<PAGE> 1
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: November 24, 1998
(Date of earliest event reported)
ONYX ACCEPTANCE FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
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<S> <C> <C>
Delaware 333-51239 33-0639768
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
</TABLE>
8001 Irvine Center Drive
6th Floor
Irvine, California 92618
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (949) 450-5500
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Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-51239) filed with the Securities and Exchange Commission
(the "Commission") on April 28, 1998 (the "Registration Statement"), pursuant to
which the Registrant registered $1,000,000,000 aggregate principal amount of its
auto loan backed notes and auto loan backed receivables, issuable in various
series, for sale in accordance with the provisions of the Securities Act of
1933, as amended (the "Act"). Reference is also hereby made to the Prospectus
and the related Prospectus Supplement (collectively, the "Prospectus"), each
dated November 19, 1998, as filed with the Commission pursuant to Rule
424(b)(5), with respect to the Registrant's Auto Loan Backed Notes and Auto Loan
Backed Certificates, Series 1998-C, consisting of (A) Class A-1 Auto Loan Backed
Notes, Class A-2 Auto Loan Backed Notes, Class A-3 Auto Loan Backed Notes and
Class A-4 Auto Loan Backed Notes (the "Notes"), and (B) Auto Loan Backed
Certificate (the "Certificate" and, together with the Notes, the "Offered
Securities").
The Offered Securities were sold to Merrill Lynch, Pierce, Fenner &
Smith Incorporated ("Merrill Lynch") and Salomon Smith Barney Inc. ("Salomon"
and, together with Salomon, the "Underwriters") pursuant to the terms of the
Underwriting Agreement dated as of November 19, 1998 (the "Underwriting
Agreement") between the Registrant and Merrill Lynch, as representative of
itself and of Salomon. A copy of the Underwriting Agreement is filed herewith as
Exhibit 1.2.
The Notes were issued pursuant to an Indenture dated as of November 1,
1998 (the "Indenture") among ONYX ACCEPTANCE OWNER TRUST 1998-C (the "Issuer" or
the "Trust") and The Chase Manhattan Bank, as Indenture Trustee (the "Indenture
Trustee"). A copy of the Indenture is filed herewith as Exhibit 4.3.
The Notes are secured by the assets of the Trust pursuant to the
Indenture. The assets of the Trust include primarily a pool of fixed rate motor
vehicle retail installment sales contracts (the "Contracts") secured by new and
used automobiles and light-duty trucks (the "Financed Vehicles"), certain monies
due under the Contracts and certain monies received with respect to the
Contracts on or after the Cut-Off Date, as defined in the Indenture, security
interests in the Financed Vehicles and certain other property.
The Certificates represent undivided ownership interests in the Trust
and were issued pursuant to the Trust Agreement dated as of November 1, 1998
(the "Trust Agreement") among the Registrant, as Depositor, Bankers Trust
(Delaware), as Owner Trustee (the "Owner Trustee"), and The Chase Manhattan
Bank, as Trust Agent (the "Trust Agent"). A copy of the Trust Agreement is filed
herewith as Exhibit 4.4.
The Contracts were sold by the Seller to the Trust pursuant to the Sale
and Servicing Agreement dated as of November 1, 1998 (the "Sale and Servicing
Agreement") among the Trust, the Registrant, as Seller, Onyx, as Servicer, and
The Chase Manhattan Bank, as Indenture Trustee and Trust Agent. A copy of the
Sale and Servicing Agreement is filed herewith as Exhibit 10.2.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
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<CAPTION>
Exhibit No. Description
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<S> <C>
1.2 Underwriting Agreement dated as of November 19, 1998 by
and among the Registrant, Onyx Acceptance Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated
4.3 Indenture dated as of November 1, 1998 between Onyx
Acceptance Owner Trust 1998-C and The Chase Manhattan
Bank, as Indenture Trustee
4.4 Trust Agreement dated as of November 1, 1998 among the
Registrant, as Depositor, Bankers Trust (Delaware), as
Owner Trustee, and The Chase Manhattan Bank, as Trust
Agent
10.2 Sale and Servicing Agreement dated as of November 1,
1998 among the Registrant, as Seller, Onyx Acceptance
Corporation, as Servicer, and The Chase Manhattan Bank,
as Indenture Trustee and Trust Agent
</TABLE>
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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.
ONYX ACCEPTANCE FINANCIAL
CORPORATION
December 8, 1998 By: /s/ REGAN E. KELLY
-------------------------------------
Regan E. Kelly,
Executive Vice President
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EXHIBIT INDEX
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<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
1.2 Underwriting Agreement dated as of November 19, 1998 by
and among the Registrant, Onyx Acceptance Corporation
and Merrill Lynch, Pierce, Fenner & Smith Incorporated
4.3 Indenture dated as of November 1, 1998 between Onyx
Acceptance Owner Trust 1998-C and The Chase Manhattan
Bank, as Indenture Trustee
4.4 Trust Agreement dated as of November 1, 1998 among the
Registrant, as Depositor, Bankers Trust (Delaware), as
Owner Trustee, and The Chase Manhattan Bank, as Trust
Agent
10.2 Sale and Servicing Agreement dated as of November 1,
1998 among the Registrant, as Seller, Onyx Acceptance
Corporation, as Servicer, and The Chase Manhattan Bank,
as Indenture Trustee and Trust Agent
</TABLE>
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Exhibit 1.2
Onyx Acceptance Owner Trust 1998-C
$53,000,000 5.261% Auto Loan Backed Notes, Class A-1
$70,000,000 5.55% Auto Loan Backed Notes, Class A-2
$89,000,000 5.65% Auto Loan Backed Notes, Class A-3
$54,000,000 5.76% Auto Loan Backed Notes, Class A-4
$14,000,000 6.09% Auto Loan Backed Certificates
Onyx Acceptance Financial Corporation
as Seller
Onyx Acceptance Corporation
as Servicer
UNDERWRITING AGREEMENT
November 19, 1998
Merrill Lynch, Pierce, Fenner & Smith Incorporated
as representative of
the several Underwriters
World Financial Center
North Tower - 15th Floor
New York, New York 10281-1315
Ladies and Gentlemen:
1. Introductory. Onyx Acceptance Financial Corporation (the "Company")
proposes to cause Onyx Acceptance Owner Trust 1998-C (the "Trust") to sell to
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Representative") and
Salomon Smith Barney Inc. (together with the Representative, the "Underwriters")
$53,000,000 aggregate principal amount of 5.261% Auto Loan Backed Notes, Class
A-1 (the "Class A-1 Notes"), $70,000,000 aggregate principal amount of 5.55%
Auto Loan Backed Notes, Class A-2 (the "Class A-2 Notes") $89,000,000 aggregate
principal amount of 5.65% Auto Loan Backed Notes, Class A-3 (the "Class A-3
Notes"), $54,000,000 aggregate principal amount of 5.76% Auto Loan Backed Notes,
Class A-4 (the "Class A-4 Notes" and together with the Class A-1 Notes, the
Class A-2 Notes and the Class A-3 Notes the "Notes"), and $14,000,000 aggregate
principal amount of 6.09% Auto Loan Backed Certificates (the "Certificates," and
together with the Notes, the "Securities"). The Notes will be issued pursuant to
an Indenture dated as of November 1, 1998 (the "Indenture"), between the Trust
and The Chase Manhattan Bank as Indenture Trustee (the "Indenture Trustee"). The
Certificates will be issued pursuant to a Trust Agreement dated as of November
1, 1998 (the "Trust Agreement")among the
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Company, Bankers Trust (Delaware) as Owner Trustee (the "Owner Trustee") and The
Chase Manhattan Bank as Trust Agent (the "Trust Agent"). Pursuant to a Sale and
Servicing Agreement dated as of November 1, 1998 (the "Servicing Agreement")
among the Trust, the Company as Seller (the "Seller"), Onyx Acceptance
Corporation as Servicer ("Onyx" or in such capacity, the "Servicer"), the Chase
Manhattan Bank in its capacity as Indenture Trustee and the Trust Agent, the
Seller will sell and assign to the Trust, without recourse, the Seller's entire
interest in the Contracts and Onyx will act as servicer of the Contracts.
Pursuant to an Administration Agreement dated as of November 1, 1998 (the
"Administration Agreement") among the Trust, Onyx, the Company, the Indenture
Trustee and the Trust Agent, Onyx will serve as administrator of the Trust.
Pursuant to an Amended and Restated Sale and Servicing dated as of September 4,
1998 (the "Purchase Agreement"), Onyx has sold the Contracts to the Company.
Pursuant to an insurance and reimbursement agreement (the "Insurance Agreement")
among the Company, Onyx and MBIA Insurance Corporation (the "Insurer"), the
Insurer has issued its financial guarantee insurance policy (the "Guarantee") to
the Indenture Trustee for the benefit of the Securityholders guaranteeing timely
payment of interest and payment of principal at maturity on the Securities. The
Trust's assets (the "Trust Property") will include: (i) a pool of fixed rate
motor vehicle retail installment sales contracts (the "Contracts"), all of which
were purchased from the Seller and secured by new and used automobiles and
light-duty trucks (the "Financed Vehicles"), (ii) certain documents relating to
the Contracts, (iii) with respect to Contracts (the "Initial Contracts")
originated prior to November 1, 1998 (the "Initial Cut-Off Date") certain monies
received with respect to the Initial Contracts on or after the Initial Cut-Off
Date, (iv) with respect to Contracts (the "Subsequent Contracts"), originated on
or after the Initial Cut-Off Date and prior to November 24, 1998 (the "Final
Cut-Off Date), certain monies received with respect to the Subsequent Contracts
on or after the Final Cut-Off Date,(v) security interests in the Financed
Vehicles and the rights to receive proceeds from claims on certain insurance
policies covering the Financed Vehicles or the individual obligors under each
related Contract, (vi) all amounts on deposit in the Collection Account, the
Payment Account, the Note Distribution Account, the Certificate Distribution
Account, and the Spread Account, including all Eligible Investments credited
thereto (but excluding any investment income from Eligible Investments, credited
to the Collection Account, which will be paid to the Servicer),(vii) the right
of the Company to cause Onyx to repurchase certain Contracts under certain
circumstances, and (viii) all proceeds of the foregoing. The Securities will be
issued in an aggregate principal amount of $280,000,000 which is approximately
equal to the outstanding principal balance of the Initial Contracts as of the
Initial Cut-Off Date and the outstanding principal balance of Subsequent
Contracts as the Final Cut-Off Date. The term "Cut-Off" Date as used herein
refers to the Initial Cut-Off Date for the Initial Contracts and the Final
Cut-Off Date for the Subsequent Contracts. Capitalized terms used herein and not
otherwise herein defined shall have the meanings assigned to such terms in the
Servicing Agreement or if not defined therein, in the Trust Agreement.
The Company hereby agrees with the Underwriters, as follows:
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with the Underwriters that:
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(i) The Company meets the requirements for use of Form S-3 under
the Securities Act of 1933, as amended (the "Act"), and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (Registration No. 333-51239) on such Form, including a prospectus
and forms of prospectus supplements, for registration under the Act of the
offering and sale of the Notes and Certificates. The Company may have filed
one or more amendments thereto, each of which amendments has previously
been furnished to the Representative. The Company will also file with the
Commission a prospectus supplement in accordance with Rule 424(b) under the
Act. The Company has included in the Registration Statement, as amended at
the Effective Date (as hereinafter defined), all information required by
the Act and the rules thereunder to be included in the Prospectus (as
hereinafter defined) with respect to the Notes and Certificates and the
offering thereof. As filed, the registration statement as amended, the
forms of prospectus supplements, and any prospectuses or prospectus
supplements filed pursuant to Rule 424(b) under the Act relating to the
Notes and Certificates shall, except to the extent that the Representative
shall agree in writing to a modification, be in all substantive respects in
the form furnished to the Representative prior to the Execution Time (as
hereinafter defined) or, to the extent not completed at the Execution Time,
shall contain only such specific additional information and other changes
as the Company has advised the Representative, prior to the Execution Time,
will be included or made therein.
For purposes of this Agreement, "Effective Time" means the date and
time as of which such registration statement, or the most recent post-effective
amendment thereto, if any, was declared effective by the Commission, and
"Effective Date" means the date of the Effective Time. "Execution Time" shall
mean the date and time that this Agreement is executed and delivered by the
parties hereto. Such registration statement, as amended at the Effective Time,
and including the exhibits thereto and any material incorporated by reference
therein (including any ABS Term Sheets (as defined in Section 4(b) of this
Agreement) filed on Form 8-K), is hereinafter referred to as the "Registration
Statement," and any prospectus supplement (the "Prospectus Supplement") relating
to the Notes and Certificates, as filed with the Commission pursuant to and in
accordance with Rule 424(b) under the Act is, together with the prospectus filed
as part of the Registration Statement (such prospectus, in the form it appears
in the Registration Statement or in the form most recently revised and filed
with the Commission pursuant to Rule 424(b) being hereinafter referred to as the
"Basic Prospectus"), hereinafter referred to as the "Prospectus". "Rule 424"
refers to such rule under the Act. Any reference herein to the Registration
Statement, the Prospectus or any Prospectus Supplement shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 which were filed by the Company as the originator of the Trust
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), on
or before the Effective Date of the Registration Statement or the issue date of
the Prospectus or any Prospectus Supplement, as the case may be (but shall not
be deemed to refer to or include any Form T-1 filed with respect to the
Indenture Trustee); and any reference herein to the terms "amend", "amendment"
or "supplement" with respect to the Registration Statement, the Prospectus or
any Prospectus Supplement shall be deemed to refer to and include the filing of
any document under the Exchange
3
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Act after the Effective Date of the Registration Statement, or the issue date of
the Prospectus or any Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference.
(ii) On the Effective Date and on the date of this Agreement, the
Registration Statement did or will, and, when the Prospectus was first
filed and on the Closing Date (as defined below), the Prospectus and any
Prospectus Supplement did or will comply in all material respects with the
applicable requirements of the Act, the Exchange Act and the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the
respective rules and regulations of the Commission thereunder (the "Rules
and Regulations"). On the Effective Date, the Registration Statement did
not and will not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order
to make the statements therein not misleading; and, on the Effective Date,
the Prospectus, if not filed pursuant to Rule 424(b), did not or will not,
and on the date of any filing pursuant to Rule 424(b) and on the Closing
Date, the Prospectus, together with any Prospectus Supplement, did not or
will not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty as
to the information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by any Underwriter through the
Representative specifically for use in connection with preparation of the
Registration Statement or the Prospectus.
(iii) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there has not been
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
management, financial condition, stockholders' equity, results of
operations, regulatory status or business prospects of the Company or Onyx,
and (ii) neither the Company nor Onyx has entered into any transaction or
agreement (whether or not in the ordinary course of business) material to
it that, in either case, would reasonably be expected to materially
adversely affect the interests of the holders of the Notes or Certificates,
other than as set forth or contemplated in the Prospectus.
(iv) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full power and authority (corporate and
other) to own its properties and conduct its businesses as described in the
Prospectus, and is duly qualified to transact business as a foreign
corporation in good standing under the laws of each jurisdiction where the
ownership or leasing of its properties or the conduct of its business
requires such qualification.
(v) As of the Closing Date the representations and warranties of
the Company, as Seller, in the Servicing Agreement and Trust Agreement will
be
4
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true and correct, and each Contract will satisfy the representations and
warranties set forth in Section 2.02(b) of the Servicing Agreement.
(vi) No consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required to be obtained
or made by the Company for the consummation of the transactions
contemplated by this Agreement, except such as have been obtained and made
under the Act, such as may be required under state securities laws and the
filing of any financing statements required to perfect the Trust's interest
in the Contracts.
(vii) The Company is not in violation of its Certificate of
Incorporation or By-Laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any agreement
or instrument to which it is a party or by which it or its properties are
bound which violation or default would have a material adverse effect on
the transactions contemplated herein or in the Indenture, the Trust
Agreement, the Servicing Agreement, the Purchase Agreement or the Insurance
Agreement. The execution, delivery and performance by the Company of this
Agreement, the Trust Agreement, the Servicing Agreement, the Purchase
Agreement or the Insurance Agreement and the issuance and sale of the
Securities and compliance with the terms and provisions thereof will not
result in a breach or violation of any of the terms and provisions of or
constitute a default under, any statute, rule, regulation or order of any
governmental agency or body or any court having jurisdiction over the
Company or any of its properties or any agreement or instrument to which
the Company is a party or by which the Company is bound or to which any of
the properties of the Company is subject, or the Certificate of
Incorporation or By-Laws of the Company and the Company has full corporate
power and authority to authorize, cause the Trust to issue, and sell the
Securities as contemplated by this Agreement, to enter into this Agreement,
the Trust Agreement, the Servicing Agreement, the Purchase Agreement and
the Insurance Agreement and to consummate the transactions contemplated
herein and therein.
(viii) This Agreement has been duly authorized, executed and
delivered by the Company.
3. Purchase, Sale, Payment and Delivery of Securities. On the basis of
the representations, warranties and agreements herein contained, but subject to
the terms and conditions herein set forth, the Company agrees to sell to each
Underwriter, and each Underwriter agrees, severally and not jointly, to purchase
from the Company the aggregate principal amount of each class of Securities set
forth opposite such Underwriter's name on Schedule I hereto and at the price set
forth on such Schedule plus accrued interest, if any, from the Closing Date.
The Company will deliver the Securities to the Underwriters against
payment of the purchase price in immediately available funds by wire transfer to
the order of the Company at the
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offices of Andrews & Kurth L.L.P., 1717 Main Street, Suite 3700, Dallas, Texas
75201 at 10:00 a.m., New York City time on November 24, 1998 or at such other
time not later than seven full business days thereafter as the Underwriters and
the Company determine, such time being herein referred to as the "Closing Date".
The Securities so to be delivered shall be represented by one or more global
notes or certificates as applicable registered in the name of Cede & Co., as
nominee for The Depository Trust Company, in such numbers as the Underwriters
shall reasonably request not later than 48 hours prior to the Closing Date. The
Company shall make such global notes or certificates, as applicable,
representing the Securities available for inspection by the Underwriters at the
office at which the Securities are to be delivered no later than 10:00 a.m., New
York City time, on the business day prior to the Closing Date.
4. Offering by the Underwriters. (a) It is understood that, after the
Registration Statement becomes effective, the Underwriters propose to offer the
Securities for sale to the public (which may include selected brokers and
dealers) as set forth in the Prospectus.
(b) The Underwriters may prepare and provide to prospective investors
certain ABS Term Sheets, in connection with its offering of the Securities,
subject to the following conditions:
(i) The Underwriters shall have complied with the requirements of
the no-action letter, dated February 17, 1995, issued by the Commission to
the Public Securities Association (the "No-Action Letter").
(ii) For purposes hereof, "ABS Term Sheets" shall have the
meaning given such term in the No-Action Letter but shall include only
those ABS Term Sheets that have been prepared or delivered to prospective
investors by or at the direction of the Underwriters.
(iii) All ABS Term Sheets provided to prospective investors that
are required to be filed pursuant to the No-Action Letter shall bear a
legend substantially in the form attached hereto as Exhibit A-1 in the case
of the Representative and Exhibit A-2 in the case of Salomon Smith Barney
Inc. The Company shall have the right to require specific legends or
notations to appear on any ABS Term Sheets, the right to require changes
regarding the use of terminology and the right to determine the types of
information appearing therein. Notwithstanding the foregoing, this
subsection (iii) will be satisfied if all ABS Term Sheets referred to
herein bear a legend in a form previously approved in writing by the
Company.
(iv) The Underwriters shall have provided the Company with
representative forms of all ABS Term Sheets prior to their first use, to
the extent such forms have not previously been approved in writing by the
Company for use by the Underwriters. The Underwriters shall have provided
to the Company, for filing as part of a current report on Form 8-K as
provided in Section 5(xii), copies (in such format as required by the
Company) of all ABS Term Sheets that are required to be filed with the
Commission pursuant to the No-Action Letter. The Underwriters may
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provide copies of the foregoing in a consolidated or aggregated form
including all information required to be filed. All ABS Term Sheets
described in this subsection (iv) shall have been provided to the Company
not later than 10:00 a.m. (New York City time) not less than one business
day before filing thereof is required to be made with the Commission
pursuant to the No-Action Letter. The Underwriters shall have not provided
to any investor or prospective investor in the Securities any ABS Term
Sheets on or after the day on which ABS Term Sheets are required to be
provided to the Company pursuant to this subsection (iv) (other than copies
of ABS Term Sheets previously submitted to the Company in accordance with
this subsection (iv) for filing pursuant to Section 5(xii)), unless such
ABS Term Sheets are preceded or accompanied by the delivery of a Prospectus
to such investor or prospective investor.
(v) All information included in the ABS Term Sheets shall have
been generated based on substantially the same methodology and assumptions
that are used to generate the information in the Prospectus as set forth
therein; provided that the ABS Term Sheets may have included information
based on alternative methodologies or assumptions if specified therein. If
any ABS Term Sheets that are required to be filed were based on assumptions
with respect to the Contract Pool that differ from the final Contract Pool
information in any material respect or on Securities structuring terms that
were revised in any material respect prior to the printing of the
Prospectus, the Underwriters shall have prepared revised ABS Term Sheets
based on the final Contract Pool information and structuring assumptions,
shall have circulated such revised ABS Term Sheets to all recipients of the
preliminary versions thereof that indicated orally to the Underwriters they
would purchase all or any portion of the Securities, and shall have
included such revised ABS Term Sheets (marked, "as revised") in the
materials delivered to the Company pursuant to subsection (iv) above.
