidation, then the Servicer may remove the Owner Trustee. If
it shall remove the Owner Trustee under the authority of the immediately
preceding sentence, the Servicer shall promptly appoint a successor Owner
Trustee by written instrument, in duplicate, one copy of which instrument shall
be delivered to the Owner Trustee so removed and one copy to the successor Owner
Trustee.
Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section 15.09
shall not become effective until acceptance of appointment by the successor
Owner Trustee pursuant to Section 15.10.
SECTION 15.10. Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 15.09 shall execute, acknowledge, and deliver to
the Servicer and to its predecessor Owner Trustee an instrument accepting such
appointment under this Agreement, and thereupon the resignation or removal of
the predecessor Owner Trustee shall become effective and such successor Owner
Trustee, without any further act, deed, or conveyance, shall become fully vested
with all the rights, powers, duties, and obligations of its predecessor under
this Agreement, with like effect as if originally named as Trustee. Any
successor Owner Trustee appointed hereunder shall file an amendment to the
Certificate of Trust with the Delaware Secretary of State reflecting the name
and principal place of business of such successor Owner Trustee in the State of
Delaware. The predecessor Owner Trustee shall deliver to the successor Owner
Trustee all documents and statements held by it under this Agreement; and the
Servicer and the predecessor Owner Trustee shall execute and deliver such
instruments and do such other things as may reasonably be required for fully and
certainly vesting and confirming in the successor Owner Trustee all such rights,
powers, duties, and obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section 15.10 unless at the time of such acceptance such successor Owner Trustee
shall be eligible pursuant to Section 15.08.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section 15.10, the Servicer shall mail notice of the successor of such
Owner Trustee under this Agreement to the Indenture Trustee and to the Holder of
the Certificate at its address as shown in the Certificate Register. If the
Servicer shall fail to mail such notice within 10 days after acceptance of
appointment by the successor Owner Trustee, the successor Owner Trustee shall
cause such notice to be mailed at the expense of the Servicer.
SECTION 15.11. Merger or Consolidation of Owner Trustee. Any
corporation into which the Owner Trustee may be merged or converted or with
which it may be consolidated, or any corporation resulting from any merger,
conversion, or consolidation to which the Owner Trustee shall be a party, or any
corporation succeeding to all or substantially all of the corporate trust
business of the Owner Trustee, shall be the successor of the Owner Trustee
hereunder, provided such corporation shall be eligible pursuant to Section
15.08, without the execution or filing of any instrument or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding.
49
<PAGE>
SECTION 15.12. Appointment of Co-Trustee or Separate Owner Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Owner Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Owner
Trustee to act as co-trustee, jointly with the Owner Trustee, or separate
trustee or separate trustees, of all or any part of the Trust, and to vest in
such Person, in such capacity and for the benefit of the Certificateholder, such
title to the Trust, or any part thereof, and, subject to the other provisions of
this Section 15.12, such powers, duties, obligations, rights, and trusts as the
Servicer and the Owner Trustee may consider necessary or desirable. If the
Servicer shall not have joined in such appointment within 15 days after the
receipt by it of a request so to do, or in the case an Event of Servicer Default
shall have occurred and be continuing, the Owner Trustee alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee pursuant to Section 15.08 and no notice to the Certificateholder
of the appointment of any co-trustee or separate trustee shall be required
pursuant to Section 15.10.
Each separate trustee and co-trustee shall, to the extent permitted by
law, be appointed and act subject to the following provisions and conditions:
(i) All rights, powers, duties, and obligations conferred or
imposed upon the Owner Trustee shall be conferred upon and exercised or
performed by the Owner Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Owner Trustee joining
in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed,
the Owner Trustee shall be incompetent or unqualified to perform such
act or acts, in which event such rights, powers, duties, and
obligations (including the holding of title to the Trust or any portion
thereof in any such jurisdiction) shall be exercised and performed
singly by such separate trustee or co-trustee, but solely at the
direction of the Owner Trustee;
(ii) No trustee under this Agreement shall be personally
liable by reason of any act or omission of any other trustee under this
Agreement; and
(iii) The Servicer and the Owner Trustee acting jointly may at
any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request, or other writing given to the Owner Trustee shall
be deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement and
the conditions of this Article XV. Each separate trustee and co-trustee, upon
its acceptance of the trusts conferred, shall be vested with the estates or
property specified in its instrument of appointment, either jointly with the
Owner Trustee or separately, as may be provided therein, subject
50
<PAGE>
to all the provisions of this Agreement, specifically including every provision
of this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Owner Trustee. Each such instrument shall be filed
with the Owner Trustee and a copy thereof given to the Servicer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign, or be removed, all of its
estates, properties, rights, remedies, and trusts shall vest in and be exercised
by the Owner Trustee, to the extent permitted by law, without the appointment of
a new or successor Owner Trustee.
SECTION 15.13. Representations and Warranties of Owner Trustee. The
Owner Trustee makes the following representations and warranties on which the
Seller, the Certificateholder and the Secured Parties may rely:
(i) Organization and Existence. The Owner Trustee is a
national banking corporation with a principal place of business in the
State of Delaware and is authorized to engage in a banking and trust
business under such laws.
(ii) Power and Authority. The Owner Trustee has full
power, authority, and legal right to execute, deliver, and perform this
Agreement, and shall have taken all necessary action to authorize the
execution, delivery, and performance by it of this Agreement.
(iii) Duly Executed. This Agreement has been duly
executed and delivered by the Owner Trustee and constitutes the legal,
valid, and binding agreement of the Owner Trustee, enforceable in
accordance with its terms, except as such enforceability may be limited
by (i) bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or other similar laws now or hereinafter
in effect relating to the enforcement of creditors' rights in general,
as such laws would apply in the event of a bankruptcy, insolvency,
liquidation, reorganization, moratorium, conservatorship, receivership
or similar occurrence affecting the Owner Trustee, and (ii) general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law) as well as concepts of
reasonableness, good faith and fair dealing.
ARTICLE XVI
Termination
SECTION 16.01. Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer and the Owner Trustee created
hereby 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 Certificateholder, at its option, pursuant to Section
16.02,
51
<PAGE>
or (ii) the payment to Noteholders and the Insurer of all amounts required to be
paid to them pursuant to this Agreement, the Indenture and the Insurance
Agreement (as set forth in writing by the Insurer) and the disposition of all
property held as part of the Trust; provided, however, that the Trust shall
terminate one year and one day following the date of the occurrence of (i)
above, if on the date of such occurrence, UAC's Consolidated Tangible Net Worth
is less than $45,000,000, plus 50% of UAC's cumulative Consolidated Net Income
(with no reduction for losses) from and after August 31, 1995; provided,
further, that in no event shall the trust created by this Agreement continue
beyond the expiration of 21 years from the date as of which this Agreement is
executed. The Servicer shall promptly notify the Owner Trustee and Indenture
Trustee in writing of any prospective termination pursuant to this Section
16.01. Notwithstanding the foregoing, the Trust shall continue and the Owner
Trustee shall pursue recovery of any Preference Amounts under the Policy and the
distribution of the same to Noteholders until the Policy terminates by its own
terms.
SECTION 16.02. Optional Disposition of All Receivables. On any Payment
Date (after giving effect to any payments to be made on such Payment Date) on
which the Note Balances will be equal to or less than 10% of the Initial Note
Balances, the Certificateholder shall have the option to cause the Owner Trustee
to sell (to the Certificateholder or any other person designated by the
Certificateholder) the corpus of the Trust at a price (the "Optional Disposition
Price") equal to the fair market value of the Receivables, but not less than the
sum of (x) 100% of the outstanding Note Balances (including any overdue
principal or interest thereon), (y) accrued and unpaid interest on such amount
computed at a rate equal to the weighted average interest rate applicable to the
Notes then outstanding, and (z) all amounts due and owing to the Insurer under
this Agreement, the Indenture and the Insurance Agreement. Any such purchase
will be effective as of the end of the Collection Period to which the Payment
Date on which the repurchase occurs. The proceeds of such sale will be deposited
into the Collection Account for distribution to the Indenture Trustee (and, to
the extent applicable, the Insurer) on the next succeeding Payment Date. In
connection with such disposition, the Certificateholder is required to pay any
unpaid fees and expenses of the Owner Trustee and the Indenture Trustee that it
would otherwise have been entitled to pursuant to this Agreement. The Servicer
shall notify the Owner Trustee, the Indenture Trustee and the Certificateholder
on or before the Determination Date if the Note Balances as of the related
Payment Date will be less than or equal to 10% of the Initial Note Balances. The
Certificateholder shall notify the Owner Trustee in writing on or before the
Determination Date if the 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 Collection Account in immediately available funds by
12:00 noon, New York City time, on the Payment Date and, upon notice to the
Owner Trustee of such deposit, the Owner Trustee shall transfer the Receivables
and the Receivable Files to the purchaser, whereupon the Certificate shall no
longer evidence any right or interest in the Receivables or any proceeds
thereof.
52
<PAGE>
ARTICLE XVII
Miscellaneous Provisions
SECTION 17.01. Amendment. This Agreement may be amended by the Seller,
the Servicer and the Owner Trustee, without the consent of the Certificateholder
or the Noteholders, to cure any ambiguity, to correct or supplement any
provisions in this Agreement, or to add any other provisions with respect to
matters or questions arising under this Agreement that shall not be inconsistent
with the provisions of this Agreement; provided, however, that such action shall
not, as evidenced by an Opinion of Counsel, adversely affect in any material
respect the interests of the Certificateholder or the Secured Parties.
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 the holders of 51% of the outstanding Note Balances, (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 Owner Trustee and receipt by the Owner Trustee of an Opinion of Counsel
to the effect that such amendment will not cause the Trust to be treated as an
association taxable as a corporation or as a publicly-traded partnership, (iii)
the Indenture Trustee shall receive a copy of all amendments to this Agreement
and (iv) no amendment which affects the Indenture Trustee shall be effective
without the consent of the Indenture Trustee.
Promptly after the execution of any amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent to the Certificateholder.
It shall not be necessary for the consent of the Certificateholder
pursuant to this Section 17.01 to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization of the execution thereof by the Certificateholder shall be
subject to such reasonable requirements as the Owner Trustee may prescribe.
Prior to the execution of any amendment to this Agreement, the Owner
Trustee shall be entitled to receive and rely upon an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted by this
Agreement and the Opinion of Counsel referred to in Section 17.02(i)(1). The
Owner Trustee may, but shall not be obligated to, enter into any such amendment
which affects the Owner Trustee's own rights, duties, or immunities under this
Agreement.
SECTION 17.02. Protection of Title to Trust.
(a) The Seller shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Trust under this Agreement in the Receivables and in
the proceeds thereof. The Seller shall deliver (or cause to be delivered) to the
53
<PAGE>
Owner Trustee and the Indenture Trustee file-stamped copies of, or filing
receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity, or corporate structure in any manner that would, could, or might make
any financing statement or continuation statement filed by the Seller in
accordance with paragraph (a) above seriously misleading within the meaning of
ss. 9-402(7) of the UCC, unless it shall have given the Owner Trustee at least
60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Owner Trustee and
Indenture Trustee at least 60 days' prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement (in which case the Servicer shall file or cause to be filed such
amendment or continuation statement or new financing statement). The Owner
Trustee shall be permitted to waive the 60 day notice period to any shorter
period; provided that such UCC financing statements or amendments have been
filed on or before the effective date of any such waiver. The Servicer shall at
all times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to each
Receivable accurately and in sufficient detail to permit (i) the reader thereof
to know at any time the status of such Receivable, including payments and
recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain its computer systems so that, from and
after the time of sale under this Agreement of the Receivables to the Owner
Trustee, the Servicer's master computer records (including any back-up archives)
that refer to a Receivable shall indicate clearly with reference to the
particular trust that such Receivable is owned by the Owner Trustee. Indication
of the Owner Trustee's ownership of a Receivable shall be deleted from or
modified on the Servicer's computer systems when, and only when, the Receivable
shall have been paid in full or repurchased.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender, or other transferee, the
Servicer shall give to such prospective purchaser, lender, or other transferee
computer tapes, records, or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Owner Trustee.
(g) The Servicer shall permit the Owner Trustee and its agents at any
time during normal business hours to inspect, audit, and make copies of and
abstracts from the Servicer's records regarding any Receivable.
54
<PAGE>
(h) Upon request, the Servicer shall furnish to the Owner Trustee and
the Indenture Trustee, within five Business Days, a list of all Receivables (by
contract number and name of Obligor) then held as part of the Trust, together
with a reconciliation of such list to 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 Owner Trustee and the Indenture
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
Owner Trustee in the Receivables and reciting the details of such
filings or referring to prior Opinions of Counsel in which such details
are given, or (b) stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such interest; 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 Owner Trustee in the Receivables, and reciting the
details of such filings or referring to prior Opinions of Counsel in
which such details are given, or (b) stating that, in the opinion of
such counsel, no such action shall be necessary to preserve and protect
such interest.
SECTION 17.03. Limitation on Rights of Certificateholder. The death or
incapacity of the Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
No Certificateholder shall have any right to vote (except as provided
in Section 17.01, 17.03 or 17.07) or in any manner otherwise control the
operation and management of the Trust, or the obligations of the parties to this
Agreement except as expressly set forth herein, nor shall anything in this
Agreement set forth, or contained in the terms of the Certificate, be construed
so as to constitute the Certificateholder from time to time as members of an
association; nor shall any Certificateholder be under any liability to any third
person by reason of any action taken pursuant to any provision of this
Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Owner Trustee a written
notice of default and of the continuance thereof, as hereinbefore provided, and
unless also the
55
<PAGE>
Certificateholder requests in writing to the Owner Trustee to institute such
action, suit, or proceeding in its own name as Trustee under this Agreement and
shall have offered to the Owner Trustee such reasonable indemnity as it may
require against the costs, expenses, and liabilities to be incurred therein or
thereby, and the Owner Trustee, for 30 days after its receipt of such notice,
request, and offer of indemnity, shall have neglected or refused to institute
any such action, suit, or proceeding and during such 30-day period no direction
inconsistent with such written request has been given to the Owner Trustee.
SECTION 17.04. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Delaware applicable to agreements made
and to be performed within the State of Delaware, and the obligations, rights,
and remedies of the parties under this Agreement shall be determined in
accordance with such laws.
SECTION 17.05. Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered, sent by facsimile to,
sent by courier to or mailed by certified mail, return receipt requested, and
shall be deemed to have been duly given unless otherwise provided herein, upon
receipt (a) in the case of the Seller to Leeanne W. Graziani, UAC Securitization
Corporation, 9240 Bonita Beach Road, Suite 1109-A, Bonita Springs, Florida
34135, facsimile (941) 948-1855 or at such other address as shall be designated
by the Seller in a written notice to the Servicer or Trustee; (b) in the case of
the Servicer to Melanie S. Otto, Union Acceptance Corporation, 250 North
Shadeland Avenue, Indianapolis, Indiana 46219, facsimile (317) 231-7926, (c) in
the case of the Owner Trustee, at the Corporate Trust Office, (d) in the case of
the Insurer, MBIA Insurance Corporation, 113 King Street, Armonk, New York
10504, facsimile (914) 765- 3163, Attention: Insured Portfolio Management,
Structured Finance and (e) in the case of the Indenture Trustee at the Indenture
Trustee Office. Unless otherwise provided herein, any notice so mailed within
the time prescribed in this Agreement shall be conclusively presumed to have
been duly given, whether or not the Certificateholder shall receive such notice.
SECTION 17.06. Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining covenants, agreements,
provisions, or terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.
SECTION 17.07. Assignment. Notwithstanding anything to the contrary
contained herein, except as provided below or in Sections 12.03 and 13.03 and as
provided in the provisions of this Agreement concerning the resignation of the
Servicer, this Agreement may not be assigned by the Seller or the Servicer
without the prior written consent of the Owner Trustee and the
Certificateholder.
SECTION 17.08. Certificate Nonassessable and Fully Paid. The
Certificateholder shall not be personally liable for obligations of the Trust.
The interests represented by the Certificate shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
56
<PAGE>
authentication thereof by the Owner Trustee pursuant to Section 11.02, the
Certificate shall be deemed fully paid.
SECTION 17.09. Nonpetition Covenants. Notwithstanding any prior
termination of this Agreement, the Servicer, UAC and the Owner Trustee shall
not, prior to the date which is one year and one day after the termination of
this Agreement with respect to the Trust or the Seller, acquiesce, petition or
otherwise invoke or cause the Trust or the Seller to invoke the process of any
court or government authority for the purpose of commencing or sustaining a case
against the Trust or the Seller under any Federal or state bankruptcy,
insolvency or similar law or appointing a receiver, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Trust or the
Seller or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust or the Seller.
SECTION 17.10. Counterparts. For the purpose of facilitating the
execution of this Agreement and for other purposes, this Agreement may be
executed simultaneously in any number of counterparts, each of which
counterparts shall be deemed to be an original, and all of which counterparts
shall constitute but one and the same instrument.
SECTION 17.11. Third Party Beneficiary. This Agreement shall inure to
the benefit of the Insurer, the Indenture Trustee and their successors and
assigns.
[Next page is signature page]
57
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Trust and
Servicing Agreement to be duly executed by their respective officers as of the
day and year first above written.
UAC SECURITIZATION CORPORATION,
as Seller
By /s/ Leeanne W. Graziani
TITLE: President
UNION ACCEPTANCE CORPORATION,
as Servicer
By /s/ Melanie S. Otto
TITLE: Vice President
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION,
as Owner Trustee
By /s/ Edward Truitt
TITLE: Vice President
Accepted and agreed to as of the day and year first above written.
HARRIS TRUST AND SAVINGS BANK,
not in its individual capacity but
solely as Indenture Trustee
By /s/ Robert D. Foltz
TITLE: Vice President
58
<PAGE>
Exhibit 1
Owner Trustee's Certificate
pursuant to Section 15.02
of the Trust and Servicing Agreement
First Union Trust Company, National Association, not in its individual
capacity but solely as owner trustee (the "Owner Trustee") of the UACSC 1999-B
Owner Trust (the "Trust") created pursuant to the Trust and Servicing Agreement
(the "Trust Agreement") dated as of May 1, 1999, among UAC Securitization
Corporation, as seller (the "Seller"), Union Acceptance Corporation, as servicer
(the "Servicer") and the Owner Trustee, does hereby sell, transfer, assign, and
otherwise convey on behalf of the Trust to Union Acceptance Corporation without
recourse, representation, or warranty, all of the Owner Trustee's right, title,
and interest in and to all of the Receivables (as defined in the Trust
Agreement) identified in the attached Servicer's Certificate as "Purchased
Receivables," which have been repurchased by the Seller pursuant to Section 7.02
and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
- -----------------, -------.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner
Trustee
By:
Title:
59
<PAGE>
Exhibit 2
Owner Trustee's Certificate
pursuant to Section 15.02
of the Trust and Servicing Agreement
First Union Trust Company, National Association, not in its individual
capacity but solely as trustee (the "Owner Trustee") of the UACSC 1999-B Owner
Trust (the "Trust") created pursuant to the Trust and Servicing Agreement (the
"Trust Agreement") dated as of May 1, 1999, among UAC Securitization
Corporation, as seller (the "Seller"), Union Acceptance Corporation, as servicer
(the "Servicer") and the Owner Trustee, does hereby sell, transfer, assign, and
otherwise convey on behalf of the Trust to the [Servicer or the
Certificateholder], without recourse, representation, or warranty, all of the
Owner Trustee's right, title, and interest in and to all of the Receivables (as
defined in the Trust Agreement) identified in the attached Servicer's
Certificate as "Purchased Receivables," which have been purchased by [the
Servicer pursuant to Section 8.07 or by the Certificateholder pursuant to
Section 16.02], and all security and documents relating thereto.
IN WITNESS WHEREOF I have hereunto set my hand this _____ day of
- -----------------, --------.
FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as Owner
Trustee
By:
Title:
60
<PAGE>
Exhibit 3
Form of Servicer's Certificate
pursuant to Sections 8.09 and 9.02
of the Trust and Servicing Agreement
SERVICER'S CERTIFICATE
61
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST OF
UACSC 1999-B OWNER TRUST
This Certificate of Trust of UACSC 1999-B Owner Trust (the "Trust"), is
being duly executed and filed by the undersigned, as trustee, to form a business
trust under the Delaware Business Trust Act (12 Del. Code, Section 3801 et seq.)
(the "Act").
1. Name. The name of the business trust formed hereby is UACSC 1999-B
OWNER TRUST.
2. Delaware Trustee. The name and business address of the trustee of
the Trust in the State of Delaware is One Rodney Square, 920 King Street, 1st
Floor, Wilmington, Delaware 19801, Attention: Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective on May
26, 1999.
IN WITNESS WHEREOF, the undersigned, being the sole trustee of the
Trust, has duly executed this Certificate of Trust in accordance with Section
3811(a) of the Act.
FIRST UNION TRUST COMPANY, NATIONAL
ASSOCIATION, not in its individual capacity
but solely as owner trustee under a Trust
Agreement dated as of May 1, 1999,
By:
Name:
Title:
62
<PAGE>
EXHIBIT B
[Form of Certificate]
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED. NEITHER THIS 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 1999-B OWNER TRUST
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 Owner 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 other government agency).
NUMBER
R-1
THIS CERTIFIES THAT UAC Securitization Corporation, a Delaware
corporation, is the registered owner of a nonassessable, fully-paid interest in
the UACSC 1999-B Owner Trust (the "Trust"), a Delaware business trust. The Trust
was created pursuant to a Trust and Servicing Agreement dated as of May 1, 1999
(the "Agreement"), among UAC Securitization Corporation as Seller, Union
Acceptance Corporation, as Servicer and First Union Trust Company, National
Association (the "Owner 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 Owner 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 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 April 30, 1999 (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 and certain
other property and rights described in the Agreement and the proceeds of the
foregoing.
This 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. The rights of the
Certificateholder in the assets of the Trust are subordinated to the rights of
the Noteholders as set forth in the Indenture and the Agreement.
Unless the certificate of authentication hereon shall have been
executed by a Responsible Officer of the Owner Trustee, by manual or facsimile
signature, this Certificate shall not entitle the holder hereof to any benefit
under the Agreement or be valid for any purpose. Registration of transfer of
this Certificate to a person may not be effected unless (a) the Insurer consents
to such transfer, (b) the Owner Trustee receives an Opinion of Counsel,
satisfactory to it, to the effect
63
<PAGE>
that such transfer may be made in reliance upon an exemption from the
registration requirements of the Securities Act of 1933, as amended, (c) such
transfer will not adversely affect the tax treatment of the Trust or the Notes,
and (d) the Rating Agency Condition has been satisfied with respect to such
transfer. Notwithstanding the foregoing, the Seller shall have no obligation to
register this 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 the Certificateholder
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
Certificate may at its option cause the Owner Trustee to sell the corpus of the
Trust at a price not to be less than the price specified in the Agreement;
however, such right is exercisable only after the Note Balances are or will be
less than or equal to 10% of the Initial Note Balances. The Certificateholder is
required to pay any unpaid fees and expenses of the Owner 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 Owner 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 Agreement,
including the agreement to disregard the Trust as a separate entity for income
tax purposes and to treat the Notes as indebtedness of the Trust.
64
<PAGE>
IN WITNESS WHEREOF, the Owner Trustee on behalf of the Trust and not in
its individual capacity has caused this Certificate to be duly executed.
Dated: May 26, 1999
UACSC 1999-B OWNER TRUST
By First Union Trust Company, National
Association, not in its individual capacity,
but solely in its capacity as Owner Trustee
By
Responsible Officer
CERTIFICATE OF AUTHENTICATION
This is the Certificate referred to in the within-mentioned Agreement.
First Union Trust Company, National
Association, not in its individual capacity,
but solely in its capacity as Owner Trustee
By
Signatory
Dated: May 26, 1999
65
<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.
66
<PAGE>
Schedule A
to the Trust and
Servicing Agreement
SCHEDULE OF RECEIVABLES
Seller 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 OWNER TRUSTEE WITH A
COUNTERPART OF THE TRUST AND SERVICING
AGREEMENT.
67
<PAGE>
Schedule B
to the Trust and
Servicing Agreement
1. Location of Receivables:
Union Acceptance Corporation
250 N. Shadeland Avenue
Indianapolis, IN 46219
INDENTURE
between
UACSC 1999-B OWNER TRUST
as Issuer
and
HARRIS TRUST AND SAVINGS BANK
as Indenture Trustee
Dated as of May 1, 1999
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INCORPORATION BY REFERENCE...............2
SECTION 1.01. Definitions............................................2
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.....14
SECTION 1.03. Rules of Construction.................................14
ARTICLE II THE NOTES...............................................15
SECTION 2.01. Form..................................................15
SECTION 2.02. Execution, Authentication and Delivery................16
SECTION 2.03. Temporary Notes.......................................16
SECTION 2.04. Registration; Registration of Transfer and Exchange...16
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes............18
SECTION 2.06. Intentionally Blank...................................19
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.19
SECTION 2.08. Cancellation..........................................20
SECTION 2.09. Book-Entry Notes......................................20
SECTION 2.10. Notices to Clearing Agency............................21
SECTION 2.11. Definitive Notes......................................21
SECTION 2.12. Release of Pledged Assets.............................22
SECTION 2.13. Tax Treatment.........................................22
SECTION 2.14. ERISA.................................................22
ARTICLE III COVENANTS...............................................22
SECTION 3.01. Payment of Principal and Interest.....................22
SECTION 3.02. Maintenance of Office or Agency.......................23
SECTION 3.03. Money for Payments to be Held in Trust................23
SECTION 3.04. Existence.............................................24
SECTION 3.05. Protection of Trust Estate............................25
SECTION 3.06. Opinions as to Pledged Assets.........................25
SECTION 3.07. Performance of Obligations; Successor Servicer........26
SECTION 3.08. Negative Covenants....................................27
SECTION 3.09. Annual Statement as to Compliance.....................28
SECTION 3.10. Issuer May Consolidate, etc.