(vi) The Company shall not be obligated to file any ABS Term
Sheets that have been determined to contain any material error or omission,
provided that, at the request of the Underwriters, the Company will file
ABS Term Sheets that contain a material error or omission if clearly marked
"superseded by materials dated _______" and accompanied by corrected ABS
Term Sheets that are marked, "supersedes material previously dated _______,
as corrected." If, within the period during which the Prospectus relating
to the Securities is required to be delivered under the Act, any ABS Term
Sheets are determined, in the reasonable judgment of the Company or the
Underwriters, to contain a material error or omission, the Underwriters
shall prepare a corrected version of such ABS Term Sheets, shall circulate
such corrected ABS Term Sheets to all recipients of the prior versions
thereof that either indicated orally to the Underwriters they would
purchase all or any portion of the Securities, or actually purchased all or
any portion thereof, and shall deliver copies of such corrected ABS Term
Sheets (marked, "as corrected") to the Company for filing with the
Commission in a subsequent current report on Form 8-K
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(subject to the Company's obtaining an accountant's comfort letter in
respect of such corrected ABS Term Sheets, which shall be at the expense of
the Underwriters).
(vii) The Underwriters shall be deemed to have represented as of
the Closing Date, that, except for ABS Term Sheets provided to the Company
pursuant to subsection (iv) above, the Underwriters did not provide any
prospective investors with any information in written or electronic form in
connection with the offering of the Securities that is required to be filed
with the Commission in accordance with the No-Action Letter.
(viii) In the event of any delay in the delivery by the
Underwriters to the Company of any ABS Term Sheets required to be delivered
in accordance with subsection (iv) above, or in the delivery of the
accountant's comfort letter in respect thereof pursuant to Section 5(xii),
the Company shall have the right to delay the release of the Prospectus to
investors or to the Underwriters, to delay the Closing Date and to take
other appropriate actions in each case as necessary in order to allow the
Company to comply with its agreement set forth in Section 5(xii) to file
the ABS Term Sheets by the time specified therein.
5. Certain Agreements of the Company. The Company agrees with the
Underwriters that:
(i) Immediately following the execution of this Agreement, the
Company will prepare a Prospectus Supplement setting forth the amount of
Securities covered thereby and the terms thereof not otherwise specified in
the Basic Prospectus, the price at which such Securities are to be
purchased by the Underwriters, the initial public offering price, the
selling concessions and allowances, and such other information as the
Company deems appropriate and shall furnish a copy to the Representative in
accordance with Section 5(ii) of this Agreement. The Company will transmit
the Prospectus including such Prospectus Supplement to the Commission
pursuant to Rule 424(b) by a means reasonably calculated to result in
filing that complies with all applicable provisions of Rule 424(b). The
Company will advise the Representative promptly of any such filing pursuant
to Rule 424(b).
(ii) Prior to the termination of the offering of the Notes, the
Company will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representative with a copy for its review prior to filing and will not file
any such proposed amendment or supplement to which the Representative
reasonably objects. Subject to the foregoing sentence, if filing of the
Prospectus is otherwise required under Rule 424(b), the Company will file
the Prospectus, properly completed, and any supplement thereto, with the
Commission pursuant to and in accordance with the applicable paragraph of
Rule 424(b) within the time period prescribed and will provide evidence
satisfactory to the Representative of such timely filing.
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(iii) The Company will advise the Representative promptly of any
proposal to amend or supplement the Registration Statement as filed or the
Prospectus, and will not effect such amendment or supplement without the
Representative's consent, which consent will not unreasonably be withheld.
The Company will also advise the Representative promptly of any request by
the Commission for any amendment of or supplement to the Registration
Statement or the Prospectus or for any additional information and the
Company will also advise the Representative promptly of any amendment or
supplement to the Registration Statement or the Prospectus and of the
issuance by the Commission of any stop order suspending the effectiveness
of the Registration Statement or the institution or threat of any
proceeding for that purpose, and the Company will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as
possible the lifting of any issued order.
(iv) The Company will use every reasonable effort to cause the
Registration Statement, and any amendment thereto, if not effective at the
Execution Time, to become effective.
(v) If, at any time when a Prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any
time to amend the Prospectus to comply with the Act, the Company promptly
will prepare and file with the Commission (subject to the Underwriter's
prior review pursuant to paragraph (ii) of this Section 5) an amendment or
supplement which will correct such statement or omission or an amendment or
supplement which will effect such compliance.
(vi) As soon as practicable, the Company will cause the Trust to
make generally available to the Securityholders of the Trust an earnings
statement or statements of the Trust covering a period of at least 12
months beginning after the Effective Date of the Registration Statement
which will satisfy the provisions of Section 11(a) of the Act and Rule 158
of the Commission promulgated thereunder.
(vii) The Company will furnish to each Underwriter copies of the
Registration Statement, the Prospectus and any preliminary Prospectus
Supplement related thereto and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as each
Underwriter may reasonably request.
(viii) The Company will cooperate with the Underwriters in
arranging for the qualification of the Securities for sale and the
determination of their eligibility for investment under the laws of such
jurisdictions as each Underwriter designates and will continue such
qualifications in effect so long as required for the distribution
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<PAGE> 10
of the Securities; provided, however, that the Company shall not be
obligated to qualify to do business in any jurisdiction in which it is not
currently so qualified or to take any action which would subject it to
general or unlimited service of process in any jurisdiction where it is not
now so subject.
(ix) For a period from the date of this Agreement until the
retirement of the Securities, the Company will furnish to the Underwriters
copies of the annual statements of compliance delivered to the Indenture
Trustee pursuant to Section 3.09 of the Indenture and Section 3.10 of the
Servicing Agreement, and the annual independent public accountant's reports
furnished to the Indenture Trustee pursuant to Section 3.11 of the
Servicing Agreement, as soon as practicable after such statements and
reports are furnished to the Indenture Trustee and Owner Trustee
respectively.
(x) So long as any of the Securities are outstanding, the Company
will furnish to you as soon as practicable, (A) all documents distributed,
or caused to be distributed, by the Servicer to the Securityholders, (B)
all documents filed, or caused to be filed, by the Company with the
Commission pursuant to the Securities Act of 1934, as amended, any order of
the Commission thereunder or pursuant to a "no-action" letter from the
staff of the Commission and (C) from time to time, such other information
in the possession of the Company concerning the Trust and any other
information concerning the Company filed with any governmental or
regulatory authority which is otherwise publicly available as you may
reasonably request.
(xi) On or before the Closing Date the Company shall cause its
computer records relating to the Contracts to be marked to show the Trust's
absolute ownership of the Contracts and shall cause the Servicer to mark
its computer records relating to the Contracts to show the sale to the
Company of the Contracts and the subsequent transfer of the Contracts to
the Trust, and from and after the Closing Date the Company shall not, and
shall instruct the Servicer not to, take any action inconsistent with the
Trust's ownership of such Contracts, other than as permitted by the
Indenture and Trust Agreement.
(xii) The Company will file with the Commission as part of a
current report on Form 8-K each ABS Term Sheet provided to the Company by
the Underwriters and identified by it as such within the time period
allotted for such filing pursuant to the No-Action Letter; provided,
however, that prior to such filing of an ABS Term Sheet (other than any ABS
Term Sheets that are not based on the Contract Pool information) by the
Company, the Underwriters must comply with their obligations pursuant to
Section 4 and the Company must receive a letter from
PricewaterhouseCoopers, certified public accountants, satisfactory in form
and substance to the Company, to the effect that such accountants have
performed certain specified procedures, all of which have been agreed to by
the Company, as a result of which PricewaterhouseCoopers have determined
that the information included in
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<PAGE> 11
such ABS Term Sheet (if any), provided by the Underwriters to the Company
for filing on a current report on Form 8-K pursuant to Section 4 and, if
the Company then so specifies, this subsection (xii), and that the
accountants have examined in accordance with such agreed upon procedures,
is accurate except as to such matters that are not deemed by the Company to
be material. The foregoing letter shall be at the expense of the
Underwriters. The Company shall file any corrected ABS Term Sheets
described in Section 4(b)(vi) as soon as practicable following receipt
thereof.
6. Payment of Expenses. Except as provided in Sections 4(b) and 5(xii)
the Company will pay or cause to be paid all expenses incident to the
performance of its obligations under this Agreement, including (i) the printing
and filing of the Registration Statement as originally filed and of each
amendment thereto and the Prospectus and Prospectus Supplement, (ii) the
Indenture Trustee's and Owner Trustee's fees and the fees and disbursements of
the counsel to the Indenture Trustee and to the Owner Trustee, (iii) any
up-front fees and premiums payable to the Insurer and the fees and disbursements
of counsel to the Insurer, (iv) the fees and disbursements of the accountants,
(v) the fees of the rating agencies and (vi) blue sky expenses.
7. Conditions to the Obligations of the Underwriters. The obligation
of the Underwriters to purchase and pay for the Securities will be subject to
the accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the written statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(i) On or prior to the date of this Agreement, the Representative
shall have received a letter, dated the date of this Agreement, of
PricewaterhouseCoopers and substantially in the form heretofore agreed,
which letter shall be in form and substance agreed to by the
Representative.
(ii) The Registration Statement shall have become effective prior
to the Execution Time, and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company or the Representative, shall be
contemplated by the Commission or by any authority administering any state
securities or blue sky law; the Prospectus and any supplements thereto
shall have been filed (if required) with the Commission in accordance with
the Rules and Regulations and the applicable paragraphs of Section 5
hereof; if filing of the Prospectus, or any supplement thereto, is required
pursuant to Rule 424(b), the Prospectus shall be filed in the manner and
within the time period required by Rule 424(b); and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or
threatened.
(iii) Subsequent to the execution and delivery of this Agreement,
there shall have not occurred (a) any change, or any development involving
a
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<PAGE> 12
prospective change, in or affecting particularly the business or properties
of the Company or Onyx which, in the reasonable judgment of the
Underwriters, materially impairs the investment quality of the Securities;
(b) any suspension or material limitation of trading in securities
generally on the New York Stock Exchange, or any setting of minimum prices
for trading on such exchange, or any suspension of trading of any
securities of Onyx on any exchange or in the over-the-counter market by
such exchange or over-the-counter market or by the Commission; (c) any
banking moratorium declared by Federal, New York or California authorities;
(d) any outbreak or material escalation of major hostilities or any other
substantial national or international calamity or emergency if, in the
reasonable judgment of the Representative, the effect of any such outbreak,
escalation, calamity or emergency on the United States financial markets
makes it impracticable or inadvisable to proceed with completion of the
sale of, and any payment for, the Securities.
(iv) The Underwriters shall have received an opinion, dated the
Closing Date, of Andrews & Kurth L.L.P., counsel of the Company,
substantially to the effect that:
(a) The Company (1) is duly incorporated and is validly
existing and in good standing under the laws of the State of Delaware,
(2) has the corporate power and corporate authority to own its
properties and conduct its business as described in the Prospectus and
(3) had at all relevant times, and now has, the power, authority and
legal right to acquire, own and sell the Contracts;
(b) The Company has, or at the time such agreement was
executed and delivered, had, the corporate power and corporate
authority to execute and deliver this Agreement, the Trust Agreement,
the Servicing Agreement, the Purchase Agreement and the Insurance
Agreement and to consummate the transactions contemplated herein and
therein;
(c) No consent, approval, authorization or order of, or
filing with, any California, Delaware or federal governmental agency
or body or any court is or was required by the Company to perform the
transactions contemplated by this Agreement, the Trust Agreement, the
Servicing Agreement, the Purchase Agreement or the Insurance Agreement
except for (1) filing of a Uniform Commercial Code financing statement
in the State of California with respect to the transfer of the
Contracts to the Trust pursuant to the Trust Agreement and the
Servicing Agreement, and the sale of the Contracts to the Company
pursuant to the Purchase Agreement (2) such consents, approvals,
authorizations, orders or filings as may be required under federal law
which have been made or obtained and (3) such consents, approvals,
authorizations, orders or filings as may be required under state
securities laws;
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<PAGE> 13
(d) None of the execution, delivery and performance by the
Company of this Agreement, the Trust Agreement, the Servicing
Agreement, the Purchase Agreement or the Insurance Agreement, the
transfer of the Contracts to the Trust, the assignment of the security
interests of the Company in the Financed Vehicles, the issuance and
sale of the Securities or the consummation of any other of the
transactions contemplated herein or in the Trust Agreement, the
Servicing Agreement, the Purchase Agreement or the Insurance Agreement
conflicts or will conflict with, has resulted or will result in a
breach, violation or acceleration of any of the terms of, or has
constituted or will constitute a default under, the By-Laws or the
Certificate of Incorporation of the Company, as amended, or, to such
counsel's knowledge (i) any rule, order, statute or regulation known
to such counsel to be currently applicable to the Company of any
court, regulatory body, administrative agency or governmental body
having jurisdiction over the Company or (ii) the terms of any material
indenture or other material agreement or instrument known to such
counsel to which the Company is a party or by which it or its
properties are bound;
(e) To such counsel's knowledge, after due inquiry, there
are no actions, proceedings or investigations pending or threatened
before any court, administrative agency or other tribunal (1)
asserting the invalidity of this Agreement, the Trust Agreement, the
Servicing Agreement, the Purchase Agreement or the Insurance Agreement
or the Securities, (2) seeking to prevent the issuance of the
Securities or the consummation of any of the transactions contemplated
by this Agreement, the Trust Agreement, the Servicing Agreement, the
Purchase Agreement or the Insurance Agreement (3) seeking adversely to
affect the federal income tax attributes of the Securities as
described in the Base Prospectus under the headings "SUMMARY OF TERMS
-- Tax Status"; "CERTAIN FEDERAL INCOME TAX CONSEQUENCES"; "TRUSTS FOR
WHICH A PARTNERSHIP ELECTION IS MADE" and "TRUSTS TREATED AS GRANTOR
TRUSTS" and in the Prospectus Supplement under the headings "SUMMARY
OF TERMS -- Federal Income Tax Status" and "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES";
(f) This Agreement, the Trust Agreement, the Servicing
Agreement, the Purchase Agreements and the Insurance Agreement have
each been duly authorized, executed and delivered by the Company;
(g) The Contracts constitute "chattel paper" as defined in
Section 9-105(a)(2) of the Uniform Commercial Code of the State of
California;
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<PAGE> 14
(h) The statements in the Prospectus under the caption
"Certain Legal Aspects of the Contracts," and "ERISA Considerations"
to the extent they constitute matters of California or federal law or
legal conclusions, are correct in all material respects;
(i) The direction by the Company to the Trust Agent to
authenticate the Certificates has been duly authorized by the Company
and, when the Certificates have been duly executed by the Owner
Trustee and authenticated and delivered by the Trust Agent in
accordance with the Trust Agreement and delivered and paid for
pursuant to this Agreement, will be duly and validly issued and
outstanding, and will be entitled to the benefits of the Trust
Agreement.
(j) When the Notes have been duly executed by the Owner
Trustee and delivered by the Trust Agent on behalf of the Trust,
authenticated by the Indenture Trustee in accordance with the
Indenture and delivered and paid for pursuant to this Agreement, the
Notes will be the valid, legal and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms, subject
to bankruptcy, insolvency, reorganization, moratorium, fraudulent or
preferential conveyance and other similar laws of general application
relating to or affecting creditors' rights generally, and general
principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law);
(k) Assuming the authorization, execution and delivery
thereof by each party thereto other than the Company, Fundco and Onyx,
each of the Trust Agreement, the Purchase Agreement, the Servicing
Agreement and the Insurance Agreement constitutes the legal, valid and
binding agreement of the Company, enforceable against the Company in
accordance with its terms, subject, as to enforcement, to (1) the
effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent or preferential conveyance and other similar laws of
general application relating to or affecting creditors' rights
generally, and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law); and (2) the unenforceability under certain circumstances of
provisions indemnifying a party against liability where such
indemnification is contrary to public policy;
(l) The Registration Statement became effective under the
Act as of the date and time specified in such opinion; after due
inquiry, to the best of such counsel's knowledge, no stop order
suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are
pending or contemplated under the Act; the Registration Statement, and
each amendment thereof or supplement thereto as of its Effective Date
and the Prospectus as of its date of issuance
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<PAGE> 15
appeared on its face to be appropriately responsive in all material
respects to the applicable requirements of the Securities Act and the
Rules and Regulations, and such counsel need not opine as to the
financial statements and related notes, schedules and other financial
and statistical data included therein; and any required filing of the
Prospectus and Prospectus Supplement pursuant to Rule 424(b) has been
made;
(m) The Securities, the Indenture, the Trust Agreement, the
Servicing Agreement, the Purchase Agreement, and the Guarantee conform
in all material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus;
(n) The Trust Agreement is not required to be qualified
under the Trust Indenture Act of 1939, as amended;
(o) The Indenture has been duly qualified under the Trust
Indenture Act;
(p) The Company is not, and after giving effect to the
offering and sale of the Securities as contemplated in the Prospectus
and this Agreement and the application of the proceeds thereof as
described in the Prospectus will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Onyx is not an "investment company" within
the meaning of the Investment Company Act;
(q) The Trust is not now, and immediately following the sale
of the Securities pursuant to this Agreement will not be, required to
be registered under the Investment Company Act; and
(r) The Indenture, the Sale and Servicing Agreement and the
Administration Agreement, assuming that they have been duly authorized
by, and when duly executed and delivered by, the Owner Trustee on
behalf of the Trust, will constitute the legal, valid and binding
obligations of the Trust, enforceable against the Trust in accordance
with their terms, except (x) the enforceability thereof may be subject
to bankruptcy, insolvency, reorganization, moratorium, fraudulent or
other preferential conveyance and other similar laws and other similar
laws of general application relating to or affecting the rights of
creditors generally and to general principles of equity (regardless of
whether such enforcement is considered in a proceeding in equity or at
law).
In addition, such counsel shall opine (i) as to certain matters
relating to the acquisition by the Company of a perfected first priority
security interest in the vehicles financed by the Contracts and (ii) as to
the existence of a valid, perfected,
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<PAGE> 16
first priority security interest in the Contacts in favor of the Owner
Trustee from the Company and in favor of the Indenture Trustee from the
Owner Trustee.
In rendering such opinion, such counsel may rely (i) as to
matters of fact, to the extent deemed proper and as stated therein, on
certificates of responsible officers of the Company and public officials
and (ii) on other opinions of counsel as specified therein. References to
the Prospectus in this paragraph (iv) include any supplements thereto.
(v) The Underwriters shall have received an opinion, dated the
Closing Date, of Andrews & Kurth L.L.P., counsel to Onyx and Fundco,
substantially to the effect that:
(a) Each of Onyx and Fundco (1) is duly incorporated and is
validly existing and in good standing under the laws of the State of
its incorporation, (2) has the corporate power and corporate authority
to own its properties and conduct its business as described in the
Prospectus and (3) had at all relevant times, and now has, the power,
authority and legal right to acquire, own and sell the Contracts;
(b) Each of Onyx and Fundco has the corporate power and
corporate authority to execute and deliver the Servicing Agreement,
the Administration Agreement and the Purchase Agreement, to the extent
applicable, and at the time it was executed and delivered, had the
power and authority to execute and deliver the Purchase Agreement, the
Servicing Agreement and the Administration Agreement to the extent
applicable, and to consummate the transactions contemplated herein and
therein;
(c) No consent, approval, authorization or order of, or
filing with, any California or federal governmental agency or body or
any court is required by Onyx or Fundco to perform the transactions
contemplated by the Servicing Agreement, the Administration Agreement
or the Purchase Agreement, as applicable, except for (1) filing of a
Uniform Commercial Code financing statement in the State of California
with respect to the sales of the Contracts to the Company pursuant to
the Purchase Agreement and (2) such consents, approvals,
authorizations, orders or filings as may be required under the federal
and state securities laws; the opinion set forth in this sentence is
limited to such authorizations, approvals, consents and orders which,
in such counsel's experience, are normally applicable to transactions
of the type contemplated by the Servicing Agreement, the
Administration Agreement and the Purchase Agreement, as applicable;
(d) None of the execution, delivery and performance by Onyx
or Fundco of the Servicing Agreement, the Administration Agreement or
the
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<PAGE> 17
Purchase Agreement, as applicable, or the transfer of the Contracts to
the Company, has conflicted with or will conflict with, has resulted
or will result in a breach, violation or acceleration of any of the
terms of, or has constituted or will constitute a default under, the
By-Laws or the Certificate of Incorporation of Onyx or Fundco, as
amended, or, to the best of such counsel's knowledge, any rule, order,
statute or regulation known to such counsel to be currently applicable
to Onyx or Fundco of any court, regulatory body, administrative agency
or governmental body having jurisdiction over Onyx or Fundco or the
terms of any material indenture or other material agreement or
instrument known to such counsel to which Onyx or Fundco is a party or
by which it or its properties are bound;
(e) The Servicing Agreement, the Administration Agreement
and the Purchase Agreement have each been duly authorized, executed
and delivered by Onyx and Fundco, as applicable;
(f) The indemnification agreement dated as of the date
hereof, between Onyx and the Underwriters has been duly authorized,
executed and delivered by Onyx; and
(g) Assuming the authorization, execution and delivery
thereof by the Company with respect to the Servicing Agreement, the
Administration Agreement and the Purchase Agreement, as applicable,
each such agreement constitutes the legal, valid and binding agreement
of Onyx and Fundco, as applicable, enforceable against Onyx and Fundco
in accordance with its terms, subject, as to enforcement, to (1) the
effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent or preferential conveyance and other similar laws of
general application relating to or affecting creditors' rights
generally and general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law); and
(2) the unenforceability under certain circumstances of provisions
indemnifying a party against liability where such indemnification is
contrary to public policy.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on certificates of
responsible officers of Onyx, Fundco and public officials.