Only on Certain Conditions......................28
SECTION 3.11. Successor Transferee..................................30
SECTION 3.12. No Other Business.....................................30
SECTION 3.13. Servicer's Obligations................................31
SECTION 3.14. Restricted Payments...................................31
SECTION 3.15. Notice of Events of Default...........................31
SECTION 3.16. Further Instruments and Acts..........................31
SECTION 3.17. Compliance with Laws..................................31
i
<PAGE>
SECTION 3.18. Amendments of Trust Agreement.........................31
ARTICLE IV SATISFACTION AND DISCHARGE..............................31
SECTION 4.01. Satisfaction and Discharge of Indenture...............31
SECTION 4.02. Application of Trust Money............................33
SECTION 4.03. Repayment of Monies Held by Paying Agent..............33
ARTICLE V EVENTS OF DEFAULT; REMEDIES.............................33
SECTION 5.01. Events of Default.....................................33
SECTION 5.02. Rights Upon Event of Default..........................34
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee.........................35
SECTION 5.04. Remedies..............................................37
SECTION 5.05. Optional Preservation of the Receivables..............38
SECTION 5.06. Priorities............................................38
SECTION 5.07. Limitation of Suits...................................39
SECTION 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest..............................40
SECTION 5.09. Restoration of Rights and Remedies....................40
SECTION 5.10. Rights and Remedies Cumulative........................40
SECTION 5.11. Delay or Omission Not a Waiver........................41
SECTION 5.12. Control by Noteholders................................41
SECTION 5.13. Waiver of Past Defaults...............................41
SECTION 5.14. Undertaking for Costs.................................42
SECTION 5.15. Waiver of Stay or Extension Laws......................42
SECTION 5.16. Action on Notes.......................................42
SECTION 5.17. Performance and Enforcement of Certain Obligations....42
ARTICLE VI THE INDENTURE TRUSTEE...................................43
SECTION 6.01. Duties of Indenture Trustee...........................43
SECTION 6.02. Rights of Indenture Trustee...........................45
SECTION 6.03. Individual Rights of Indenture Trustee................47
SECTION 6.04. Indenture Trustee's Disclaimer........................47
SECTION 6.05. Notice of Defaults....................................47
SECTION 6.06. Reports by Indenture Trustee to Holders...............47
SECTION 6.07. Compensation and Indemnity............................47
SECTION 6.08. Replacement of Indenture Trustee......................48
SECTION 6.09. Successor Indenture Trustee by Merger.................49
SECTION 6.10. Appointment of Co-Indenture Trustee
or Separate Indenture Trustee........................49
SECTION 6.11. Eligibility...........................................51
SECTION 6.12. Preferential Collection of Claims Against Issuer......51
SECTION 6.13. Representations and Warranties of Indenture Trustee...51
ii
<PAGE>
ARTICLE VII NOTEHOLDERS' LISTS AND REPORTS..........................52
SECTION 7.01. Issuer to Furnish Names and Addresses of Noteholders..52
SECTION 7.02. Preservation of Information;
Communications to Noteholders........................52
SECTION 7.03. Reports by Issuer.....................................52
SECTION 7.04. Reports by Indenture Trustee..........................53
ARTICLE VIII INTENTIONALLY BLANK.....................................53
ARTICLE IX DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDERS............53
SECTION 9.01. Collection Account....................................53
SECTION 9.02. Collections...........................................54
SECTION 9.03. Purchase Amounts......................................54
SECTION 9.04. Distributions to Parties..............................54
SECTION 9.06. Net Deposits..........................................57
SECTION 9.07. Intentionally Blank...................................57
SECTION 9.08. Intentionally Blank...................................57
SECTION 9.09. Payahead Account......................................57
SECTION 9.10. Release of Pledged Assets.............................58
SECTION 9.11. Opinion of Counsel....................................58
ARTICLE X CREDIT ENHANCEMENT......................................59
SECTION 10.01. Subordination........................................59
SECTION 10.02. Spread Account.......................................59
SECTION 10.03. Policy...............................................60
ARTICLE XI SUPPLEMENTAL INDENTURES.................................61
SECTION 11.01. Supplemental Indentures Without Consent
of Noteholders..................................61
SECTION 11.02. Supplemental Indentures With Consent of Noteholders..62
SECTION 11.03. Execution of Supplemental Indentures.................64
SECTION 11.04. Effect of Supplemental Indenture.....................64
SECTION 11.05. Conformity With Trust Indenture Act..................64
SECTION 11.06. Reference in Notes to Supplemental Indentures........64
ARTICLE XII REDEMPTION OF NOTES.....................................65
SECTION 12.01. Redemption...........................................65
SECTION 12.02. Form of Redemption Notice............................65
SECTION 12.03. Notes Payable on Redemption Date.....................65
ARTICLE XIII MISCELLANEOUS...........................................66
SECTION 13.01. Compliance Certificates and Opinions, etc............66
SECTION 13.02. Form of Documents Delivered to Indenture Trustee.....67
SECTION 13.03. Acts of Noteholders..................................68
iii
<PAGE>
SECTION 13.04. Notices, etc., to Indenture Trustee, Issuer,
Insurer and Rating Agencies.....................69
SECTION 13.05. Notices to Noteholders; Waiver.......................70
SECTION 13.06. Alternate Payment and Notice Provisions..............70
SECTION 13.07. Conflict With Trust Indenture Act....................70
SECTION 13.08. Effect of Headings and Table of Contents.............71
SECTION 13.09. Successors and Assigns...............................71
SECTION 13.10. Separability.........................................71
SECTION 13.11. Benefits of Indenture................................71
SECTION 13.12. Legal Holidays.......................................71
SECTION 13.13. Governing Law........................................71
SECTION 13.14. Counterparts.........................................71
SECTION 13.15. Recording of Indenture...............................71
SECTION 13.16. Trust Obligation.....................................72
SECTION 13.17. No Petition..........................................72
SECTION 13.18. Inspection...........................................72
SECTION 13.19. Limitation of Liability of Owner Trustee.............72
SECTION 13.20. Certain Matters Regarding the Insurer................73
EXHIBITS
Schedule A Form of Depository Agreement
Exhibit A-1 Form of Class A-1 Note
Exhibit A-2 Form of Class A-2 Note
Exhibit A-3 Form of Class A-3 Note
Exhibit A-4 Form of Class A-4 Note
Exhibit B Form of Class B Note
TRUST INDENTURE ACT CROSS-REFERENCE TABLE
TIA SECTION OF
REQUIREMENT INDENTURE
- ----------- ---------
310(a)......................................................................6.11
310(b)......................................................................6.11
310(c).......................................................................N/A
311(a)......................................................................6.12
311(b)......................................................................6.12
311(c).......................................................................N/A
312(a)................................................................7.01, 7.02
312(b)......................................................................7.02
312(c)......................................................................7.02
iv
<PAGE>
313(a)......................................................................7.04
313(b)......................................................................7.04
313(c)......................................................................7.04
314(a)......................................................................7.03
314(b)......................................................................3.06
314(c).............................................................. 4.01, 13.01
314(d).....................................................................13.01
314(e).....................................................................13.01
314(f).......................................................................N/A
315(a)......................................................................6.01
315(b)......................................................................6.05
315(c)......................................................................6.01
315(d)......................................................................6.01
315(e)......................................................................5.14
316(a)......................................................................5.04
316(b).....................................................................11.02
316(c).....................................................................13.03
317(a)......................................................................5.03
317(b)......................................................................3.03
318(a)......................................................................1.02
v
<PAGE>
This INDENTURE, dated as of May 1, 1999, is entered into between UACSC
1999-B OWNER TRUST, a Delaware business trust, as issuer (the "Issuer"), and
HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation, as indenture
trustee (the "Indenture Trustee").
Each party agrees as follows for the benefit of the other parties and
for the benefit of the Noteholders and the Insurer:
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on the Closing Date,
on behalf of and for the benefit of the Noteholders and the Insurer, without
recourse, all of the Issuer's right, title and interest in, to and under, (i)
the Receivables listed on Schedule A to the Trust Agreement, (ii) the security
interests in the Financed Vehicles or in any other property 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 relating to the Receivables, (iv) funds
deposited in the Spread Account (and any Eligible Investments purchased
therewith), the Collection Account and the Payahead Account with respect to the
Receivables, (v) the interest of the Issuer in any proceeds from recourse to
Dealers relating to the Receivables, (vi) all documents contained in the
Receivable Files relating to the Receivables, (vii) all monies paid and all
monies due, including Accrued Interest, as of and after the Cutoff Date (but
excluding Accrued Interest paid on or prior to the Closing Date), (viii) the
rights of the Seller pursuant to the Purchase Agreement and the rights of the
Issuer pursuant to the Trust Agreement to require UAC to repurchase any such
Receivables as to which there has been a breach of the representations and
warranties contained therein, (ix) the benefits of the Policy with respect to
the Receivables and (x) all proceeds (including, without limitation, "proceeds"
as defined in the UCC of the jurisdiction the law of which governs the
perfection of the interest in such Receivables so transferred) of any of the
foregoing. Such property described in the preceding sentence, together with (a)
any and all other right, title and interest, including any beneficial interest
the Issuer may have in the Collection Account, the Spread Account and (b) the
funds deposited in and from time to time on deposit in such accounts, and all
Eligible Investments and other securities, instruments and other investments
purchased from such funds, shall hereinafter be referred to as the "Pledged
Assets." The Issuer does not convey to the Indenture Trustee, and the Pledged
Assets do not include, any interest in any contracts with Dealers related to any
"dealer reserve" or any rights to the recapture of any dealer reserve with
respect to such Receivables.
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction (except as
provided herein with respect to the subordination of the Class B Notes), and to
secure compliance with the provisions of this Indenture and the Insurance
Agreement, all as provided in this Indenture and the Insurance Agreement.
The Indenture Trustee, on behalf of the Noteholders and the Insurer,
acknowledges such Grant, accepts the trusts under this Indenture in accordance
with the provisions of this Indenture and agrees to perform its duties required
in this Indenture to the best of its ability to the end that the interests of
the Noteholders may be adequately and effectively protected.
1
<PAGE>
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.01. Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, (i) capitalized terms that are used herein that are not
otherwise defined herein shall have the meanings assigned to them in the Trust
Agreement (as defined below) and (ii) the following terms have the respective
meanings set forth below for all purposes of this Indenture.
"Accelerated Principal" means, for any Payment Date the lesser of (1)
the Available Excess Funds or (2) the amount necessary to reduce the then
aggregate Note Balances below the Pool Balance as of the end of the related
Collection Period until the aggregate Pool Balance exceeds the aggregate Note
Balances by 2.5% of the initial Note Balances or $8,505,822.60 (the "Accelerated
Principal Amount").
"Act" shall have the meaning specified in Section 13.03(a).
"Administration Agreement" means the Administration Agreement, dated as
of May 1, 1999 among the Trust, the Administrator and the Indenture Trustee.
"Administrator" means the Administrator under the Administration
Agreement, which is initially UAC, and its successors and assigns thereunder.
"Authorized Officer" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee in matters
relating to the Issuer and who is identified on the list of Authorized Officers
delivered by the Owner Trustee or to the Indenture Trustee on the Closing Date
(as such list may be modified or supplemented from time to time thereafter) and,
so long as the Administration Agreement is in effect, any vice president or more
senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
a list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"Available Excess Funds" for any Payment Date means the amount of
Available Funds remaining from such Payment Date after paying the amounts
pursuant to Section 9.04(a)(i) through (x).
"Available Funds" has the meaning provided in the Trust Agreement.
"Avoided Payment" has the meaning provided in the definition of
Preference Amounts.
2
<PAGE>
"Basic Documents" means the Certificate of Trust, the Trust Agreement,
the Administration Agreement, the Depository Agreement, the Insurance Agreement,
the Policy and this Indenture.
"Book-Entry Notes" means a beneficial interest in the Notes, ownership
and transfers of which shall be made through book entries by a Clearing Agency
as described in Section 2.09.
"Certificateholders" mean the owners or holders of the Certificates
pursuant to the Trust Agreement.
"Class" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"Class A Monthly Interest" means the sum of Class A-1 Monthly Interest,
Class A-2 Monthly Interest, Class A-3 Monthly Interest and Class A-4 Monthly
Interest.
"Class A Monthly Principal" means the sum of Class A-1 Monthly
Principal, Class A-2 Monthly Principal, Class A-3 Monthly Principal and Class
A-4 Monthly Principal.
"Class A Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3
Note or a Class A-4 Note.
"Class A-1 Interest Rate" means 4.96% per annum.
"Class A-1 Monthly Interest" means, (i) for the first Payment Date, the
product of one-three hundred sixtieth (1/360th) of the Class A-1 Interest Rate,
the actual number of days from the Closing Date through the day before the first
Payment Date and the Class A-1 Note Balance at the Closing Date and (ii) for any
subsequent Payment Date, the product of one-three hundred sixtieth (1/360th) of
the Class A-1 Interest Rate, the actual number of days from the previous Payment
Date through the day before the related Payment Date and the Class A-1 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-1 Monthly Principal" means that portion of Monthly Principal
to be paid to Class A-1 Noteholders on each Payment Date in accordance with
Section 9.04.
"Class A-1 Note" means a promissory note executed on behalf of the
Trust and authenticated by the Indenture Trustee substantially in the form
attached hereto as Exhibit A-1.
"Class A-1 Note Balance" means, at any time, the Initial Class A-1 Note
Balance minus all payments of Monthly Principal to Class A-1 Noteholders made up
to such time.
"Class A-1 Noteholder" means the Person in whose name the respective
Class A-1 Note shall be registered in the Note Register, except that, solely for
the purposes of giving any consent, waiver,
3
<PAGE>
request, or demand pursuant to this Indenture, the interest evidenced by any
Class A-1 Note registered in the name of the Issuer, the Seller, the Servicer or
UAC, or any Person controlling, controlled by, or under common control with the
Issuer, the Seller 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 Interest Rate" means 5.47% per annum.
"Class A-2 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-2 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-2 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-2 Interest Rate and the Class A-2 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-2 Monthly Principal" means that portion of Monthly Principal
to be paid to Class A-2 Noteholders on each Payment Date in accordance with
Section 9.04.
"Class A-2 Note" means a promissory note executed on behalf of the
Trust and authenticated by the Indenture Trustee substantially in the form
attached hereto as Exhibit A-2.
"Class A-2 Note Balance" means, at any time, the Initial Class A-2 Note
Balance minus all payments of Monthly Principal to Class A-2 Noteholders made up
to such time.
"Class A-2 Noteholder" means the Person in whose name the respective
Class A-2 Note shall be registered in the Note Register, except that, solely for
the purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-2 Note registered in the name
of the Issuer, the Seller, the Servicer or UAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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 Interest Rate" means 5.84% per annum.
"Class A-3 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-3 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-3 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-3 Interest Rate and the Class A-3 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
4
<PAGE>
"Class A-3 Monthly Principal" means that portion of Monthly Principal
to be paid to Class A-3 Noteholders on each Payment Date in accordance with
Section 9.04.
"Class A-3 Note" means a promissory note executed on behalf of the
Trust and authenticated by the Indenture Trustee substantially in the form
attached hereto as Exhibit A-3.
"Class A-3 Note Balance" means, at any time, the Initial Class A-3 Note
Balance minus all payments of Monthly Principal to Class A-3 Noteholders made up
to such time.
"Class A-3 Noteholder" means the Person in whose name the respective
Class A-3 Note shall be registered in the Note Register, except that, solely for
the purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-3 Note registered in the name
of the Issuer, the Seller, the Servicer or UAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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 Interest Rate" means 6.11% per annum; provided, however, the
per annum rate shall be increased by 0.50% beginning on the first Payment Date
on which the Note Balances (after giving effect to all payments of principal on
such Payment Date) will be less than 10% of the Initial Note Balances if the
Class A-4 Notes will not be redeemed on such Payment Date.
"Class A-4 Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class A-4 Interest Rate, the number of days from
the Closing Date (assuming the month of the Closing Date has 30 days) through
the day before the first Payment Date divided by 30 and the Class A-4 Note
Balance at the Closing Date and (ii) for any subsequent Payment Date, the
product of one-twelfth of the Class A-4 Interest Rate and the Class A-4 Note
Balance as of the immediately preceding Payment Date (after giving effect to any
distribution of Monthly Principal made on such immediately preceding Payment
Date).
"Class A-4 Monthly Principal" means that portion of Monthly Principal
to be paid to Class A-4 Noteholders on each Payment Date in accordance with
Section 9.04.
"Class A-4 Note" means a promissory note executed on behalf of the
Trust and authenticated by the Indenture Trustee substantially in the form
attached hereto as Exhibit A-4.
"Class A-4 Note Balance" means, at any time, the Initial Class A-4 Note
Balance minus all payments of Monthly Principal to Class A-4 Noteholders made up
to such time.
"Class A-4 Noteholder" means the Person in whose name the respective
Class A-4 Note shall be registered in the Note Register, except that, solely for
the purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class A-4 Note registered in the name
of the Issuer, the Seller, the Servicer or UAC, or any Person controlling,
5
<PAGE>
controlled by, or under common control with the Issuer, the Seller 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 B Interest Rate" means 6.31% per annum; provided, however, the
per annum rate shall be increased by 0.50% beginning on the first Payment Date
on which the Note Balances (after giving effect to all payments of principal on
such Payment Date) will be less than 10% of the Initial Note Balances if the
Class B Notes will not be redeemed on such Payment Date.
"Class B Monthly Interest" means, (i) for the first Payment Date, the
product of one twelfth of the Class B Interest Rate, the number of days from the
Closing Date (assuming the month of the Closing Date has 30 days) through the
day before the first Payment Date divided by 30 and the Class B Note Balance at
the Closing Date and (ii) for any subsequent Payment Date, the product of
one-twelfth of the Class B Interest Rate and the Class B Note Balance as of the
immediately preceding Payment Date (after giving effect to any distribution of
Monthly Principal made on such immediately preceding Payment Date).
"Class B Monthly Principal" means that portion of Monthly Principal to
be paid to Class B Noteholders on each Payment Date in accordance with Section
9.04.
"Class B Note" means a promissory note executed on behalf of the Trust
and authenticated by the Indenture Trustee substantially in the form attached
hereto as Exhibit B.
"Class B Note Balance" means, at any time, the Initial Class B Note
Balance minus all payments of Monthly Principal to Class B Noteholders made up
to such time.
"Class B Noteholder" means the Person in whose name the respective
Class B Note shall be registered in the Note Register, except that, solely for
the purposes of giving any consent, waiver, request, or demand pursuant to this
Indenture, the interest evidenced by any Class B Note registered in the name of
the Issuer, the Seller, the Servicer or UAC, or any Person controlling,
controlled by, or under common control with the Issuer, the Seller 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.
"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.
"Code" means the Internal Revenue Code of 1986, as amended.
6
<PAGE>
"Controlling Party" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing, and the Indenture Trustee, for so long as
an Insurer Default shall have occurred and be continuing.
"Default" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"Definitive Notes" shall have the meaning specified in Section 2.09.
"Depository Agreement" means the agreement dated May 26, 1999, among
the Issuer, the Indenture Trustee and DTC, as the initial Clearing Agency,
relating to the Notes, substantially in the form of Schedule A hereto.
"Event of Default" shall have the meaning specified in Section 5.01.
"Executive Officer" means, with respect to any corporation or bank, the
Chief Executive Officer, Chief Operating Officer, Chief Financial Officer,
President, Executive Vice President, any Vice President, the Secretary or the
Treasurer of such corporation or bank; and with respect to any partnership, any
general partner thereof.
"Final Maturity Date" means June 8, 2000 with respect to the Class A-1
Notes, September 9, 2002 with respect to the Class A-2 Notes, January 8, 2004
with respect to the Class A-3 Notes, September 8, 2005 with respect to the Class
A-4 Notes and December 8, 2006 with respect to the Class B Notes.
"Grant" means mortgage, pledge, bargain, sell, warrant, alienate,
remise, release, convey, assign, transfer, create and grant a lien upon and a
security interest in and right of set-off against, deposit, set over and confirm
pursuant to this Indenture. A Grant of the Pledged Assets or of any other
agreement or instrument shall include all rights, powers and options (but none
of the obligations) of the granting party thereunder, including the immediate
and continuing right to claim for, collect, receive and give receipt for
principal and interest payments in respect of the Pledged Assets and all other
monies payable thereunder, to give and receive notices and other communications,
to make waivers or other agreements, to exercise all rights and options, to
bring Proceedings in the name of the granting party or otherwise and generally
to do and receive anything that the granting party is or may be entitled to do
or receive thereunder or with respect thereto.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Note Register.
"Indebtedness" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in
7
<PAGE>
accordance with generally accepted accounting principles, recorded as capital
leases; (iii) current liabilities of such Person in respect of unfunded vested
benefits under plans covered by Title IV of ERISA; (iv) obligations issued for
or liabilities incurred on the account of such Person; (v) obligations or
liabilities of such Person arising under acceptance facilities; (vi) obligations
of such Person under any guaranties, endorsements (other than for collection or
deposit in the ordinary course of business) and other contingent obligations to
purchase, to provide funds for payment, to supply funds to invest in any Person
or otherwise to assure a creditor against loss; (vii) obligations of such Person
secured by any lien on property or assets of such Person, whether or not the
obligations have been assumed by such Person; or (viii) obligations of such
Person under any interest rate or currency exchange agreement.
"Indenture" means this Indenture, as amended or supplemented from time
to time.
"Indenture Trustee" means Harris Trust and Savings Bank, an Illinois
banking corporation as the Indenture Trustee under this Indenture and its
permitted successors and assigns.
"Independent" when used with respect to any specified Person, means
such a Person who (i) is in fact independent of the Issuer, the Seller and any
of their respective Affiliates, (ii) is not a director, officer or employee of
the Issuer, the Seller or any of their respective Affiliates, (iii) is not a
person related to any officer or director of the Issuer, the Seller or any of
their respective Affiliates, (iv) is not a holder (directly or indirectly) of
more than 10% of any voting securities of the Issuer, the Seller or any of their
respective Affiliates, and (v) is not connected with the Issuer, the Seller or
any of their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"Independent Certificate" means a certificate or opinion to be
delivered to the Indenture Trustee under the circumstances described in, and
otherwise complying with, the applicable requirements of Section 13.01, made by
an Independent appraiser or other expert appointed by an Issuer Order and
approved by the Indenture Trustee in the exercise of reasonable care, and such
opinion or certificate shall state that the signer has read the definition of
"Independent" in this Indenture and that the signer is Independent within the
meaning thereof.
"Initial Class A-1 Note Balance" means $66,275,000.00.
"Initial Class A-2 Note Balance" means $96,350,000.00.
"Initial Class A-3 Note Balance" means $73,350,000.00.
"Initial Class A-4 Note Balance" means $87,247,000.00.
"Initial Class B Note Balance" means $17,010,904.00.
"Initial Note Balances" means $340,232,904.00.
8
<PAGE>
"Insurance Premium" has the meaning specified in the Premium Side
Letter Agreement.
"Insurer Default" means the Insurer is in default under the Policy
after the expiration of any applicable cure period.
"Issuer" means UACSC 1999-B Owner Trust as the issuer of the Notes
under this Indenture and its permitted successors and assigns.
"Issuer Order" and "Issuer Request" means a written order or request
signed in the name of the Issuer by an Authorized Officer and delivered to the
Indenture Trustee.
"Monthly Interest" means the sum of Class A Monthly Interest and Class
B Monthly Interest.
"Monthly Principal" for any Payment Date will equal the sum of the
following:
(i) the amount by which the Pool Balance declined during the
related Collection Period; and
(ii) the additional amount, if any, which is necessary to reduce
the Note Balance of a class of Notes to zero on its Final
Maturity Date.
The amount of Monthly Principal otherwise payable on any Payment Date
may be reduced by payments of Accelerated Principal to the Noteholders
pursuant to Section 9.04(b)(i) if the amount of Available Funds are not
sufficient to fully pay the amounts required in Section 9.04(a)(i)
through (vi). 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. In no event will Monthly
Principal exceed the Outstanding Note Balances.
"Net Cumulative Loss Event" has the meaning specified in the Insurance
Agreement.
"Net Cumulative Loss Percentage" means, for any Payment Date, the
fraction (expressed as a percentage) of which the numerator is the aggregate
Principal Balance of all Defaulted Receivables as of such Payment Date less the
aggregate amount of Liquidation Proceeds received after the Cutoff Date as of
such Payment Date and (ii) the denominator is the Original Pool Balance.
"Net Principal Policy Amount" means the Initial Note Balances minus all
amounts previously drawn on the Policy or from the Spread Account with respect
to Monthly Principal.
"Note" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note, a
Class A-4 Note or a Class B Note.
9
<PAGE>
"Note Balances" means, at any time the Initial Note Balances minus all
payments of principal made to the Noteholders up to such time. The term "Note
Balance" means the Outstanding principal balance of a particular Class of Notes,
depending upon the context. When the term "Note Balances" is used herein with
respect to an issue relating to the consent of or voting of Noteholders, such
term shall refer only to the classes of Notes then Outstanding such that the
Noteholders will vote as a single class.
"Noteholder" see definition of Holder.
"Note Owner" means, with respect to a Book-Entry Note, the Person who
is the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"Note Register" and "Note Registrar" have the respective meanings
specified in Section 2.04.
"UAC" means Union Acceptance Corporation, an Indiana corporation, and
its successors.
"Officer's Certificate" means a certificate signed by an Authorized
Officer of the Issuer, under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 13.01, and delivered to,
the Indenture Trustee.
"Opinion of Counsel" means one or more written opinions of counsel who
may, except as otherwise expressly provided in this Indenture, be employees of
or counsel to the Seller or the Issuer and who shall be satisfactory to the
Indenture Trustee and, if addressed to the Insurer, satisfactory to the Insurer,
and which shall comply with any applicable requirements of Section 13.01, and
shall be in form and substance satisfactory to the Indenture Trustee, and if
addressed to the Insurer, satisfactory to the Insurer.
"Original Pool Balance" means $340,232,904.32.
"Outstanding" or "Outstanding Notes" means, as of the date of
determination, all Notes theretofore authenticated and delivered under this
Indenture except:
(i) Notes theretofore canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice, satisfactory to the Indenture Trustee, has
been made); and
10
<PAGE>
(iii) Notes in exchange for or in lieu of other Notes which
have been authenticated and delivered pursuant to this Indenture unless
proof satisfactory to the Indenture Trustee is presented that any such
Notes are held by a bona fide purchaser; provided, however, that in
determining whether the Holders of the requisite Outstanding Note
Balances have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document,
Notes owned by the Issuer, the Seller or any of their respective
Affiliates shall be disregarded and deemed not to be Outstanding,
except that, in determining whether the Indenture Trustee shall be
protected in relying upon any such request, demand, authorization,
direction, notice, consent or waiver, only Notes that the Indenture
Trustee knows to be so owned shall be so disregarded. Notes so owned
that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee
the pledgee's right so to act with respect to such Notes and that the
pledgee is not the Issuer, the Seller or any of their respective
Affiliates.
"Owner Trustee" means First Union Trust Company, National Association,
acting not in its individual capacity but solely as trustee under the Trust
Agreement on behalf of the Trust.
"Paying Agent" means the Indenture Trustee or any other Person that
meets the eligibility standards for the Indenture Trustee specified in Section
6.11 and is authorized by the Issuer to make the distributions from the
Collection Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"Pledged Assets" has the meaning provided in the Granting Clause of
this Indenture.
"Policy" means the irrevocable financial guaranty insurance policy
dated as of May 26, 1999, issued by the Insurer to the Indenture Trustee for the
benefit of the Noteholders and having a maximum amount available to be drawn in
respect of Monthly Interest and Monthly Principal equal to the Policy Amount.
"Policy Amount" on any payment date means:
(A) the sum of:
(x) the Monthly Servicing Fee;
(y) Monthly Interest; and
(z) the lesser of (i) the Outstanding Note Balances on such
Payment Date (after giving effect to any distributions of Available
Funds and any funds withdrawn from the Spread Account to pay Monthly
Principal on such Payment Date) and (ii) the Net Principal Policy
Amount (after giving effect to any distributions of Available Funds and
any funds withdrawn from the Spread Account to pay Monthly Principal).
11
<PAGE>
less:
(B) all amounts on deposit in the Spread Account on such Payment
Date (after giving effect to any amounts withdrawn from the
Spread Account on such Payment Date).
"Predecessor Note" means, with respect to any particular Note, every
previous Note evidencing all or a portion of the same debt as that evidenced by
such particular Note; and, for the purpose of this definition, any Note
authenticated and delivered under Section 2.05 in lieu of a mutilated, lost,
destroyed or stolen Note shall be deemed to evidence the same debt as the
mutilated, lost, destroyed or stolen Note.
"Preference Amounts" means any amount guaranteed pursuant to the Policy
which is voided (a "Preference Event") under any applicable bankruptcy,
insolvency, receivership or similar law in an Insolvency Proceeding, and, as a
result of such a Preference Event, the Indenture Trustee or any Noteholder is
required to return such voided payment, or any portion of such voided payment
made or to be made in respect of the Notes (an "Avoided Payment").
"Premium Side Letter Agreement" means the letter dated the Closing Date
as defined in the Insurance Agreement.
"Principal Payment Sequence" means the order in which Monthly Principal
shall be distributed among the Noteholders. The order of distribution of Monthly
Principal is:
(1) to the Class A-1 Noteholders until the Class A-1 Note Balance
has been reduced to zero;
(2) to the Class A-2 Noteholders until the Class A-2 Note Balance
has been reduced to zero;
(3) to the Class A-3 Noteholders until the Class A-3 Note Balance
has been reduced to zero;
(4) to the Class A-4 Noteholders until the Class A-4 Note Balance
has been reduced to zero; and
(5) to the Class B Noteholders until the Class B Note Balance has
been reduced to zero.
However, if the amount of Available Funds (together with amounts withdrawn from
the Spread Account and/or the Policy) are not sufficient on any Payment Date to
pay the required payment of Class A Monthly Principal to Class A Noteholders in
full, the amount of such funds available to pay Class A Monthly Principal to
Class A Noteholders will be distributed pro rata to the Class A Noteholders
based upon the relative Note Balance of each class of Class A Notes.
12
<PAGE>
"Proceeding" means any suit in equity, action at law or other judicial
or administrative proceeding.
"Rating Agency Condition" means, with respect to any action, that (i)
Standard & Poor's shall have been given ten Business Days (or such shorter
period as is acceptable to Standard & Poor's) prior notice thereof and that
Standard & Poor's shall have notified the Seller, the Servicer, the Insurer and
the Issuer in writing that such action will not result in a qualification,
reduction or withdrawal of its then-current rating of any Class of Notes, (ii)
Moody's shall have been given ten Business Days (or such shorter period as is
acceptable to Moody's) prior notice thereof and copies of all documentation
relating to the event requiring such Rating Agency Condition and (iii) each
Rating Agency shall have confirmed to the Insurer that the shadow risk of the
Insurer with respect to the Notes is investment grade.
"Rating Event" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
"Record Date" means, with respect to a Payment Date or Redemption Date,
the close of business on the day immediately preceding such Payment Date or
Redemption Date, or, in the event that Definitive Notes are issued, the close of
business on the last day of the related Collection Period.
"Redemption Date" means the Payment Date specified by the Servicer or
the Issuer pursuant to Section 12.01.
"Redemption Price" means an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the respective
interest rates of each Class of Notes being so redeemed to but excluding the
Redemption Date.
"Required Spread Amount" means on each Payment Date, the greater of (x)
0.25% of the Original Pool Balance (the "Required Cash Floor") and (y) 0.50% of
the Pool Balance as of the end of the related Collection Period; provided, that
on any Payment Date on which a Net Cumulative Loss Event (as defined in the
Insurance Agreement) has occurred and has not been cured, the Required Spread
Amount shall equal 0.75% of the Original Pool Balance. Notwithstanding the
foregoing, upon and during the continuance of an Indenture Default or a Trigger
Event, the Required Spread Amount shall be equal to the Policy Amount as of such
Payment Date, without giving effect to amounts on deposit in the Spread Account,
after giving effect to any draws on the Policy, draws on the Spread Account and
other distributions pursuant to Section 9.04 on such Payment Date. Once such
Indenture Default or Trigger Event has been cured or discontinued, the Required
Spread Amount shall be determined as otherwise set forth above.
"Servicer Default" means an Event of Servicer Default under the Trust
Agreement.
"State" means any one of the 50 states of the United States or the
District of Columbia.
13
<PAGE>
"Successor Servicer" shall have the meaning specified in Section
3.07(e).
"Termination Date" means the latest of (i) the expiration of the Policy
and the return of the Policy to the Insurer for cancellation, (ii) the date on
which the Insurer shall have received payment and performance of all amounts and
obligations which the Issuer may owe to or on behalf of the Insurer under this
Indenture and (iii) the date on which the Indenture Trustee shall have received
payment and performance of all amounts and obligations which the Issuer may owe
to or on behalf of the Indenture Trustee for the benefit of the Noteholders
under this Indenture or the Notes.
"Trigger Event" has the meaning provided in the Insurance Agreement.
"Trust Agreement" means the Trust and Servicing Agreement, dated as of
the date hereof, among the Seller, the Servicer and the Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939,
as amended, as in force on the date hereof, unless otherwise specifically
provided.
"United States" means the United States of America.
SECTION 1.02. Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Indenture
Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
SECTION 1.03. Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
14
<PAGE>
(ii) an accounting term not otherwise defined has the meaning
assigned to it in accordance with generally accepted accounting
principles as in effect from time to time;
(iii) "or" is not exclusive;
(iv) "including" means including without limitation;
(v) words in the singular include the plural and words in
the plural include the singular;
(vi) any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection
herewith means such agreement, instrument or statute as from time to
time amended, modified or supplemented and includes (in the case of
agreements or instruments) references to all attachments thereto and
instruments incorporated therein; references to a Person are also to
its permitted successors and assigns; and
(vii) the words "hereof," "herein" and "hereunder" and words
of similar import when used in this Indenture shall refer to this
Indenture as a whole and not to any particular provision of this
Indenture; Section, subsection and Schedule references contained in
this Indenture are references to Sections, subsections and Schedules in
or to this Indenture unless otherwise specified.
ARTICLE II
THE NOTES
SECTION 2.01. Form. The Class A-1 Notes, Class A-2 Notes, Class A-3
Notes, Class A-4 Notes and Class B Notes, in each case together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
forms set forth as Exhibits A-1, A-2, A-3, A-4 and B to this Indenture with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have such letters, numbers or
other marks of identification and such legends or endorsements placed thereon as
may, consistently herewith, be determined by the officers executing such Notes,
as evidenced by their execution of the Notes. Any portion of the text of any
Note may be set forth on the reverse thereof, with an appropriate reference
thereto on the face of the Note.
Each Note shall be dated the date of its authentication. The terms of
the Notes set forth in the exhibits hereto are part of the terms of this
Indenture.
SECTION 2.02. Execution, Authentication and Delivery. The Notes shall
be executed on behalf of the Issuer by the Owner Trustee, as provided herein.
The signature of any such Authorized Officer on the Notes may be manual or
facsimile. Notes bearing the manual or facsimile signature
15
<PAGE>
of individuals who were at any time Authorized Officers of the Issuer shall bind
the Issuer, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Notes or did
not hold such offices at the date of such Notes.
The Indenture Trustee shall, upon receipt of an Issuer Order,
authenticate and deliver for original issue Notes in the amount of the Initial
Class A-1 Note Balance, the Initial Class A-2 Note Balance, the Initial Class
A-3 Note Balance, the Initial Class A-4 Note Balance and the Initial Class B
Note Balance. The aggregate principal amount of the Notes outstanding at any
time may not exceed such respective amounts, except as otherwise provided in
Section 2.05. Each Note shall be dated the date of its authentication. The Notes
shall be issuable as registered Notes in the minimum denomination of $1,000 and
in integral multiples of $1,000 in excess thereof, except that one Note of each
Class may be issued in a different denomination.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in the
forms of Notes attached as exhibits to this Indenture executed by the Indenture
Trustee by the manual signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
SECTION 2.03. Temporary Notes. Pending the preparation of Definitive
Notes, the Issuer may execute, and upon receipt of an Issuer Order the Indenture
Trustee shall authenticate and deliver, temporary Notes that are printed,
lithographed, typewritten, mimeographed or otherwise produced, of the tenor of
the definitive Notes in lieu of which they are issued and with such variations
not inconsistent with the terms of this Indenture as the officers executing such
Notes may determine, as evidenced by their execution of such Notes.
If temporary Notes are issued, the Issuer will cause Definitive Notes
to be prepared without unreasonable delay. After the preparation of definitive
Notes, the temporary Notes shall be exchangeable for definitive Notes upon
surrender of the temporary Notes at the office or agency of the Issuer to be
maintained as provided in Section 3.02, without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Notes, the Issuer shall
execute and the Indenture Trustee shall authenticate and deliver in exchange
therefor a like tenor and principal amount of definitive Notes of authorized
denominations. Until so exchanged, the temporary Notes shall in all respects be
entitled to the same benefits under this Indenture as Definitive Notes.
SECTION 2.04. Registration; Registration of Transfer and Exchange. The
Issuer shall cause to be kept a register (the "Note Register") in which, subject
to such reasonable regulations as it may prescribe, the Issuer shall provide for
the registration of Notes and the registration of transfers of Notes. The
Indenture Trustee shall be the initial "Note Registrar" for the purpose of
registering Notes and transfers of Notes as herein provided. Upon any
resignation of any Note Registrar, the Issuer shall promptly appoint a successor
or, if it elects not to make such an appointment, assume the duties of Note
Registrar.
16
<PAGE>
If a Person other than the Indenture Trustee is appointed by the Issuer
as Note Registrar, the Issuer will give the Indenture Trustee prompt written
notice of the appointment of such Note Registrar and of the location, and any
change in the location, of the Note Register, and the Indenture Trustee shall
have the right to inspect the Note Register at all reasonable times and to
obtain copies thereof, and the Indenture Trustee shall have the right to rely
upon a certificate executed on behalf of the Note Registrar by an Executive
Officer thereof as to the names and addresses of the Noteholders and the
principal amounts and number of such Notes.
Upon surrender for registration of transfer of any Note at the office
or agency of the Issuer to be maintained as provided in Section 3.02, the Issuer
shall execute, and the Indenture Trustee shall authenticate and the Noteholder
shall obtain from the Indenture Trustee, in the name of the designated
transferee or transferees, one or more new Notes of the same Class in any
authorized denominations, of a like aggregate principal amount.
At the option of the Holder, Notes may be exchanged for other Notes of
the same Class in any authorized denominations, of a like aggregate principal
amount, upon surrender of the Notes to be exchanged at such office or agency.
Whenever any Notes are so surrendered for exchange, the Issuer shall execute,
and the Indenture Trustee shall authenticate and the Noteholder shall obtain
from the Indenture Trustee, the Notes which the Noteholder making the exchange
is entitled to receive.
All Notes issued upon any registration of transfer or exchange of Notes
shall be the valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Notes surrendered
upon such registration of transfer or exchange.
Every Note presented or surrendered for registration of transfer or
exchange shall be duly endorsed by, or be accompanied by a written instrument of
transfer in form satisfactory to the Indenture Trustee duly executed by, the
Holder thereof or such Holder's attorney duly authorized in writing, with such
signature guaranteed by a commercial bank or trust company located, or having a
correspondent located, in the city of New York or the city in which the
Corporate Trust Office is located, or by a member firm of a national securities
exchange, and such other documents as the Indenture Trustee may require.
No service charge shall be made to a Holder for any registration of
transfer or exchange of Notes, but the Issuer or the Indenture Trustee may
require payment of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Notes, other than exchanges pursuant to Section 2.03 or 11.06 not
involving any transfer.
The preceding provisions of this Section notwithstanding, the Issuer
shall not be required to make and the Note Registrar need not register transfers
or exchanges of Notes selected for redemption or of any Note for a period of 15
days preceding the due date for any payment with respect to the Note.
17
<PAGE>
SECTION 2.05. Mutilated, Destroyed, Lost or Stolen Notes. If (i) any
mutilated Note is surrendered to the Indenture Trustee, or the Indenture Trustee
receives evidence to its satisfaction of the destruction, loss or theft of any
Note, and (ii) there is delivered to the Indenture Trustee and the Insurer
(unless an Insurer Default shall have occurred and be continuing) such security
or indemnity as may be required by them to hold the Issuer, the Indenture
Trustee and the Insurer harmless, then, in the absence of notice to the Issuer,
the Note Registrar or the Indenture Trustee that such Note has been acquired by
a bona fide purchaser, the Issuer shall execute and upon its request the
Indenture Trustee shall authenticate and deliver, in exchange for or in lieu of
any such mutilated, destroyed, lost or stolen Note, a replacement Note of the
same Class; provided, however, that if any such destroyed, lost or stolen Note,
but not a mutilated Note, shall have become or within seven days shall be due
and payable, or shall have been called for redemption, instead of issuing a
replacement Note, the Issuer may pay such destroyed, lost or stolen Note when so
due or payable or upon the Redemption Date without surrender thereof. If, after
the delivery of such replacement Note or payment of a destroyed, lost or stolen
Note pursuant to the proviso to the preceding sentence, a bona fide purchaser of
the original Note in lieu of which such replacement Note was issued presents for
payment such original Note, the Issuer, the Insurer and the Indenture Trustee
shall be entitled to recover such replacement Note (or such payment) from the
Person to whom it was delivered or any Person taking such replacement Note from
such Person to whom such replacement Note was delivered or any assignee of such
Person, except a bona fide purchaser, and shall be entitled to recover upon the
security or indemnity provided therefor to the extent of any loss, damage, cost
or expense incurred by the Issuer, the Insurer or the Indenture Trustee in
connection therewith.
Upon the issuance of any replacement Note under this Section, the
Issuer or the Indenture Trustee may require the payment by the Holder of such
Note of a sum sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto and any other reasonable expenses (including the
fees and expenses of the Indenture Trustee or the Note Registrar) connected
therewith.
Every replacement Note issued pursuant to this Section in replacement
of any mutilated, destroyed, lost or stolen Note shall constitute an original
contractual obligation of the Issuer, whether or not the mutilated, destroyed,
lost or stolen Note shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Notes duly issued hereunder.
The provisions of this Section are exclusive and shall preclude (to the
extent lawful) all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Notes. In the case of the
registration of transfer of any Note, the Issuer, the Indenture Trustee, the
Insurer and any of their respective agents may treat the Person in whose name
any Note is registered (as of the day of determination) as the owner of such
Note for the purpose of receiving payments of principal of and interest, if any,
on such Note and for all other purposes whatsoever, whether or not such Note be
overdue, and none of the Issuer, the Insurer, the Indenture Trustee nor any of
their respective agents shall be affected by notice to the contrary.
SECTION 2.06. Intentionally Blank.
18
<PAGE>
SECTION 2.07. Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest as provided in this
Indenture at the related interest rate for such Class, and such interest shall
be payable on each Payment Date as specified herein, subject to Section 3.01.
Interest accrued on any Note but not paid on any Payment Date will be due on the
immediately succeeding Payment Date, together with, to the extent permitted by
applicable law, interest on such shortfall at the related interest rate. Any
installment of interest or principal, if any, payable on any Note which is
punctually paid or duly provided for by the Issuer on the applicable Payment
Date shall be paid to the Person in whose name such Note (or one or more
Predecessor Notes) is registered on the Record Date, by check mailed
first-class, postage prepaid to such Person's address as it appears on the Note
Register on such Record Date, except that, unless Definitive Notes have been
issued pursuant to Section 2.11, with respect to Notes registered on the Record
Date in the name of the nominee of the Clearing Agency (initially, such nominee
to be Cede & Co.), payment will be made by wire transfer in immediately
available funds to the account designated by such nominee and except for the
final installment of principal payable with respect to such Note on a Payment
Date, a Redemption Date or on the related Final Maturity Date, as the case may
be (and except for the Redemption Price for any Note called for redemption
pursuant to Section 12.01), which shall be payable as provided below. The funds
represented by any such checks returned undelivered shall be held in accordance
with Section 3.03.
(b) The principal of each Note shall be payable on each Payment Date to
the extent provided in this Indenture and in the form of the related Note set
forth as an Exhibit hereto. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes of a Class of Notes shall be due and payable, if
not previously paid, on the earlier of:
(i) the Final Maturity Date of such Class;
(ii) the Redemption Date;
(iii) if an Event of Default shall have occurred and be
continuing, so long as an Insurer Default shall not have occurred and
be continuing, the date on which the Insurer shall have declared the
Notes to be immediately due and payable in the manner provided in
Section 5.02; or
(iv) if an Event of Default shall have occurred and be
continuing and an Insurer Default has occurred and is continuing, the
date on which the Noteholders representing not less than 66 2/3% of the
Note Balances have declared the Notes to be immediately due and payable
in the manner provided in Section 5.02.
All principal payments on each Class of Notes shall be made pro rata to the
Noteholders of such Class entitled thereto. The Indenture Trustee shall notify
the Person in whose name a Note is registered at the close of business on the
Record Date preceding the Payment Date on which the Issuer expects that the
final installment of principal of and interest on such Note will be paid. Such
notice shall be
19
<PAGE>
mailed within five Business Days of such Payment Date (or, in the case of Notes
registered in the name of Cede & Co., as nominee of DTC, such notice shall be
provided within one Business Day of such Payment Date) or receipt of notice of
termination of the Trust pursuant to Section 16.01 of the Trust Agreement and
shall specify that such final installment will be payable only upon presentation
and surrender of such Note and shall specify the place where such Note may be
presented and surrendered for payment of such installment. Notices in connection
with redemptions of Notes shall be mailed to Noteholders as provided in Section
12.02. In addition, the Administrator shall notify the Insurer and the Rating
Agencies upon the final payment of interest and principal of each Class of
Notes, and upon the termination of the Trust, in each case pursuant to the
Administration Agreement.
SECTION 2.08. Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly cancelled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes cancelled as provided in this Section, except as expressly permitted
by this Indenture. All cancelled Notes may be held or disposed of by the
Indenture Trustee in accordance with its standard retention or disposal policy
as in effect at the time unless the Issuer shall direct by an Issuer Order that
they be destroyed or returned to it; provided that such Issuer Order is timely
and the Notes have not been previously disposed of by the Indenture Trustee.
SECTION 2.09. Book-Entry Notes. The Notes, upon original issuance, will
be issued in the form of a typewritten Note or Notes representing the Book-Entry
Notes, to be delivered to DTC, the initial Depository, by, or on behalf of, the
Issuer (except for any fractional units which cannot be accepted by DTC). Such
Notes shall initially be registered on the Note Register in the name of Cede &
Co., the nominee of the initial Clearing Agency, and no Note Owner will receive
a Definitive Note representing such Note Owner's interest in such Note, except
as provided in Section 2.11. Unless and until definitive, fully registered Notes
(the "Definitive Notes") have been issued to Note Owners pursuant to Section
2.11:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Note Registrar and the Indenture Trustee shall be
entitled to deal with the Clearing Agency for all purposes of this
Indenture (including the payment of principal of and interest on the
Notes and the giving of instructions or directions hereunder) as the
sole holder of the Notes, and shall have no obligation to the Note
Owners;
(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Indenture, the provisions of
this Section shall control;
20
<PAGE>
(iv) the rights of Note Owners shall be exercised only through
the Clearing Agency and shall be limited to those established by law
and agreements between such Note Owners and the Clearing Agency and/or
the Clearing Agency Participants. Pursuant to the Depository Agreement,
unless and until Definitive Notes are issued pursuant to Section 2.11,
the Clearing Agency will make book-entry transfers among the Clearing
Agency Participants and receive and transmit payments of principal of
and interest on the Notes to such Clearing Agency Participants; and
(v) whenever this Indenture requires or permits actions to be
taken based upon instructions or directions of Noteholders evidencing a
specified percentage of the Note Balances, the Clearing Agency shall be
deemed to represent such percentage only to the extent that it has
received instructions to such effect from Note Owners and/or Clearing
Agency Participants owning or representing, respectively, such required
percentage of the beneficial interest in the Notes and has delivered
such instructions to the Indenture Trustee.
SECTION 2.10. Notices to Clearing Agency. Whenever a notice or other
communication to the Noteholders is required under this Indenture, unless and
until Definitive Notes shall have been issued to Note Owners pursuant to Section
2.11, the Indenture Trustee shall give all such notices and communications
specified herein to be given to Noteholders to the Clearing Agency, and shall
have no obligation to the Note Owners.
SECTION 2.11. Definitive Notes. If (i) the Administrator advises the
Indenture Trustee in writing that the Clearing Agency is no longer willing or
able to properly discharge its responsibilities as described in the Depository
Agreement, and the Administrator or the Indenture Trustee is unable to locate a
qualified successor, or (ii) after the occurrence of an Event of Default or a
Servicer Default, Note Owners representing in the aggregate more than 50% of the
Note Balances of all Classes of Notes advise the Indenture Trustee through the
Clearing Agency Participants in writing that the continuation of a book-entry
system through the Clearing Agency is no longer in the best interests of the
related Note Owners, then the Indenture Trustee shall notify all Note Owners,
through the Clearing Agency, of the availability of Definitive Notes to Note
Owners requesting the same. Upon surrender to the Indenture Trustee of the Note
or Notes evidencing the Book Entry Notes by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes and deliver such
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Indenture 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 Notes of a Class, the Indenture Trustee shall recognize the Holders
of the Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or
the Administrator is unable to locate a qualified successor Clearing Agency. The
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without
21
<PAGE>
steel engraved borders), all as determined by the officers executing such Notes,
as evidenced by their execution of such Notes.