In addition, such counsel shall state that they have participated
in conferences with the officers and other representatives of the Company and
Onyx, representatives of the independent public accountants of the Company and
Onyx and representatives of the Underwriters and the Insurer at which the
contents of the Registration Statement and the Prospectus and related matters
were discussed and, although such counsel has not independently verified and are
not passing upon and do not assume any responsibility for, the accuracy,
completeness or fairness of the
17
<PAGE> 18
statements contained in the Registration Statement and the Prospectus, on the
basis of the foregoing, no facts have come to such counsel's attention that lead
them to believe that the Registration Statement, as of the Effective Date,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or that the Prospectus as of its date or as of the Closing Date
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading (it
being understood that such counsel need make no comment and express no belief
with respect to (i) any information incorporated by reference in the
Registration Statement or the Prospectus or (ii) the financial statements and
related notes, schedules and the other financial and statistical data included
in the Registration Statement or the Prospectus).
(vi) The Underwriters shall have received opinions of Andrews &
Kurth L.L. P., counsel to the Company, dated the Closing Date and
satisfactory in form and substance to you, with respect the
characterization of the transfer of the Contracts by Onyx to the Company as
a sale and with respect to the perfection of the Trust's interests in the
Contracts and with respect to the non-consolidation of the Company with
Onyx in the event of bankruptcy filing with respect to Onyx and with
respect to certain other matters.
(vii) The Underwriters shall have received an opinion of Andrews
& Kurth L.L.P., tax counsel to the Company, dated the Closing Date and
satisfactory in form and substance to you substantially to the effect that:
(a) The Notes will be characterized as debt and the Trust
will not be characterized as an association (or a publicly traded
partnership) taxable as a corporation;
(b) the Statements in the Base Prospectus under the heading
"SUMMARY OF TERMS -- Tax Status"; "CERTAIN FEDERAL INCOME TAX
CONSEQUENCES"; "TRUSTS FOR WHICH A PARTNERSHIP ELECTION IS MADE" and
"TRUSTS TREATED AS GRANTOR TRUSTS" and in the Prospectus Supplement
under the headings "SUMMARY OF TERMS -- Federal Income Tax Status" and
"CERTAIN FEDERAL INCOME TAX CONSEQUENCES" to the extent that they
constitute matters of law or legal conclusions with respect thereto,
have been prepared or reviewed by such counsel and are correct in all
material respects; and
(c) Such state tax opinions as are satisfactory to the
Representative.
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<PAGE> 19
(viii) The Underwriters shall have received an opinion, dated the
Closing Date, of Shaw, Pittman, Potts & Trowbridge, counsel to the Insurer,
substantially to the effect that:
(a) The Insurer is a corporation validly existing, in good
standing and licensed to transact the business of surety and financial
guaranty insurance under the laws of the State of New York;
(b) The Insurer has the corporate power to execute and
deliver, and to take all action required of it under the Guarantee,
the Insurance Agreement and the Indemnification Agreement;
(c) Except as have already been obtained, no authorization,
consent, approval, license, formal exemption or declaration from, nor
any registration or filing with, any court or governmental agency or
body of the United States of America or the State of New York, which
if not obtained would affect or impair the validity or enforceability
of the Guarantee, the Insurance Agreement or the Indemnification
Agreement dated as of the Closing Date between the Underwriters and
Onyx (the "Indemnification Agreement") against the Insurer, is
required in connection with the execution and delivery by the Insurer
of the Guarantee, the Insurance Agreement or the Indemnification
Agreement or in connection with the Insurer's performance of its
obligations thereunder;
(d) The Guarantee, the Insurance Agreement and the
Indemnification Agreement have been duly authorized, executed and
delivered by the Insurer, and the Guarantee and, assuming due
authorization, execution and delivery of the Insurance Agreement by
the parties thereto (other than the Insurer), the Insurance Agreement
constitute the legally valid and binding obligations of the Insurer,
enforceable in accordance with their respective terms subject, as to
enforcement, to (1) bankruptcy, reorganization, insolvency, moratorium
and other similar laws relating to or affecting the enforcement of
creditors' rights generally, including, without limitation, laws
relating to fraudulent transfers or conveyances, preferential
transfers and equitable subordination, presently or from time to time
in effect and general principles of equity (regardless of whether such
enforcement is considered in a proceeding in equity or at law), as
such laws may be applied in any such proceeding with respect to the
Insurer and (2) the qualification that the remedy of specific
performance may be subject to equitable defenses and to the discretion
of the court before which any proceedings with respect thereto may be
brought; and
(e) The Guarantee is not required to be registered under the
Securities Act of 1933, as amended.
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<PAGE> 20
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on certificates of
responsible officers of the Insurer and public officials. References to the
Prospectus in this paragraph (viii) include any supplements thereto.
(ix) The Underwriters shall have received an opinion of Thacher,
Proffitt & Wood, counsel to the Indenture Trustee and Trust Agent, dated
the Closing Date and satisfactory in form and substance to you,
substantially in the form of Exhibit B hereto.
(x) The Underwriters shall have received an opinion of Richards,
Layton & Finger, counsel to the Owner Trustee, dated the Closing Date and
satisfactory in form and substance to you, substantially in the form of
Exhibit C hereto.
(xi) The Underwriters shall have received an opinion of Richards,
Layton & Finger, special Delaware counsel to the Trust, dated the Closing
Date and satisfactory in form and substance to you, substantially in the
form of Exhibit D hereto.
(xii) The Representative shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel to the Underwriters, such opinion or
opinions, dated the Closing Date and satisfactory in form and substance to
you, with respect to the validity of the Securities, the Registration
Statement, the Prospectus and other related matters as the Underwriters may
require, and the Company shall have furnished to such counsel such
documents as they reasonably request for the purpose of enabling them to
pass upon such matters.
(xiii) The Underwriters shall have received a letter, dated the
Closing Date, of PricewaterhouseCoopers which meets the requirements of the
subsection (i) of this Section 7, except that the specified date referred
to in such subsection will be a date not more than five days prior to the
Closing Date for the purposes of this subsection.
(xiv) The Underwriters shall have received evidence satisfactory
to them that the Securities have been rated in the highest rating category
by Moody's Investors Service, Inc. and by Standard & Poor's Ratings
Services.
(xv) The Underwriters shall have received a certificate, dated
the Closing Date, of a Vice President or more senior officer of the Company
in which such officer shall state that, to the best of his or her knowledge
after reasonable investigation, the representations and warranties of the
Company in this Agreement are true and correct on and as of the Closing
Date, that the Company has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied
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<PAGE> 21
hereunder at or prior to the Closing Date, that the representations and
warranties of the Company, as Seller, in the Servicing Agreement and the
Trust Agreement are true and correct as of the dates specified therein and
the representations and warranties set forth in Section 2.02(b) of the
Servicing Agreement, are true and correct as of the dates specified in the
Servicing Agreement, that no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or are threatened by the Commission and that,
subsequent to the date of the Prospectus, there has been no material
adverse change in the financial position or results of operations of the
Company's motor vehicle installment loan business except as set forth in or
contemplated by the Prospectus or as described in such certificate.
(xvi) The Underwriters shall have received a certificate, dated
the Closing Date, of a Vice President or more senior officer of Onyx in
which such officer shall state that, to the best of his or her knowledge
after reasonable investigation, the representations and warranties of Onyx
in the Purchase Agreement and Servicing Agreement are true and correct in
all material respects on and as of the Closing Date, that Onyx has complied
with all agreements and satisfied all conditions on its part to be
performed or satisfied thereunder at or prior to the Closing Date, that the
representations and warranties of Onyx, as Servicer, in the Servicing
Agreement are true and correct as of the dates specified in the Servicing
Agreement, there has been no material adverse change in the financial
position or results of operations of Onyx's motor vehicle installment loan
business except as set forth in or contemplated by the Prospectus or as
described in such certificate.
(xvii) The Guarantee shall have been duly authorized, executed,
issued and delivered by the Insurer; all fees due and payable to the
Insurer as of the Closing Date shall have been paid in full; and the
Guarantee shall conform to the description thereof in the Registration
Statement and the Prospectus.
(xviii) The Underwriters shall have received a certificate from a
senior officer of the Insurer to the effect that such officer has no reason
to believe that the section of the Prospectus captioned "Description of the
Insurer" or any such amendment thereof or supplement thereto as of its
Effective Date or date of issuance, as the case may be, contained any
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
The Company will furnish or cause to be furnished to the Underwriters
such number of conformed copies of such opinions, certificates, letters and
documents as the Underwriters reasonably request.
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8. Indemnification.
(i) The Company will indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the meaning
of Section 15 of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (a) arise out of, or
are based upon, any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, or arise out of, or
are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (b) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; and will reimburse the Underwriters for any
legal or other expenses reasonably incurred by the Underwriters in
connection with investigating or defending any such action or claim;
provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage or liability arises out of, or
is based upon, an untrue statement or alleged untrue statement or omission
or alleged omission made in the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by the Underwriters expressly
for use therein, or (y) contained in any ABS Term Sheet to the extent set
forth in subsection (ii) of this Section 8; provided, further, that the
Company shall not be liable under this subsection (i) to the extent that
such losses, claims, damages or liabilities arose out of or are based upon
an untrue statement or omission made in any preliminary prospectus that is
corrected in the final Prospectus (or any amendment or supplement thereto),
and the Company has previously furnished copies thereof in sufficient
quantity to the Underwriters, if the person asserting such loss, claim,
damage or liability was not given the final Prospectus (or any amendment or
supplement thereto) on or prior to the confirmation of the sale of the
Securities.
(ii) Each Underwriter severally and jointly agrees to indemnify
and hold harmless the Company, its directors, each of its officers or
agents who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act against
any and all loss, liability, claim, damage and expense described in the
indemnity contained in subsection (i) of this Section 8, as incurred, but
only with respect to untrue statements or omissions, or alleged untrue
statements or omissions, (A) made in the Registration Statement (or any
amendment thereto) or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with
written information furnished to the Company by the Underwriters through
Merrill Lynch, Pierce, Fenner & Smith Incorporated expressly for use in the
22
<PAGE> 23
Registration Statement (or any amendment thereto) or any preliminary
prospectus or the Prospectus (or any amendment or supplement thereto) or
(B) made in the ABS Term Sheets distributed by the Underwriters and filed
as a post-effective amendment to the Registration Statement or the
Prospectus as a result of any filing pursuant to Section 5(xii); provided
however that the Underwriters will not be liable in any such case to the
extent that any such loss, claim or damage or liability arises out of, or
is based upon, an untrue statement or omission made in the ABS Term Sheet
or any supplement thereto in reliance upon and in conformity with (x)
information furnished to such Underwriter by the Company or (y) information
contained in the Registration Statement or any preliminary prospectus or
the Prospectus other than information described in clause (A) above.
(iii) Each indemnified party shall give prompt notice to the
indemnifying party of any action commenced against the indemnified party in
respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve such indemnifying party from
any liability which it may have hereunder or otherwise than on account of
this indemnity agreement except and to the extent of any prejudice to such
indemnifying party arising from such failure to provide such notice. In
case any such action shall be brought against an indemnified party and it
shall have notified the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, to assume the defense thereof, with counsel,
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party with
respect to such action), and it being understood that the indemnifying
party shall not, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising
out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys,
and, after notice from the indemnifying party to the indemnified party of
its election so to assume the defense thereof, the indemnifying party shall
not be liable to the indemnified party under subsections (i) or (ii) of
this Section 8 for any legal expenses of other counsel or any other
expenses, in each case subsequently incurred by the indemnified party, in
connection with the defense thereof other than reasonable costs of
investigation.
9. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnity agreement provided for in
Section 8 is for any reason held to be unavailable other than in accordance with
its terms, then each indemnifying party shall contribute to the amount paid or
payable by such indemnifying party as a result of the losses, claims, damages or
liabilities referred to in 8(i) and 8(ii) above (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and each
23
<PAGE> 24
Underwriter on the other from the offering of the Securities or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of such Underwriter on the other in connection with the
statements or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The relative
benefits received by the Company on the one hand and each Underwriter on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts and commissions received by each such
Underwriter. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or by such Underwriter and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities referred to in the first
sentence of this Section 9 shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any action or claim which is the subject of this
Section 9. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discount or commission applicable to the Securities purchased by it hereunder.
The Company and each Underwriter agrees that it would not be just and equitable
if contribution pursuant to this Section 9 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above in this Section 9. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
10. Termination. The Underwriters may terminate this Agreement
immediately upon notice to the Company, if at any time, prior to the Closing
Date, there has occurred: (a) any change, or any development involving a
prospective change, in or affecting particularly the business or properties of
the Company or Onyx which, in the reasonable judgment of the Underwriters,
materially impairs the investment quality of the Securities; (b) any suspension
or material limitation of trading in securities generally on the New York Stock
Exchange, or any setting of minimum prices for trading on such exchange, or any
suspension of trading of any securities of the Company or of Onyx on any
exchange or in the over-the-counter market by such exchange or over-the-counter
market or by the Commission; (c) any banking moratorium declared by Federal, New
York or California authorities; or (d) any outbreak or material escalation of
major hostilities or any other substantial national or international calamity or
emergency if, in the reasonable judgment of the Underwriters, the effect of any
such outbreak, escalation, calamity or emergency on the United States financial
markets makes it impracticable or inadvisable to proceed with completion of the
sale of and any payment for the Securities.
11. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the Underwriters set forth in
or made pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof, made by
or on behalf of the Underwriters, the Company or any of their respective
representatives, officers or directors or any controlling person, and will
survive delivery of and payment for the Securities. If for any reason the
purchase of the Securities by the Underwriters is not consummated, the Company
shall remain
24
<PAGE> 25
responsible for the expenses to be paid or reimbursed by it pursuant to Section
6 and the respective obligations of the Company and the Underwriters pursuant to
Sections 6, 8 and 9 shall remain in effect. If the purchase of the Securities by
the Underwriters is not consummated for any reason other than solely because of
the occurrence of any event specified in clauses (b), (c) or (d) of Section
7(iii) or clauses (b), (c) or (d) of Section 10, and other than solely because
the Underwriters fail to perform their obligations hereunder, the Company will
reimburse the Underwriter for all out-of-pocket expenses (including fees and
disbursements of counsel) reasonably incurred by it in connection with the
offering of the Securities.
12. Notices. All communications hereunder will be in writing and, if
sent to the Underwriters, will be mailed, delivered or telegraphed and confirmed
to the Underwriters at c/o Merrill Lynch, Pierce, Fenner and Smith Incorporated,
World Financial Center, North Tower, 15th Floor, New York, New York 10281-1315
Attention: Managing Director, Asset-Backed Securities Department, or to such
other address as the Underwriters may designate in writing to the Company, or if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
the Company at Onyx Acceptance Financial Corporation, 8001 Irvine Center Drive,
6th Floor, Irvine CA 92618, Attention: Regan E. Kelly, Esq., Executive Vice
President.
13. Successors. This Agreement will inure to the benefit of, and be
binding upon, the parties hereto and their respective successors. Nothing
expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the parties hereto and their
respective successors and the controlling persons and officers and directors
referred to in Sections 8 and 9 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or any provision herein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
parties hereto and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
the Underwriters shall be deemed to be a successor by reason merely of such
purchase.
14. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
15. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
16. Severability of Provisions. Any covenant, provisions, agreement or
term of this Agreement that is prohibited or is held to be void or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof.
17. Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto with respect to the matters and
transactions contemplated hereby
25
<PAGE> 26
and supersedes all prior agreements and understandings whatsoever relating to
such matters and transactions.
18. Amendment. Neither this Agreement nor any term hereof may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge or termination is sought.
19. Heading. The headings in this Agreement are for the purposes of
reference only and shall not limit or otherwise affect the meaning hereof.
20. The Representative. The Representative will act for the several
Underwriters in connection with the transactions described in this Agreement,
and any action taken by the Representative under this Agreement will be binding
upon all the Underwriters.
21. Defaults of Underwriters. If any Underwriter defaults in its
obligation to purchase the Certificates hereunder on the Closing Date and the
aggregate principal amount of the Securities that such defaulting Underwriter
agreed but failed to purchase does not exceed 10% of the total principal amount
of the Securities, the Representative may make arrangements satisfactory to the
Representative and the Seller for the purchase of such Securities by other
persons, including either of the Underwriters, but if no such arrangements are
made by the Closing Date, the nondefaulting Underwriter shall be obligated, in
proportion to its respective commitment hereunder, to purchase the Securities
that such defaulting Underwriter agreed but failed to purchase. If an
Underwriter so defaults and the aggregate principal amount of the Securities
with respect to such default exceeds 10% of the total principal amount of the
Securities and arrangements satisfactory to the Representative and the Company
for the purchase of such Securities by other persons are not made within 24
hours after such default, this Agreement will terminate without liability on the
part of the nondefaulting Underwriter or the Company, except as provided in
Section 11. Nothing herein will relieve a defaulting Underwriter from liability
for its default.
26
<PAGE> 27
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate thereof,
whereupon it will become a binding agreement among the undersigned in accordance
with its terms.
Very truly yours,
ONYX ACCEPTANCE FINANCIAL
CORPORATION
By: /s/ DON P. DUFFY
---------------------------------
Name: Don P. Duffy
Title: Chief Financial Officer
The foregoing Underwriting Agreement
is hereby confirmed and accepted as
of the date first above written.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Smith Barney Inc.
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
/s/ SHAWN CEPEDA
-----------------------------------
Name: Shawn Cepeda
Title: Vice President
For themselves and the other several
underwriters named in Schedule I
attached hereto.
27
<PAGE> 28
Exhibit A-1
The attached information(the "Term Sheet") is privileged and
confidential and is intended for use by the addressee only. The Term Sheet is
furnished to you solely by Merrill Lynch, Pierce, Fenner & Smith Incorporated
("Merrill Lynch") and not by the issuer of the securities or any of its
affiliates. The issuer of these securities has not prepared or taken part in the
preparation of these materials. Neither Merrill Lynch, the issuer of the
securities nor any of its affiliates makes any representation as to the accuracy
or completeness of the information herein. The information herein is
preliminary, and will be superseded by the applicable prospectus supplement and
by any other information subsequently filed with the Securities and Exchange
Commission. The information herein may not be provided by the addressee to any
third party other than the addressee's legal, tax, financial and/or accounting
advisors for the purposes of evaluating said material.
Although a registration statement (including the prospectus) relating
to the securities discussed in this communication has been filed with the
Securities and Exchange Commission and is effective, the final prospectus
supplement relating to the securities discussed in this communication has not
been filed with the Securities and Exchange Commission. This communication shall
not constitute an offer to sell or the solicitation of any offer to buy nor
shall there be any sale of the securities discussed in this communication in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Prospective purchasers are referred to the final prospectus and prospectus
supplement relating to the securities discussed in this communication for
definitive information on any matter discussed in this communication. A final
prospectus and prospectus supplement may be obtained by contacting the Merrill
Lynch Trading Desk at (212) 449-3659.
Please be advised that asset-backed securities may not be appropriate
for all investors. Potential investors must be willing to assume, among other
things, market price volatility, prepayments, yield curve and interest rate
risk. Investors should fully consider the risk of any investment in these
securities.
If you have received this communication in error, please notify the
sending party immediately by telephone and return the original to such party by
mail.
28
<PAGE> 29
Exhibit A-2
The information herein is preliminary, and will be superseded by the
applicable prospectus supplement and by any other information subsequently filed
with the Securities and Exchange Commission. The information addresses only
certain aspects of the applicable security's characteristics and thus does not
provide a complete assessment. As such, the information may not reflect the
impact of all structural characteristics of the security. The assumptions
underlying the information, including structure and collateral, may be modified
from time to time to reflect changed circumstances. The attached term sheet is
not intended to be a prospectus and any investment decision with respect to the
Notes or Certificates should be made by you based solely upon all of the
information contained in the final prospectus and the final prospectus
supplement. Under no circumstances shall the information presented constitute an
offer to sell or the solicitation of any offer to buy nor shall there be any
sale of the securities in any jurisdiction in which such offer, solicitation or
sale would be unlawful prior to registration or qualification under the
securities laws of such jurisdiction. The securities may not be sold nor may an
offer to buy be accepted prior to the delivery of a final prospectus and final
prospectus supplement relating to the securities. All information described
herein is preliminary, limited in nature and subject to completion or amendment.
No representation is made that the above referenced securities will actually
perform as described in any scenario presented. A final prospectus and final
prospectus supplement may be obtained by contacting the Salomon Smith Barney
Syndicate Desk at (212) 783-3727.
29
<PAGE> 30
Schedule I
<TABLE>
<CAPTION>
Purchase
Price as a
percentage of
the aggregate
Initial principal
Principal amount
Amount thereof
--------------------------------------------------------------- -----------------
<S> <C> <C>
Merrill Lynch, Pierce, Fenner $26,500,000 5.261% Auto Loan Backed Notes, Class A-1
and ................................ $35,000,000 5.55% Auto Loan Backed Notes, Class A-2
Smith Incorporated $44,500,000 5.65% Auto Loan Backed Notes, Class A-3 99.77008%
$27,000,000 5.76% Auto Loan Backed Notes, Class A-4 99.74273%
$7,000,000 6.09% Auto Loan Backed Certificates 99.67601%
99.53495%
Salomon Smith Barney Inc $26,500,000 5.261% Auto Loan Backed Notes, Class A-1 99.825%
$35,000,000 5.55% Auto Loan Backed Notes, Class A-2 99.77008%
$44,500,000 5.65% Auto Loan Backed Notes, Class A-3 99.74273%
$27,000,000 5.76% Auto Loan Backed Notes, Class A-4 99.67601%
$ 7,000,000 6.09% Auto Loan Backed Certificates 99.53495%
</TABLE>
30
<PAGE> 1
EXHIBIT 4.3
INDENTURE
between
ONYX ACCEPTANCE OWNER TRUST 1998-C,
as Issuer,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
-----------------
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE I - DEFINITIONS AND INCORPORATION BY REFERENCE.......................................1
Section 1.01 Definitions..........................................................1
Section 1.02 Incorporation by Reference of Trust Indenture Act....................6
Section 1.03 Rules of Construction................................................7
ARTICLE II - THE NOTES.......................................................................8
Section 2.01 Form.................................................................8
Section 2.02 Execution, Authentication and Delivery...............................8
Section 2.03 Temporary Notes......................................................9
Section 2.04 Registration; Registration of Transfer and Exchange..................9
Section 2.05 Mutilated, Destroyed, Lost or Stolen Notes..........................10
Section 2.06 Persons Deemed Owner................................................11
Section 2.07 Payment of Principal and Interest; Defaulted Interest...............11
Section 2.08 Cancellation........................................................12
Section 2.09 Book-Entry Notes....................................................13
Section 2.10 Notices to Clearing Agency..........................................13
Section 2.11 Definitive Notes....................................................13
Section 2.12 Release of Collateral...............................................14
Section 2.13 Tax Treatment.......................................................14
Section 2.14 ERISA...............................................................14
ARTICLE III - COVENANTS.....................................................................15
Section 3.01 Payment of Principal and Interest...................................15
Section 3.02 Maintenance of Office or Agency.....................................15
Section 3.03 Money for Payments to be Held in Trust..............................15
Section 3.04 Existence...........................................................17
Section 3.05 Protection of Trust Estate..........................................17
Section 3.06 Opinions as to Collateral...........................................18
Section 3.07 Performance of Obligations; Servicing of Contracts..................18
Section 3.08 Negative Covenants..................................................20
Section 3.09 Annual Statement as to Compliance...................................20
Section 3.10 Issuer May Consolidate, etc. Only on Certain Terms..................21
Section 3.11 Successor Transferee................................................23
Section 3.12 No Other Business...................................................23
Section 3.13 Servicer's Obligations..............................................23
Section 3.14 Restricted Payments.................................................23
Section 3.15 Notice of Events of Default.........................................24
Section 3.16 Further Instruments and Acts........................................24
Section 3.17 Compliance with Laws................................................24
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 3.18 Amendments of Sale and Servicing Agreement and Trust Agreement......24
ARTICLE IV - SATISFACTION AND DISCHARGE.....................................................24
Section 4.01 Satisfaction and Discharge of Indenture.............................24
Section 4.02 Application of Trust Money..........................................25
Section 4.03 Repayment of Monies Held by Paying Agent............................25
ARTICLE V - EVENTS OF DEFAULT; REMEDIES.....................................................26
Section 5.01 Events of Default...................................................26
Section 5.02 Rights Upon Event of Default........................................27
Section 5.03 Collection of Indebtedness and Suits for Enforcement
by Indenture Trustee................................................27
Section 5.04 Remedies............................................................29
Section 5.05 Optional Preservation of the Contracts..............................31
Section 5.06 Priorities..........................................................31
Section 5.07 Limitation of Suits.................................................32
Section 5.08 Unconditional Rights of Noteholders to Receive
Principal and Interest..............................................33
Section 5.09 Restoration of Rights and Remedies..................................33
Section 5.10 Rights and Remedies Cumulative......................................33
Section 5.11 Delay or Omission Not a Waiver......................................33
Section 5.12 Control by Noteholders..............................................33
Section 5.13 Waiver of Past Defaults.............................................34
Section 5.14 Undertaking for Costs...............................................34
Section 5.15 Waiver of Stay or Extension Laws....................................34
Section 5.16 Action on Notes.....................................................35
Section 5.17 Performance and Enforcement of Certain Obligations..................35
ARTICLE VI - THE INDENTURE TRUSTEE..........................................................35
Section 6.01 Duties of Indenture Trustee.........................................35
Section 6.02 Rights of Indenture Trustee.........................................38
Section 6.03 Individual Rights of Indenture Trustee..............................39
Section 6.04 Indenture Trustee's Disclaimer......................................39
Section 6.05 Notice of Defaults..................................................39
Section 6.06 Reports by Indenture Trustee to Holders.............................40
Section 6.07 Compensation and Indemnity..........................................40
Section 6.08 Replacement of Indenture Trustee....................................40
Section 6.09 Successor Indenture Trustee by Merger...............................41
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee...42
Section 6.11 Eligibility; Disqualification.......................................43
Section 6.12 Preferential Collection of Claims Against Issuer....................43
Section 6.13 Representations and Warranties of Indenture Trustee.................43
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
ARTICLE VII - NOTEHOLDERS' LISTS AND REPORTS................................................44
Section 7.01 Issuer to Furnish Indenture Trustee Names and
Addresses of Noteholders............................................44
Section 7.02 Preservation of Information; Communications to Noteholders..........44
Section 7.03 Reports by Issuer...................................................44
Section 7.04 Reports by Indenture Trustee........................................45
ARTICLE VIII - ACCOUNTS, DISBURSEMENTS AND RELEASES.........................................45
Section 8.01 Collection of Money.................................................45
Section 8.02 Trust Accounts......................................................46
Section 8.03 [RESERVED]..........................................................47
Section 8.04 Release of Collateral...............................................47
Section 8.05 Opinion of Counsel..................................................47
ARTICLE IX - SUPPLEMENTAL INDENTURES........................................................48
Section 9.01 Supplemental Indentures Without Consent of Noteholders..............48
Section 9.02 Supplemental Indentures With Consent of Noteholders.................49
Section 9.03 Execution of Supplemental Indentures................................50
Section 9.04 Effect of Supplemental Indenture....................................50
Section 9.05 Conformity With Trust Indenture Act.................................51
Section 9.06 Reference in Notes to Supplemental Indentures.......................51
ARTICLE X - REDEMPTION OF NOTES.............................................................51
Section 10.01 Redemption.........................................................51
Section 10.02 Form of Redemption Notice..........................................51
Section 10.03 Notes Payable on Redemption Date...................................52
ARTICLE XI - MISCELLANEOUS..................................................................52
Section 11.01 Compliance Certificates and Opinions, etc..........................52
Section 11.02 Form of Documents Delivered to Indenture Trustee...................53
Section 11.03 Acts of Noteholders................................................54
Section 11.04 Notices, etc., to Indenture Trustee, Issuer, Insurer and
Rating Agencies....................................................55
Section 11.05 Notices to Noteholders; Waiver.....................................55
Section 11.06 Alternate Payment and Notice Provisions............................56
Section 11.07 Conflict With Trust Indenture Act..................................56
Section 11.08 Effect of Headings and Table of Contents...........................56
Section 11.09 Successors and Assigns.............................................56
Section 11.10 Separability.......................................................57
Section 11.11 Benefits of Indenture..............................................57
Section 11.12 Legal Holidays.....................................................57
Section 11.13 Governing Law......................................................57
Section 11.14 Counterparts.......................................................57
</TABLE>
iii
<PAGE> 5
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
Section 11.15 Recording of Indenture.............................................57
Section 11.16 Trust Obligation...................................................57
Section 11.17 No Petition........................................................58
Section 11.18 Inspection.........................................................58
Section 11.19 Limitation of Liability of Owner Trustee...........................58
Section 11.20 Certain Matters Regarding the Insurer..............................58
</TABLE>
EXHIBITS
<TABLE>
<S> <C> <C>
Schedule A -- Schedule of Contracts
Exhibit A -- Form of Depository Agreement
Exhibit B -- Form of Class A-1 Note
Exhibit C -- Form of Class A-2 Note
Exhibit D -- Form of Class A-3 Note
Exhibit E -- Form of Class A-4 Note
Exhibit F -- Form of Note Assignment
</TABLE>
ic
<PAGE> 6
This Indenture, dated as of November 1, 1998, is between Onyx Acceptance
Owner Trust 1998-C, a Delaware business trust, as the Issuer, and The Chase
Manhattan Bank, a New York banking corporation, as the Indenture Trustee.
Each party agrees as follows for the benefit of the other parties and for
the equal and ratable benefit of the holders of the Issuer's 5.261% Auto Loan
Backed Notes, Class A-1 (the "CLASS A-1 NOTES"), 5.55% Auto Loan Backed Notes,
Class A-2 (the "CLASS A-2 NOTES"), 5.65% Auto Loan Backed Notes, Class A-3 (the
"Class A-3 Notes") and 5.76% Auto Loan Backed Notes, Class A-4 (the "Class A-4
Notes" and, together with the Class A-1 Notes, the Class A-2 Notes and the Class
A-3 Notes, the "NOTES"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee on behalf of the Trust on
the Closing Date, on behalf of and for the benefit of the Holders of the Notes
and the Insurer, without recourse, all of the Issuer's right, title and interest
in, to and under the Collateral.
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, 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, as Indenture Trustee on behalf of the Holders of the
Notes 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 Holders of the Notes may be adequately and
effectively protected.
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 Sale
and Servicing Agreement (as defined below) and (ii) the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"ACT" shall have the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as of
the date hereof, among the Administrator, the Issuer, the Seller, the Indenture
Trustee
-1-
<PAGE> 7
and the Trust Agent.
"ADMINISTRATOR" means the Servicer, or any successor Administrator under
the Administration Agreement.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of the
Owner Trustee who is authorized to act for the Owner Trustee or the Trust Agent,
as the case may be, in matters relating to the Issuer and who is identified on
the list of Authorized Officers delivered by the Owner Trustee or the Trust
Agent, as the case may be, 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).
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement, the
Sale and Servicing 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.
"CERTIFICATE OF TRUST" means the Certificate of Trust of the Issuer
substantially in the form of Exhibit B to the Trust Agreement.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 NOTES" means the Class A-1 Notes, substantially in the form of
Exhibit B.
"CLASS A-2 NOTES" means the Class A-2 Notes, substantially in the form of
Exhibit C.
"CLASS A-3 NOTES" means the Class A-3 Notes, substantially in the form of
Exhibit D.
"CLASS A-4 NOTES" means the Class A-4 Notes, substantially in the form of
Exhibit E.
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"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the Trust Property, excluding the Certificate
Distribution Account and amounts on deposit therein.
"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 November 24, 1998, among
the Issuer, the Indenture Trustee, the Owner Trustee and DTC, as the initial
Clearing Agency, relating to the Notes and the Certificates, substantially in
the form of Exhibit 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.
"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 Collateral 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 Collateral 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.
"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 accordance with generally accepted
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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.
"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 11.01, 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.
"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.
"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.
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"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 11.01, and delivered to, the
Indenture Trustee.
"ONYX" means Onyx Acceptance Corporation, and its successors.
"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 Depositor 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 11.01, and
shall be in form and substance satisfactory to the Indenture Trustee, and if
addressed to the Insurer, satisfactory to the Insurer.
"OUTSTANDING" means, as of the date of determination, all Notes theretofore
authenticated and delivered under this Indenture except:
(i) Notes theretofore cancelled 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
has been made, satisfactory to the Indenture Trustee, has been made); and
(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 Amount 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.
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"OUTSTANDING AMOUNT" means the aggregate principal amount of all Notes of
one Class or of all Classes, as the case may be, Outstanding at the date of
determination.
"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 Note
Distribution Account, including payment of principal of or interest on the Notes
on behalf of the Issuer.
"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.
"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 and the Certificates 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 Distribution Date or Redemption
Date, the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date, or, in the event that Definitive Notes are
issued, the close of business on the last day of the calendar month immediately
preceding the month in which such Distribution Date or Redemption Date occurs.
"REDEMPTION DATE" means the Distribution Date specified by the Servicer or
the Issuer pursuant to Section 10.01.
"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
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Date.
"REGISTERED HOLDER" means the Person in whose name a Note is registered on
the Note Register on the applicable Record Date.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of the date hereof, between the Issuer, the Seller, the Servicer, the
Indenture Trustee and the Trust Agent.
"STATE" means any one of the 50 states of the United States or the District
of Columbia.
"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.
"TRUST AGENT" means the The Chase Manhattan Bank, as agent of the Owner
Trustee under the Trust Agreement, and any successor Trust Agent thereunder.
"TRUST AGREEMENT" means the Trust Agreement, dated as of November 1, 1998,
between the Seller, the Owner Trustee and the Trust Agent.
"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.
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"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;
(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, the Class A-2 Notes, the
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Class A-3 Notes and the Class A-4 Notes, in each case together with the
Indenture Trustee's certificate of authentication, shall be in substantially the
forms set forth as Exhibits B, C, D and E 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 Exhibits B, C, D and E 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 in the
Trust Agreement. The signature of any such Authorized Officer on the Notes may
be manual or facsimile. Notes bearing the manual or facsimile signature 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 the following aggregate principal amount of
Notes: (i) $53,000,000 of Class A-1 Notes, (ii) $70,000,000 of Class A-2 Notes,
(iii) $89,000,000 of Class A-3 Notes and (iv) $54,000,000 of Class A-4 Notes.
The aggregate principal amount of Class A-1 Notes, Class A-2 Notes, Class A-3
Notes and Class A-4 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
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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 "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.
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 Holders of the Notes 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
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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 9.06 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.
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
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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
additional 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.
Section 2.06 Persons Deemed Owner. Prior to due presentment for
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 2.07 Payment of Principal and Interest; Defaulted Interest.
(a) Each Class of Notes shall accrue interest during each Interest
Accrual Period at the related Interest Rate, and such interest shall be payable
on each Distribution Date as specified therein, subject to Section 3.01.
Interest accrued on any Note but not paid on any Distribution Date will be due
on the immediately succeeding
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Distribution Date, together with, to the extent permitted by applicable law,
interest on such shortfall at the related Interest Rate. Interest on the Notes
shall be calculated on the basis of a 360-day year of twelve 30-day months. 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
Distribution 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
Distribution Date, a Redemption Date or on the related Final Scheduled
Distribution Date, as the case may be (and except for the Redemption Price for
any Note called for redemption pursuant to Section 10.01), 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 Distribution
Date to the extent provided 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 Scheduled Distribution 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, if an Insurer Default has occurred and is continuing, the date
on which the Holders of Notes representing not less than 66 2/3% of the
Outstanding Amount 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 Distribution 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 mailed within five Business Days of such Distribution 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
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Business Day of such Distribution Date) or receipt of notice of termination of
the Trust pursuant to Section 9.01(c) 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
10.02. 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 cancelled 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. 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;
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(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 Holders of Notes
evidencing a specified percentage of the Outstanding Amount, 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 Holders of the Notes 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 Outstanding Amount 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.
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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 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 Collateral. Subject to Section 11.01 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 Collateral. 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 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 the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account on a Distribution Date
deposited therein pursuant to the Sale and Servicing Agreement for the benefit
of (i) the Class A-1 Notes, to the Class A-1 Noteholders, (ii) the Class A-2
Notes, to the Class A-2 Noteholders, (iii) the Class A-3 Notes, to the Class A-3
Noteholders and (iv) the Class A-4 Notes, to the Class A-4 Noteholders. Amounts
properly withheld under the Code by any Person from a payment
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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 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 8.02, 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 Payment Account and the Note Distribution
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 Payment Account and the Note Distribution 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 Collateral 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.
On the Business Day immediately preceding each Distribution Date, the
Servicer shall cause funds to be withdrawn from the Collection Account and
deposited into the Payment Account pursuant to Section 4.02(e) of the Sale and
Servicing Agreement, and on each Distribution Date, the Indenture Trustee shall
make the deposits to the Note Distribution Account required by Section 4.03(a)
of the Sale and Servicing Agreement.
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:
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(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 or otherwise
disposed of as herein provided and pay such sums to such Persons 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
(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
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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 Collateral.
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 Collateral, 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 Collateral. The Issuer will from time to
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 Collateral;
(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 Collateral;
(v) preserve and defend title to the Collateral and the rights of
the Indenture Trustee and the Noteholders in such Collateral against
the claims of all persons and parties; or
(vi) pay all taxes or assessments levied or assessed upon the
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Collateral 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 Collateral.
(a) Promptly after the execution and delivery of this Indenture, 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 Collateral (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 Cut Off
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 collateral (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.
Section 3.07 Performance of Obligations; Servicing of Contracts.
(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 Collateral 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
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the Administrator. Initially, the Issuer has contracted with the Servicer and
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 Collateral,
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 Sale and Servicing 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 shall have occurred
and be continuing) and the Holders of at least a majority of the Outstanding
Amount 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 Sale and Servicing Agreement with respect to the
Contracts, the Issuer shall take all reasonable steps available to it to remedy
such failure.
(e) Upon the termination of the Servicer by the Insurer pursuant to
Section 7.01 of the Sale and Servicing Agreement or upon the resignation of the
Servicer pursuant to Section 6.04 of the Sale and Servicing Agreement, the
Insurer shall appoint a successor servicer ("SUCCESSOR SERVICER"). Upon the
termination of the Servicer by the Indenture Trustee, the Noteholders or the
Certificateholders pursuant to Section 7.01 of the Sale and Servicing Agreement,
(i) if the Notes have not been paid in full, the Indenture Trustee shall be the
Successor Servicer, and (ii) if the Notes have been paid in full, the Owner
Trustee, acting at the direction of the Holders of Certificates evidencing not
less than 51% of the outstanding principal amount of the Certificates, shall
appoint a Successor Servicer. The Successor Servicer shall succeed to all the
responsibilities, duties and liabilities of the Servicer under the Sale and
Servicing Agreement. Notwithstanding the foregoing, if the Notes have not been
paid in full, the Indenture Trustee may, if it shall be unwilling to act, or
shall, if it shall be legally unable to so act, appoint, or petition a court of
competent jurisdiction (with any related costs to be at the sole expense of the
Issuer) 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 retail installment sales contracts, as the successor to the
Servicer under the Sale and Servicing Agreement. If the Indenture Trustee shall
succeed to the Servicer's duties as servicer of the Contracts as provided
herein, 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
Servicer and the servicing of the Contracts. In case
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the Indenture Trustee shall become successor to the Servicer under the Sale and
Servicing 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 Sale and Servicing 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 Holders of the Notes.
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 Collateral,
unless directed to do so by the Indenture Trustee with the prior
written consent of the Insurer;
(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 Collateral;
(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 Collateral 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
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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 Collateral; or
(iv) dissolve or liquidate in whole or in part.
Section 3.09 Annual Statement as to Compliance. The Issuer will
deliver to the Indenture Trustee and the Insurer, on or before 120 days after
the end of each fiscal year of the Issuer (commencing with the fiscal year ended
December 31, 1998), an Officer's Certificate 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 Terms.
(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 shall have occurred and be 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
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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
consolidation or merger and such supplemental indenture comply with
this Article Three 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 Collateral, 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 shall have
occurred and be 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
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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 Holders of the Notes, (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
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
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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
Contracts 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 2.03 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 Sale and Servicing
Agreement.
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, (A) distributions to the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Securityholders and the
holders of Residual Interest Instruments as contemplated by, and to the extent
funds are available for such purpose under, the Sale and Servicing Agreement or
the Trust Agreement and (B) payments to the Indenture Trustee and the Owner
Trustee pursuant to Section 1(a)(ii) of the Administration 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.
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Section 3.15 Notice of Events of Default. The Issuer agrees to
give the Indenture Trustee, the Trust Agent, 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
Sale and Servicing 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 Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 9.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Holders of the Notes 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) the obligation of the Indenture Trustee
to make claims under the Policy, which shall survive the Class A-4 Final
Scheduled Distribution Date 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
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(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 Class A-4 Final
Scheduled Distribution Date 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 direct obligations of or obligations guaranteed by the United States (which
will mature prior to the date such amounts are payable), in trust in an Eligible
Account 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 Class A-4 Final Scheduled Distribution
Date or Redemption Date (if Notes shall have been called for redemption pursuant
to Section 10.01), 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 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent herein
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
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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 Sale
and Servicing 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) the delivery to the Insurer of a claim for payment under the
Policy;
(b) 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;
(c) default in the payment of any principal due and payable on a
Class of Notes on the Final Scheduled Distribution Date for such Class of Notes;
(d) (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 90 days after notice thereof shall have been given, by
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 Outstanding Amount of the Notes, 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 Outstanding Amount of the Notes acting
together as a
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single class;
(e) 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 Collateral 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 Collateral, 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
(f) 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 Collateral, 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 shall have occurred and be
continuing, neither the Indenture Trustee nor the Noteholders may declare an
Indenture Event of Default under the Indenture. So long as an Insurer Default
shall not have occurred and be continuing, an Indenture Event of Default shall
occur only upon delivery by the Insurer to the Indenture Trustee of notice of
the occurrence of an Indenture Event of Default. The failure to pay principal on
a class of Notes shall not result in the occurrence of an Indenture Event of
Default until the Final Scheduled Distribution 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 be 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 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 payable. The Indenture
Trustee will have no discretion with
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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(b), (c), (d), (e) or (f) shall
have occurred and be continuing, the Indenture Trustee shall, if so requested in
writing by the Holders of Notes representing at least 66 2/3% of the aggregate
Outstanding Amount 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 pay all
or any portion of the outstanding amount of the Notes, plus accrued interest
thereon to the date of payment.