SECTION 2.12. Release of Pledged Assets. Subject to Section 13.01 and
the terms of the Basic Documents, the Indenture Trustee shall release property
from the lien of this Indenture only upon receipt of an Issuer Request
accompanied by an Officer's Certificate, an Opinion of Counsel and Independent
Certificates in accordance with Sections 314(c) and 314(d)(l) of the TIA or an
Opinion of Counsel in lieu of such Independent Certificates to the effect that
the TIA does not require any such Independent Certificates.
SECTION 2.13. Tax Treatment. The Issuer has entered into this
Indenture, and the Notes will be issued, with the intention that, for federal,
state and local income, single business and franchise tax purposes, the Notes
will qualify as indebtedness of the Issuer secured by the Pledged Assets. The
Issuer, by entering into this Indenture, and each Noteholder, by its acceptance
of its Note (and each Note Owner by its acceptance of an interest in the
applicable Book-Entry Note), agree to treat the Notes for federal, state and
local income, single business and franchise tax purposes as indebtedness of the
Issuer.
SECTION 2.14. ERISA. Each purchaser or transferee of a Note that is a
Benefit Plan (as such term is defined in the Employee Retirement Income Security
Act of 1974 as amended) shall be deemed to have represented that the relevant
conditions for exemptive relief under Prohibited Transaction Class Exemption
("PTCE") 84-14, PTCE 90-1, PTCE 91-38, PTCE 95-60 or PTCE 96-23 or other
applicable exemption providing substantially similar relief have been satisfied.
ARTICLE III
COVENANTS
SECTION 3.01. Payment of Principal and Interest. The Issuer will duly
and punctually pay Monthly Interest and Monthly Principal on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 9.04(a), the Issuer will cause to be distributed
the amount of Available Funds on a Payment Date. The Issuer will cause the
deposits received on Receivables to be deposited into the Collection Account
pursuant to the Trust Agreement for the benefit of the Noteholders. Amounts
properly withheld under the Code by any Person from a payment to any Noteholder
of interest and/or principal shall be considered as having been paid by the
Issuer to such Noteholder for all purposes of this Indenture.
SECTION 3.02. Maintenance of Office or Agency. The Issuer will or will
cause the Administrator or the Indenture Trustee to maintain in The City of New
York, an office or agency where Notes may be surrendered for registration of
transfer or exchange, and where notices and demands to or upon the Issuer in
respect of the Notes and this Indenture may be served. The Issuer hereby
initially appoints the Indenture Trustee to serve as its agent for the foregoing
purposes. The Issuer will give prompt written notice to the Indenture Trustee of
the location, and of any change in
22
<PAGE>
the location, of any such office or agency. If at any time the Issuer shall fail
to maintain any such office or agency or shall fail to furnish the Indenture
Trustee with the address thereof, such surrenders, notices and demands may be
made or served at the Corporate Trust Office, and the Issuer hereby appoints the
Indenture Trustee as its agent to receive all such surrenders, notices and
demands.
SECTION 3.03. Money for Payments to be Held in Trust.
(a) As provided in Section 9.02 of the Trust Agreement, all payments of
amounts due and payable with respect to any Notes that are to be made from
amounts withdrawn from the Collection Account, the Spread Account and the
Payahead Account shall be made on behalf of the Issuer by the Indenture Trustee
or by another Paying Agent, and no amounts so withdrawn from the Collection
Account, the Spread Account and the Payahead Account for payments of Notes shall
be paid over to the Issuer except as provided in this Section.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Pledged Assets and the
Policy as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No Person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this paragraph, the
provisions of this paragraph shall control.
The Issuer will cause each Paying Agent other than the Indenture
Trustee to execute and deliver to the Indenture Trustee and the Insurer an
instrument in which such Paying Agent shall agree with the Indenture Trustee
(and if the Indenture Trustee acts as Paying Agent, it hereby so agrees),
subject to the provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts due
with respect to the Notes in trust for the benefit of the Persons
entitled thereto until such sums shall be paid to such Persons by the
Paying Agent or otherwise disposed of as herein provided;
(ii) give the Indenture Trustee notice of any default by the
Issuer (or any other obligor upon the Notes) in the making of any
payment required to be made with respect to the Notes;
(iii) at any time during the continuance of any such default,
upon the written request of the Indenture Trustee, forthwith pay to the
Indenture Trustee all sums so held in trust by such Paying Agent;
(iv) immediately resign as Paying Agent and forthwith pay to
the Indenture Trustee all sums held by it in trust for the payment of
Notes if at any time it ceases to meet the standards required to be met
by a Paying Agent at the time of its appointment; and
23
<PAGE>
(v) comply with all requirements of the Code with respect to
the withholding from any payments made by it on any Notes of any
applicable withholding taxes imposed thereon and with respect to any
applicable reporting requirements in connection therewith.
The Issuer may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, by Issuer
Order direct any Paying Agent to pay to the Indenture Trustee all sums held in
trust by such Paying Agent, such sums to be held by the Indenture Trustee upon
the same trusts as those upon which the sums were held by such Paying Agent; and
upon such payment by any Paying Agent to the Indenture Trustee, such Paying
Agent shall be released from all further liability with respect to such money.
Subject to applicable laws with respect to escheat of funds, any money
held by the Indenture Trustee or any Paying Agent in trust for the payment of
any amount due with respect to any Note and remaining unclaimed for two years
after such amount has become due and payable shall be discharged from such trust
and be paid to the Issuer upon receipt of an Issuer Request; and the Holder of
such Note shall thereafter, as an unsecured general creditor, look only to the
Issuer for payment thereof, and all liability of the Indenture Trustee or such
Paying Agent with respect to such trust money shall thereupon cease; provided,
however, that the Indenture Trustee or such Paying Agent, before being required
to make any such repayment, shall at the expense and direction of the Issuer
cause to be published once, in a newspaper published in the English language,
customarily published on each Business Day and of general circulation in The
City of New York, notice that such money remains unclaimed and that, after a
date specified therein, which shall not be less than 30 days from the date of
such publication, any unclaimed balance of such money then remaining will be
repaid to or for the account of the Issuer. The Indenture Trustee may also adopt
and employ, at the expense of the Issuer, any other reasonable means of
notification of such repayment (including, but not limited to, mailing notice of
such repayment to Holders whose Notes have been called but have not been
surrendered for redemption or whose right to or interest in monies due and
payable but not claimed is determinable from the records of the Indenture
Trustee or of any Paying Agent, at the last address of record for each such
Holder).
SECTION 3.04. Existence. The Issuer will keep in full effect its
existence, rights and franchises as a business trust under the laws of the State
of Delaware (unless it becomes, or any successor Issuer hereunder is or becomes,
organized under the laws of any other state or of the United States, in which
case the Issuer will keep in full effect its existence, rights and franchises
under the laws of such other jurisdiction) and will obtain and preserve its
qualification to do business in each jurisdiction in which such qualification is
or shall be necessary to protect the validity and enforceability of this
Indenture, the Notes, and the Pledged Assets.
SECTION 3.05. Protection of Trust Estate. The Issuer intends the
security interest Granted pursuant to this Indenture in favor of the Indenture
Trustee on behalf of the Noteholders to be prior to all other liens in respect
of the Pledged Assets, and the Issuer shall take all actions necessary to obtain
and maintain, for the benefit of the Indenture Trustee on behalf of the
Noteholders, a first lien on and a first priority, perfected security interest
in the Pledged Assets. The Issuer will from time to
24
<PAGE>
time execute and deliver all such supplements and amendments hereto and all such
financing statements, continuation statements, instruments of further assurance
and other instruments, all as prepared by the Servicer and delivered to the
Issuer, and will take such other action necessary or advisable to:
(i) Grant more effectively all or any portion of the Pledged
Assets;
(ii) maintain or preserve the lien and security interest (and
the priority thereof) created by this Indenture or carry out more
effectively the purposes hereof;
(iii) perfect, publish notice of or protect the validity of
any Grant made or to be made by this Indenture;
(iv) enforce any of the Pledged Assets;
(v) preserve and defend title to the Pledged Assets and the
rights of the Indenture Trustee and the Noteholders in such Pledged
Assets against the claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
Pledged Assets when due.
The Issuer hereby designates the Indenture Trustee its agent and
attorney-in-fact to execute all financing statements, continuation statements or
other instruments required to be executed pursuant to this Section.
SECTION 3.06. Opinions as to Pledged Assets.
(a) On the Closing Date, the Issuer shall furnish to the Indenture
Trustee and the Insurer an Opinion of Counsel to the effect that, in the opinion
of such counsel, either (i) all financing statements and continuation statements
have been executed and filed that are necessary to create and continue the
Indenture Trustee's first priority perfected security interest in the Pledged
Assets (subject to the rights of the Insurer under the Insurance Agreement) for
the benefit of the Noteholders, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (ii)
no such action shall be necessary to perfect such security interest.
(b) 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, the Issuer shall furnish to the Indenture Trustee and the Insurer an
Opinion of Counsel, dated as of a date during such 90-day period, to the effect
that, in the opinion of such counsel, either (i) all financing statements and
continuation statements have been executed and filed that are necessary to
create and continue the Indenture Trustee's first priority perfected security
interest in the Pledged Assets (subject to the rights of the Insurer under the
Insurance Agreement) for the benefit of the Noteholders, and reciting the
25
<PAGE>
details of such filings or referring to prior Opinions of Counsel in which such
details are given, or (ii) no such action shall be necessary to perfect such
security interest.
SECTION 3.07. Performance of Obligations; Successor Servicer.
(a) The Issuer will not take any action and will use its best efforts
not to permit any action to be taken by others that would release any Person
from any of such Person's material covenants or obligations under any instrument
or agreement included in the Pledged Assets or that would result in the
amendment, hypothecation, subordination, termination or discharge of, or impair
the validity or effectiveness of, any such instrument or agreement, except as
expressly provided in the Basic Documents or such other instrument or agreement.
(b) The Issuer may contract with or otherwise obtain the assistance of
other Persons (including, without limitation, the Administrator under the
Administration Agreement) to assist it in performing its duties and obligations
under this Indenture, and any performance of such duties by a Person identified
to the Indenture Trustee and the Insurer in an Officer's Certificate shall be
deemed to be action taken by the Issuer. The Indenture Trustee shall not be
responsible for the action or inaction of the Servicer or the Administrator.
Initially, the Issuer has contracted with UAC as the Administrator to assist the
Issuer in performing its duties under this Indenture.
(c) The Issuer will punctually perform and observe all of its
obligations and agreements contained in this Indenture, the other Basic
Documents and in the instruments and agreements included in the Pledged Assets,
including but not limited to filing or causing to be filed all UCC financing
statements and continuation statements required to be filed by the terms of this
Indenture and the Trust Agreement in accordance with and within the time periods
provided for herein and therein. Except as otherwise expressly provided therein,
the Issuer shall not waive, amend, modify, supplement or terminate any Basic
Document or any provision thereof without the consent of the Indenture Trustee,
the Insurer (unless an Insurer Default has occurred and is continuing) and the
Holders of at least a majority of the Outstanding Note Balances of the Notes.
(d) If the Issuer shall have actual knowledge of the occurrence of a
Servicer Default, the Issuer shall promptly notify the Indenture Trustee, the
Insurer and each Rating Agency thereof, and shall specify in such notice the
action, if any, the Issuer is taking with respect of such default. If a Servicer
Default shall arise from the failure of the Servicer to perform any of its
duties or obligations under the Trust Agreement with respect to the Receivables,
the Issuer shall take all reasonable steps available to it to remedy such
failure.
(e) Upon the resignation or termination of the Servicer pursuant to
Sections 13.05 or 14.01 of the Trust Agreement, the Indenture Trustee shall
appoint a successor servicer ("Successor Servicer") acceptable to the Insurer.
If the Indenture Trustee shall succeed to the Servicer's duties as servicer of
the Receivables as provided in Section 14.02 of the Trust Agreement, it shall do
so in its individual capacity and not in its capacity as Indenture Trustee and,
accordingly, the provisions of Article Six shall be inapplicable to the
Indenture Trustee in its duties as the successor to the
26
<PAGE>
Servicer and the servicing of the Receivables. In case the Indenture Trustee
shall become successor to the Servicer under the Trust Agreement, the Indenture
Trustee shall be entitled to appoint as Servicer one of its Affiliates; provided
that it shall not be liable for the actions and omissions of any such Affiliate
in such capacity as successor Servicer appointed with due care.
(f) Upon any termination of the Servicer's rights and powers pursuant
to the Trust Agreement, the Issuer shall promptly notify the Indenture Trustee
and the Insurer. As soon as a Successor Servicer is appointed, the Issuer shall
notify the Indenture Trustee and the Insurer of such appointment, specifying in
such notice the name and address of such Successor Servicer.
(g) The Issuer agrees that it will not waive timely performance or
observance by the Servicer or the Seller of their respective duties under the
Basic Documents: (i) without the prior consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) or (ii) if the effect thereof
would adversely affect the Noteholders.
SECTION 3.08. Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Basic Documents,
sell, transfer, exchange or otherwise dispose of any of the properties
or assets of the Issuer, including those included in the Pledged
Assets, unless directed to do so by the Indenture Trustee with the
prior written consent of the Insurer (unless an Insurer Default has
occurred and is continuing);
(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other than
amounts properly withheld from such payments under the Code or
applicable state law) or assert any claim against any present or former
Noteholder by reason of the payment of the taxes levied or assessed
upon any part of the Pledged Assets;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this Indenture
to be amended, hypothecated, subordinated, terminated or discharged, or
permit any Person to be released from any covenants or obligations with
respect to the Notes under this Indenture except as may be expressly
permitted hereby, (B) permit any lien, charge, excise, claim, security
interest, mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon or
burden the Pledged Assets or any part thereof or any interest therein
or the proceeds thereof (other than tax liens, mechanics' liens and
other liens that arise by operation of law, in each case on a Financed
Vehicle and arising solely as a result of an action or omission of the
related Obligor), (C) permit the lien created by this Indenture not to
constitute a valid first priority (other than with respect to any such
tax, mechanics' or other lien) security interest in the Pledged Assets;
or
(iv) dissolve or liquidate in whole or in part.
27
<PAGE>
SECTION 3.09. Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Insurer, on or before April 30 of each
year, beginning on the first April 30 that is at least six months after the
Closing Date, an Officer's Certificate dated as of December 31 of the preceding
year stating, as to the Authorized Officer signing such Officer's Certificate,
that:
(i) a review of the activities of the Issuer during such year
and of performance under this Indenture has been made under such
Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge, based
on such review, the Issuer has complied with all conditions and
covenants under this Indenture throughout such year, or, if there has
been a default in the compliance of any such condition or covenant,
specifying each such default known to such Authorized Officer and the
nature and status thereof.
SECTION 3.10. Issuer May Consolidate, etc. Only on Certain Conditions.
(a) The Issuer shall not consolidate or merge with or into any other Person,
unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person organized and
existing under the laws of the United States or any State and shall
expressly assume, by an indenture supplemental hereto, executed and
delivered to the Indenture Trustee and the Insurer, in form and
substance satisfactory to the Indenture Trustee and the Insurer (so
long as no Insurer Default has occurred and is continuing), the due and
punctual payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of this
Indenture and each other Basic Document on the part of the Issuer to be
performed or observed, all as provided herein;
(ii) immediately after giving effect to such consolidation or
merger, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee and the Insurer to the effect that such consolidation or merger
will not have any material adverse tax consequence to the Trust, the
Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
and the Insurer an Officer's Certificate and an Opinion of Counsel
(which shall describe the actions taken as required by clause (v) above
or that no such actions will be taken) each stating that such
28
<PAGE>
consolidation or merger and such supplemental indenture comply with
this Article III and that all conditions precedent herein provided for
relating to such transaction have been compiled with (including any
filings required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such consolidation or merger at least 20 Business Days prior to the
consummation of such action and shall have received the prior written
approval of the Insurer of such consolidation or merger and the Issuer
or the Person (if other than the Issuer) formed by or surviving such
consolidation or merger has a net worth, immediately after such
consolidation or merger, that is (A) greater than zero and (B) not less
than the net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially all of
its properties or assets, including those included in the Pledged Assets, to any
Person (except as expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer the
properties and assets of the Issuer shall (A) be a United States
citizen or a Person organized and existing under the laws of the United
States or any State, (B) expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee and the
Insurer, in form and substance satisfactory to the Indenture Trustee
and the Insurer (so long as no Insurer Default has occurred and is
continuing), the due and punctual payment of the principal of and
interest on all Notes and the performance or observance of every
agreement and covenant of this Indenture and each other Basic Document
on the part of the Issuer to be performed or observed, all as provided
herein, (C) expressly agree by means of such supplemental indenture
that all right, title and interest so conveyed or transferred shall be
subject and subordinate to the rights of Noteholders, (D) unless
otherwise provided in such supplemental indenture, expressly agree to
indemnify, defend and hold harmless the Issuer against and from any
loss, liability or expense arising under or related to this Indenture
and the Notes and (E) expressly agree by means of such supplemental
indenture that such Person (or if a group of Persons, then one
specified Person) shall make all filings with the Commission (and any
other appropriate Person) required by the Exchange Act in connection
with the Notes;
(ii) immediately after giving effect to such conveyance or
transference, no Default or Event of Default shall have occurred and be
continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such conveyance or transference;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the Indenture
Trustee and the Insurer (so long as no Insurer Default shall have
occurred and be continuing) to the effect that such conveyance or
29
<PAGE>
transference will not have any material adverse tax consequence to the
Trust, the Insurer, any Noteholder or any Certificateholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been taken;
(vi) the Issuer shall have delivered to the Indenture Trustee
and the Insurer an Officer's Certificate and an Opinion of Counsel
(which shall describe the actions taken as required by clause (v) above
or that no such actions will be taken) each stating that such
conveyance or transference and such supplemental indenture comply with
this Article Three and that all conditions precedent herein provided
for relating to such transaction have been complied with (including any
filings required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and be
continuing, the Issuer shall have given the Insurer written notice of
such conveyance or transfer of properties or assets at least 20
Business Days prior to the consummation of such action and shall have
received the prior written approval of the Insurer of such conveyance
or transfer and the Person acquiring by conveyance or transference the
properties or assets of the Issuer has a net worth, immediately after
such conveyance or transfer, that is (A) greater than zero and (B) not
less than the net worth of the Issuer immediately prior to giving
effect to such conveyance or transfer.
SECTION 3.11. Successor Transferee. (a) Upon any consolidation or
merger of the Issuer in accordance with Section 3.10(a), the Person formed by or
surviving such consolidation or merger (if other than the Issuer) shall succeed
to, and be substituted for, and may exercise every right and power of, the
Issuer under this Indenture with the same effect as if such Person had been
named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.10(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee and the Insurer
stating that the Issuer is to be so released.
SECTION 3.12. No Other Business. The Issuer shall not engage in (i) any
business other than financing, purchasing, owning, selling and managing the
Receivables in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto or (ii) any other business or
activities as contemplated by Section 1.03 of the Trust Agreement.
SECTION 3.13. Servicer's Obligations. The Issuer shall cause the
Servicer to comply with the Servicer's obligations under the Trust Agreement.
30
<PAGE>
SECTION 3.14. Restricted Payments. Except as expressly permitted by the
Basic Documents, the Issuer shall not, directly or indirectly, (i) pay any
dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, distributions to the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Noteholders and the
Certificateholder as contemplated by, and to the extent funds are available for
such purpose under, the Trust Agreement. The Issuer will not, directly or
indirectly, make payments to or distributions from the Collection Account except
in accordance with this Indenture and the other Basic Documents.
SECTION 3.15. Notice of Events of Default. The Issuer agrees to give
the Indenture Trustee, the Insurer and each Rating Agency prompt written notice
of each Event of Default hereunder and each default on the part of the Servicer
or the Seller of their respective obligations under the Trust Agreement.
SECTION 3.16. Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such further acts as may be reasonably necessary or
proper to carry out more effectively the purpose of this Indenture.
SECTION 3.17. Compliance with Laws. The Issuer shall comply with the
requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
SECTION 3.18. Amendments of Trust Agreement. The Issuer shall not agree
to any amendment to Section 17.01 of the Trust Agreement to eliminate the
requirements thereunder that the Noteholders consent to amendments thereto as
provided therein.
ARTICLE IV
SATISFACTION AND DISCHARGE
SECTION 4.01. Satisfaction and Discharge of Indenture. This Indenture
shall cease to be of further effect with respect to the Notes except as to (i)
rights of registration of transfer and exchange, (ii) substitution of mutilated,
destroyed, lost or stolen Notes, (iii) rights of Noteholders to receive payments
of principal thereof and interest thereon, (iv) Sections 3.03, 3.04, 3.05, 3.07,
3.08, 3.10, 3.11, 3.12, 3.17 and 3.18, (v) the rights, obligations and
immunities of the Indenture Trustee hereunder (including the rights of the
Indenture Trustee under Section 6.07 and the obligations of the Indenture
Trustee under Section 4.02), (vi) the rights of Noteholders as beneficiaries
hereof with respect to the property so deposited with the Indenture Trustee
payable to all or any of them and (vii)
31
<PAGE>
the obligation of the Indenture Trustee to make claims under the Policy, which
shall survive the Final Maturity Date of the Class B Notes and extend through
any preference period applicable with respect to the Notes or any payments made
in respect of the Notes, and the Indenture Trustee, on demand of and at the
expense of the Issuer, shall execute proper instruments acknowledging
satisfaction and discharge of this Indenture with respect to the Notes, when
(A) either
(1) all Notes theretofore authenticated and delivered (other
than (i) Notes that have been destroyed, lost or stolen and that have been
replaced or paid as provided in Section 2.05 and (ii) Notes for whose payment
money has theretofore been deposited in trust or segregated and held in trust by
the Issuer and thereafter repaid to the Issuer or discharged from such trust, as
provided in Section 3.03) have been delivered to the Indenture Trustee for
cancellation and the Policy has expired and been returned to the Insurer for
cancellation; or
(2) all Notes not theretofore delivered to the Indenture
Trustee for cancellation
(i) have become due and payable,
(ii) will become due and payable at the Final
Maturity Date of the Class B Notes within one year, or
(iii) are to be called for redemption within one year
under arrangements satisfactory to the Indenture Trustee for the giving
of notice of redemption by the Indenture Trustee in the name, and at
the expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or Eligible Investments for such purpose, in an amount sufficient to pay and
discharge the entire indebtedness on such Notes not theretofore delivered to the
Indenture Trustee for cancellation when due to the Final Maturity Date of the
Class B Notes or Redemption Date (if Notes shall have been called for redemption
pursuant to Section 12.01), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or performed
all amounts and obligations which the Issuer may owe to or on behalf of (1) the
Indenture Trustee for the benefit of the Noteholders under this Indenture or the
Notes and (2) the Insurer under this Indenture and the Basic Documents; and
(C) the Issuer has delivered to the Indenture Trustee and the Insurer
an Officer's Certificate, an Opinion of Counsel and (if required by the TIA, the
Indenture Trustee) an Independent Certificate from a firm of certified public
accountants, each meeting the applicable requirements of Section 13.01(a) and,
subject to Section 13.02, each stating that all conditions precedent herein
32
<PAGE>
provided for relating to the satisfaction and discharge of this Indenture have
been complied with and the Rating Agency Condition has been satisfied.
SECTION 4.02. Application of Trust Money. All monies deposited with the
Indenture Trustee pursuant to Section 4.01 shall be held in trust and applied by
it, in accordance with the provisions of the Notes and this Indenture, to the
payment, either directly or through any Paying Agent, as the Indenture Trustee
may determine, to the Holders of the particular Notes for the payment or
redemption of which such monies have been deposited with the Indenture Trustee,
of all sums due and to become due thereon for principal and interest; but such
monies need not be segregated from other funds except to the extent required
herein or in the Trust Agreement or required by law.