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 Holders
of the Notes, 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 Rate 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 shall have occurred and be
continuing, at the direction of the Insurer, or (ii) if an Insurer Default shall
have occurred and be continuing, at the direction of the Holders of Notes
representing at least 66 2/3% of the Outstanding Amount 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 Collateral, Proceedings under Title 11 of the United States Code
or any other
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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 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 Holders of Notes 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 Holders of Notes 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.
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(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.
(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 Holders of the Notes.
(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 shall have occurred and be continuing, at the direction of
the Insurer, or (ii) if an Event of Default specified in Section 5.01(b), (c),
(d), (e) or (f) 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
shall have occurred and be continuing, at the direction of the Holders of Notes
representing at least 66 2/3% of the Outstanding Amount 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 Collateral;
(iii) exercise any remedies of a secured party under the UCC and
any other remedy available to the Indenture Trustee and take any
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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
Collateral 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 Collateral.
(b) Notwithstanding the foregoing,
(i) in the event that the Indenture Trustee is acting at the
direction of the Insurer, so long as an Insurer Default shall not have
occurred and be continuing, if an Event of Default specified in
Section 5.01(b), (c) or (d) 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 Collateral in whole or in part if 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 Holders of Notes representing at least 66 2/3% of the
Outstanding Amount of the Notes, 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 Collateral
in whole or in part unless (A) an Indenture Event of Default as
specified in Section 5.01(b), (c), (e) or (f) shall have occurred and
be continuing and in any case the Insurer shall have failed to make a
payment required under the Policy in accordance with its terms or (B)
(1) an Indenture Event of Default as specified in Section 5.01(d)
shall have occurred and be continuing, (2) the Insurer shall not have
failed to make a payment required under the Policy in accordance with
its terms and (3) either (x) the proceeds of such sale or liquidation
would be sufficient to pay all outstanding principal of and accrued
interest on the Notes and the Certificates and all amounts owing to
the Insurer pursuant to the terms of the Insurance Agreement or (y)
the holders of Certificates evidencing 100% of the outstanding
principal amount of the Certificates consent to such liquidation and
all amounts owing to the Insurer under the Insurance Agreement shall
be paid upon such sale or liquidation. In the event of a liquidation
of the Collateral pursuant to clause (ii), the Policy will not be
available to cover
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losses to Securityholders resulting from such liquidation, and the
Policy shall be terminated and the Insurer shall have no further
obligation thereunder.
(c) In determining the sufficiency or insufficiency of the proceeds
of a sale or liquidation of the Collateral to pay all amounts required pursuant
to Section 5.04(b)(i) or (ii) 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 Collateral
for such purpose.
Section 5.05 Optional Preservation of the Contracts. 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
Collateral.
Section 5.06 Priorities.
(a) If the Notes have been declared to be due and payable under
Section 5.02 following an Indenture 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 Collateral, the Notes or the
Certificates 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
Collateral, the Notes or the Certificates (excluding any payments made under the
Policy), shall be applied in the following order and priority:
first, to the Servicer, to pay any unpaid Servicing Fee;
second, to pay any accrued and unpaid fees and expenses of the
Owner Trustee, the Indenture Trustee and the Trust Agent without
preference or priority of any kind;
third, to the Noteholders, to pay accrued interest on each Class
of Notes on a pro rata basis based on the interest accrued (including,
to the extent permitted by applicable law, interest accrued on any
interest accrued but not timely paid) on each Class of Notes at the
related Interest Rate for such Class;
fourth, to the Noteholders, to pay principal on each Class of
Notes on a pro rata basis based on the Outstanding Amount of each
Class of Notes, until the Outstanding Amount of each Class of Notes is
reduced to zero;
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fifth, to the Certificateholders, to pay accrued interest on the
Certificates (including, to the extent permitted by applicable law,
interest accrued on any interest accrued but not timely paid) at the
Certificate Rate;
sixth, to the Certificateholders, to pay principal on the
Certificates until the Certificate Balance is reduced to zero;
seventh, to the Insurer, to pay amounts owing to the Insurer
under the Insurance Agreement (including the Premium); and
eighth, any excess amounts remaining after making the
distributions described in clauses first through seventh to the Spread
Account, to be applied in accordance with the Insurance 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 Outstanding Amount
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;
(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 Outstanding Amount of the Notes, voting
together as a single class; and
(vi) an Insurer Default shall have occurred and be continuing.
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It is understood and intended that no one or more Holders of Notes 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
Holders of Notes 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 Holders of Notes,
each representing less than a majority of the Outstanding Amount of the Notes,
the Indenture Trustee in its sole discretion may determine that 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 payment of the principal of and interest 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.
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
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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
Outstanding Amount 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 Collateral 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 the Holders of Notes representing not less than a majority of the
Outstanding Amount of the Notes 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 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 Holders of the Notes 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.
Section 5.14 Undertaking for Costs. All parties to this Indenture
agree,
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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
Outstanding Amount of the Notes 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 and manner whatsoever, claim or take the benefit or
advantage of, any stay or extension 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 Collateral 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 Sale and Servicing
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 Sale and Servicing
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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 Sale and Servicing Agreement.
(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 Outstanding Amount of the Notes
shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Servicer under or in connection with the Sale
and Servicing 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 Sale and Servicing
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, and of
which the Indenture Trustee shall have actual knowledge, 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
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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:
(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 Sale and Servicing 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)
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perform all of the obligations and duties required of it under the Sale and
Servicing 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 Sale and Servicing Agreement.
(j) Except as otherwise required or permitted by the TIA, nothing
contained herein shall be deemed to authorize the Indenture Trustee to engage in
any business operations or any activities other than those set forth in this
Indenture. Specifically, the Indenture Trustee shall have no authority to engage
in any business operations, acquire any assets other than those specifically
included in the Collateral under this Indenture or otherwise vary the assets
held by the Trust. Similarly, the Indenture Trustee shall have no discretionary
duties other than performing those ministerial acts set forth above necessary to
accomplish the purpose of this Trust as set forth in this Indenture.
(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 Amount of Notes, 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.
(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 Collateral, 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.
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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.
(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; nothing contained herein shall,
however, relieve the Indenture Trustee of the obligation, during the continuance
of an Event of Default of which a
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Responsible Officer of the Indenture Trustee shall have actual knowledge, to
exercise such of the rights and powers vested in it by this Indenture, and to
use the same degree of care and skill in their exercise, as a prudent person
would exercise or use under the circumstances in the conduct of such person's
own affairs.
(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. 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 Collateral 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 may be required to
enable
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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 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, at the request of the
Insurer shall, remove the Indenture Trustee, unless an Insurer Default shall
have occurred and be continuing, 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,
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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
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 Amount of
the Notes 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
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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 (unless the Indenture
Trustee is The Chase Manhattan Bank) 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 which it is
anywhere in the Notes or in this Indenture provided that the certificate of the
Indenture Trustee shall have.
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 Collateral 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 in such Person or Persons, in such capacity and
for the benefit of the Noteholders, such title to the Collateral, 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
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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 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; Disqualification.
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(a) The Indenture Trustee shall have a combined capital and surplus
of at least $50,000,000 as set forth in its most recent published annual report
of condition. The Indenture Trustee shall provide copies of such reports to the
Insurer upon request. 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 Section 310(b)(1) are met.
(b) If the long term debt rating of the Indenture Trustee shall not
be at least Baa3 from Moody's and BBB- from Standard & Poor's, the Rating
Agencies shall be given notice of such lower long-term debt rating.
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.
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses
of Noteholders. The Issuer will furnish or cause to be furnished to the
Indenture Trustee (i) not more than five days after the earlier of (a) each
Record Date and (b) 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 Holders of Notes as of such Record Date and (ii) at such other times as
the Indenture Trustee may request in writing, within 30 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. 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.
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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 Holders of Notes
contained in the most recent list furnished to the Indenture Trustee as provided
in Section 7.01 and the names and addresses of Holders of Notes 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;
(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 December 31 of each year.
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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,
1998, 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
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money.
(a) General. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article Five.
(b) Claims Under Policy. The Notes and the Certificates will be
insured by the Policy pursuant to the terms set forth therein, notwithstanding
any provisions to the contrary contained in this Indenture or the Sale and
Servicing Agreement. All amounts received under the Policy shall be used solely
for the payment to Securityholders of principal and interest on the Notes and
the Certificates.
Section 8.02 Trust Accounts.
(a) On or prior to the Closing Date, the Issuer shall cause the
Servicer to establish in the name of the Indenture Trustee, for the benefit of
the Noteholders and the Insurer, or in the name of the Trust Agent, for the
benefit of the Certificateholders and the Insurer, the Trust Accounts as
provided in Section 4.01 of the Sale and Servicing Agreement.
(b) On the Business Day immediately preceding each Distribution Date,
based solely on the Distribution Date Statement, the Servicer shall cause funds
to be withdrawn from the Collection Account equal to the amount of Net
Collections available with respect to such Distribution Date and deposited into
the Payment Account, as provided in Section 4.02(e) of the Sale and Servicing
Agreement. On each Distribution Date, the Indenture Trustee will apply the Net
Collections available with
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respect to the related Collection Period, together with amounts, if any,
withdrawn from the Spread Account or representing payment of the Policy Claim
Amount, to make the deposits to the Note Distribution Account required pursuant
to Section 4.03(a) of the Sale and Servicing Agreement.
(c) On each Distribution Date, the Indenture Trustee shall distribute
all available amounts on deposit in the Note Distribution Account in respect of
such Distribution Date to Noteholders in the following order of priority:
(i) to the Holders of each Class of Notes, the Note Interest
Distributable Amount for such Distribution Date;
(ii) if such Distribution Date is the Final Scheduled
Distribution Date with respect to a Class of Notes, to the Holders of
such Class of Notes, the Note Principal Distributable Amount to the
extent of the remaining Outstanding Amount of such Class of Notes;
(iii) to the Holders of the Class A-1 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payment, if
any, described in clause (ii) above), until the Outstanding Amount of
the Class A-1 Notes is reduced to zero;
(iv) to the Holders of the Class A-2 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments,
if any, described in clauses (ii) and (iii) above), until the
Outstanding Amount of the Class A-2 Notes is reduced to zero;
(v) to the Holders of the Class A-3 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments,
if any, described in clauses (ii), (iii) and (iv) above), until the
Outstanding Amount of the Class A-3 Notes is reduced to zero; and
(vi) to the Holders of the Class A-4 Notes, the remaining Note
Principal Distributable Amount (after giving effect to the payments,
if any, described in clauses (ii), (iii), (iv) and (v) above), until
the Outstanding Amount of the Class A-4 Notes is reduced to zero.
(d) The Indenture Trustee shall make claims under the Policy pursuant
to Section 4.02(c) of the Sale and Servicing Agreement and in accordance with
the Policy. In making any such claim, the Indenture Trustee shall comply with
all the terms and conditions of the Policy. Upon receipt of the Policy Claim
Amount, the Indenture Trustee shall distribute such Policy Claim Amount as part
of the Note Distributable Amount under this Indenture to the extent such Policy
Claim Amount relates to the Notes and as part of the Certificate Distributable
Amount under the Sale and Servicing Agreement to the extent such Policy Claim
Amount relates to the Certificates.
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Section 8.03 [RESERVED].
Section 8.04 Release of Collateral.
(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 have
been paid, release any remaining portion of the Collateral 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 Trust Accounts. The
Indenture Trustee shall release property from the lien of this Indenture
pursuant to this Section 8.04(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 11.01.
Section 8.05 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 8.04(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
Collateral. 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 IX
SUPPLEMENTAL INDENTURES
Section 9.01 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
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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 Holders of the Notes, or to surrender any right or power herein
conferred upon the Issuer;
(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 Holders of the Notes;
(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 is hereby authorized to join in the execution of any
such
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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 Holders of the Notes
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
Holders of the Notes 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 9.02 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
Amount of the Notes, 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 Holders of the Notes 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 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 Five, 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 Outstanding Amount 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 Outstanding Amount of the Notes, the
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consent of the Holders of which is required to direct the Indenture Trustee to
sell or liquidate the Collateral pursuant to Section 5.04;
(f) decrease the percentage of the Outstanding Amount 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
Collateral 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
Holders of the Notes 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 therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.03 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 9.04 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 Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder
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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 9.05 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 9.06 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 X
REDEMPTION OF NOTES
Section 10.01 Redemption. In the event that the Servicer pursuant to
Section 8.01(a) of the Sale and Servicing Agreement purchases the corpus of the
Trust, the Notes are subject to redemption in whole, but not in part, on the
Distribution 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 Seller, the Servicer or the Issuer
shall furnish the Insurer and each Rating Agency notice of such redemption. If
the Notes are to be redeemed pursuant to this Section 10.01, the Servicer or the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Note Distribution 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 10.02 to
each Holder of the Notes.
Section 10.02 Form of Redemption Notice. Notice of redemption under
Section 10.01 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 1(a)(i) of the Administration
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Agreement.
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 10.03 Notes Payable on Redemption Date. The Notes or portions
thereof to be redeemed shall, following notice of redemption (if any) as
required by Section 10.02, 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 XI
MISCELLANEOUS
Section 11.01 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 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. 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:
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(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 Collateral 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 11.01(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
Collateral 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 Outstanding Amount of the Notes, 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 in the
related Officer's Certificate is less than $25,000 or less than one
percent of the Outstanding Amount of the Notes.
(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.
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(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 Outstanding Amount 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 Outstanding Amount of the
Notes.
Section 11.02 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.
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
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(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 11.03 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.
(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.
Section 11.04 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
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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: Onyx
Acceptance Owner Trust 1998-C, in care of Bankers Trust (Delaware), as
Owner Trustee, 1011 Centre Road, Suite 200, Wilmington, Delaware
19805-1266, Attention: Corporate Trust Administration Department, or
at any other address furnished in writing to the Indenture Trustee by
the Issuer; or
(iii) 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.
(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 11.05 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
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.
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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 11.06 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 11.07 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 11.08 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.
Section 11.09 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 11.10 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 11.11 Benefits of Indenture. The Insurer and its successors
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and assigns shall be a third-party beneficiary to the provisions of this
Indenture, and shall be entitled to rely upon and directly to enforce such
provisions of this Indenture so long as no Insurer Default shall have occurred
and be continuing. 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
Collateral, 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 11.12 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 11.13 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 11.14 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 11.15 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 11.16 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 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, any holder of a
beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee or
of any
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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 11.17 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 11.18 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 and the Insurer may reasonably determine that such disclosure
is consistent with its obligations hereunder.
Section 11.19 Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Bankers Trust (Delaware) not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Bankers Trust (Delaware) 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 Agreement, 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. Notwithstanding anything herein to the contrary, Section 2.07 of the
Trust Agreement
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shall remain in full force and effect.
Section 11.20 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, Certificateholders or Residual Interestholders are entitled to
exercise pursuant to this Indenture, without any consent of such Noteholders,
Certificateholders or Residual Interestholders; provided, however, that without
the consent of each Noteholder, Certificateholder or Residual Interestholder
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 Contracts or distributions which are required
to be made on any Note, Certificate or Residual Interest Instrument, (ii)
adversely affect in any material respect the interests of the Holders of any
Notes, Certificates or Residual Interest Instruments, 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, the Owner
Trustee or the Trust Agent 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, the Trust Agent or the Holders of the Notes, the
Certificates, or the Residual Interest Instruments; provided, that the consent
of the Insurer shall be required at all times with respect to any amendment of
this Indenture.
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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.
ONYX ACCEPTANCE OWNER TRUST 1998-C
By: BANKERS TRUST (DELAWARE),
not in its individual capacity but solely on
behalf of the Issuer as Owner Trustee under the
Trust Agreement
By: /s/ PETER BECKER
--------------------------
Name: Peter Becker
Title: Attorney-in-fact
THE CHASE MANHATTAN BANK,
not in its individual capacity but
solely as Indenture Trustee
By: /s/ TARA SWEENEY
--------------------------
Name: Tara Sweeney
Title: Trust Officer
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EXHIBIT 4.4
TRUST AGREEMENT
among
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Depositor
BANKERS TRUST (DELAWARE),
as Owner Trustee
and
THE CHASE MANHATTAN BANK,
as Trust Agent
Dated as of November 1, 1998
ONYX ACCEPTANCE OWNER TRUST 1998-C
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
<S> <C>
ARTICLE I - DEFINITIONS............................................................1
Section 1.01 Capitalized Terms........................................1
Section 1.02 Other Definitional Provisions............................5
Section 1.03 Usage of Terms...........................................5
Section 1.04 Section References.......................................5
Section 1.05 Accounting Terms.........................................5
ARTICLE II - ORGANIZATION..........................................................5
Section 2.01 Name.....................................................5
Section 2.02 Office...................................................5
Section 2.03 Purposes and Powers......................................6
Section 2.04 Appointment of Owner Trustee.............................6
Section 2.05 Initial Capital Contribution of Owner Trust Estate.......6
Section 2.06 Declaration of Trust.....................................7
Section 2.07 Title to Trust Property..................................7
Section 2.08 Situs of Trust...........................................7
Section 2.09 Representations and Warranties of the Depositor..........7
Section 2.10 Federal Income Tax Allocations...........................9
ARTICLE III - TRUST CERTIFICATES AND TRANSFER OF INTERESTS........................10
Section 3.01 Initial Ownership.......................................10
Section 3.02 The Trust Certificates and the Notes....................10
Section 3.03 Execution, Authentication and Delivery of Trust
Certificates and Notes..................................10
Section 3.04 Registration of Transfer and Exchange of Trust
Certificates............................................11
Section 3.05 Mutilated, Destroyed, Lost or Stolen Trust
Certificates............................................12
Section 3.06 Persons Deemed Owners...................................12
Section 3.07 Access to List of Owners' Names and Addresses...........12
Section 3.08 Maintenance of Office or Agency.........................13
Section 3.09 Temporary Trust Certificates............................13
Section 3.10 Appointment of Paying Agent.............................13
Section 3.11 Book-Entry Certificates.................................14
Section 3.12 Notices to Clearing Agency..............................15
Section 3.13 Definitive Trust Certificates...........................15
Section 3.14 Restrictions on Transfer of Trust Certificates..........15
ARTICLE IV - ACTIONS BY OWNER TRUSTEE.............................................17
Section 4.01 Prior Notice to Owners with Respect to Certain
Matters.................................................17
Section 4.02 Action by Owners with Respect to Certain Matters........18
Section 4.03 Action by Owners with Respect to Bankruptcy.............18
Section 4.04 Restrictions on Owners' Power...........................18
</TABLE>
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<TABLE>
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Page
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Section 4.05 Majority Control........................................19
ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES...........................19
Section 5.01 Establishment of Certificate Distribution Account......19
Section 5.02 Application of Trust Funds.............................19
Section 5.03 Method of Payment......................................20
Section 5.04 No Segregation of Monies; No Interest..................20
Section 5.05 Accounting and Reports to the Noteholders, Owners,
the Internal Revenue Service and Others................20
Section 5.06 Signature on Returns; Tax Matters Partner..............20
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE
AND TRUST AGENT........................................................21
Section 6.01 General Authority......................................21
Section 6.02 General Duties.........................................21
Section 6.03 Action Upon Instruction................................22
Section 6.04 No Duties Except as Specified in this Agreement or
in Instructions........................................23
Section 6.05 No Action Except Under Specified Documents or
Instructions...........................................23
Section 6.06 Restrictions...........................................23
ARTICLE VII - CONCERNING THE OWNER TRUSTEE AND THE TRUST AGENT...................23
Section 7.01 Acceptance of Trusts and Duties........................23
Section 7.02 Furnishing of Documents................................26
Section 7.03 Representations and Warranties.........................26
Section 7.04 Reliance; Advice of Counsel............................27
Section 7.05 Not Acting in Individual Capacity......................27
Section 7.06 Owner Trustee and Trust Agent Not Liable for
Trust Certificates, Notes or Contracts.................28
Section 7.07 Owner Trustee and Trust Agent May Own Trust
Certificates and Notes.................................28
ARTICLE VIII - COMPENSATION AND INDEMNIFICATION OF OWNER
TRUSTEE AND TRUST AGENT................................................28
Section 8.01 Owner Trustee's Fees and Expenses......................28
Section 8.02 Indemnification........................................29
Section 8.03 Payments to the Owner Trustee or Trust Agent...........29
ARTICLE IX - TERMINATION OF TRUST AGREEMENT......................................29
Section 9.01 Termination of Trust Agreement.........................29
ARTICLE X - SUCCESSOR OWNER TRUSTEES, ADDITIONAL OWNER
TRUSTEE AND TRUST AGENT................................................30
Section 10.01 Eligibility Requirements for Owner Trustee............30
</TABLE>
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<TABLE>
<CAPTION>
Page
<S> <C>
Section 10.02 Resignation or Removal of Owner Trustee...............31
Section 10.03 Successor Owner Trustee...............................31
Section 10.04 Merger or Consolidation of Owner Trustee..............32
Section 10.05 Appointment of Co-Trustee or Separate Trustee.........32
Section 10.06 Appointment of Trust Agent............................32
ARTICLE XI - MISCELLANEOUS.......................................................34
Section 11.01 Supplements and Amendments............................34
Section 11.02 [RESERVED]............................................35
Section 11.03 Limitations on Rights of Others.......................35
Section 11.04 Notices...............................................35
Section 11.05 Severability of Provisions............................36
Section 11.06 Counterparts..........................................36
Section 11.07 Successors and Assigns................................36
Section 11.08 No Petition...........................................36
Section 11.09 No Recourse...........................................36
Section 11.10 Certificates Nonassessable and Fully Paid.............36
Section 11.11 Headings..............................................37
Section 11.12 Governing Law.........................................37
Section 11.13 Depositor Payment Obligation..........................37
Section 11.14 Certain Matters Regarding the Insurer.................37
Section 11.15 Fiduciary Duties......................................37
</TABLE>
EXHIBITS
Exhibit A - Form of Depository Agreement
Exhibit B - Form of Certificate of Trust
Exhibit C - Form of Certificate
Exhibit D - Form of Residual Interest Instrument
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<PAGE> 5
This TRUST AGREEMENT, dated as of November 1, 1998, is among ONYX
ACCEPTANCE FINANCIAL CORPORATION, a Delaware corporation (the "DEPOSITOR"),
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as owner trustee (the
"OWNER TRUSTEE"), and THE CHASE MANHATTAN BANK, a New York corporation, as agent
of the Owner Trustee for the limited purposes set forth herein (the "TRUST
AGENT").
ARTICLE I
DEFINITIONS
Section 1.01 Capitalized Terms. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ADMINISTRATION AGREEMENT" means the administration agreement, dated
as of November 1, 1998, among the Trust, the Depositor, the Indenture Trustee
and Onyx, as administrator.
"ADMINISTRATOR" means the Person acting as "Administrator" under the
Administration Agreement.
"AGREEMENT" means this Trust Agreement, as the same may be amended and
supplemented from time to time.
"APPLICANTS" shall have the meaning assigned to such term in Section
3.07.
"BENEFIT PLAN" means (i) an employee benefit plan (as such term is
defined in Section 3(3) of ERISA) that is subject to the provisions of Title I
of ERISA, (ii) a plan described in Section 4975(e)(1) of the Code or (iii) any
entity whose underlying assets include plan assets by reason of a plan's
investment in the entity.
"BOOK-ENTRY TRUST CERTIFICATE" means a beneficial interest in the
Certificates, the ownership of which shall be evidenced, and transfers of which
shall be made, through book entries by a Clearing Agency as described in Section
3.11.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware
Code, 12 Del. C. Section 3801, et seq., as the same may be amended from time to
time.
"CERTIFICATE" means a certificate (other than a Residual Interest
Instrument) evidencing the beneficial ownership interest of an Owner in the
Trust, substantially in the form of Exhibit C hereto.
"CERTIFICATE DISTRIBUTION ACCOUNT" means the account established and
<PAGE> 6
maintained as such pursuant to Section 5.01.
"CERTIFICATE OF TRUST" means the Certificate of Trust filed for the
Trust pursuant to Section 3810(a) of the Business Trust Statute, substantially
in the form of Exhibit B hereto.
"CERTIFICATE OWNER" means, with respect to a Book-Entry Trust
Certificate, the Person who is the owner of such Book-Entry Trust Certificate,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly or as an indirect
participant, in either case in accordance with the rules of such Clearing
Agency) and shall mean, with respect to a Definitive Trust Certificate, the
related Certificateholder.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"CERTIFICATEHOLDER" or "HOLDER" means the Person in whose name a
Certificate is registered in the Certificate Register.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"CLOSING DATE" means November 24, 1998.
"CODE" means the Internal Revenue Code of 1986, as amended, and
Treasury Regulations promulgated thereunder.
"DEFINITIVE TRUST CERTIFICATES" shall have the meaning assigned to
such term in Section 3.11.
"DEPOSITOR" means Onyx Acceptance Financial Corporation in its
capacity as depositor hereunder, and its successors.
"DEPOSITORY AGREEMENT" means the agreement dated November 24, 1998,
among the Trust, the Owner Trustee, the Indenture Trustee and DTC, as the
initial Clearing Agency, substantially in the form of Exhibit A hereto, relating
to the Certificates, as the same may be amended and supplemented from time to
time.
"DTC" means The Depository Trust Company, and its successors.
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"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"EXPENSES" shall have the meaning assigned to such term in Section
8.02.
"HOLDER" means, with respect to a Certificate, the Person in whose
name such Certificate is registered in the Certificate Register, and with
respect to a Residual Interest Instrument, the Person in whose name such
Residual Interest Instrument is registered in the Certificate Register.
"INDEMNIFIED PARTIES" shall have the meaning assigned to such term in
Section 8.02.
"INDENTURE" means the indenture dated as of November 1, 1998, between
the Trust, as Issuer, and The Chase Manhattan Bank, as Indenture Trustee.
"INSURER" means MBIA Insurance Corporation, and its successors.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes and the Class A-4 Notes in each case issued pursuant to the Indenture.
"ONYX" means Onyx Acceptance Corporation, and its successors.
"ORIGINAL CERTIFICATE BALANCE" means $14,000,000.
"OWNER" means each Holder of a Certificate and each Holder of a
Residual Interest Instrument, as applicable.
"OWNER TRUSTEE" means Bankers Trust (Delaware), a Delaware banking
corporation, not in its individual capacity but solely as owner trustee under
this Agreement, and any successor Owner Trustee hereunder.
"OWNER TRUSTEE CORPORATE TRUST OFFICE" means the office of the Owner
Trustee at which its corporate trust business shall be administered, which
initially shall be E.A. Delle Donne Corporate Center, 1011 Centre Road, Suite
200, Wilmington, Delaware 19805-1266, Attention: Corporate Trust Administration
Department, or such other office at such other address as the Owner Trustee may
designate from time to time by notice to the Certificateholders, the Residual
Interestholders, the Servicer, the Depositor and the Insurer.
"PAYING AGENT" means the Trust Agent or any successor in interest
thereto or any other paying agent or co-paying agent appointed pursuant to
Section 3.10 and authorized by the Issuer to make payments to and distributions
from the Certificate
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Distribution Account, including distributions of principal of or interest on the
Certificates.
"PERCENTAGE INTEREST" means with respect to any single Certificate,
the portion of the Certificates as a whole evidenced by such single Certificate,
expressed as a percentage rounded to five decimal places, equivalent to a
fraction, the numerator of which is the denomination represented by such single
Certificate and the denominator of which is Original Certificate Balance. With
respect to each Residual Interest Instrument, the "Percentage Interest" is the
percentage portion of the Residual Interest evidenced thereby as stated on the
face of such Residual Interest Instrument.
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"RECORD DATE" means, with respect to any Distribution Date, the day
immediately preceding such Distribution Date or, if Definitive Certificates are
issued, the last day of the calendar month preceding the month in which such
Distribution Date occurs.
"RESIDUAL INTEREST" means the right to receive amounts to be
distributed or paid to holders of the "Residual Interests" (as defined in the
Sale and Servicing Agreement), pursuant to the terms of the Sale and Servicing
Agreement.
"RESIDUAL INTEREST INSTRUMENT" means an instrument substantially in
the form attached as Exhibit D hereto and evidencing the Residual Interest.
"RESIDUAL INTERESTHOLDER" means the Holder of a Residual Interest
Instrument.
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer within the Owner Trustee Corporate Trust Office, and with respect to the
Trust Agent, any officer within the Trust Agent Office, including any Vice
President, assistant secretary or other officer or assistant officer of the
Owner Trustee or the Trust Agent, as the case may be, customarily performing
functions similar to those performed by the people who at such time shall be
officers and has direct responsibility for the administration of this Agreement.
"SALE AND SERVICING AGREEMENT" means the sale and servicing agreement,
dated as of November 1, 1998, among the Trust, as Issuer, the Depositor, as
Seller, Onyx, as Servicer, the Indenture Trustee and the Trust Agent as the same
may be amended or supplemented from time to time.
"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
"SELLER" means Onyx Acceptance Financial Corporation, in its capacity
as seller under the Sale and Servicing Agreement, and its successors.
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"TREASURY REGULATIONS" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" means the trust established by this Agreement.
"TRUST AGENT" means The Chase Manhattan Bank, a New York corporation,
not in its individual capacity but solely as agent of the Owner Trustee under
this Agreement, and any successor Trust Agent hereunder.
"TRUST AGENT OFFICE" means the office of the Trust Agent at 450 West
33rd Street, New York, New York 10001-2697, Attention: Structured Finance
Services or such other office at such other address as the Trust Agent may
designate from time to time by notice to the Certificateholders, the Residual
Interestholders, the Servicer, the Depositor and the Insurer.
"TRUST CERTIFICATES" means the Certificates and the Residual Interest
Instruments, collectively.
"TRUST ESTATE" means all right, title and interest of the Trust in and
to the property and rights assigned to the Trust pursuant to Article II of the
Sale and Servicing Agreement, all funds on deposit from time to time in the
Trust Accounts and all other property of the Trust from time to time, including
any rights of the Owner Trustee and the Trust pursuant to the Sale and Servicing
Agreement and the Administration Agreement.
"UNDERWRITERS" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Salomon Smith Barney Inc.
Section 1.02 Other Definitional Provisions. Capitalized terms used
that are not otherwise defined herein shall have the meanings ascribed thereto
in the Sale and Servicing Agreement or, if not defined therein, in the
Indenture.
Section 1.03 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
amendments, modifications and supplements thereto or any 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".
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Section 1.04 Section References. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
Section 1.05 Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
ARTICLE II
ORGANIZATION
Section 2.01 Name. The Trust created hereby shall be known as Onyx
Acceptance Owner Trust 1998-C, in which name the Owner Trustee may conduct the
activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued, and in which name the Owner Trustee may
perform its duties hereunder.
Section 2.02 Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners, the Depositor, the Servicer and the Insurer.
Section 2.03 Purposes and Powers. The sole purpose of the Trust is to
conserve the Trust Estate and collect and disburse the periodic income therefrom
for the use and benefit of the Owners, and in furtherance of such purpose to
engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture and the
Certificates pursuant to this Agreement, to sell the Notes and the
Certificates, and to issue Residual Interest Instruments pursuant to
this Agreement;
(ii) with the proceeds of the sale of the Notes and the
Certificates, to purchase the Contracts, and to pay the
organizational, start-up and transactional expenses of the Trust and
to pay the balance to the Depositor pursuant to the Sale and Servicing
Agreement;
(iii) to assign, grant, transfer, pledge, mortgage and convey
("GRANT") the Trust Estate (excluding the Certificate Distribution
Account) pursuant to the Indenture and to hold, manage and distribute
to the Owners pursuant to the Sale and Servicing Agreement any portion
of the Trust Estate released from the Lien of, and remitted to the
Trust pursuant to, the Indenture;
(iv) to enter into and perform its obligations under the
Basic Documents to which it is to be a party;
(v) subject to compliance with the Basic Documents, to engage
in
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such other activities as may be required in connection with
conservation of the Trust Estate and the making of distributions to
the Owners and the Noteholders; and
(vi) to engage in those activities, including entering into
agreements, that are necessary to accomplish the foregoing or are
incidental thereto or connected therewith.
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 Basic
Documents.
Section 2.04 Appointment of Owner Trustee. The Depositor 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
Business Trust Statute, and the Owner Trustee hereby accepts such appointment.
The Owner Trustee is hereby authorized and directed to file the Certificate of
Trust with the Secretary of State.
Section 2.05 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Estate and
shall be deposited in the Certificate Distribution Account. The Depositor shall
pay organizational expenses of the Trust as they may arise or shall, upon the
request of the Owner Trustee or the Trust Agent, as applicable, promptly
reimburse the Owner Trustee and the Trust Agent, respectively, for any such
expenses paid by the Owner Trustee or the Trust Agent, as applicable.
Section 2.06 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 sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, on and
after the Closing Date the Trust shall be treated as a partnership, with the
assets of the partnership being the Contracts and other assets held by the Trust
and with the partners of the partnership being the Certificate Owners and the
Holders of the Residual Interest Instruments and the Notes being debt of the
partnership. The Trust shall not elect to be treated as an association under
Section 301.7701-3(a) of the regulations of the United States Department of the
Treasury for federal income tax purposes. The parties agree that, unless
otherwise required by appropriate tax authorities, the Trust will file or cause
to be filed annual or other necessary returns, reports and other forms
consistent with the characterization of the Trust as a partnership for such tax
purposes. Effective as of the date hereof, the Owner Trustee
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shall have all rights, powers and duties set forth herein and in the Business
Trust Statute for the sole purpose and to the extent necessary to accomplish the
purposes of the Trust as set forth in Section 2.03.
Section 2.07 Title to Trust Property. Subject to the Indenture, legal
title to all 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 and/or a
separate trustee, as the case may be.
The Owners shall not have legal title to any part of the Trust Estate.
The Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles Five and
Nine. No transfer, by operation of law or otherwise, of any right, title or
interest of the Owners to and in their ownership interest in the Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Trust Estate.
Section 2.08 Situs of Trust. The Trust will be located and
administered in the State of Delaware. All bank accounts maintained on behalf of
the Trust shall be located in the State of California, the State of Delaware or
the State of New York. 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 will be received by the Trust only in Delaware or New York and payments
will be made by the Trust only from Delaware or New York. The only office of the
Trust will be at the Owner Trustee Corporate Trust Office.
Section 2.09 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of Delaware, with power and authority to own its
properties and to conduct its business and had at all relevant times,
and has, power, authority and legal right to acquire and own the
Contracts.
(ii) The Depositor 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.
(iii) The Depositor has the power and authority to execute
and deliver
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this Agreement and to carry out its terms; the Depositor has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Owner Trustee on behalf of the
Trust as part of the Trust Estate and has duly authorized such sale
and assignment and deposit with the Owner Trustee on behalf of the
Trust by all necessary corporate action. The execution, delivery and
performance of this Agreement have been duly authorized by the
Depositor by all necessary corporate action. The Depositor has duly
executed and delivered this Agreement, and this Agreement constitutes
the legal, valid and binding obligation of the Depositor enforceable
against the Depositor in accordance with its terms.
(iv) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof do not conflict
with, result in the breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the certificate of incorporation or bylaws of the Depositor, or any
indenture, agreement or other instrument to which the Depositor is a
party or by which it is bound; nor result in the creation or
imposition of any Lien upon any of the properties of the Depositor
pursuant to the terms of any such indenture, agreement or other
instrument (other than pursuant to the Basic Documents); nor violate
any law or any order, rule or regulation applicable to the Depositor
of any court or of any federal or state regulatory body,
administrative agency or other governmental instrumentality having
jurisdiction over the Depositor or its properties.
(v) There are no proceedings or investigations pending, or to
the Depositor's best knowledge threatened, before any court,
regulatory body, administrative agency or other governmental
instrumentality having jurisdiction over the Depositor or its
properties: (A) asserting the invalidity of this Agreement, any of the
other Basic Documents or the Certificates, (B) seeking to prevent the
issuance of the Certificates or the consummation of any of the
transactions contemplated by this Agreement or any of the other Basic
Documents, (C) seeking any determination or ruling that might
materially and adversely affect the performance by the Depositor of
its obligations under, or the validity or enforceability of, this
Agreement, any of the other Basic Documents or the Certificates or (D)
involving the Depositor and which might materially and adversely
affect the federal income tax or other federal, state or local tax
attributes of the Certificates.
Section 2.10 Federal Income Tax Allocations.
(a) Net income of the Trust for any month, as determined for Federal
income tax purposes (and each item of income, gain, loss and deduction entering
into the computation thereof), shall be allocated:
(i) among the Certificate Owners as of the first day
following the end
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of such month, in proportion to their ownership of the principal
amount of Certificates on such date, net income in an amount up to the
sum of (A) the Certificate Interest Distributable Amount for such
month, (B) interest on the excess, if any, of the Certificate Interest
Distributable Amount for the preceding Distribution Date over the
amount in respect of interest that is actually deposited in the
Certificate Distribution Account on such preceding Distribution Date,
to the extent permitted by law, at the Certificate Rate from such
preceding Distribution Date through the current Distribution Date, (C)
the portion of the market discount on the Contracts accrued during
such month that is allocable to the excess, if any, of the initial
aggregate principal amount of the Trust Certificates over their
initial aggregate issue price and (D) any other amounts of income
payable to the Certificateholders for such month; such sum to be
reduced by any amortization by the Trust of premium on Contracts that
corresponds to any excess of the issue price of Trust Certificates
over their principal amount; and
(ii) among the Residual Interestholders in proportion to the
Percentage Interest of the Residual Interest of each Residual
Interestholder, to extent of any remaining net income.
(b) If the net income of the Trust for any calendar month is
insufficient for the allocations described in Section 2.10(a)(i), subsequent net
income shall first be allocated to make up such shortfall before being allocated
as provided in Section 2.10(a)(ii). Net losses of the Trust, if any, for any
calendar month as determined for federal income tax purposes (and each item of
income, gain, loss and deduction entering into the computation thereof) shall be
allocated to the Residual Interestholders, to the extent the Residual
Interestholders are reasonably expected to bear the economic burden of such net
losses, and any remaining net losses shall be allocated among the Certificate
Owners as of the first day following the end of such month in proportion to
their ownership of the principal amount of Certificates on such day. Any
indebtedness allocated pursuant to Treasury Regulation Section 1.752-3(a)(3)
shall be allocated to the Residual Interest. The Depositor is authorized to
modify the allocations in this paragraph if necessary or appropriate, in its
sole discretion, for the allocations to fairly reflect the income, gain, loss
and deduction to the Depositor or to the Owners, or as otherwise required by the
Code.
ARTICLE III
TRUST CERTIFICATES AND TRANSFER OF INTERESTS
Section 3.01 Initial Ownership. Upon the formation of the Trust by the
contribution by the Depositor pursuant to Section 2.05 and until the issuance of
the Trust Certificates, the Depositor shall be the sole beneficiary of the
Trust.
Section 3.02 The Trust Certificates and the Notes.
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(a) The Certificates shall be issuable in minimum denominations of
$1,000 and integral multiples thereof, except that one Certificate may be issued
in a different denomination. The Residual Interest Instruments shall not be
issued with a principal amount. The Trust Certificates shall be executed by the
Owner Trustee on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee, and authenticated by the Trust Agent by
the manual or facsimile signature of an authorized officer of the Trust Agent
and shall be deemed to have been validly issued when so executed and
authenticated. Trust Certificates bearing the manual or facsimile signatures of
individuals who were, at the time when such signatures were affixed, authorized
to sign on behalf of the Owner Trustee or the Trust Agent shall be validly
issued by the Trust, notwithstanding that such individuals or any of them have
ceased to be so authorized prior to the execution, authentication and delivery
of such Trust Certificates or did not hold such offices at the date of such
Trust Certificates. All Trust Certificates shall be dated the date of their
authentication.
(b) The Notes shall be executed by the Owner Trustee on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee, and shall be authenticated as provided in the Indenture. Notes bearing
the manual or facsimile signature of an individual who was, at the time when
such signature was affixed, authorized to sign on behalf of the Owner Trustee
shall be deemed to have been validly executed by the Trust, notwithstanding that
such individual has ceased to be so authorized prior to the execution and
delivery of such Notes or did not hold such office at the date of such Notes.
Section 3.03 Execution, Authentication and Delivery of Trust
Certificates and Notes. The Owner Trustee shall cause to be executed,
authenticated and delivered upon the order of the Depositor, in exchange for the
Contracts and the other assets of the Trust, simultaneously with the sale,
assignment and transfer to the Trust of the Contracts, and such other assets,
(a) (i) Certificates in authorized denominations equaling in the aggregate the
Original Certificate Balance, and (ii) the Residual Interest Instruments
representing 100% of the Percentage Interests of the Residual Interest,
evidencing the entire ownership of the Trust, and (b) Notes executed by the
Trust in aggregate principal amount of, in the case of the (i) Class A-1 Notes,
$53,000,000, (ii) Class A-2 Notes, $70,000,000, (iii) Class A-3 Notes,
$89,000,000 and (iv) Class A-4 Notes, $54,000,000. The Trust Agent is hereby
authorized to direct, on behalf of the Trust, the Indenture Trustee to
authenticate and deliver the Notes upon the order of the Depositor. No Trust
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless there appears on such Trust Certificate a certificate of
authentication substantially in the form set forth in the forms of Trust
Certificate attached hereto as Exhibit C and D, executed by the Trust Agent or
another authenticating agent of the Owner Trustee, by manual or facsimile
signature, and such certificate upon any Trust Certificate shall be conclusive
evidence, and the only evidence, that such Trust Certificate has been duly
authenticated and delivered hereunder. Upon issuance, authorization and delivery
pursuant to the terms hereof, the Trust Certificates will be entitled to the
benefits of this Agreement. All Trust Certificates
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shall be dated the date of their authentication.