SECTION 4.03. Repayment of Monies Held by Paying Agent. In connection
with the satisfaction and discharge of this Indenture with respect to the Notes,
all monies then held by any Paying Agent other than the Indenture Trustee under
the provisions of this Indenture with respect to such Notes shall, upon demand
of the Issuer, be paid to the Indenture Trustee to be held and applied according
to Section 3.03 and thereupon such Paying Agent shall be released from all
further liability with respect to such monies.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
SECTION 5.01. Events of Default. "Event of Default," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any interest on any Note when the same
becomes due and payable and such default shall continue for a period of five
days after notice thereof is given to the Issuer by the Indenture Trustee, the
Insurer, the Servicer, or to the Issuer and the Indenture Trustee by the Holders
of at least 25% of the Note Balances;
(b) default in the payment of any principal due and payable on a Class
of Notes on the Final Maturity Date for such Class of Notes and such default
shall continue for a period of five days after notice thereof is given to the
Issuer by the Indenture Trustee, the Insurer, the Servicer, or to the Issuer and
the Indenture Trustee by the Holders of at least 25% of the Note Balances;
(c) (i) default in the observance or performance of any covenant or
agreement of the Issuer made in this Indenture (other than a covenant or
agreement, a default in the observance or performance of which is elsewhere in
this Section specifically dealt with), and such default shall continue or not be
cured for a period of 60 days after notice thereof shall have been given, by
33
<PAGE>
registered or certified mail, to the Issuer by the Indenture Trustee or the
Insurer or to the Issuer and the Indenture Trustee by the Holders of at least
25% of the Note Balances, acting together as a single class or (ii) any
representation or warranty made by the Issuer in this Indenture or in any
certificate delivered pursuant hereto or in connection herewith having been
incorrect in a material respect as of the time made, and such breach not having
been cured within 30 days after notice thereof is given to the Issuer by the
Indenture Trustee or the Insurer, or to the Issuer and the Indenture Trustee by
the holders of at least 25% of the Note Balances of the Notes acting together as
a single class;
(d) the filing of a decree or order for relief by a court having
jurisdiction in the premises in respect of the Issuer or any substantial part of
the Pledged Assets in an involuntary case under any applicable federal or state
bankruptcy, insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator or
similar official of the Issuer or for any substantial part of the Pledged
Assets, or ordering the winding-up or liquidation of the Issuer's affairs, and
such decree or order shall remain unstayed and in effect for a period of 60
consecutive days; or
(e) the commencement by the Issuer of a voluntary case under any
applicable federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect, or the consent by the Issuer to the entry of an order for
relief in an involuntary case under any such law, or the consent by the Issuer
to the appointment or taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of the Issuer or for any
substantial part of the Pledged Assets, or the making by the Issuer of any
general assignment for the benefit of creditors, or the failure by the Issuer
generally to pay its debts as such debts become due, or the taking of action by
the Issuer in furtherance of any of the foregoing;
provided, however that so long as no Insurer Default has occurred and is
continuing, neither the Indenture Trustee nor the Noteholders may declare an
Event of Default under the Indenture. So long as an Insurer Default has not
occurred and is continuing, an Event of Default shall occur only upon delivery
by the Insurer to the Indenture Trustee of notice of the occurrence of an Event
of Default. The failure to pay principal on a class of Notes shall not result in
the occurrence of an Event of Default until the Final Maturity Date for such
class of Notes.
The Issuer shall deliver to the Indenture Trustee and the Insurer,
within five days after obtaining knowledge of the occurrence thereof, written
notice in the form of an Officer's Certificate of any event which with the
giving of notice or the lapse of time would become an Event of Default, its
status and what action the Issuer is taking or proposes to take with respect
thereto.
SECTION 5.02. Rights Upon Event of Default. (a) So long as no Insurer
Default has occurred and is continuing, if an Event of Default shall have
occurred and is continuing, then the Insurer shall have the right, but not the
obligation, upon prior written notice to each Rating Agency, to declare by
written notice to the Issuer, the Servicer and the Indenture Trustee that the
Notes become immediately due and payable, and upon any such declaration the
unpaid principal amount of the Notes, together with accrued and unpaid interest
thereon, shall become immediately due and
34
<PAGE>
payable. The Indenture Trustee will have no discretion with respect to the
acceleration of the Notes under the foregoing circumstances. In the event of any
such acceleration of the Notes, the Indenture Trustee shall continue to make
claims under the Policy with respect to the Notes.
(b) If an Insurer Default shall have occurred and be continuing and an
Event of Default specified in Section 5.01(a), (b), (c), (d) or (e) shall have
occurred and be continuing, the Indenture Trustee shall, if so requested in
writing by the Noteholders representing at least 66 2/3% of the aggregate Note
Balances of the Notes, upon prior written notice to each Rating Agency, declare
that the Notes become immediately due and payable, and upon any such declaration
the unpaid principal amount of the Notes, together with accrued and unpaid
interest thereon, shall become immediately due and payable.
(c) Following any Event of Default, the Insurer may elect to pre-pay
all or any portion of the outstanding amount of the Notes, plus accrued interest
thereon to the date of payment; provided, however that the Insurer shall fulfill
its obligations under the Policy.
SECTION 5.03. Collection of Indebtedness and Suits for Enforcement by
Indenture Trustee. (a) The Issuer covenants that, if the Notes are accelerated
following the occurrence of an Event of Default, the Issuer will, upon demand of
the Indenture Trustee, pay to the Indenture Trustee, for the benefit of the
Noteholders, the whole amount then due and payable on such Notes for principal
and interest, with interest upon the overdue principal, and, to the extent
payment at such rate of interest shall be legally enforceable, upon overdue
installments of interest, at the applicable interest rates and in addition
thereto such further amount as shall be sufficient to cover the costs and
expenses of collection, including the reasonable compensation, expenses and
disbursements of the Indenture Trustee and its agents and counsel.
(b) If an Event of Default shall have occurred and be continuing, the
Indenture Trustee shall (i) if no Insurer Default has occurred and is
continuing, at the direction of the Insurer, or (ii) if an Insurer Default shall
have occurred and be continuing, at the direction of the Noteholders
representing at least 66 2/3% of the Note Balances of the Notes, as more
particularly provided in Section 5.04, proceed to protect and enforce the rights
of the Noteholders, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective to protect and enforce any such rights, whether for
the specific enforcement of any covenant or agreement in this Indenture or in
aid of the exercise of any power granted herein, or to enforce any other proper
remedy or legal or equitable right vested in the Indenture Trustee by this
Indenture or by law.
(c) In case there shall be pending, relative to the Issuer or any other
obligor upon the Notes or any Person having or claiming an ownership interest in
the Pledged Assets, Proceedings under Title 11 of the United States Code or any
other applicable federal or state bankruptcy, insolvency or other similar law,
or in case a receiver, assignee or trustee in bankruptcy or reorganization,
liquidator, sequestrator or similar official shall have been appointed for or
taken possession of the Issuer or its property or such other obligor or Person,
or in case of any other comparable judicial Proceedings relative to the Issuer
or other obligor upon the Notes, or to the
35
<PAGE>
creditors or property of the Issuer or such other obligor, the Indenture
Trustee, irrespective of whether the principal of any Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Indenture Trustee shall have made any demand pursuant to the
provisions of this Section, shall be entitled and empowered, by intervention in
such Proceedings or otherwise:
(i) to file and prove a claim or claims for the whole amount
of principal and interest owing and unpaid in respect of the Notes and
to file such other papers or documents as may be necessary or advisable
in order to have the claims of the Indenture Trustee (including any
claim for reasonable compensation to the Indenture Trustee and each
predecessor Indenture Trustee, and their respective agents, attorneys
and counsel, and for reimbursement of all expenses and liabilities
incurred by the Indenture Trustee and each predecessor Indenture
Trustee, except as a result of negligence or bad faith) and of the
Noteholders allowed in such Proceedings;
(ii) unless prohibited by applicable law and regulations, to
vote on behalf of the Noteholders in any election of a trustee, a
standby trustee or Person performing similar functions in any such
Proceedings;
(iii) to collect and receive any monies or other property
payable or deliverable on any such claims and to distribute all amounts
received with respect to the claims of the Noteholders and of the
Indenture Trustee on their behalf; and
(iv) to file such proofs of claim and other papers or
documents as may be necessary or advisable in order to have the claims
of the Indenture Trustee or the Noteholders allowed in any judicial
proceedings relative to the Issuer, its creditors and its property; and
any trustee, receiver, liquidator, custodian or other similar official
in any such Proceeding is hereby authorized by each of such Noteholders
to make payments to the Indenture Trustee, and, in the event that the
Indenture Trustee shall consent to the making of payments directly to
such Noteholders, to pay to the Indenture Trustee such amounts as shall
be sufficient to cover reasonable compensation to the Indenture
Trustee, each predecessor Indenture Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred by the Indenture Trustee and each predecessor Indenture
Trustee except as a result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize the Indenture
Trustee to authorize or consent to or vote for or accept or adopt on behalf of
any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
36
<PAGE>
(e) All rights of action and of asserting claims under this Indenture,
or under any of the Notes, may be enforced by the Indenture Trustee without the
possession of any of the Notes or the production thereof in any trial or other
Proceedings relative thereto, and any such action or Proceedings instituted by
the Indenture Trustee shall be brought in its own name as trustee of an express
trust, and any recovery of judgment, subject to the payment of the expenses,
disbursements and compensation of the Indenture Trustee, each predecessor
Indenture Trustee and their respective agents and attorneys, shall be for the
ratable benefit of the Noteholders.
(f) In any Proceedings brought by the Indenture Trustee (including any
Proceedings involving the interpretation of any provision of this Indenture),
the Indenture Trustee shall be held to represent all the Noteholders, and it
shall not be necessary to make any Noteholder a party to any such Proceedings.
SECTION 5.04. Remedies. (a) If (i) an Event of Default shall have
occurred and be continuing, the Indenture Trustee shall (subject to Section
5.04(b) below and Section 5.05), if no Insurer Default has occurred and is
continuing, at the direction of the Insurer, or (ii) if an Event of Default
shall have occurred and be continuing, the Indenture Trustee shall (subject to
Section 5.04(b) below and Section 5.05), if an Insurer Default has occurred and
is continuing, at the direction of the Noteholders representing at least 66 2/3%
of the Note Balances of the Notes, take one or more of the following actions as
so directed:
(i) institute Proceedings in its own name and as or on behalf
of a trustee of an express trust for the collection of all amounts then
payable on the Notes or under this Indenture with respect thereto,
whether by declaration or otherwise, enforce any judgment obtained, and
collect from the Issuer and any other obligor upon such Notes monies
adjudged due;
(ii) institute Proceedings from time to time for the complete
or partial foreclosure of this Indenture with respect to the Pledged
Assets;
(iii) exercise any remedies of a secured party under the UCC
and any other remedy available to the Indenture Trustee and take any
other appropriate action to protect and enforce the rights and remedies
of the Indenture Trustee on behalf of the Noteholders under this
Indenture or the Notes;
(iv) sell or cause the Servicer to otherwise liquidate the
Pledged Assets or any portion thereof or rights or interests therein,
at one or more public or private sales called and conducted in any
manner permitted by law and deliver the proceeds of such sale or
liquidation to the Indenture Trustee for distribution in accordance
with the terms of this Indenture; and
(v) maintain possession of the Pledged Assets.
(b) Notwithstanding the foregoing,
37
<PAGE>
(i) in the event that the Indenture Trustee is acting at the
direction of the Insurer, so long as no Insurer Default has occurred
and is continuing, if an Event of Default specified in Section 5.01(a),
(b) or (c) shall have occurred and be continuing, the Insurer shall not
have the right to cause the Indenture Trustee or the Servicer to, and
neither the Indenture Trustee nor the Servicer shall, liquidate the
Pledged Assets in whole or in part if the Indenture Trustee reasonably
believes that the proceeds of such sale or liquidation would not be
sufficient to pay all outstanding principal of and accrued interest on
the Notes; and
(ii) in the event that the Indenture Trustee is acting at the
direction of the Noteholders representing at least 66 2/3% of the Note
Balances of the Notes (so long as an Insurer Default has occurred and
is continuing), the Noteholders shall not have the right to direct the
Indenture Trustee or the Servicer to, and neither the Indenture Trustee
nor the Servicer shall, liquidate the Pledged Assets in whole or in
part unless an Event of Default as specified in Section 5.01(d) or (e)
shall have occurred and be continuing.
(c) In determining the sufficiency or insufficiency of the proceeds of
a sale or liquidation of the Pledged Assets to pay all amounts required pursuant
to Section 5.04(b)(i) above, the Indenture Trustee may, but need not, at the
sole expense of the Issuer obtain and rely upon an opinion of an Independent
investment banking or accounting firm of national reputation as to the
feasibility of such proposed action and as to the sufficiency of the Pledged
Assets for such purpose.
SECTION 5.05. Optional Preservation of the Receivables. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall, absent direction to the contrary from the
Insurer or the Noteholders pursuant to Section 5.04, maintain possession of the
Pledged Assets.
SECTION 5.06. Priorities. (a) If the Notes have been declared to be due
and payable under Section 5.02 following an Event of Default and such
declaration and its consequences have not been rescinded and annulled, any money
collected by the Indenture Trustee with respect to the Pledged Assets or the
Notes pursuant to this Article or otherwise and any money that may then be held
or thereafter received by the Indenture Trustee with respect to the Pledged
Assets or the Notes (excluding any payments made under the Policy), shall be
applied as follows, notwithstanding the provisions of Section 9.04(a) to the
contrary:
(i) first, to pay any unpaid Monthly Servicing Fee and
Outstanding Advances to the Servicer;
(ii) second, to pay any accrued and unpaid fees of the
Indenture Trustee and the Owner Trustee without preference or priority
of any kind;
38
<PAGE>
(iii) third, to pay Monthly Interest on each Class of Class A
Notes on a pro rata basis based on the interest accrued (including
interest accrued on past due interest) on each Class of Class A Notes;
(iv) fourth, to pay Monthly Interest on the Class B Notes
(including accrued interest on past due interest);
(v) fifth, to pay principal on each Class of Class A Notes, on
a pro rata basis based on the Note Balance of each Class of Class A
Notes, until the Note Balance of each Class of Class A Notes is reduced
to zero;
(vi) sixth, to pay principal on the Class B Notes until the
Class B Note Balance is reduced to zero;
(vii) seventh, to pay amounts owing the Insurer under the
Insurance Agreement; and
(viii) eighth, to the Spread Account, to be applied in
accordance with Section 10.02 hereof and the Trust Agreement.
(b) The Indenture Trustee may fix a record date and payment date for
any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
SECTION 5.07. Limitation of Suits. No Holder of any Note shall have any
right to institute any Proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless:
(i) such Holder has previously given written notice to the
Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Note Balances of
the Notes have made written request to the Indenture Trustee to
institute such Proceeding in respect of such Event of Default in its
own name as Indenture Trustee hereunder;
(iii) such Holder or Holders have offered to the Indenture
Trustee reasonable indemnity against the costs, expenses and
liabilities to be incurred in complying with such request;
(iv) the Indenture Trustee for 60 days after its receipt of
such notice, request and offer of indemnity has failed to institute
such Proceedings;
39
<PAGE>
(v) no direction inconsistent with such written request has
been given to the Indenture Trustee during such 60-day period by the
Holders of a majority of the Note Balances, voting together as a single
class; and
(vi) an Insurer Default shall have occurred and be continuing.
It is understood and intended that no one or more Noteholders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other
Noteholders or to obtain or to seek to obtain priority or preference over any
other Holders or to enforce any right under this Indenture, except in the manner
herein provided.
In the event the Indenture Trustee shall receive conflicting or
inconsistent requests and indemnity from two or more groups of Noteholders, each
representing less than a majority of the Note Balances of the Notes, the
Indenture Trustee in its sole discretion may determine which action, if any,
shall be taken, notwithstanding any other provisions of this Indenture and any
such action shall be binding on all parties.
SECTION 5.08. Unconditional Rights of Noteholders to Receive Principal
and Interest. Notwithstanding any other provisions in this Indenture, the Holder
of any Note shall have the right, which is absolute and unconditional, to
receive payments of Monthly Interest and Monthly Principal on such Note on or
after the respective due dates thereof expressed in such Note or in this
Indenture (or, in the case of redemption, on or after the Redemption Date) and
to institute suit for the enforcement of any such payment, and such right shall
not be impaired without the consent of such Holder.
SECTION 5.09. Restoration of Rights and Remedies. If the Indenture
Trustee, the Insurer or any Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee, the Insurer or to such Noteholder, then and in every such
case the Issuer, the Indenture Trustee, the Insurer and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such Proceeding had been instituted.
SECTION 5.10. Rights and Remedies Cumulative. No right or remedy herein
conferred upon or reserved to the Indenture Trustee, the Insurer or to the
Noteholders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
40
<PAGE>
SECTION 5.11. Delay or Omission Not a Waiver. No delay or omission of
the Indenture Trustee, the Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an acquiescence therein. Every right and remedy given by this Article
Five or by law to the Indenture Trustee, the Insurer or to the Noteholders may
be exercised from time to time, and as often as may be deemed expedient, by the
Indenture Trustee, the Insurer or by the Noteholders, as the case may be.
SECTION 5.12. Control by Noteholders. The Holders of a majority of the
Note Balances of the Notes shall have the right to direct the time, method and
place of conducting any Proceeding for any remedy available to the Indenture
Trustee with respect to the Notes or exercising any trust or power conferred on
the Indenture Trustee; provided that:
(i) such direction shall not be in conflict with any rule of
law or with this Indenture;
(ii) any direction to the Indenture Trustee to sell or
liquidate the Pledged Assets shall be subject to the terms of Section
5.04; and
(iii) the Indenture Trustee may take any other action deemed
proper by the Indenture Trustee that is not inconsistent with such
direction.
Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines,
in its sole discretion, might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
SECTION 5.13. Waiver of Past Defaults. Prior to the declaration of the
acceleration of the maturity of the Notes as provided in Section 5.02, the
Insurer or, if an Insurer Default has occurred and is continuing, the
Noteholders representing not less than a majority of the Note Balances with the
consent of the Insurer may waive any past Default or Event of Default and its
consequences except a Default (a) in the payment of principal or interest on any
of the Notes or (b) in respect of a covenant or provision hereof that cannot be
modified or amended without the consent of the Holder of each Note, as
applicable. In the case of any such waiver, the Issuer, the Indenture Trustee,
the Insurer and the Noteholders shall be restored to their former positions and
rights hereunder, respectively; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed
to have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
41
<PAGE>
SECTION 5.14. Undertaking for Costs. All parties to this Indenture
agree, and each Holder of any Note by such Holder's acceptance thereof shall be
deemed to have agreed, that any court may in its discretion require, in any suit
for the enforcement of any right or remedy under this Indenture, or in any suit
against the Indenture Trustee for any action taken, suffered or omitted by it as
Indenture Trustee, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; but the
provisions of this Section shall not apply to (i) any suit instituted by the
Indenture Trustee, (ii) any suit instituted by any Noteholder, or group of
Noteholders, in each case holding in the aggregate more than 10% of the Note
Balances or (iii) any suit instituted by any Noteholder for the enforcement of
the payment of principal of or interest on any Note on or after the respective
due dates expressed in such Note and in this Indenture (or, in the case of
redemption, on or after the Redemption Date).
SECTION 5.15. Waiver of Stay or Extension Laws. The Issuer covenants
(to the extent that it may lawfully do so) that it will not at any time insist
upon, or plead or in any manner whatsoever, claim or take the benefit or
advantage of, any stay or extension law or any valuation or appraisement law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Issuer (to the extent
that it may lawfully do so) hereby expressly waives all benefit or advantages of
any such law, and covenants that it will not hinder, delay or impede the
execution of any power herein granted to the Indenture Trustee, but will suffer
and permit the execution of every such power as though no such law had been
enacted.
SECTION 5.16. Action on Notes. The Indenture Trustee's right to seek
and recover judgment on the Notes or under this Indenture shall not be affected
by the seeking, obtaining or application of any other relief under or with
respect to this Indenture. Neither the lien of this Indenture nor any rights or
remedies of the Indenture Trustee or the Noteholders shall be impaired by the
recovery of any judgment by the Indenture Trustee against the Issuer or by the
levy of any execution under such judgment upon any portion of the Pledged Assets
or upon any of the assets of the Issuer. Any money or property collected by the
Indenture Trustee shall be applied in accordance with Section 5.06.
SECTION 5.17. Performance and Enforcement of Certain Obligations. (a)
Promptly following a request from the Indenture Trustee to do so and at the
Administrator's expense, the Issuer shall take all such lawful action as the
Indenture Trustee may request to compel or secure the performance and observance
by the Seller and the Servicer as applicable, of each of their obligations to
the Issuer under or in connection with the Trust Agreement in accordance with
the terms thereof, and to exercise any and all rights, remedies, powers and
privileges lawfully available to the Issuer under or in connection with the
Trust Agreement to the extent and in the manner directed by the Indenture
Trustee, including the transmission of notices of default on the part of the
Seller or the Servicer thereunder and the institution of legal or administrative
actions or proceedings to compel or secure performance by the Seller or the
Servicer of each of their obligations under the Trust Agreement.
42
<PAGE>
(b) If the Indenture Trustee is the Controlling Party and if an Event
of Default has occurred and is continuing, the Indenture Trustee may, and at the
direction (which direction shall be given in writing and may include a
facsimile) of the Holders of 66 2/3% of the Note Balances shall, exercise all
rights, remedies, powers, privileges and claims of the Issuer against the Seller
or the Servicer under or in connection with the Trust Agreement, including the
right or power to take any action to compel or secure performance or observance
by the Seller or the Servicer of each of their obligations to the Issuer
thereunder and to give any consent, request, notice, direction, approval,
extension or waiver under the Trust Agreement, and any right of the Issuer to
take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
SECTION 6.01. Duties of Indenture Trustee. (a) If an Event of Default
has occurred and is continuing, the Indenture Trustee shall exercise the rights
and powers vested in it by this Indenture and with the same degree of care and
skill in their exercise as a prudent person would exercise or use under the
circumstances in the conduct of such person's own affairs; provided, however,
that if the Indenture Trustee shall assume the duties of the Servicer pursuant
to Section 3.07(e), the Indenture Trustee in performing such duties shall use
the degree of care and skill customarily exercised by a prudent institutional
servicer with respect to automobile retail installment sales contracts that it
services for itself or others.
(b) Except during the continuance of an Event of Default of which a
Responsible Officer of the Indenture Trustee shall have actual knowledge or
written notice:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this Indenture
and no implied covenants or obligations shall be read into this
Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Indenture Trustee and conforming to the
requirements of this Indenture; however, the Indenture Trustee shall
examine the certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and the other Basic
Documents to which the Indenture Trustee is a party; provided, however,
that the Indenture Trustee shall not be responsible for the accuracy or
content of any of the aforementioned documents and the Indenture
Trustee shall have no obligation to verify, re-compute or recalculate
any numerical information provided to it pursuant to the Basic
Documents.
(c) The Indenture Trustee may not be relieved from liability for its
own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
43
<PAGE>
(i) this paragraph does not limit the effect of Section
6.01(b);
(ii) the Indenture Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer unless it is
proved that the Indenture Trustee was negligent in ascertaining the
pertinent facts; and
(iii) the Indenture Trustee shall not be liable with respect
to any action it takes or omits to take in good faith in accordance
with a direction received by it pursuant to Section 5.12.
(d) Every provision of this Indenture that in any way relates to the
Indenture Trustee is subject to paragraphs (a), (b) and (c) of this Section.
(e) The Indenture Trustee shall not be liable for interest on any money
received by it.
(f) Money held in trust by the Indenture Trustee need not be segregated
from other funds except to the extent required by law or the terms of this
Indenture or the Trust Agreement.
(g) No provision of this Indenture shall require the Indenture Trustee
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 it shall have reasonable grounds to believe that repayments
of such funds or adequate indemnity against such risk or liability is not
reasonably assured to it.
(h) Every provision of this Indenture relating to the conduct or
affecting the liability of or affording protection to the Indenture Trustee
shall be subject to the provisions of this Section and to the provisions of the
TIA.
(i) The Indenture Trustee shall, and hereby agrees that it will (i)
perform all of the obligations and duties required of it under the Trust
Agreement and (ii) hold the Policy in trust, and will hold any proceeds of any
claim on the Policy in trust solely for application as provided in the Trust
Agreement.
(j) The Indenture Trustee shall have no discretionary duties other than
performing those ministerial acts set forth in this Indenture to accomplish the
purpose of this Trust as set forth in this Indenture or as otherwise required
under the TIA.
(k) The Indenture Trustee shall not be liable in its individual
capacity with respect to any action taken, suffered or omitted to be taken by it
in good faith in accordance with this Indenture or at the direction of a
majority of the Outstanding Note Balances, relating to the time, method and
place of conducting any proceeding for any remedy available to the Indenture
Trustee, or exercising or omitting to exercise any trust or power conferred upon
the Indenture Trustee, under this Indenture.
44
<PAGE>
(l) The Indenture Trustee shall not be required to take notice or be
deemed to have notice or knowledge of any Default or Event of Default unless a
Responsible Officer of the Indenture Trustee shall have received written notice
thereof. In the absence of receipt of such notice, the Indenture Trustee may
conclusively assume that there is no Default or Event of Default.
(m) Subject to the other provisions of this Indenture, the Indenture
Trustee shall have no duty (i) to see to any recording, filing, or depositing of
this Agreement or any agreement referred to herein or any financing statement or
continuation statement evidencing a security interest, or to see to the
maintenance of any such recording or filing or depositing or to any rerecording,
refiling or redepositing of any thereof, (ii) to see to any insurance, (iii) to
see to the payment or discharge of any tax, assessment, or other governmental
charge or any lien or encumbrance of any kind owing with respect to, assessed or
levied against, any part of the Pledged Assets, or (iv) to confirm or verify the
contents of any reports or certificates delivered to the Indenture Trustee
pursuant to this Indenture believed by the Indenture Trustee to be genuine and
to have been signed or presented by the proper party or parties.
(n) Anything in this Agreement to the contrary notwithstanding, in no
event shall the Indenture Trustee be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Indenture Trustee has been advised of the
likelihood of such loss or damage regardless of the form of action.
(o) Notwithstanding the foregoing or any other provision in this
Indenture to the contrary, the Indenture Trustee shall be liable in its
commercial capacity for losses attributable to its failure to make payments on
Eligible Investments issued by the Indenture Trustee in its commercial capacity
as principal obligor and not as Indenture Trustee, in accordance with the terms
of the agreements or instruments governing any such Eligible Investments;
(p) The Indenture Trustee shall acknowledge and accept the
Administration Agreement on behalf of the Secured Parties.