Section 3.04 Registration of Transfer and Exchange of Trust
Certificates.
(a) The Certificate Registrar shall keep or cause to be kept, a
Certificate Register, subject to such reasonable regulations as it may
prescribe. The Certificate Register shall provide for the registration of Trust
Certificates and transfers and exchanges of Trust Certificates as provided
herein. The Trust Agent, as agent for the Trust, is hereby initially appointed
Certificate Registrar for the purpose of registering Trust Certificates and
transfers and exchanges of Trust Certificates as herein provided. In the event
that, subsequent to the Closing Date, the Trust Agent notifies the Servicer that
the Trust Agent is unable to act as Certificate Registrar, the Servicer shall
appoint another bank or trust company, having an office or agency located in The
City of New York, agreeing to act in accordance with the provisions of this
Agreement applicable to it, and otherwise acceptable to the Depositor, to act as
successor Certificate Registrar hereunder.
(b) Upon surrender for registration of transfer of any Trust
Certificate at the office of the Certificate Registrar, the Owner Trustee shall
execute, authenticate and deliver (or shall cause the Trust Agent, as its
authenticating agent, to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Trust Certificates in
authorized denominations of a like aggregate principal amount.
(c) At the option of a Holder of a Trust Certificate, Trust
Certificates may be exchanged for other Trust Certificates in authorized
denominations of a like aggregate principal amount, upon surrender of the Trust
Certificates to be exchanged at the office of the Certificate Registrar.
Whenever any Trust Certificates are so surrendered for exchange, the Owner
Trustee on behalf of the Trust shall execute, authenticate and deliver (or shall
cause the Trust Agent, as its authenticating agent, to authenticate and deliver)
the Trust Certificates that the Holder making the exchange is entitled to
receive. Every Trust Certificate presented or surrendered for registration of
transfer or exchange shall be accompanied by a written instrument of transfer in
form satisfactory to the Trust Agent and the Certificate Registrar duly executed
by the Holder thereof or his attorney duly authorized in writing. In addition,
each Residual Interest Instrument presented or surrendered for registration of
transfer and exchange must be accompanied by a letter from the prospective Owner
certifying as to the representations set forth in Section 3.14(a) and (b).
(d) No service charge shall be made for any registration of transfer
or exchange of Trust Certificates, but the Owner Trustee or, on its behalf, the
Trust Agent, 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 Trust Certificates.
(e) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered to any agent of the Owner Trustee under this Agreement,
shall be
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delivered to the Trust Agent and promptly canceled by it, or, if surrendered to
the Trust Agent, shall be promptly canceled by it, and no Trust Certificates
shall be issued in lieu thereof except as expressly permitted by any of the
provisions of this Agreement. The Trust Agent shall dispose of cancelled Trust
Certificates in accordance with the normal industry practice.
Section 3.05 Mutilated, Destroyed, Lost or Stolen Trust Certificates.
If (a) any mutilated Trust Certificate is surrendered to the Certificate
Registrar, or the Certificate Registrar receives evidence to its satisfaction of
the destruction, loss or theft of any Trust Certificate, and (b) there is
delivered to the Certificate Registrar and the Trust Agent such security or
indemnity as may be required by them to save each of them harmless, then, in the
absence of notice that such Trust Certificate has been acquired by a bona fide
purchaser, the Owner Trustee on behalf of the Trust shall execute and the Trust
Agent, as its authenticating agent, shall authenticate and deliver, in exchange
for or in lieu of any such mutilated, destroyed, lost or stolen Trust
Certificate, a new Trust Certificate of like tenor and fractional undivided
interest. In connection with the issuance of any new Trust Certificate under
this Section, the Owner Trustee or, on its behalf, the Trust Agent, may require
the payment by the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto. Any duplicate Trust
Certificate issued pursuant to this Section shall constitute complete and
indefeasible evidence of ownership in the Trust, as if originally issued,
whether or not the lost, stolen or destroyed Trust Certificate shall be found at
any time.
Section 3.06 Persons Deemed Owners. Prior to due presentation of a
Trust Certificate for registration of transfer, the Owner Trustee, the Trust
Agent, the Certificate Registrar, any Paying Agent and any of their respective
agents may treat the Person in whose name any Trust Certificate is registered as
the owner of such Trust Certificate for the purpose of receiving distributions
pursuant to Section 5.02 and for all other purposes whatsoever, and none of the
Owner Trustee, the Trust Agent, the Certificate Registrar, any Paying Agent or
any of their respective agents shall be affected by any notice to the contrary.
Section 3.07 Access to List of Owners' Names and Addresses. The Trust
Agent shall furnish or cause to be furnished to the Servicer, the Insurer and
the Depositor, within 15 days after receipt by the Trust Agent of a written
request therefor from the Servicer, the Insurer or the Depositor, a list, in
such form as the Servicer, the Insurer or the Depositor may reasonably require,
of the names and addresses of the Owners as of the most recent Record Date. If
three or more Certificateholders, or one or more Holders of Certificates
evidencing not less than 25% of the Percentage Interests of the Certificates
(hereinafter referred to as "APPLICANTS"), apply in writing to the Trust Agent,
and such application states that the Applicants desire to communicate with other
Certificateholders with respect to their rights hereunder or under the
Certificates and such application is accompanied by a copy of the communication
that such Applicants propose to transmit, then the Trust Agent shall, within
five Business Days after the receipt of such application, afford such Applicants
access, during normal business
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hours, to the current list of Certificateholders. Each Owner, by receiving and
holding a Trust Certificate, agrees with the Servicer, the Depositor, the Owner
Trustee and the Trust Agent that none of the Servicer, the Depositor, the Owner
Trustee or the Trust Agent shall be held accountable by reason of the disclosure
of any such information as to its name and address hereunder, regardless of the
source from which such information was derived.
Section 3.08 Maintenance of Office or Agency. The Trust Agent shall
maintain in the City of New York an office or offices or agency or agencies
where Trust Certificates may be surrendered for registration of transfer or
exchange and where notices and demands to or upon the Trust Agent in respect of
the Trust Certificates and the Basic Documents may be served. The Trust Agent
hereby designates the office of The Chase Manhattan Bank at the address provided
under the definition of the term "TRUST AGENT OFFICE" as its office for such
purposes. The Trust Agent shall give prompt written notice to the Owner Trustee,
the Depositor, the Servicer and to Certificateholders of any change in the
location of the Certificate Register or any such office or agency.
Section 3.09 Temporary Trust Certificates. Pending the preparation of
definitive Trust Certificates, the Owner Trustee, on behalf of the Trust, may
execute, authenticate and deliver, temporary Trust Certificates that are
printed, lithographed, typewritten, mimeographed or otherwise produced, in any
authorized denomination, substantially of the tenor of the definitive Trust
Certificates in lieu of which they are issued. If temporary Trust Certificates
are issued, the Depositor will cause definitive Trust Certificates to be
prepared without unreasonable delay. After the preparation of definitive Trust
Certificates, the temporary Trust Certificates shall be exchangeable for
definitive Trust Certificates upon surrender of the temporary Trust Certificates
at the office or agency to be maintained as provided in Section 3.08, without
charge to the Holder. Upon surrender for cancellation of any one or more
temporary Trust Certificates, the Owner Trustee shall execute, authenticate and
deliver (or shall cause the Trust Agent, as its authenticating agent, to
authenticate and deliver) in exchange therefor a like principal amount of
definitive Trust Certificates in authorized denominations. Until so exchanged,
the temporary Trust Certificates shall in all respects be entitled to the same
benefits hereunder as definitive Trust Certificates.
Section 3.10 Appointment of Paying Agent. The Owner Trustee, on behalf
of the Trust, hereby appoints the Trust Agent as Paying Agent under this
Agreement. The Paying Agent shall make distributions to Certificateholders and
to Residual Interestholders from the Certificate Distribution Account pursuant
to Section 5.02 hereof and shall report the amounts of such distributions to the
Owner Trustee. The Paying Agent shall have the revocable power to withdraw funds
from the Certificate Distribution Account for the purpose of making the
distributions referred to above. The Owner Trustee on behalf of the Trust may
revoke such power and remove the Paying Agent if the Owner Trustee is directed
in writing to do so by the Administrator. Each Paying
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Agent shall be permitted to resign as Paying Agent upon 30 days' written notice
to the Trust. In the event that the Trust Agent shall no longer be the Paying
Agent, the Administrator shall appoint a successor to act as Paying Agent (which
shall be a bank or trust company acceptable to the Insurer). The Administrator
shall cause such successor Paying Agent or any additional Paying Agent appointed
by the Administrator to execute and deliver to the Trust an instrument in which
such successor Paying Agent or additional Paying Agent shall agree with the
Trust that, as Paying Agent, such successor Paying Agent or additional Paying
Agent will hold all sums, if any, held by it for payment to the
Certificateholders and to the Residual Interestholders in trust for the benefit
of the Certificateholders and the Residual Interestholders entitled thereto
until such sums shall be paid to such Certificateholders and Residual
Interestholders. The Paying Agent shall return all unclaimed funds to the Trust
and upon removal of a Paying Agent such Paying Agent shall also return all funds
in its possession to the Trust. The provisions of Sections 7.01, 7.03, 7.04 and
8.01 shall apply to the Trust Agent also in its role as Paying Agent, for so
long as the Trust Agent shall act as Paying Agent and, to the extent applicable,
to any other paying agent appointed hereunder. Any reference in this Agreement
to the Paying Agent shall include any co-paying agent unless the context
requires otherwise. Notwithstanding anything herein to the contrary, the Trust
Agent and the Paying Agent shall be the same entity as the Indenture Trustee
under the Indenture and the Sale and Servicing Agreement, unless an Insurer
Default has occurred and is continuing. In such event, the Trust Agent and the
Paying Agent shall resign and the Owner Trustee shall assume the duties and
obligations of the Trust Agent and the Paying Agent hereunder and under the Sale
and Servicing Agreement.
Section 3.11 Book-Entry Certificates. The Certificates upon original
issuance will be issued in the form of one or more typewritten certificates
representing the Book-Entry Trust Certificates, to be delivered to DTC, the
initial Clearing Agency, by, or on behalf of, the Trust. The Residual Interest
Instrument will be issued as a Definitive Trust Certificate. The certificate or
certificates delivered to DTC evidencing such Trust Certificates shall initially
be registered on the Certificate Register in the name of Cede & Co., the nominee
of the initial Clearing Agency, and no Certificate Owner will receive a
definitive certificate representing such Certificate Owner's interest in the
Trust Certificates, except as provided in Section 3.13. Unless and until
definitive, fully registered Trust Certificates (the "DEFINITIVE TRUST
CERTIFICATES") have been issued to Certificate Owners pursuant to Section 3.13:
(i) the provisions of this Section shall be in full force and
effect;
(ii) the Depositor, the Servicer, the Certificate Registrar,
the Owner Trustee and the Trust Agent, subject to the provisions and
limitations of Sections 2.03 and 2.06, may deal with the Clearing
Agency for all purposes (including the making of distributions on the
Trust Certificates) as the authorized representative of the
Certificate Owners;
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(iii) to the extent that the provisions of this Section
conflict with any other provisions of this Agreement, the provisions
of this Section shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency (or through procedures established by the
Clearing Agency) and shall be limited to those established by law and
agreements between such Certificate Owners and the Clearing Agency
and/or the Clearing Agency Participants; pursuant to the Depository
Agreement, unless and until Definitive Trust Certificates are issued
pursuant to Section 3.13, the Clearing Agency will make book-entry
transfers among the Clearing Agency Participants and receive and
transmit distributions of principal and interest on the Certificates
to such Clearing Agency Participants; and
(v) whenever this Agreement requires or permits actions to be
taken based upon instructions or directions of Holders of Certificates
evidencing a specified percentage of the Percentage Interests thereof,
the Clearing Agency shall be deemed to represent such percentage only
to the extent that it has received instructions to such effect from
Certificate Owners and/or Clearing Agency Participants owning or
representing, respectively, such required percentage of the beneficial
interest in Certificates and has delivered such instructions to the
Owner Trustee or the Trust Agent.
Section 3.12 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required or desired to be given
hereunder, unless and until Definitive Trust Certificates shall have been issued
to Certificate Owners pursuant to Section 3.13, (i) each party required or
desiring to give such notice shall furnish such notice to the Trust Agent and
(ii) the Owner Trustee shall give any notices referred to in the preceding
clause (i) and any notices which it is required or desires to give hereunder to
the Clearing Agency.
Section 3.13 Definitive Trust Certificates. If (i)(A) the Seller or
the Administrator advises the Owner Trustee or the Trust Agent in writing that
the Clearing Agency is no longer willing or able to properly discharge its
responsibilities as described in the Depository Agreement and (B) the Seller,
the Owner Trustee, the Trust Agent or the Administrator is unable to locate a
qualified successor, or (ii) after the occurrence of an Event of Default or a
Servicer Default, Certificate Owners representing in the aggregate more than 50%
of the Certificate Balance advise the Owner Trustee (and if the Owner Trustee
receives such advice it shall promptly notify the Trust Agent) or the Trust
Agent 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 Certificate Owners, then the Trust Agent shall notify all
Certificate Owners of the availability through the Clearing Agency of Definitive
Trust Certificates to Certificate Owners requesting the same. Upon surrender to
the Trust Agent by the Clearing Agency of the Certificate or Certificates
evidencing the Book- Entry Trust Certificates by the Clearing Agency,
accompanied by registration instructions from the Clearing Agency, the Owner
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Trustee on behalf of the Trust shall execute and the Trust Agent shall
authenticate the Definitive Trust Certificates and deliver such Definitive Trust
Certificates in accordance with the instructions of the Clearing Agency. Neither
the Depositor, the Certificate Registrar, the Owner Trustee nor the Trust Agent
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 Trust Certificates, the Owner Trustee and the
Trust Agent shall recognize the Holders of the Definitive Trust Certificates as
Certificateholders hereunder. Neither the Owner Trustee nor the Trust Agent
shall be liable if the Owner Trustee, the Trust Agent or the Administrator is
unable to locate a qualified successor Clearing Agency. The Definitive Trust
Certificates shall be printed, lithographed or engraved or may be produced in
any manner as is reasonably acceptable to the Owner Trustee, as evidenced by its
execution thereof.
Section 3.14 Restrictions on Transfer of Trust Certificates.
(a) Each prospective purchaser and any subsequent transferee of a
Residual Interest Instrument (each, a "PROSPECTIVE OWNER"), other than the
Depositor, by virtue of its acceptance thereof, shall be deemed to have
represented and warranted to the Owner Trustee, the Trust Agent and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "QUALIFIED INSTITUTIONAL BUYER" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is aware that the seller of the Residual Interest
Instrument may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is
acquiring such Residual Interest Instrument for its own account or for
the account of one or more qualified institutional buyers for whom it
is authorized to act, or (B) a Person involved in the organization or
operation of the Trust or an affiliate of such Person within the
meaning of Rule 3a-7 of the Investment Company Act of 1940, as amended
(including, but not limited to, the Depositor and Onyx Acceptance
Corporation).
(ii) Such Person understands that the Residual Interest
Instruments have not been and will not be registered under the
Securities Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably believes is
(A) a qualified institutional buyer (as such term is defined in Rule
144A under the Securities Act) or (B) a Person involved in the
organization or operation of the Trust or an affiliate of such Person,
in a transaction meeting the requirements of Rule 144A under the
Securities Act and in accordance with any applicable securities laws
of any state of the United States.
(iii) Such person understands that the Residual Interest
Instrument bears a legend to the following effect:
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"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL
INTEREST INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THIS RESIDUAL INTEREST INSTRUMENT MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING, BUT NOT
LIMITED TO ONYX ACCEPTANCE FINANCIAL CORPORATION AND ONYX
ACCEPTANCE CORPORATION) IN A TRANSACTION THAT IS REGISTERED UNDER
THE ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT IS EXEMPT
FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND SUCH LAWS. NO
PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL INTEREST INSTRUMENT
UNDER THE ACT OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY
BENEFICIAL INTEREST THEREIN SHALL BE MADE TO ANY PERSON UNLESS
THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE TRANSFEREE
TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS
AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN,
DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING
A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING AN INSURANCE
COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY."
(iv) Such Person shall comply with the provisions of Section
3.14(b), as applicable, relating to the ERISA restrictions with respect
to the acceptance or acquisition of such Residual Interest Instrument.
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(b) The Trust Certificates may not be acquired by or for the account of
(i) an employee benefit plan (as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) that is subject to
the provisions of Title I of ERISA, (ii) a plan described in Section 4975(e)(1)
of the Internal Revenue Code of 1986, as amended, or (iii) any entity, including
an insurance company separate account or general account, whose underlying
assets include plan assets by reason of a plan's investment in the entity (each,
a "BENEFIT PLAN"). By accepting and holding a Certificate, the Certificate Owner
shall be deemed to have represented and warranted that it is not a Benefit Plan,
and after the date on which Definitive Trust Certificates are issued to
Certificate Owners pursuant to Section 3.13, every Certificateholder shall be
deemed to have represented and warranted that it is not a Benefit Plan.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Owners with Respect to Certain Matters.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, neither the Owner Trustee nor the Trust Agent shall take any
action unless at least 30 days before the taking of such action, the Owner
Trustee or the Trust Agent, as applicable, shall have notified the Owners in
writing of the proposed action and the Owners shall not have notified the Owner
Trustee or the Trust Agent, as applicable, in writing prior to the 30th day
after such notice is given that such Owners have withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Contracts) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Contracts);
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Owners; or
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<PAGE> 24
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or the Paying Agent, or the
consent to the assignment by the Note Registrar, paying agent for the Notes,
Indenture Trustee, Certificate Registrar or Paying Agent of its obligations
under the Indenture or this Agreement, as applicable.
Section 4.02 Action by Owners with Respect to Certain Matters. Subject
to the provisions and limitations of Section 4.04, neither the Owner Trustee nor
the Trust Agent shall have the power, except upon the direction of the Owners
and with the prior written consent of the Insurer (so long as no Insurer Default
shall have occurred and be continuing), to (a) remove the Administrator pursuant
to Section 8 of the Administration Agreement, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement, (c) remove
the Servicer pursuant to Section 7.01 of the Sale and Servicing Agreement, (d)
except as expressly provided in the Basic Documents, sell the Contracts after
the termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
Trust, (f) authorize the merger or consolidation of the Trust with or into any
other business trust or entity (other than in accordance with Section 3.10 of
the Indenture) or (g) amend the Certificate of Trust. The Owner Trustee and the
Trust Agent may only take the actions referred to in the preceding sentence upon
written instructions signed by the Owners and, to the extent required by the
preceding sentence, with the prior written consent of the Insurer.
Section 4.03 Action by Owners with Respect to Bankruptcy. Neither the
Owner Trustee nor the Trust Agent shall have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the prior written consent
of the Insurer and the unanimous prior approval of all Owners and the delivery
to the Owner Trustee or the Trust Agent, as applicable, by each such Owner of a
certificate certifying that such Owner reasonably believes that the Trust is
insolvent.
Section 4.04 Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee or the Trust Agent to take or to refrain from taking any
action if such action or inaction would be contrary to any obligation of the
Trust, or of the Owner Trustee or the Trust Agent, as applicable, under this
Agreement or any of the other Basic Documents or would be contrary to the
purpose of this Trust as set forth in Section 2.03, nor shall the Owner Trustee
or the Trust Agent be obligated to follow any such direction, if given.
Section 4.05 Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by the
Holders of Certificates evidencing more than 50% of the Certificate Balance and
Residual Interestholders evidencing more than 50% of the Percentage Interest in
the Residual Interest. Except as expressly provided herein, any written notice
of the Owners delivered pursuant to this Agreement shall be effective if signed
by Holders of
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Certificates evidencing more than 50% of the Percentage Interest in the
Certificates and Residual Interestholders evidencing more than 50% of the
Percentage Interest in the Residual Interest at the time of the delivery of such
notice.
ARTICLE V
APPLICATION OF TRUST FUNDS; CERTAIN DUTIES
Section 5.01 Establishment of Certificate Distribution Account. The
Trust Agent shall cause the Servicer, for the benefit of the Owners, to
establish and maintain an account denominated "CERTIFICATE DISTRIBUTION ACCOUNT
- -OT 1998-C, THE CHASE MANHATTAN BANK, TRUST AGENT," which account shall be an
Eligible Account (the "CERTIFICATE DISTRIBUTION ACCOUNT"). Funds shall be
deposited in the Certificate Distribution Account as provided in the Sale and
Servicing Agreement.
All of the right, title and interest of the Trust Agent in all funds on
deposit from time to time in the Certificate Distribution Account and in all
proceeds thereof shall be held for the benefit of the Owners and such other
persons entitled to distributions therefrom. Except as otherwise expressly
provided herein or in the Sale and Servicing Agreement, the Certificate
Distribution Account shall be under the sole dominion and control of the Trust
Agent, as agent of the Owner Trustee, for the benefit of the Owners.