SECTION 6.02. Rights of Indenture Trustee.
(a) Except as otherwise provided in the second succeeding sentence, the
Indenture Trustee may conclusively rely and shall be protected in acting upon or
refraining from acting upon any resolution, certificate, statement, instrument,
opinion, report, notice, request, consent, order, note, direction, demand,
election or other paper or document believed by it to be genuine and to have
been signed or presented by the proper person. The Indenture Trustee need not
investigate any fact or matter stated in the document. Notwithstanding the
foregoing, the Indenture Trustee, subject to Section 6.01(b)(ii) upon receipt of
all resolutions, certificates, statements, opinions, reports, documents, orders
or other instruments furnished to the Indenture Trustee that shall be
specifically required to be furnished pursuant to any provision of this
Indenture, shall examine them to determine whether they comply as to form to the
requirements of this Indenture.
45
<PAGE>
(b) Before the Indenture Trustee acts or refrains from acting, it may
require an Officer's Certificate (with respect to factual matters) or an Opinion
of Counsel, as applicable. The Indenture Trustee shall not be liable for any
action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent, attorney, custodian or nominee appointed by the Indenture Trustee with
due care.
(d) The Indenture Trustee shall not be liable for any action it takes
or omits to take in good faith which it believes to be authorized or within its
rights or powers; provided, however, that the Indenture Trustee's conduct does
not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the advice or
opinion of counsel with respect to legal matters relating to this Indenture and
the Notes shall be full and complete authorization and protection from liability
in respect to any action taken, omitted or suffered by it hereunder in good
faith and in accordance with the advice or opinion of such counsel.
(f) The Indenture Trustee shall be under no obligation to exercise any
of the trusts or powers vested in it by this Indenture or to institute, conduct
or defend any litigation hereunder or in relation hereto at the request, order
or direction of any of the Noteholders, pursuant to the provisions of this
Indenture, unless such Noteholders shall have offered to the Indenture Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby.
(g) The Indenture Trustee shall not be bound to make any investigation
into the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond or
other paper or document, unless requested in writing to do so by a majority of
Noteholders; provided, however, that if the payment within a reasonable time to
the Indenture Trustee of the costs, expenses or liabilities likely to be
incurred by it in the making of such investigation is, in the opinion of the
Indenture Trustee, not reasonably assured to the Indenture Trustee by the
security afforded to it by the terms of this Agreement, the Indenture Trustee
may require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action.
(h) The right of the Indenture Trustee to perform any discretionary act
enumerated in this Indenture shall not be construed as a duty, and the Indenture
Trustee shall not be answerable for other than its willful misconduct,
negligence or bad faith in the performance of such act.
SECTION 6.03. Individual Rights of Indenture Trustee. The Indenture
Trustee in its individual or any other capacity may become the owner or pledgee
of Notes and may otherwise deal with the Issuer or its Affiliates with the same
rights it would have if it were not Indenture Trustee.
46
<PAGE>
Any Paying Agent, Note Registrar, co-registrar or co-paying agent may do the
same with like rights. However, the Indenture Trustee is required to comply with
Sections 6.11 and 6.12.
SECTION 6.04. Indenture Trustee's Disclaimer. The Indenture Trustee
shall not be responsible for and makes no representation as to the validity or
adequacy of this Indenture, the Pledged Assets or the Notes, it shall not be
accountable for the Issuer's use of the proceeds from the Notes, and it shall
not be responsible for any statement of the Issuer in this Indenture or in any
document issued in connection with the sale of the Notes or in the Notes other
than the Indenture Trustee's certificate of authentication.
SECTION 6.05. Notice of Defaults. If a Default occurs and is continuing
and a Responsible Officer of the Indenture Trustee has actual knowledge or has
received written notice thereof, the Indenture Trustee shall mail to each
Noteholder and the Insurer notice of the Default within 90 days after it occurs.
Except in the case of a Default in payment of principal of or interest on any
Note (including payments pursuant to the redemption of Notes), the Indenture
Trustee may withhold the notice if and so long as a committee of its Responsible
Officers in good faith determines that withholding the notice is in the
interests of Noteholders.
SECTION 6.06. Reports by Indenture Trustee to Holders. The Indenture
Trustee shall deliver to each Noteholder such information as it customarily
provides to enable such Holder to prepare its federal and state income tax
returns.
SECTION 6.07. Compensation and Indemnity. The Issuer shall cause the
Servicer to pay to the Indenture Trustee from time to time reasonable
compensation for its services. The Indenture Trustee's compensation shall not be
limited by any law on compensation of a trustee of an express trust. The Issuer
shall cause the Servicer to reimburse the Indenture Trustee for all reasonable
out-of-pocket expenses incurred or made by it, including costs of collection, in
addition to the compensation for its services. Such expenses shall include the
reasonable compensation and expenses and disbursements and advances of the
Indenture Trustee's agents, counsel, accountants and experts. The Issuer shall,
or shall cause the Administrator to, indemnify the Indenture Trustee against any
and all loss, liability or expense (including attorneys' fees) incurred by it in
connection with the administration of this trust and the performance of its
duties hereunder. The Indenture Trustee shall notify the Issuer and the
Administrator promptly of any claim for which it may seek indemnity. Failure by
the Indenture Trustee to so notify the Issuer and the Administrator shall not
relieve the Issuer or the Administrator of its obligations hereunder. The Issuer
shall, or shall cause the Administrator to, defend any such claim, and the
Indenture Trustee may have separate counsel and the Issuer shall, or shall cause
the Administrator to, pay the fees and expenses of such counsel. Neither the
Issuer nor the Administrator need reimburse any expense or indemnify against any
loss, liability or expense incurred by the Indenture Trustee through the
Indenture Trustee's own willful misconduct, negligence or bad faith.
The Issuer's obligations to the Indenture Trustee pursuant to this
Section shall survive the resignation or removal of the Indenture Trustee and
the discharge of this Indenture. When the
47
<PAGE>
Indenture Trustee incurs expenses after the occurrence of a Default specified in
Section 5.01(e) or (f) with respect to the Issuer, the expenses are intended to
constitute expenses of administration under Title 11 of the United States Code
or any other applicable federal or state bankruptcy, insolvency or similar law.
SECTION 6.08. Replacement of Indenture Trustee. The Indenture Trustee
may resign at any time by so notifying the Issuer, the Servicer and the Insurer.
The Issuer, may, with the consent of the Insurer, and, unless an Insurer Default
shall have occurred and be continuing, at the request of the Insurer shall,
remove the Indenture Trustee if:
(i) the Indenture Trustee fails to comply with Section 6.11;
(ii) a court having jurisdiction in the premises in respect of
the Indenture Trustee in an involuntary case or proceeding under
federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, shall have entered a decree or order
granting relief or appointing a receiver, liquidator, assignee,
custodian, trustee, conservator, sequestrator (or similar official) for
the Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or ordering the winding-up or liquidation of the
Indenture Trustee's affairs, provided any such decree or order shall
have continued unstayed and in effect for a period of 30 consecutive
days;
(iii) the Indenture Trustee commences a voluntary case under
any federal or state banking or bankruptcy laws, as now or hereafter
constituted, or any other applicable federal or state bankruptcy,
insolvency or other similar law, or consents to the appointment of or
taking possession by a receiver, liquidator, assignee, custodian,
trustee, conservator, sequestrator or other similar official for the
Indenture Trustee or for any substantial part of the Indenture
Trustee's property, or makes any assignment for the benefit of
creditors or fails generally to pay its debts as such debts become due
or takes any corporate action in furtherance of any of the foregoing;
or
(iv) the Indenture Trustee otherwise becomes incapable of
acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists
in the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Insurer.
A successor Indenture Trustee shall deliver a written acceptance of
its appointment to the retiring Indenture Trustee and to the Issuer. Thereupon
the resignation or removal of the retiring Indenture Trustee shall become
effective, and the successor Indenture Trustee shall have all the rights, powers
and duties of the Indenture Trustee under this Indenture. The Issuer or the
successor
48
<PAGE>
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of the Outstanding
Note Balances may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of
a successor Indenture Trustee pursuant to the provisions of this Section shall
not become effective until acceptance of appointment by the successor Indenture
Trustee pursuant to this Section and payment of all fees and expenses owed to
the outgoing Indenture Trustee. Notwithstanding the replacement of the Indenture
Trustee pursuant to this Section, the retiring Indenture Trustee shall be
entitled to payment or reimbursement of such amounts as such Person is entitled
pursuant to Section 6.07.
SECTION 6.09. Successor Indenture Trustee by Merger. If the Indenture
Trustee consolidates with, merges or converts into, or transfers all or
substantially all its corporate trust business or assets to, another corporation
or banking association, the resulting, surviving or transferee corporation
without any further act shall be the successor Indenture Trustee; provided, that
such corporation or banking association shall be otherwise qualified and
eligible under Section 6.11. The Indenture Trustee shall provide the Insurer and
each Rating Agency prompt notice of any such transaction.
In case at the time such successor by merger, conversion or
consolidation to the Indenture Trustee shall succeed to the trusts created by
this Indenture any of the Notes shall have been authenticated but not delivered,
any such successor to the Indenture Trustee may adopt the certificate of
authentication of any predecessor trustee, and deliver such Notes so
authenticated; and in case at that time any of the Notes shall not have been
authenticated, any successor to the Indenture Trustee may authenticate such
Notes either in the name of any predecessor hereunder or in the name of the
successor to the Indenture Trustee; and in all such cases such certificates
shall have the full force and effect of the certificate of the Indenture Trustee
pursuant to the Notes or this Indenture.
SECTION 6.10. Appointment of Co-Indenture Trustee or Separate Indenture
Trustee.
(a) Notwithstanding any other provision of this Indenture, at any time,
for the purpose of meeting any legal requirement of any jurisdiction in which
any part of the Pledged Assets may at the time be located, the Indenture Trustee
shall have the power and may execute and deliver all instruments to appoint one
or more Persons to act as a co-trustee or co-trustees, jointly with the
Indenture Trustee, or separate trustee or separate trustees, of all or any part
of the Trust, and to vest
49
<PAGE>
in such Person or Persons, in such capacity and for the benefit of the
Noteholders, such title to the Pledged Assets, or any part hereof, and, subject
to the other provisions of this Section, such powers, duties, obligations,
rights and trusts as the Indenture Trustee may consider necessary or desirable.
No co-trustee or separate trustee hereunder shall be required to meet the terms
of eligibility as a successor Indenture Trustee under Section 6.11 and no notice
to Noteholders of the appointment of any co-trustee or separate trustee shall be
required under Section 6.08.
(b) Every 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 Indenture Trustee shall be conferred or imposed upon
and exercised or performed by the Indenture 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
Indenture Trustee joining in such act), except to the extent that under
any law of any jurisdiction in which any particular act or acts are to
be performed the Indenture 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 Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by reason
of any act or omission of any other trustee hereunder; and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture 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 Indenture and
the conditions of this Article. 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 co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including every provision relating to the
conduct of, affecting the liability of, or affording protection to, the
Indenture Trustee.
Every such instrument shall be filed with the Indenture Trustee.
(d) Any separate trustee or co-trustee may at any time constitute the
Indenture Trustee, its agent or attorney-in-fact with full power and authority,
to the extent not prohibited by law, to do any lawful act under or in respect of
this Indenture 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 Indenture Trustee, to the extent permitted by law, without the
appointment of a new or successor trustee. Notwithstanding
50
<PAGE>
anything to the contrary in this Indenture, the appointment of any separate
trustee or co-trustee shall not relieve the Indenture Trustee of its obligations
and duties under this Indenture.
SECTION 6.11. Eligibility. The Indenture Trustee shall at all times
satisfy the requirements of TIA Section 310(a). The Indenture Trustee hereunder
shall at all times be a financial institution organized and doing business under
the laws of the United States of America or any state, authorized under such
laws to exercise corporate trust powers, whose long term unsecured debt is rated
at least Baa3 by Moody's and shall have a combined capital and surplus of at
least $50,000,000 or shall be a member of a bank holding system to the aggregate
combined capital and surplus of which is $50,000,000 and subject to supervision
or examination by federal or state authority, provided that the Trustee's
separate capital and surplus shall at all times be at least the amount required
by Section 310(a)(2) of the TIA. If such Person publishes reports of condition
at least annually, pursuant to law or to the requirements of a supervising or
examining authority, then for the purposes of this Section 6.11, the combined
capital and surplus of such Person 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 6.11, the Trustee shall resign immediately in the
manner and with the effect specified in Section 6.08. The Indenture Trustee
shall comply with TIA Section 310(b); provided, however, that there shall be
excluded from the operation of TIA Section 310(b)(1) any indenture or indentures
under which other securities of the Issuer are outstanding if the requirements
for such exclusion set forth in TIA Sections 310(b)(1) are met.
SECTION 6.12. Preferential Collection of Claims Against Issuer. The
Indenture Trustee shall comply with TIA Section 311(a), excluding any creditor
relationship listed in TIA Section 311(b). An Indenture Trustee who has resigned
or been removed shall be subject to Section 311(a) to the extent indicated.
SECTION 6.13. Representations and Warranties of Indenture Trustee. The
Indenture Trustee hereby makes the following representations and warranties on
which the Issuer and Noteholders shall rely:
(a) the Indenture Trustee is a corporation duly organized, validly
existing and in good standing under the laws of its place of incorporation; and
(b) the Indenture Trustee has full power, authority and legal right to
execute, deliver, and perform this Indenture and shall have taken all necessary
action to authorize the execution, delivery and performance by it of this
Indenture.
(c) this Indenture has been duly executed and delivered by the
Indenture Trustee and constitutes the legal, valid, and binding agreement of the
Indenture 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 apply in the event of
51
<PAGE>
a bankruptcy, insolvency, liquidation, reorganization, moratorium,
conservatorship, receivership or similar occurrence affecting the Indenture
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 VII
NOTEHOLDERS' LISTS AND REPORTS
SECTION 7.01. Issuer to Furnish Names and Addresses of Noteholders. (a)
The Issuer will furnish or cause to be furnished to the Indenture Trustee or the
Servicer (i) not more than five days after the earlier of (1) each Record Date
and (2) three months after the last Record Date, a list, in such form as the
Indenture Trustee may reasonably require, of the names and addresses of the
Noteholders as of such Record Date and (ii) at such other times as the Indenture
Trustee may request in writing, within 15 days after receipt by the Issuer of
any such request, a list of similar form and content as of a date not more than
ten days prior to the time such list is furnished; provided, however, that so
long as the Indenture Trustee is the Note Registrar, no such list shall be
required to be furnished to the Indenture Trustee, but shall be provided by the
Note Registrar to the Servicer, upon request, as provided above. The Indenture
Trustee or, if the Indenture Trustee is not the Note Registrar, the Issuer shall
furnish to the Insurer in writing at such times as the Insurer may reasonably
request a copy of the list.
SECTION 7.02. Preservation of Information; Communications to
Noteholders.
(a) The Indenture Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of the Noteholders contained in
the most recent list furnished to the Indenture Trustee as provided in Section
7.01 and the names and addresses of Noteholders received by the Indenture
Trustee in its capacity as Note Registrar. The Indenture Trustee may destroy any
list furnished to it as provided in such Section 7.01 upon receipt of a new list
so furnished.
(b) Noteholders may communicate pursuant to TIA Section 312(b) with
other Noteholders with respect to their rights under this Indenture or under the
Notes.
(c) The Issuer, the Indenture Trustee and the Note Registrar shall have
the protection of TIA Section 312(c).
SECTION 7.03. Reports by Issuer. (a) The Issuer shall:
(i) file with the Indenture Trustee, within 15 days after the
Issuer is required to file the same with the Commission, copies of the
annual reports and of the information, documents and other reports (or
copies of such portions of any of the foregoing as the Commission may
from time to time by rules and regulations prescribe) which the Issuer
may be required to file with the Commission pursuant to Section 13 or
15(d) of the Exchange Act;
52
<PAGE>
(ii) file with the Indenture Trustee and the Commission in
accordance with rules and regulations prescribed from time to time by
the Commission such additional information, documents and reports with
respect to compliance by the Issuer with the conditions and covenants
of this Indenture as may be required from time to time by such rules
and regulations; and
(iii) supply to the Indenture Trustee (and the Indenture
Trustee shall transmit by mail to all Noteholders described in TIA
Section 313(c)) such summaries of any information, documents and
reports required to be filed by the Issuer pursuant to clauses (i) and
(ii) of this Section 7.03(a) as may be required by rules and
regulations prescribed from time to time by the Commission.
(b) Unless the Issuer otherwise determines, the fiscal year of the
Issuer shall end on June 30 of each year.
SECTION 7.04. Reports by Indenture Trustee. To the extent that any of
the events described in TIA Section 313(a) shall have occurred, the Indenture
Trustee shall, within 60 days after each December 15 beginning with December 15,
1999, mail to the Issuer, the Insurer and each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
ARTICLE VIII
INTENTIONALLY BLANK
ARTICLE IX
DISTRIBUTIONS; STATEMENTS TO THE NOTEHOLDERS
SECTION 9.01. Collection Account. The Issuer shall cause the Servicer
to establish the Collection Account with the Indenture Trustee or another
Eligible Bank as a segregated trust account in the name of the Indenture Trustee
for the benefit of the Secured Parties. The amounts in the Collection Account
shall be invested in Eligible Investments that mature not later than the
Business Day prior to the next succeeding Payment Date and such Eligible
Investments shall be held to maturity. The Indenture 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 Indenture Trustee or registered in the name
of the Indenture Trustee and (ii) cause any Eligible Investment represented by
an uncertificated security to be registered in the name of the Indenture
Trustee.
53
<PAGE>
SECTION 9.02. Collections. The Indenture Trustee shall review the
Servicer's Certificate prepared by the Servicer immediately upon receipt thereof
pursuant to Section 9.02 of the Trust Agreement.
For any Payment Date on which there will not be sufficient Available
Funds to make the distributions required pursuant to Sections 9.04(a)(i) through
(vi), the Indenture Trustee shall withdraw or direct the Servicer to withdraw
from the Spread Account, to the extent of the Available Spread Amount, an amount
equal to such deficiency (after consideration of the adjustment provided in
Section 9.04(b)(i)) and promptly deposit such amount in the Collection Account.
If such deficiency exceeds the Available Spread Amount, the Indenture Trustee
shall notify the Insurer of the amount of such excess deficiency. To the extent
the Insurer is required pursuant to the terms of the Policy to pay the amount of
such excess deficiency of the Monthly Servicing Fee, Monthly Interest and
Monthly Principal, the Indenture Trustee shall promptly (and in any event not
later than 1:00 p.m., New York City time, on the Business Day preceding the
Payment Date) deliver a Notice for Payment as defined in the Policy
(appropriately completed) to the Fiscal Agent with respect to the Policy.
The Indenture Trustee shall, immediately upon receipt, deposit in the
Collection Account any funds received by the Indenture Trustee in respect of
funds drawn under the Policy from the Insurer.
If the Available Funds for a Payment Date are insufficient to pay
current and past due Insurance Premiums on the Policy, 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 Indenture Trustee of such
deficiency, and the applicable Available Spread Amount, if any, then on deposit
in the Spread Account (after giving effect to any withdrawal to satisfy a
deficiency in the Monthly Servicing Fee, Monthly Interest or Monthly Principal,
other than amounts that would be attributable to the Accelerated Principal
Amount) shall be available to cover such deficiency.
SECTION 9.03. Purchase Amounts. Pursuant to the Trust Agreement, the
Servicer and the Seller have agreed to remit to the Collection Account not later
than the Determination Date, the aggregate Purchase Amount for such Collection
Period pursuant to Sections 7.02 and 8.07 of the Trust Agreement.
SECTION 9.04. Distributions to Parties. (a) On each Payment Date, the
Indenture Trustee shall apply or cause to be applied the Available Funds in the
Collection 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 payments in the listed order of priority:
(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 of the Trust Agreement, to the Servicer;
54
<PAGE>
(ii) To the extent not previously distributed to the Servicer,
the Monthly Servicing Fee, including any such overdue Monthly Servicing
Fee, to the Servicer;
(iii) Class A Monthly Interest (including any overdue amounts)
to the Class A Noteholders;
(iv) Class B Monthly Interest (including any overdue amounts)
to the Class B Noteholders, except that such payment will be
subordinate to Monthly Principal payable to Class A Noteholders under
clause (v) to the extent of principal in respect of a Final Maturity
Date for a class of Class A Notes on any Payment Date on which the
amount of Available Funds, plus funds withdrawn from the Spread Account
or drawn on the Policy will not be sufficient to fully pay the Note
Balance of such Class of Class A Notes.
(v) Monthly Principal (including any overdue amounts) to the
Class A Noteholders, in accordance with the Principal Payment Sequence;
(vi) Monthly Principal (including any overdue amounts) to the
Class B Noteholders in accordance with the Principal Payment Sequence;
(vii) The Insurance Premium, including any overdue Insurance
Premium, plus accrued interest thereon at the rate provided in the
Insurance Agreement, to the Insurer;
(viii) The amount of Recoveries of Advances, to the Servicer
(to the extent not applied pursuant to (i) above on or prior to such
Payment Date);
(ix) The aggregate amount of all unreimbursed draws made on
the Policy in respect of 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;
(x) The amount, if any, which is necessary to increase the
amount on deposit in the Spread Account to the Required Cash Floor, for
deposit to the Spread Account;
(xi) To the extent of remaining Available Funds, the unpaid
portion, if any, of the Accelerated Principal to the Noteholders in
accordance with the Principal Payment Sequence;
(xii) The balance for deposit in the Spread Account. The
rights of the Certificateholder to receive distributions from the
Spread Account are described in Sections 10.02(e) and (f).
(b)(i) If on any Payment Date there are not sufficient Available Funds to pay
the distributions required by Section 9.04(a)(iii) through (vi), then (1) the
amount of Monthly Principal payable on such date shall be reduced by the lesser
of (A) the amount of such shortfall and (B) the amount, if
55
<PAGE>
any, by which the Note Balances as of the preceding Payment Date (after giving
effect to all payments of principal on such date) was less than the Pool Balance
as of the end of the Collection Period to which that Payment Date relates and
(2) if there remains a shortfall, the Available Funds (together with amounts
withdrawn from the applicable Spread Account and/or the Policy) payable under
Section 9.04(a)(iii) through (vi) shall be allocated first to Class A
Noteholders pari passu for the payment of Class A Monthly Interest, second to
the Class B Noteholders in respect of Class B Monthly Interest, third to the
Class A Noteholders pari passu in respect of Class A Monthly Principal and
finally, to the Class B Noteholders in respect of Class B Monthly Principal. The
amount of Monthly Interest allocated to Class A Noteholders shall be based upon
the amount of interest due each class of Class A Noteholders and the amount of
Monthly Principal allocated to Class A Noteholders shall be based upon the
relative outstanding Note Balance of each class of Class A Notes then
Outstanding.
(ii) Notwithstanding the foregoing, if on any Payment Date,
the Certificateholder exercises its option to cause a disposition of
the remaining corpus of the Trust pursuant to Section 16.02 of the
Trust Agreement: (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 Payment Date as determined in accordance with Sections 9.02
and 9.04 shall be distributed to the Noteholders on such Payment Date;
(b) the Policy will not be available to pay any shortfall of Monthly
Interest or Monthly Principal after a prepayment of the Note Balances
pursuant to this Section 9.04(b)(ii); and (c) any remaining Pledged
Assets (including all remaining Available Spread Amounts) shall be paid
to the Noteholders on such Payment Date until the Note Balances shall
have been reduced to zero. Any amounts in excess thereof shall be
remitted to the Certificateholder pursuant to the Trust Agreement.
(iii) In making such payments the Indenture Trustee shall be
entitled to rely (without investigation, confirmation or recalculation)
upon all information and calculations contained in the Servicer's
Certificate delivered to the Indenture Trustee pursuant to Section 8.09
of the Trust Agreement.
(iv) All monthly payments shall be made by wire transfer of
immediately available funds to the Noteholder of record on the
preceding Record Date. Notwithstanding the foregoing, the final payment
on the Notes shall be made only against presentation and surrender of
the Notes at the office or agency then maintained by the Indenture
Trustee in accordance with Section 2.04 of this Indenture.
(c) On each Payment Date, if the Servicer has reported to the Indenture
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 to such Obligor for monies
previously collected and remitted to the Indenture Trustee and not otherwise
netted against collections pursuant to Section 9.02, the
56
<PAGE>
Indenture Trustee shall make all payments in respect of such claims or defenses
out of the amounts on deposit in the Collection Account with respect to such
Collection Period before making the distributions required by paragraph (a) of
this Section 9.04.
(d) If the Servicer has failed to provide the Indenture Trustee with
the notice required pursuant to Section 9.02, the Indenture Trustee may
calculate Monthly Interest and Monthly Principal and apply funds, if any, in the
Collection Account as of the last day of the Collection Period, to make a
distribution of Monthly Interest and Monthly Principal to the Noteholders.
SECTION 9.05. Servicer Advances. The Servicer is required to make
certain Advances pursuant to Section 9.05 of the Trust Agreement. If the
Servicer shall determine that an Outstanding Advance with respect to any
Receivable shall not be recoverable, the Servicer shall be entitled to
reimbursement from any collections made on other Receivables pursuant to Section
9.04(a)(i), and Outstanding Advances with respect to such Receivable shall be
reduced accordingly.