The Certificate Distribution Account shall be subject to and established
and maintained in accordance with the applicable provisions of the Sale and
Servicing Agreement, including, without limitation, the provisions of Section
4.03(b) of the Sale and Servicing Agreement regarding distributions from the
Certificate Distribution Account.
Section 5.02 Application of Trust Funds.
(a) On each Distribution Date, the Trust Agent, on behalf of the Owner
Trustee, shall direct the Paying Agent to distribute to the Certificateholders
from amounts on deposit in the Certificate Distribution Account the
distributions as provided in Section 4.03(b) of the Sale and Servicing Agreement
with respect to such Distribution Date.
(b) On each Distribution Date, the Trust Agent, on behalf of the Owner
Trustee, shall cause the Paying Agent to send to each Certificateholder and each
Residual Interestholder the statement or statements provided to the Owner
Trustee or the Trust Agent by the Servicer pursuant to Section 4.05 of the Sale
and Servicing Agreement with respect to such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Trust
Agent is hereby
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authorized and directed to retain from amounts otherwise distributable to the
Owners sufficient funds for the payment of any tax that is legally owed by the
Trust (but such authorization shall not prevent the Owner Trustee or the Trust
Agent 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 an Owner
shall be treated as cash distributed to such Owner at the time it is withheld by
the Trust and remitted to the appropriate taxing authority. If there is a
possibility that withholding tax is payable with respect to a distribution, the
Trust Agent shall withhold such amounts in accordance with this paragraph (c).
Section 5.03 Method of Payment. Subject to Section 9.01(c) respecting
the final payment upon retirement of each Trust Certificate, distributions
required to be made to each Owner of record on the related Record Date shall be
made by check mailed to such Owner at the address of such Holder appearing in
the Certificate Register (or, if DTC, its nominee or a Clearing Agency is the
relevant Certificateholder, by wire transfer of immediately available funds or
pursuant to other arrangements), the amount to be distributed to such Owner
pursuant to such Owner's Trust Certificates.
Section 5.04 No Segregation of Monies; No Interest. Subject to Sections
5.01 and 5.02, monies received by the Trust Agent hereunder need not be
segregated in any manner except to the extent required by law or the Sale and
Servicing Agreement and may be deposited under such general conditions as may be
prescribed by law, and the Trust Agent shall not be liable for any interest
thereon.
Section 5.05 Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Trust Agent shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.02(c) with respect to income or distributions to
Owners. The Trust Agent shall elect under Section 1278 of the Code to include in
income currently any market discount that accrues with respect to the Contracts.
The Trust Agent shall not make the election provided under Section 754 of the
Code.
Section 5.06 Signature on Returns; Tax Matters Partner.
(a) The Owner Trustee shall sign on behalf of the Trust the tax returns
of the
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Trust, unless applicable law requires an Owner to sign such documents, in which
case such documents shall be signed by the Depositor, as long as the Depositor
holds a Residual Interest Instrument, and otherwise the holder of the largest
Percentage Interest in the Residual Interest Instruments shall sign such
documents.
(b) The Depositor shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations, as long as the Depositor holds a Residual Interest Instrument, and
otherwise the owner of the largest Percentage Interest in the Residual Interest
Instruments shall be the "tax matters partner".
ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE AND TRUST AGENT
Section 6.01 General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver on behalf of the Trust the Basic Documents to
which the Trust is to be a party and each certificate or other document attached
as an exhibit to or contemplated by the Basic Documents to which the Trust is to
be a party and any amendment or other agreement, as evidenced conclusively by
the Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust pursuant to the Basic Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator recommends
with respect to the Basic Documents.
Section 6.02 General Duties. Subject to the provisions and limitations
of Sections 2.03 and 2.06;
(a) it shall be the duty of the Owner Trustee to discharge (or cause to
be discharged through the Administrator or such agents as shall be appointed
with the consent of the Insurer) all of its responsibilities pursuant to the
terms of this Agreement and the other Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Owners, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the other Basic
Documents to the extent the Administrator or the Trust Agent has agreed in the
Administration Agreement or this Agreement, respectively, to perform any act or
to discharge any duty of the Owner Trustee or the Trust hereunder or under any
Basic Document, and the Owner Trustee shall not be held liable for the default
or failure of the Administrator or the Trust Agent to carry out its obligations
under the Administration Agreement or this Agreement, respectively; and
(b) it shall be the duty of the Trust Agent to discharge all of its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the
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Trust and the Trust Agent are a party and to administer the Trust in the
interest of the Owners, subject to the Basic Documents and in accordance with
the provisions of this Agreement.
Section 6.03 Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Owners may by written instruction direct the Owner Trustee or the
Trust Agent in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Owners pursuant to Article Four.
(b) Neither the Owner Trustee nor the Trust Agent shall be required to
take any action hereunder or under any other Basic Document if the Owner Trustee
or the Trust Agent, as applicable, shall have reasonably determined, or shall
have been advised by counsel, that such action is likely to result in liability
on the part of the Owner Trustee or the Trust Agent, as applicable, or is
contrary to the terms hereof or of any other Basic Document or is otherwise
contrary to law.
(c) Whenever the Owner Trustee or the Trust Agent is unable to decide
between alternative courses of action permitted or required by the terms of this
Agreement or under any other Basic Document, the Owner Trustee or the Trust
Agent, as applicable, shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Owners and the Insurer requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee or the Trust Agent, as applicable, acts in good faith in
accordance with any written instruction of the Owners received, the Owner
Trustee or the Trust Agent, as applicable, shall not be liable on account of
such action to any Person. If the Owner Trustee or the Trust Agent shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement and
the other Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee or the Trust Agent is unsure as
to the application of any provision of this Agreement or any other Basic
Document or any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or the Trust
Agent or is silent or is incomplete as to the course of action that the Owner
Trustee is required to take with respect to a particular set of facts, the Owner
Trustee or the Trust Agent may give notice (in such form as shall be appropriate
under the circumstances) to the Owners requesting instruction and, to the extent
that the Owner Trustee or the Trust Agent, as applicable, acts or refrains from
acting in good faith in accordance with any such instruction received, the Owner
Trustee or the Trust Agent, as applicable, shall not be liable, on
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account of such action or inaction, to any Person. If the Owner Trustee or the
Trust Agent shall not have received appropriate instruction within ten days of
such notice (or within such shorter period of time as reasonably may be
specified in such notice or may be necessary under the circumstances) it may,
but shall be under no duty to, take or refrain from taking such action not
inconsistent with this Agreement or the other Basic Documents, as it shall deem
to be in the best interests of the Owners, and shall have no liability to any
Person for such action or inaction.
Section 6.04 No Duties Except as Specified in this Agreement or in
Instructions. Neither the Owner Trustee nor the Trust Agent shall have any duty
or obligation to manage, make any payment with respect to, register, record,
sell, dispose of or otherwise deal with the Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee or the Trust Agent, as
applicable, is a party, except as expressly provided by the terms of this
Agreement or in any document or written instruction received by the Owner
Trustee or the Trust Agent, as applicable, pursuant to Section 6.03; and no
implied duties or obligations shall be read into this Agreement or any other
Basic Document against the Owner Trustee or the Trust Agent. Neither the Owner
Trustee nor the Trust Agent shall have any responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file any Commission filing for the
Trust or to record this Agreement or any other Basic Document. Each of the Owner
Trustee and the Trust Agent nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any liens
on any part of the Trust Estate that result from actions by, or claims against,
the Owner Trustee or the Trust Agent, as applicable, that are not related to the
ownership or the administration of the Trust Estate or the Grant of any portion
thereof to the Indenture Trustee pursuant to the Indenture.
Section 6.05 No Action Except Under Specified Documents or Instructions.
Neither the Owner Trustee nor the Trust Agent shall manage, control, use, sell,
dispose of or otherwise deal with any part of the Trust Estate except in
accordance with (i) the powers granted to and the authority conferred upon the
Owner Trustee or the Trust Agent, as applicable, pursuant to this Agreement,
(ii) the other Basic Documents and (iii) any document or instruction delivered
to the Owner Trustee or the Trust Agent, as applicable, pursuant to Section
6.03.
Section 6.06 Restrictions. Neither the Owner Trustee nor the Trust Agent
shall take any action (i) that is inconsistent with the purposes of the Trust
set forth in Section 2.03 or (ii) that, to the actual knowledge of the Owner
Trustee or the Trust Agent, as applicable, would result in the Trust's becoming
taxable as a corporation for federal or state income tax purposes. The Owners
shall not direct the Owner Trustee or the Trust Agent to take action that would
violate the provisions of this Section.
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ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE TRUST AGENT
Section 7.01 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement and the other
Basic Documents. The Trust Agent agrees to perform its duties hereunder upon the
terms of this Agreement and the other Basic Documents. Neither the Owner Trustee
nor the Trust Agent shall be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the Owner
Trustee or the Trust Agent and, in the absence of bad faith on the part of the
Owner Trustee or the Trust Agent, as applicable, the Owner Trustee and the Trust
Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Owner Trustee or the Trust Agent and conforming to the
requirements of this Agreement. Each of the Owner Trustee and the Trust Agent
agrees to disburse all monies actually received by it constituting part of the
Trust Estate upon the terms of this Agreement and the other Basic Documents.
Neither the Owner Trustee nor the Trust Agent shall be answerable or accountable
hereunder or under any other Basic Document under any circumstances, except (i)
for its own willful misconduct or negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03 expressly
made by the Owner Trustee or the Trust Agent, as the case may be. In particular,
but not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) neither the Owner Trustee nor the Trust Agent shall be liable for
any error of judgment made by a Responsible Officer of the Owner Trustee or the
Trust Agent, respectively;
(b) neither the Owner Trustee nor the Trust Agent shall be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with this Agreement, the Basic Documents or the written direction of
the Administrator or any Owner;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee or the Trust Agent to expend or risk funds or
otherwise incur any financial liability in the performance of any of its rights
or powers hereunder or under any other Basic Document if the Owner Trustee or
the Trust Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee or the Trust Agent be
liable for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
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(e) neither the Owner Trustee nor the Trust Agent shall be responsible
for or in respect of the validity or sufficiency of this Agreement or for the
due execution hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate, or for or in respect
of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Trust Certificates, and neither the Owner
Trustee nor the Trust Agent shall assume or incur any liability, duty or
obligation to any Noteholder or to any Owner, other than as expressly provided
for herein or expressly agreed to in the other Basic Documents;
(f) neither the Owner Trustee nor the Trust Agent shall be liable for
the default or misconduct of the Administrator, the Depositor, the Insurer, the
Indenture Trustee or the Servicer under any of the Basic Documents or otherwise
and neither the Owner Trustee nor the Trust Agent shall have any obligation or
liability to perform the obligations of the Trust under this Agreement or the
other Basic Documents that are required to be performed by the Administrator
under the Administration Agreement, the Indenture Trustee under the Indenture or
the Servicer or the Depositor under the Sale and Servicing Agreement;
(g) neither the Owner Trustee nor the Trust Agent shall be under any
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 otherwise or in relation to this Agreement or any other Basic
Document, at the request, order or direction of the Owners, unless such Owners
have offered to the Owner Trustee or the Trust Agent, as applicable, security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee or the Trust Agent, as applicable, therein
or thereby; the right of the Owner Trustee and the Trust Agent to perform any
discretionary act enumerated in this Agreement or in any other Basic Document
shall not be construed as a duty, and neither the Owner Trustee nor the Trust
Agent shall be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(h) anything in this Agreement to the contrary notwithstanding, in no
event shall the Owner Trustee or Trust Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profit), even if the Owner Trustee or Trust Agent has been advised of
the likelihood of such loss or damage and regardless of the form of action;
(i) neither the Owner Trustee nor the Trust Agent shall be required to
take notice or be deemed to have notice or knowledge of any default, any Event
of Default or Servicer Default under any of the Basic Documents unless a
Responsible Officer of the Owner Trustee or the Trust Agent, respectively, shall
have received written notice thereof. In the absence of receipt of such notice,
the Owner Trustee and Trust Agent may conclusively assume that there is no
default, Event of Default or Servicer Default;
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(j) [RESERVED].
(k) each of the Owner Trustee and the Trust Agent may rely and shall be
protected in acting or refraining from acting upon any resolution, opinion of
counsel, 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;
(l) each of the Owner Trustee and the Trust Agent may consult with
counsel and any 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 hereunder in good faith and in accordance with such advice or
opinion of counsel;
(m) neither the Owner Trustee nor the Trust Agent shall 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 the Administrator or Owners; provided, however, that if the payment
within a reasonable time to the Owner Trustee or Trust Agent, as applicable, of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Owner Trustee or Trust Agent, as
applicable, not reasonably assured to it by the security afforded to them by the
terms of this Agreement, the Owner Trustee or Trust Agent, as applicable, may
require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action;
(n) neither the Owner Trustee nor the Trust Agent shall be required to
give any bond or surety in respect of the execution of the Trust created hereby
or the powers granted hereunder; and
(o) each of the Owner Trustee and Trust Agent may execute any of their
respective trusts or powers hereunder or perform any of their respective duties
hereunder either directly or by or through agents, attorneys or custodians, and
neither the Owner Trustee nor the Trust Agent shall be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed by the Owner Trustee or Trust Agent, as applicable, with due care.
Section 7.02 Furnishing of Documents. The Owner Trustee shall furnish to
the Trust Agent duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents. The Trust Agent shall furnish to the
Owners promptly upon receipt of a written request therefor, duplicates or copies
of all reports, notices, requests, demands, certificates, financial statements
and any other instruments furnished to the Trust Agent under the Basic Documents
or furnished to the Trust Agent as provided in the preceding sentence.
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Section 7.03 Representations and Warranties.
(a) The Owner Trustee hereby represents and warrants to the Depositor
and the Owners:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of Delaware. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or Delaware law, governmental rule or
regulation governing the banking or trust powers of the Owner Trustee or
any judgment or order binding on it, or constitute any default under its
charter documents or bylaws or any indenture, mortgage, contract,
agreement or instrument to which it is a party or by which any of its
properties may be bound or result in the creation or imposition of any
lien, charge or encumbrance on the Trust Estate resulting from actions
by or claims against the Owner Trustee individually which are unrelated
to this Agreement or the other Basic Documents.
(b) The Trust Agent hereby represents and warrants to the Depositor and
the Owners:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of New York. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or New York law, governmental rule or
regulation governing the banking or trust powers of the Trust Agent or
any judgment or order binding on it, or constitute
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any default under its charter documents or bylaws or any indenture,
mortgage, contract, agreement or instrument to which it is a party or by
which any of its properties may be bound or result in the creation or
imposition of any lien, charge or encumbrance on the Trust Estate
resulting from actions by or claims against the Trust Agent individually
which are unrelated to this Agreement or the other Basic Documents.
Section 7.04 Reliance; Advice of Counsel.
(a) Neither the Owner Trustee nor the Trust Agent shall incur liability
to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee and the Trust Agent may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of determination of which is not specifically prescribed herein, the
Owner Trustee and the Trust Agent may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Owner Trustee or
the Trust Agent, as applicable, for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee and the Trust Agent each (i) may act directly
or through its agents or attorneys pursuant to agreements entered into with any
of them, and neither the Owner Trustee nor the Trust Agent shall be liable for
the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee or the Trust Agent with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it at the
sole expense of the Depositor. Neither the Owner Trustee nor the Trust Agent
shall be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and not contrary to this Agreement or any other Basic
Document.
Section 7.05 Not Acting in Individual Capacity. Except as otherwise
provided in this Article Seven, in accepting the trusts hereby created, Bankers
Trust (Delaware) acts solely as Owner Trustee hereunder and not in its
individual capacity, and The Chase Manhattan Bank acts solely as Trust Agent
hereunder and not in its individual capacity, and all Persons having any claim
against the Owner Trustee or the Trust Agent by reason of the transactions
contemplated by this Agreement or any other Basic Document shall look only to
the Trust Estate for payment or satisfaction thereof.
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Section 7.06 Owner Trustee and Trust Agent Not Liable for Trust
Certificates, Notes or Contracts. The recitals contained herein and in the Trust
Certificates (other than the respective signatures of the Owner Trustee and the
Trust Agent, and, in the case of the Trust Agent, the certificate of
authentication on the Trust Certificates) shall be taken as the statements of
the Depositor, and neither the Owner Trustee nor the Trust Agent assumes
responsibility for the correctness thereof. Neither the Owner Trustee nor the
Trust Agent makes any representations as to the validity or sufficiency of this
Agreement, any other Basic Document or the Trust Certificates (other than the
respective signatures of the Owner Trustee and the Trust Agent, and, in the case
of the Trust Agent, the certificate of authentication on the Trust Certificates)
or the Notes, or of any Contract or related documents. The Owner Trustee and the
Trust Agent shall at no time have any responsibility or liability for or with
respect to the legality, validity and enforceability of any Contract, or the
perfection and priority of any security interest created by any Contract in any
Financed Vehicle or the maintenance of any such perfection and priority, or for
or with respect to the sufficiency of the Trust Estate or its ability to
generate the payments to be distributed to Certificateholders and Residual
Interestholders under this Agreement or the Noteholders under the Indenture,
including, without limitation, the existence, condition and ownership of any
Financed Vehicle; the existence and enforceability of any insurance thereon; the
existence and contents of any Contract on any computer or other record thereof;
the validity of the assignment of any Contract to the Trust or of any
intervening assignment; the completeness of any Contract; the performance or
enforcement of any Contract; the compliance by the Depositor, the Insurer or the
Servicer with any warranty or representation made under any Basic Document or in
any related document or the accuracy of any such warranty or representation; or
any action of the Administrator, the Indenture Trustee or the Servicer or any
subservicer taken in the name of the Owner Trustee or the Trust Agent.
Section 7.07 Owner Trustee and Trust Agent May Own Trust Certificates
and Notes. The Owner Trustee and the Trust Agent, each in its individual or any
other capacity, may become the owner or pledgee of Trust Certificates or Notes
and may deal with the Depositor, the Insurer, the Administrator, the Indenture
Trustee and the Servicer in banking transactions with the same rights as it
would have if it were not Owner Trustee or Trust Agent, as the case may be.
ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE AND TRUST AGENT
Section 8.01 Owner Trustee's Fees and Expenses. The Owner Trustee and
the Trust Agent shall receive as compensation for their respective services
hereunder such fees as have been separately agreed upon before the date hereof
between the Depositor and the Owner Trustee and the Trust Agent, respectively,
and the Owner
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Trustee and the Trust Agent shall be entitled to be reimbursed by the Depositor
for other reasonable expenses hereunder, including the reasonable compensation,
expenses and disbursements of such agents, representatives, experts and counsel
as the Owner Trustee or the Trust Agent may employ in connection with the
exercise and performance of its rights and its duties hereunder.
Section 8.02 Indemnification. The Depositor shall be liable as primary
obligor for, and shall indemnify the Owner Trustee, the Trust Agent, each
co-trustee and their respective officers, directors, employees, successors,
assigns, agents and servants (collectively, the "INDEMNIFIED PARTIES") from and
against, any and all liabilities, obligations, losses, damages, taxes, claims,
actions and suits, and any and all reasonable costs, expenses and disbursements
(including reasonable legal fees and expenses) of any kind and nature whatsoever
(collectively, "EXPENSES") which may at any time be imposed on, incurred by or
asserted against any Indemnified Party in any way relating to or arising out of
this Agreement, the other Basic Documents, the Trust Estate, the administration
of the Trust Estate or the action or inaction of the Owner Trustee, Trust Agent,
or any co-trustee hereunder, except only that the Depositor shall not be liable
for or required to indemnify an Indemnified Party from and against Expenses
arising or resulting from any of the matters described in the fifth sentence of
Section 7.01. The indemnities contained in this Section shall survive the
resignation or termination of the Owner Trustee or the Trust Agent and the
termination of this Agreement. In the event of any claim, action or proceeding
for which indemnity will be sought pursuant to this Section, the choice of legal
counsel by the Owner Trustee or the Trust Agent, as applicable, shall be subject
to the approval of the Depositor, which approval shall not be unreasonably
withheld.
Section 8.03 Payments to the Owner Trustee or Trust Agent. Any amounts
paid to the Owner Trustee or the Trust Agent pursuant to this Article shall be
deemed not to be a part of the Trust Estate immediately after such payment.
ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01 Termination of Trust Agreement.
(a) This Agreement (other than Article Eight) and the Trust shall
terminate and be of no further force or effect upon the earlier of (i) final
distribution of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five and (ii) the expiration of 21 years from the death of the survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James's, living on the date hereof. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Owner's legal
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representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of all or any part of the
Trust or Trust Estate or (iii) otherwise affect the rights, obligations and
liabilities of the parties hereto.
(b) Except as provided in Section 9.01(a), neither the Depositor, the
Insurer nor any Owner shall be entitled to revoke or terminate the Trust.
(c) Notice of any termination of the Trust, specifying the Distribution
Date upon which Certificateholders shall surrender their Certificates to the
Paying Agent for payment of the final distribution and cancellation, shall be
given by the Trust Agent by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 8.01(b) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final payment of the
Certificates shall be made upon presentation and surrender of the Certificates
at the office of the Paying Agent in the City of New York therein designated,
(ii) the amount of any such final payment and (iii) that the Record Date
otherwise applicable to such Distribution Date is not applicable, payments being
made only upon presentation and surrender of the Certificates at the office of
the