SECTION 9.06. Net Deposits. For so long as UAC is the Servicer, UAC (in
whatever capacity) may make the remittances with respect to any Payment Date
pursuant to Section 9.02 above, net of amounts to be distributed to itself or
its delegee under Section 13.06 (also in whatever capacity) pursuant to Section
9.04, if it determines pursuant to Section 9.02 that there is no deficiency in
Available Funds for such Payment Date. Nonetheless, the Servicer shall account
for all of the above described amounts as if such amounts were deposited and
distributed.
SECTION 9.07. Intentionally Blank.
SECTION 9.08. Intentionally Blank.
SECTION 9.09. Payahead Account. The Servicer shall establish the
Payahead Account with the Indenture Trustee or another Eligible Bank in the name
of the Indenture Trustee on behalf of the Obligors and the Noteholders as their
interests may appear pursuant to Section 9.09 of the Trust Agreement. 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 Payment Date, the Servicer shall transfer or the
Indenture Trustee (as instructed in the Servicer's Certificate) shall transfer
(a) from the Collection Account to the Payahead Account, in immediately
available funds, all Payaheads received by the Servicer and previously deposited
to the Collection Account during the Collection Period as described in Section
8.02(b) of the Trust Agreement; and (b) from the Payahead Account to the
Collection Account, in immediately available funds, the aggregate amount of
previously deposited Payaheads to be applied to the related Scheduled Payments
on Precomputed Receivables for the related Collection Period or prepayments for
the related Collection Period, pursuant to Section 8.02(b) of the Trust
Agreement, 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 Collection Account may be made. Any amount deposited in any
Payahead Account shall not constitute Available Funds under Section 9.02. Any
amount
57
<PAGE>
deposited to the Collection Account from a Payahead Account pursuant to Section
9.09(b) shall be included in Available Funds under Section 9.02.
SECTION 9.10. Release of Pledged Assets. (a) Subject to the payment of
its fees and expenses pursuant to Section 6.07, the Indenture Trustee may, and
when required by the provisions of this Indenture shall, execute instruments to
release property from the lien of this Indenture, or convey the Indenture
Trustee's interest in the same, in a manner and under circumstances that are not
inconsistent with the provisions of this Indenture. No party relying upon an
instrument executed by the Indenture Trustee as provided in this Article shall
be bound to ascertain the Indenture Trustee's authority, inquire into the
satisfaction of any conditions precedent or see to the application of any
monies.
(b) The Indenture Trustee shall, at such time as there are no Notes
Outstanding and all sums due the Indenture Trustee pursuant to Section 6.07 and
to the Insurer pursuant to the Insurance Agreement have been paid, release any
remaining portion of the Pledged Assets that secured the Notes from the lien of
this Indenture and release to the Issuer or any other Person entitled thereto
any funds then on deposit in the Collection Account, Spread Account and Payahead
Account. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 9.10(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 13.01.
SECTION 9.11. Opinion of Counsel. The Indenture Trustee shall receive
at least seven days' notice when requested by the Issuer to take any action
pursuant to Section 9.10(a), accompanied by copies of any instruments involved,
and the Indenture Trustee shall also require, as a condition to such action, an
Opinion of Counsel, in form and substance satisfactory to the Indenture Trustee
(and not at the expense of the Indenture Trustee), stating the legal effect of
any such action, outlining the steps required to complete the same, and
concluding that all conditions precedent to the taking of such action have been
complied with and such action will not materially and adversely impair the
security for the Notes or the rights of the Noteholders in contravention of the
provisions of this Indenture; provided, however, that such Opinion of Counsel
shall not be required to express an opinion as to the fair value of the Pledged
Assets. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
ARTICLE X
CREDIT ENHANCEMENT
SECTION 10.01. Subordination. The payment of Monthly Principal to Class
B Noteholders shall be subordinated to the payment of Class A Monthly Interest
and Class A Monthly Principal on any Payment Date and the payment of Class B
Monthly Interest shall be subordinate to the payment
58
<PAGE>
of Class A Monthly Interest and Class A Monthly Principal to the extent of
principal owed on a Final Maturity Date of a Class of Class A Notes.
SECTION 10.02. Spread Account. (a) On or prior to the Closing Date, the
Indenture Trustee shall establish and maintain a segregated trust account with
the Indenture 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 Indenture Trustee. The Spread Account and any
amounts on deposit therein shall be part of the Pledged Assets and shall be for
the benefit of Secured Parties, as their respective interests may appear herein;
provided, however, that the interest of the Insurer therein shall be
subordinated to the interests of the Noteholders 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 Collection Account pursuant to
Section 9.01, including the limitation that Eligible Investments mature not
later than the Business Day prior to the next succeeding Payment Date; provided,
however, that no such limitation on the maturity of Eligible Investments shall
apply if the Indenture Trustee 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 and the Administrative
Agent, 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
Notes will not be lowered or withdrawn as a result of eliminating or modifying
the limitation on the maturity of Eligible 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 Indenture, 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 such Spread Account,
do not exceed the Required Spread Amount.
(c) If on any Payment Date the amount of Available Funds is
insufficient to make the distributions required by Sections 9.04(a)(i) through
(vi) (after consideration of the adjustment provided in Section 9.04(b)(i)), the
Indenture Trustee shall withdraw or cause to be withdrawn from the Spread
Account and deposited in the Collection 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 Payment Date, all distributions made pursuant to Sections
9.04(a)(x) and 9.04(a)(xii) 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 Payment Date (after giving effect to the payment of the
Accelerated Principal Amount), the amount of such excess shall be distributed by
59
<PAGE>
the Indenture Trustee to the Owner Trustee, or as the Owner Trustee shall direct
in writing in accordance with the Trust Agreement to the Certificateholder.
Amounts properly distributed to the Owner Trustee or 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 security
interest of the Indenture Trustee on behalf of the Secured Parties.
(f) The Certificateholder is permitted to purchase the Receivables from
the Issuer when the Note Balances have been reduced to 10% or less of the
Initial Note Balances pursuant to Section 16.02 of the Trust Agreement. Upon
discharge and satisfaction of this Indenture pursuant to Section 16.01, amounts
remaining in the Spread Account, after payment of any amounts due and owing to
the Noteholders and to the Insurer, shall be distributed by the Indenture
Trustee to the Owner Trustee, or as the Owner Trustee shall direct in accordance
with the Trust Agreement to the Certificateholder and such amounts shall not be
subject to any claims or rights of any Noteholder.
SECTION 10.03. Policy. (a) The Insurer is required under the terms of
the Policy to pay the Monthly Servicing Fee, 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 related Outstanding
Advances) not covered by amounts withdrawn from the Spread Account, as
determined pursuant to Section 9.02 to the Indenture Trustee for credit to the
Collection Account on the later of (a) 12:00 noon, New York City time, on the
Payment Date and (b) 12:00 noon, New York City time, on the Business Day
immediately succeeding presentation to the Fiscal Agent of the Indenture
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 foregoing, on a Redemption Date, the
obligations of the Insurer under the Policy shall be limited in accordance with
Section 9.04(b)(ii). The Indenture Trustee hereby agrees on behalf of the
Noteholders (and each Noteholder, by its acceptance of its Notes, hereby agrees)
for the benefit of the Insurer that the Indenture Trustee shall recognize that
to the extent the Insurer makes a payment under the Policy, either directly or
indirectly (as by paying through the Indenture Trustee), to the Noteholders, the
Insurer will be entitled to be subrogated to the rights of the Noteholders to
the extent of such payments under the Policy. Any rights of subrogation acquired
by the Insurer as a result of any payment made under 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 Indenture Trustee on account
of payments due under the Notes pursuant to Section 9.04 hereof.
(b) The Insurer shall pay any Preference Amounts, but only after there
shall have been delivered to the Insurer (x) a certified copy of a final order
of the court exercising jurisdiction in the Insolvency Proceeding to the effect
that the Indenture Trustee is required to return any such payment or portion
thereof prior to the Termination Date (as defined in the Policy) of the Policy
because such payment was voided under applicable law, with respect to which
order the appeal period has expired without an appeal having been filed (the
"Final Order"), (y) an assignment, in the form of Exhibit D to the Policy,
irrevocably assigning to the Insurer all rights and claims of such Indenture
Trustee
60
<PAGE>
relating to or arising under such Avoided Payment and (z) a Notice for Payment
in the form of Exhibit A to the Policy appropriately completed and executed by
the Indenture Trustee. Such payment shall be disbursed to the receiver,
conservator, debtor-in-possession or trustee in bankruptcy named in the Final
Order and not to the Indenture Trustee directly. In no event shall the Insurer
pay more than one Insured Payment in respect of any Preference Amount.
The Indenture Trustee, for itself and on behalf of the Noteholders,
agrees that the Insurer may at any time during the continuation of any
proceeding relating to a Final Order direct all matters relating to such Final
Order, including, without limitation, the direction of any appeal of any order
relating to such Final Order and the posting of any surety, supersedeas or
performance bond pending any such appeal. In addition and without limitation of
the foregoing, the Insurer shall be subrogated, to the extent of the Insured
Payments, to the rights of UAC, the Servicer, the Seller, the Issuer, the
Indenture Trustee and the Noteholders in the conduct of any preference claim,
including, without limitation, all rights of any party to any adversarial
proceeding or action with respect to any court order issued in connection with
any such preference claim.
ARTICLE XI
SUPPLEMENTAL INDENTURES
SECTION 11.01. Supplemental Indentures Without Consent of Noteholders.
(a) Without the consent of the Holders of any Notes but with the
consent of the Insurer and with prior notice to each Rating Agency, the Issuer
and the Indenture Trustee, when authorized by an Issuer Order, and the other
parties hereto at any time and from time to time, may enter into one or more
indentures supplemental hereto (which shall conform to the provisions of the TIA
as in force at the date of the execution thereof), in form satisfactory to the
Indenture Trustee, for any of the following purposes:
(i) to correct or amplify the description of any property at
any time subject to the lien of this Indenture, or better to assure,
convey and confirm unto the Indenture Trustee any property subject or
required to be subjected to the lien created by this Indenture, or to
subject to the lien created by this Indenture additional property;
(ii) to evidence the succession, in compliance with the
applicable provisions hereof, of another Person to the Issuer, and the
assumption by any such successor of the covenants of the Issuer herein
and in the Notes contained;
(iii) to add to the covenants of the Issuer, for the benefit
of the Noteholders, or to surrender any right or power herein conferred
upon the Issuer;
61
<PAGE>
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any supplemental
indenture or the Basic Documents or to make any other provisions with
respect to matters or questions arising under this Indenture or in any
supplemental indenture; provided that such action shall not adversely
affect the interests of the Noteholders;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the Notes
and to add to or change any of the provisions of this Indenture as
shall be necessary to facilitate the administration of the trusts
hereunder by more than one trustee, pursuant to the requirements of
Article Six; or
(vii) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to effect the
qualification of this Indenture under the TIA or under any similar
federal statute hereafter enacted and to add to this Indenture such
other provisions as may he expressly required by the TIA.
The Indenture Trustee shall join in the execution of any such
supplemental indenture and to make any further appropriate agreements and
stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an Issuer
Order, may, also without the consent of any of the Noteholders but with the
consent of the Insurer and with prior notice to each Rating Agency, enter into
an indenture or indentures supplemental hereto for the purpose of adding any
provisions to, or changing in any manner or eliminating any of the provisions
of, this Indenture or of modifying in any manner the rights of the Noteholders
under this Indenture; provided, however, that such action shall not, as
evidenced by an Opinion of Counsel, adversely affect in any material respect the
interests of any Noteholder.
SECTION 11.02. Supplemental Indentures With Consent of Noteholders. The
Issuer and the Indenture Trustee, when authorized by an Issuer Order, also may,
with prior notice to each Rating Agency, with the consent of the Insurer and
with the consent of the Holders of not less than a majority of the Outstanding
Note Balances, by Act of such Holders delivered to the Issuer and the Indenture
Trustee, enter into an indenture or indentures supplemental hereto for the
purpose of adding any provisions to, or changing in any manner or eliminating
any of the provisions of, this Indenture or of modifying in any manner the
rights of the Noteholders under this Indenture; provided, however, that, subject
to the express rights of the Insurer under the Basic Documents, no such
supplemental indenture shall, without the consent of the Holder of each
Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of or
interest on any Note, or reduce the principal amount thereof, the interest rate
thereon or the Redemption Price with respect
62
<PAGE>
thereto, or change any place of payment where, or the coin or currency in which,
any Note or the interest thereon is payable;
(b) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article V, to the payment of any such amount due on the
Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(c) reduce the percentage of the Note Balances of the Notes, the
consent of the Holders of which is required for any such supplemental indenture,
or the consent of the Holders of which is required for any waiver of compliance
with certain provisions of this Indenture or certain defaults hereunder and
their consequences provided for in this Indenture;
(d) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(e) reduce the percentage of the Note Balances of the Notes, the
consent of the Holders of which is required to direct the Indenture Trustee to
sell or liquidate the Pledged Assets pursuant to Section 5.04;
(f) decrease the percentage of the Note Balances of the Notes required
to amend this Indenture or the other Basic Documents;
(g) permit the creation of any lien ranking prior to or on a parity
with the lien created by this Indenture with respect to any part of the Pledged
Assets or, except as otherwise permitted or contemplated herein, terminate the
lien created by this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien created by
this Indenture.
The Indenture Trustee may in its discretion determine whether or not
any Notes would be affected by any supplemental indenture and any such
determination shall be conclusive upon the Holders of all Notes, whether
theretofore or thereafter authenticated and delivered hereunder. The Indenture
Trustee shall not be liable for any such determination made in good faith.
It shall not be necessary for any act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Noteholders to which such amendment or supplemental indenture relates a notice
setting forth in general terms the substance of such supplemental indenture. Any
failure of the Indenture Trustee to mail such notice, or any defect
63
<PAGE>
therein, shall not, however, in any way impair or affect the validity of any
such supplemental indenture.
SECTION 11.03. Execution of Supplemental Indentures. In executing, or
permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
SECTION 11.04. Effect of Supplemental Indenture. Upon the execution of
any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Noteholders shall thereafter be determined, exercised
and enforced hereunder subject in all respects to such modifications and
amendments, and all the terms and conditions of any such supplemental indenture
shall be and be deemed to be part of the terms and conditions of this Indenture
for any and all purposes.
SECTION 11.05. Conformity With Trust Indenture Act. Every amendment of
this Indenture and every supplemental indenture executed pursuant to this
Article shall conform to the requirements of the Trust Indenture Act as then in
effect so long as this Indenture shall then be qualified under the Trust
Indenture Act.
SECTION 11.06. Reference in Notes to Supplemental Indentures. Notes
authenticated and delivered after the execution of any supplemental indenture
pursuant to this Article may, and if required by the Indenture Trustee shall,
bear a notation in form approved by the Indenture Trustee as to any matter
provided for in such supplemental indenture. If the Issuer or the Indenture
Trustee shall so determine, new notes so modified as to conform, in the opinion
of the Indenture Trustee and the Issuer, to any such supplemental indenture may
be prepared and executed by the Issuer and authenticated and delivered by the
Indenture Trustee in exchange for Outstanding Notes.
ARTICLE XII
REDEMPTION OF NOTES
SECTION 12.01. Redemption. In the event that the Certificateholder
pursuant to Section 16.02 of the Trust Agreement purchases the corpus of the
Trust, the Notes are subject to redemption in whole, but not in part, on the
Payment Date on which such repurchase occurs, for a purchase price equal to the
Redemption Price; provided, however, that the Issuer has available funds
sufficient to pay the Redemption Price. The Certificateholder, the Servicer or
the Issuer shall furnish the Insurer and
64
<PAGE>
each Rating Agency notice of such redemption. If the Notes are to be redeemed
pursuant to this Section 12.01, the Servicer or the Issuer shall furnish notice
of such election to the Indenture Trustee not later than ten (10) days prior to
the Redemption Date and the Issuer shall deposit with the Indenture Trustee in
the Collection Account the Redemption Price of the Notes to be redeemed
whereupon all such Notes shall be due and payable on the Redemption Date upon
the furnishing of a notice complying with Section 12.02 to each Holder of the
Notes.
SECTION 12.02. Form of Redemption Notice. Notice of redemption under
Section 12.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register. In addition, the Administrator shall notify the
Insurer and Rating Agencies upon the redemption of any Class of Notes, pursuant
to Section 2.07(b) of this Indenture.
All notices of redemption shall state:
(i) the Redemption Date;
(ii) the Redemption Price; and
(iii) the place where such Notes are to be surrendered for
payment of the Redemption Price (which shall be the office or agency of
the Issuer to be maintained as provided in Section 3.02).
Notice of redemption of the Notes shall be given by the Indenture
Trustee in the name and at the expense of the Issuer. Failure to give notice of
redemption, or any defect therein, to any Holder of any Note shall not impair or
affect the validity of the redemption of any other Note.
SECTION 12.03. Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 12.02, on the Redemption Date become due and payable at the
Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XIII
MISCELLANEOUS
SECTION 13.01. Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the Indenture
Trustee to take any action under any provision of this Indenture, the Issuer
shall furnish to the Indenture Trustee (i) an
65
<PAGE>
Officer's Certificate stating that all conditions precedent, if any, provided
for in this Indenture relating to the proposed action have been complied with,
(ii) an Opinion of Counsel stating that in the opinion of such counsel all such
conditions precedent, if any, have been complied with and (iii) (if required by
the TIA) an Independent Certificate from a firm of certified public accountants
meeting the applicable requirements of this Section and TIA Sections 314(c) and
314(d)(1). Notwithstanding the foregoing, in the case of any such application or
request as to which the furnishing of such documents is specifically required by
any provision of this Indenture, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or condition
and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such signatory,
such signatory has made such examination or investigation as is
necessary to enable such signatory to express an informed opinion as to
whether or not such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any Pledged Assets or other property or
securities with the Indenture Trustee that is to be made the basis for the
release of any property subject to the lien created by this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 13.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee and the Insurer an
Officer's Certificate certifying or stating the opinion of the signer thereof as
to the fair value (within 90 days of such deposit) to the Issuer of the Pledged
Assets or other property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (i) above, the Issuer shall also deliver to the
Indenture Trustee and the Insurer an Independent Certificate as to the
named matters, if the fair value to the Issuer of the property to be so
deposited and of all other such property made the basis of any such
withdrawal or release since the commencement of the then-current fiscal
year of the Issuer, as set forth in the Officer's Certificates
delivered pursuant to clause (i) above and this clause (ii), is 10% or
more of the Note Balances, but such Officer's Certificate need not be
furnished with respect to any property so deposited, if the fair value
thereof to the Issuer as set forth
66
<PAGE>
in the related Officer's Certificate is less than $25,000 or less than
one percent of the Note Balances.
(iii) Whenever any property or securities are to be released
from the lien created by this Indenture, the Issuer shall also furnish
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of
the property or securities proposed to be released and stating that in
the opinion of such person the proposed release will not impair the
security created by this Indenture in contravention of the provisions
hereof.
(iv) Whenever the Issuer is required to furnish to the
Indenture Trustee and the Insurer an Officer's Certificate certifying
or stating the opinion of any signer thereof as to the matters
described in clause (iii) above, the Issuer shall also furnish to the
Indenture Trustee and the Insurer an Independent Certificate as to the
same matters if the fair value of the property or securities and of all
other property or securities released from the lien created by this
Indenture since the commencement of the then current fiscal year, as
set forth in the Officer's Certificate required by clause (iii) above
and this clause (iv), equals 10% or more of the Note Balances of the
Notes, but such Officer's Certificate need not be furnished in the case
of any release of property or securities if the fair value thereof as
set forth in the related Officer's Certificate is less than $25,000 or
less than one percent of the then Note Balances of the Notes.
SECTION 13.02. Form of Documents Delivered to Indenture Trustee. In any
case where several matters are required to be certified by, or covered by an
opinion of, any specified Person, it is not necessary that all such matters be
certified by, or covered by the opinion of, only one such Person, or that they
be so certified or covered by only one document, but one such Person may certify
or give an opinion with respect to some matters and one or more other such
Persons as to other matters, and any such Person may certify or give an opinion
as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may
be based, insofar as it relates to legal matters, upon a certificate or opinion
of, or representations by, counsel, unless such officer knows, or in the
exercise of reasonable care should know, that the certificate or opinion or
representations with respect to the matters upon which his certificate or
opinion is based are erroneous. Any such certificate of an Authorized Officer or
Opinion of Counsel may be based, insofar as it relates to factual matters, upon
a certificate or opinion of, or representations by, an officer or officers of
the Servicer, the Seller or the Issuer, stating that the information with
respect to such factual matters is in the possession of the Servicer, the Seller
or the Issuer, unless such officer or counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
67
<PAGE>
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
SECTION 13.03. Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register and the
record date applicable to any solicitation for an Act of the Noteholders shall
comply with Section 3.16(c) of the TIA.
(d) Any request, demand, authorization, direction, notice, consent,
waiver or other action by the Holder of any Notes shall bind the Holder of every
Note issued upon the registration thereof or in exchange therefor or in lieu
thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
68
<PAGE>
SECTION 13.04. Notices, etc., to Indenture Trustee, Issuer, Insurer and
Rating Agencies.
(a) Any request, demand, authorization, direction, notice, consent,
waiver or Act of Noteholders or other documents provided or permitted by this
Indenture shall be in writing and if such request, demand, authorization,
direction, notice, consent, waiver or Act of Noteholders is to be made upon,
given or furnished to or filed with:
(i) the Indenture Trustee by any Noteholder or by the Issuer
shall be sufficient for every purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and confirmed or
mailed by overnight service, to or with the Indenture Trustee at its
Corporate Trust Office;
(ii) the Issuer by the Indenture Trustee or by any Noteholder
shall be sufficient for every purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and confirmed or
mailed by overnight service, to the Issuer addressed to: UACSC 1999-B,
in care of First Union Trust Company, National Association, as Owner
Trustee, One Rodney Square, 920 King Street, First Floor, Wilmington,
Delaware 19801, Attention: Corporate Trust Administration, facsimile
(302) 888-7544 or at any other address furnished in writing to the
Indenture Trustee by the Issuer; or
(iii) any Notes delivered to the Issuer hereunder shall also
be delivered (by the same means) to the Servicer and the Administrator
c/o Union Acceptance Corporation, 250 North Shadeland Avenue,
Indianapolis, Indiana 46219, Attention: Melanie S. Otto, facsimile
(317) 231-7926.
(iv) the Insurer by the Issuer or the Indenture Trustee shall
be sufficient for any purpose hereunder if in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by
overnight service, to the Insurer addressed to: MBIA Insurance
Corporation, 113 King Street, Armonk, New York 10504, Attention:
Insured Portfolio Management, Structured Finance, facsimile (914)
765-3163.
(b) Notices required to be given to the Rating Agencies by the Issuer,
the Indenture Trustee or the Owner Trustee shall be in writing, personally
delivered, sent by facsimile transmission and confirmed or mailed by overnight
service, to (i) in the case of Moody's, at the following address: Moody's
Investors Service, Inc., ABS Monitoring Department, 99 Church Street, New York,
New York 10007 and (ii) in the case of Standard & Poor's, at the following
address: Standard & Poor's Ratings Services, 26 Broadway (20th Floor), New York,
New York 10004, Attention: Asset Backed Surveillance Department; or as to each
of the foregoing, at such other address as shall be designated by written notice
to the other parties.
SECTION 13.05. Notices to Noteholders; Waiver. Where this Indenture
provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
69
<PAGE>
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed with the Indenture
Trustee but such filing shall not be a condition precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a
result of a strike, work stoppage or similar activity, it shall be impractical
to mail notice of any event to Noteholders when such notice is required to be
given pursuant to any provision of this Indenture, then any manner of giving
such notice as shall be satisfactory to the Indenture Trustee shall be deemed to
be a sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies,
failure to give such notice shall not affect any other rights or obligations
created hereunder, and shall not under any circumstance constitute a Default or
Event of Default.
SECTION 13.06. Alternate Payment and Notice Provisions. Notwithstanding
any provision of this Indenture or any of the Notes to the contrary, the Issuer
may enter into any agreement with any Holder of a Note providing for a method of
payment, or notice by the Indenture Trustee or any Paying Agent to such Holder,
that is different from the methods provided for in this Indenture for such
payments or notices. The Issuer will furnish to the Indenture Trustee a copy of
each such agreement and the Indenture Trustee will cause payments to be made and
notices to be given in accordance with such agreements.
SECTION 13.07. Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on
any Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
SECTION 13.08. Effect of Headings and Table of Contents. The Article
and Section headings herein and the Table of Contents are for convenience only
and shall not affect the construction hereof.
70
<PAGE>
SECTION 13.09. Successors and Assigns. All covenants and agreements in
this Indenture and the Notes by the Issuer shall bind its successors and
assigns, whether so expressed or not. All agreements of the Indenture Trustee in
this Indenture shall bind its successors, co-trustees and agents.
SECTION 13.10. Separability. In case any provision in this Indenture or
in the Notes shall be invalid, illegal or unenforceable, the validity, legality
and enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
SECTION 13.11. Benefits of Indenture. The Insurer and its successors
and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and directly enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. The Owner Trustee shall be a third-party beneficiary to the
provisions of this Indenture with respect to fees, expenses and indemnity upon
and following the occurrence of an Event of Default. Nothing in this Indenture
or in the Notes, express or implied, shall give to any Person, other than the
parties hereto and their successors hereunder, and the Noteholders, and any
other party secured hereunder, and any other Person with an ownership interest
in any part of the Pledged Assets, any benefit or any legal or equitable right,
remedy or claim under this Indenture. The Insurer may disclaim any of its rights
and powers under this Indenture, but not its duties and obligations under the
Policy, upon delivery of a written notice to the Indenture Trustee.
SECTION 13.12. Legal Holidays. In any case where the date on which any
payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
SECTION 13.13. Governing Law. This Indenture shall be construed in
accordance with the laws of the state of New York and the obligations, rights,
and remedies of the parties under this Indenture shall be determined in
accordance with such laws.
SECTION 13.14. Counterparts. This Indenture may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
SECTION 13.15. Recording of Indenture. If this Indenture is subject to
recording in any appropriate public recording offices, such recording is to be
effected by the Issuer and at its expense accompanied by an Opinion of Counsel
(which may be counsel to the Indenture Trustee or any other counsel reasonably
acceptable to the Indenture Trustee and the Insurer) to the effect that such
recording is necessary either for the protection of the Noteholders or any other
Person secured hereunder or for the enforcement of any right or remedy granted
to the Indenture Trustee under this Indenture.
SECTION 13.16. Trust Obligation. No recourse may be taken, directly or
indirectly, with respect to the obligations of the Issuer, the Owner Trustee or
the Indenture Trustee on the Notes or
71
<PAGE>
under this Indenture or any certificate or other writing delivered in connection
herewith or therewith, against (i) the Indenture Trustee or the Owner Trustee in
its individual capacity, (ii) any owner of a beneficial interest in the Issuer
or (iii) any partner, owner, beneficiary, agent, officer, director, employee or
agent of the Indenture Trustee or the Owner Trustee in its individual capacity,
or of any holder of a beneficial interest in the Issuer, or of any successor or
assign of the Indenture Trustee or the Owner Trustee in its individual capacity,
except as any such Person may have expressly agreed (it being understood that
the Indenture Trustee and the Owner Trustee have no such obligations in their
individual capacity) and except that any such partner, owner or beneficiary
shall be fully liable, to the extent provided by applicable law, for any unpaid
consideration for stock, unpaid capital contribution or failure to pay any
installment or call owing to such entity. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles Six, Seven and Eight of the Trust Agreement.
SECTION 13.17. No Petition. The parties hereto, by entering into this
Indenture, and each Noteholder, by accepting a Note or a beneficial interest in
a Note, hereby covenant and agree that they will not at any time institute
against the Seller or the Issuer, or join in any institution against the Seller
or the Issuer of, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings, or other proceedings under any United States Federal or
state bankruptcy or similar law in connection with any obligations relating to
the Notes, this Indenture or any of the other Basic Documents.
SECTION 13.18. Inspection. The Issuer agrees that, on reasonable prior
notice, it will permit any representative of the Indenture Trustee or of the
Insurer, during the Issuer's normal business hours, to examine all the books of
account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee and the Insurer shall and shall cause their
respective representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee or the Insurer may reasonably determine that such disclosure
is consistent with its obligations hereunder.
SECTION 13.19. Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by the Owner Trustee not in its individual capacity but
solely in its capacity as Owner Trustee of the Issuer and in no event shall the
Owner Trustee in its individual capacity or any beneficial owner of the Issuer
have any liability for the representations, warranties, covenants, agreements or
other obligations of the Issuer hereunder, as to all of which recourse shall be
had solely to the assets of the Issuer. For all purposes of this Indenture, in
the performance of any duties or obligations of the Issuer hereunder, the Owner
Trustee shall be subject to, and entitled to the benefits of, the terms and
provisions of Articles Seven, Eight, Ten, Twelve, Thirteen, Fourteen and Fifteen
of the Trust Agreement.
72
<PAGE>
SECTION 13.20. Certain Matters Regarding the Insurer. So long as an
Insurer Default shall not have occurred and be continuing, the Insurer shall
have the right to exercise all rights, including voting rights, which the
Noteholders or Certificateholders are entitled to exercise pursuant to this
Indenture, without any consent of such Noteholders or Certificateholders;
provided, however, that without the consent of each Noteholder and
Certificateholder affected thereby, the Insurer shall not exercise such rights
to amend this Indenture in any manner that would (i) reduce the amount of, or
delay the timing of, collections of payments on the Receivables or distributions
which are required to be made on any Note or Certificate, (ii) adversely affect
in any material respect the interests of the Holders of any Notes or
Certificates, or (iii) alter the rights of any such Holder to consent to such
amendment.
Notwithstanding any provision in this Indenture to the contrary, in the
event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the Indenture Trustee or the
Owner Trustee pursuant to the terms of this Indenture, nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Seller, the Indenture Trustee, the Owner
Trustee or the Noteholders or the Certificateholders; provided, that the consent
of the Insurer shall be required at all times with respect to any amendment of
this Indenture.
[Next page is signature page]
73
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed and delivered as of the day and year first above written.
UACSC 1999-B OWNER TRUST
By FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely on
behalf of the Issuer as Owner
Trustee under the Trust Agreement
By: /s/ Edward Truitt
Name: Edward Truitt
Title: Vice President
HARRIS TRUST AND SAVINGS BANK
not in its individual capacity but
solely as Indenture Trustee
By: /s/ Robert D. Foltz
Name: Robert D. Foltz
Title: Vice President
74
<PAGE>
EXHIBIT A-1
[FORM OF CLASS A-1 NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS A-1 NOTE 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 Note 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
UACSC 1999-B OWNER TRUST
4.96% CLASS A-1 AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the UACSC 1999-B Owner Trust, a Delaware
business Trust, secured by the Pledged Assets, as defined below,
including 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.
(This Note does not represent an interest in UAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP 902534 AA4
UACSC 1999-B Owner Trust, a Delaware business Trust, for value
received, hereby promises to pay to the order of [Cede & Co.] ("the Noteholder")
or its registered assigns, the principal sum of ____________________ dollars
($___________), which amount shall be payable in the amounts and at the times
set forth in the Indenture dated as of May 1, 1999 (the "Indenture"; such term
to include any amendment, restatement, supplement or other modification thereof
or thereto) provided, however, that the entire unpaid amount of this Note shall
be due and payable on or before June 8,
75
<PAGE>
2000. However, principal with respect to the Notes may be paid earlier or later
under certain limited circumstances under the Indenture. The Issuer will pay
interest on this Note at the Class A-1 Interest Rate. Such interest shall be
payable in the manner and at the times set forth in the Indenture. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Indenture. This Note is issued under and is
subject to the terms, provisions, and conditions of the Indenture, to which the
holder of this Note by virtue of the acceptance hereof assents and by which such
holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of 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 (but excluding Accrued Interest paid on or
prior to the Closing Date with respect to such Receivables), 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 the
Indenture Trustee on behalf of the Noteholder, any Liquidation Proceeds, any
rights of the Issuer 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 Issuer 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
Noteholder, and the Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the eighth calendar day of
each month, or if such day is not a Business Day, on the first Business Day
thereafter (the "Payment Date"), commencing July 8, 1999, to the person in whose
name this Note is registered on the Record Date, the portion of Monthly Interest
and Monthly Principal to which the Noteholder is entitled pursuant to the
Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
The Note constitutes an obligation of the Issuer only and does not
represent an interest in the Issuer nor an interest in or obligation of any
affiliate of the Issuer, including UAC Securitization Corporation or Union
Acceptance Corporation. The Note is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Indenture. In addition to the Class A-1 Notes, the Issuer has
also issued Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes.
The Class B Notes are subordinated to the Class A Notes as provided in the
Indenture. The Indenture provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are
76
<PAGE>
insufficient to make payments relating to this Note and the other notes issued
by the Issuer, the Indenture Trustee will draw on the Policy up to the Policy
Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to the Noteholder of all amounts
required to be paid to it pursuant to the Indenture. The Certificateholder may
at its option cause the Indenture Trustee to sell the Pledged Assets at a price
not to be less than the price specified in the Trust Agreement, and such sale of
the Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
77
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated: May 26, 1999
UACSC 1999-B OWNER TRUST
By FIRST UNION TRUST COMPANY,
NATIONAL ASSOCIATION, not in its
individual capacity but solely as
Owner Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note
referred to in the within-mentioned
Indenture.
HARRIS TRUST AND SAVINGS BANK,
solely in its capacity as Indenture Trustee,
By ________________________
Name:
Title:
Dated: May 26, 1999
78
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,
attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
79
<PAGE>
EXHIBIT A-2
[FORM OF CLASS A-2 NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS A-2 NOTE 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 Note 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
UACSC 1999-B OWNER TRUST
5.47% CLASS A-2 AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the UACSC 1999-B Owner Trust, a Delaware
business Trust, secured by the Pledged Assets, as defined below,
including 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.
(This Note does not represent an interest in UAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP 902534 AB2
UACSC 1999-B Owner Trust, a Delaware business Trust, for value
received, hereby promises to pay to the order of [Cede & Co.] ("the Noteholder")
or its registered assigns, the principal sum of ____________________ dollars
($___________), which amount shall be payable in the amounts and at the times
set forth in the Indenture dated as of May 1, 1999 (the "Indenture"; such term
to include any amendment, restatement, supplement or other modification thereof
or thereto) provided, however, that the entire unpaid amount of this Note shall
be due and payable on or before
80
<PAGE>
September 9, 2002. However, principal with respect to the Notes may be paid
earlier or later under certain limited circumstances under the Indenture. The
Issuer will pay interest on this Note at the Class A-2 Interest Rate. Such
interest shall be payable in the manner and at the times set forth in the
Indenture. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Indenture. This Note is
issued under and is subject to the terms, provisions, and conditions of the
Indenture, to which the holder of this Note by virtue of the acceptance hereof
assents and by which such holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of 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 (but excluding Accrued Interest paid on or
prior to the Closing Date with respect to such Receivables), 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 the
Indenture Trustee on behalf of the Noteholder, any Liquidation Proceeds, any
rights of the Issuer 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 Issuer 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
Noteholder, and the Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the eighth calendar day of
each month, or if such day is not a Business Day, on the first Business Day
thereafter (the "Payment Date"), commencing July 8, 1999, to the person in whose
name this Note is registered on the Record Date, the portion of Monthly Interest
and Monthly Principal to which the Noteholder is entitled pursuant to the
Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
The Note constitutes an obligation of the Issuer only and does not
represent an interest in the Issuer nor an interest in or obligation of any
affiliate of the Issuer, including UAC Securitization Corporation or Union
Acceptance Corporation. The Note is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Indenture. In addition to the Class A-2 Notes, the Issuer has
also issued Class A-1 Notes, Class A-3 Notes, Class A-4 Notes and Class B Notes.
The Class B Notes are subordinated to the Class A Notes as provided in the
Indenture. The Indenture provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are
81
<PAGE>
insufficient to make payments relating to this Note and the other notes issued
by the Issuer, the Indenture Trustee will draw on the Policy up to the Policy
Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to the Noteholder of all amounts
required to be paid to it pursuant to the Indenture. The Certificateholder may
at its option cause the Indenture Trustee to sell the Pledged Assets at a price
not to be less than the price specified in the Trust Agreement, and such sale of
the Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
82
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated: May 26, 1999
UACSC 1999-B OWNER
TRUST By FIRST
UNION TRUST
COMPANY, NATIONAL
ASSOCIATION, not
in its individual
capacity but
solely as Owner
Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note
referred to in the within-mentioned
Indenture.
HARRIS TRUST AND SAVINGS BANK,
solely in its capacity as Indenture Trustee,
By ________________________
Name:
Title:
Dated: May 26, 1999
83
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,
attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
84
<PAGE>
EXHIBIT A-3
[FORM OF CLASS A-3 NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS A-3 NOTE 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 Note 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
UACSC 1999-B OWNER TRUST
5.84% CLASS A-3 AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the UACSC 1999-B Owner Trust, a Delaware
business Trust, secured by the Pledged Assets, as defined below,
including 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.
(This Note does not represent an interest in UAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP 902534 AC0
UACSC 1999-B Owner Trust, a Delaware business Trust, for value
received, hereby promises to pay to the order of [Cede & Co.] ("the Noteholder")
or its registered assigns, the principal sum of ____________________ dollars
($___________), which amount shall be payable in the amounts and at the times
set forth in the Indenture dated as of May 1, 1999 (the "Indenture"; such term
to include any amendment, restatement, supplement or other modification thereof
or thereto) provided, however, that the entire unpaid amount of this Note shall
be due and payable on or before January 8,
85
<PAGE>
2004. However, principal with respect to the Notes may be paid earlier or later
under certain limited circumstances under the Indenture. The Issuer will pay
interest on this Note at the Class A-3 Interest Rate. Such interest shall be
payable in the manner and at the times set forth in the Indenture. To the extent
not otherwise defined herein, the capitalized terms used herein have the
meanings assigned to them in the Indenture. This Note is issued under and is
subject to the terms, provisions, and conditions of the Indenture, to which the
holder of this Note by virtue of the acceptance hereof assents and by which such
holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of 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 (but excluding Accrued Interest paid on or
prior to the Closing Date with respect to such Receivables), 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 the
Indenture Trustee on behalf of the Noteholder, any Liquidation Proceeds, any
rights of the Issuer 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 Issuer 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
Noteholder, and the Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the eighth calendar day of
each month, or if such day is not a Business Day, on the first Business Day
thereafter (the "Payment Date"), commencing July 8, 1999, to the person in whose
name this Note is registered on the Record Date, the portion of Monthly Interest
and Monthly Principal to which the Noteholder is entitled pursuant to the
Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
The Note constitutes an obligation of the Issuer only and does not
represent an interest in the Issuer nor an interest in or obligation of any
affiliate of the Issuer, including UAC Securitization Corporation or Union
Acceptance Corporation. The Note is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Indenture. In addition to the Class A-3 Notes, the Issuer has
also issued Class A-1 Notes, Class A-2 Notes, Class A-4 Notes and Class B Notes.
The Class B Notes are subordinated to the Class A Notes as provided in the
Indenture. The Indenture provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are
86
<PAGE>
insufficient to make payments relating to this Note and the other notes issued
by the Issuer, the Indenture Trustee will draw on the Policy up to the Policy
Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to the Noteholder of all amounts
required to be paid to it pursuant to the Indenture. The Certificateholder may
at its option cause the Indenture Trustee to sell the Pledged Assets at a price
not to be less than the price specified in the Trust Agreement, and such sale of
the Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
87
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated: May 26, 1999
UACSC 1999-B OWNER
TRUST By FIRST
UNION TRUST
COMPANY, NATIONAL
ASSOCIATION, not
in its individual
capacity but
solely as Owner
Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note
referred to in the within-mentioned
Indenture.
HARRIS TRUST AND SAVINGS BANK,
solely in its capacity as Indenture Trustee,
By ________________________
Name:
Title:
Dated: May 26, 1999
88
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,
attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
89
<PAGE>
EXHIBIT A-4
[FORM OF CLASS A-4 NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS A-4 NOTE 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 Note 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
UACSC 1999-B OWNER TRUST
6.11% CLASS A-4 AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the UACSC 1999-B Owner Trust, a Delaware
business Trust, secured by the Pledged Assets, as defined below,
including 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.
(This Note does not represent an interest in UAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP 902534 AD8
UACSC 1999-B Owner Trust, a Delaware business Trust, for value
received, hereby promises to pay to the order of [Cede & Co.] ("the Noteholder")
or its registered assigns, the principal sum of ____________________ dollars
($___________), which amount shall be payable in the amounts and at the times
set forth in the Indenture dated as of May 1, 1999 (the "Indenture"; such term
to include any amendment, restatement, supplement or other modification thereof
or thereto) provided, however, that the entire unpaid amount of this Note shall
be due and payable on or before
90
<PAGE>
September 8, 2005. However, principal with respect to the Notes may be paid
earlier or later under certain limited circumstances under the Indenture. The
Issuer will pay interest on this Note at the Class A-4 Interest Rate. Such
interest shall be payable in the manner and at the times set forth in the
Indenture. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Indenture. This Note is
issued under and is subject to the terms, provisions, and conditions of the
Indenture, to which the holder of this Note by virtue of the acceptance hereof
assents and by which such holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of 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 (but excluding Accrued Interest paid on or
prior to the Closing Date with respect to such Receivables), 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 the
Indenture Trustee on behalf of the Noteholder, any Liquidation Proceeds, any
rights of the Issuer 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 Issuer 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
Noteholder, and the Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the eighth calendar day of
each month, or if such day is not a Business Day, on the first Business Day
thereafter (the "Payment Date"), commencing July 8, 1999, to the person in whose
name this Note is registered on the Record Date, the portion of Monthly Interest
and Monthly Principal to which the Noteholder is entitled pursuant to the
Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
The Note constitutes an obligation of the Issuer only and does not
represent an interest in the Issuer nor an interest in or obligation of any
affiliate of the Issuer, including UAC Securitization Corporation or Union
Acceptance Corporation. The Note is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Indenture. In addition to the Class A-4 Notes, the Issuer has
also issued Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class B Notes.
The Class B Notes are subordinated to the Class A Notes as provided in the
Indenture. The Indenture provides for certain amounts to be deposited into the
Spread Account. In the event amounts available for withdrawal from the Spread
Account are
91
<PAGE>
insufficient to make payments relating to this Note and the other notes issued
by the Issuer, the Indenture Trustee will draw on the Policy up to the Policy
Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to the Noteholder of all amounts
required to be paid to it pursuant to the Indenture. The Certificateholder may
at its option cause the Indenture Trustee to sell the Pledged Assets at a price
not to be less than the price specified in the Trust Agreement, and such sale of
the Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
92
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated: May 26, 1999
UACSC 1999-B OWNER
TRUST By FIRST
UNION TRUST
COMPANY, NATIONAL
ASSOCIATION, not
in its individual
capacity but
solely as Owner
Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note
referred to in the within-mentioned
Indenture.
HARRIS TRUST AND SAVINGS BANK,
solely in its capacity as Indenture Trustee,
By ________________________
Name:
Title:
Dated: May 26, 1999
93
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,
attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
94
<PAGE>
EXHIBIT B
[FORM OF CLASS B NOTE]
PRINCIPAL IN RESPECT OF THIS CLASS B NOTE 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 Note 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.
PRINCIPAL IN RESPECT OF THIS NOTE IS PAYABLE AS SET FORTH HEREIN.
UACSC 1999-B OWNER TRUST
6.31% CLASS B AUTOMOBILE RECEIVABLE BACKED NOTE
Evidencing the indebtedness of the UACSC 1999-B Owner Trust, a Delaware
business Trust, secured by the Pledged Assets, as defined below,
including 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.
(This Note does not represent an interest in UAC Securitization
Corporation nor an interest in or obligation of any of its affiliates.
Neither this Note nor the underlying Receivables, as defined below, are
insured or guaranteed by any government agency).
NUMBER ____ $_____________
CUSIP 902534 AE6
UACSC 1999-B Owner Trust, a Delaware business Trust, for value
received, hereby promises to pay to the order of [Cede & Co.] ("the Noteholder")
or its registered assigns, the principal sum of ____________________ dollars
($___________), which amount shall be payable in the amounts and at the times
set forth in the Indenture dated as of May 1, 1999 (the "Indenture"; such term
to include any amendment, restatement, supplement or other modification thereof
or thereto) provided, however, that the entire unpaid amount of this Note shall
be due and payable on or before
95
<PAGE>
December 8, 2006. However, principal with respect to the Notes may be paid
earlier or later under certain limited circumstances under the Indenture. The
Issuer will pay interest on this Note at the Class B Interest Rate. Such
interest shall be payable in the manner and at the times set forth in the
Indenture. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in the Indenture. This Note is
issued under and is subject to the terms, provisions, and conditions of the
Indenture, to which the holder of this Note by virtue of the acceptance hereof
assents and by which such holder is bound.
This Note is secured by the Pledged Assets. The Pledged Assets consist
of 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 (but excluding Accrued Interest paid on or
prior to the Closing Date with respect to such Receivables), 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 the
Indenture Trustee on behalf of the Noteholder, any Liquidation Proceeds, any
rights of the Issuer 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 Issuer 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
Noteholder, and the Policy for the benefit of the Noteholder.
Under the Indenture, the Issuer will pay, on the eighth calendar day of
each month, or if such day is not a Business Day, on the first Business Day
thereafter (the "Payment Date"), commencing July 8, 1999, to the person in whose
name this Note is registered on the Record Date, the portion of Monthly Interest
and Monthly Principal to which the Noteholder is entitled pursuant to the
Indenture.
Payments on this Note will be made by the Indenture Trustee by wire
transfer through the facilities of the Depository Trust Company if this note is
held by Cede & Co. and otherwise by check mailed to the Person entitled thereto
without the presentation or surrender of this Note or the making of any notation
hereon. Except as otherwise provided in the Indenture and notwithstanding the
above, the final payment on this Note will be made only upon presentation and
surrender of this Note at the office or agency maintained for that purpose by
the Indenture Trustee.
The Note constitutes an obligation of the Issuer only and does not
represent an interest in the Issuer nor an interest in or obligation of any
affiliate of the Issuer, including UAC Securitization Corporation or Union
Acceptance Corporation. The Note is limited in right of payment to certain
collections and recoveries respecting the Receivables, all as more specifically
set forth in the Indenture. In addition to the Class B Notes, the Issuer has
also issued Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4
Notes. The Class B Notes are subordinated to the Class A Notes as provided in
the Indenture. The Indenture provides for certain amounts to be deposited into
the Spread Account. In the event amounts available for withdrawal from the
Spread Account are
96
<PAGE>
insufficient to make payments relating to this Note and the other notes issued
by the Issuer, the Indenture Trustee will draw on the Policy up to the Policy
Amount to pay such deficiency.
The Indenture permits, with certain exceptions therein provided, the
amendment thereof and the modification of the rights and obligations of the
Issuer and the rights of the Noteholder under the Indenture at any time by the
Issuer and the Indenture Trustee with the consent of the Noteholder. Any such
consent by the holder of this Note shall be conclusive and binding on the
Noteholder.
This Note is transferrable solely in accordance with Section 2.04 of
the Indenture.
The obligations and responsibilities to the Noteholder created by the
Indenture shall terminate upon the payment to the Noteholder of all amounts
required to be paid to it pursuant to the Indenture. The Certificateholder may
at its option cause the Indenture Trustee to sell the Pledged Assets at a price
not to be less than the price specified in the Trust Agreement, and such sale of
the Receivables and other property may effect early retirement of the Note.
Although this Note summarizes certain provisions of the Indenture, this
Note does not purport to summarize the Indenture and reference is made to the
Indenture for information with respect to the interests, rights, benefits,
obligations, proceeds and duties evidenced hereby and the rights, duties and
obligations of the Indenture Trustee. In the event of any inconsistency or
conflict between the terms of this Note and the terms of the Indenture, the
terms of the Indenture shall control.
Unless the certificate of authentication hereon has been executed by
the Indenture Trustee whose name appears below by manual signature, this Note
shall not be entitled to any benefit under the Indenture referred to on the
reverse hereof, or be valid or obligatory for any purpose.
97
<PAGE>
IN WITNESS WHEREOF, the Issuer has caused this Note to be duly
executed.
Dated: May 26, 1999
UACSC 1999-B OWNER
TRUST By FIRST
UNION TRUST
COMPANY, NATIONAL
ASSOCIATION, not
in its individual
capacity but
solely as Owner
Trustee
By
Name:
Title:
CERTIFICATE OF AUTHENTICATION
This is the Note
referred to in the within-mentioned
Indenture.
HARRIS TRUST AND SAVINGS BANK,
solely in its capacity as Indenture Trustee,
By ________________________
Name:
Title:
Dated: May 26, 1999
98
<PAGE>
ASSIGNMENT
Social Security or taxpayer I.D. or other identifying number of assignee:_______
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto:
(name and address of assignee)
the within Note and all rights thereunder, and hereby irrevocably constitutes
and appoints,
attorney,
to transfer said Note on the books kept for registration thereof, with full
power of substitution in the premises.
Dated:_________________
Signature Guaranteed:
*
* NOTICE: The signature to this assignment must correspond with the name of the
registered owner as it appears on the face of the within Note in every
particular, without alteration, enlargement or any change whatever. Such
signature must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Note Registrar, which requirements include membership or
participation in STAMP or such other "signature guarantee program" as may be
determined by the Note Registrar in addition to, or in substitution for, STAMP,
all in accordance with the Securities Exchange Act of 1934, as amended.
CONSENT OF INDEPENDENT ACCOUNTANTS
We consent to the incorporation by reference in the Prospectus Supplement of UAC
Securitization Corporation relating to UACSC 1999-B Owner Trust Automobile
Receivable Backed Notes, of our report dated February 2, 1999, on our audits of
the consolidated financial statements of MBIA Insurance Corporation and
Subsidiaries as of December 31, 1998 and 1997 and for each of the three years in
the period ended December 31, 1998. We also consent to the reference to our firm
under the caption "Experts".
/s/ PRICEWATERHOUSECOOPERS, LLP
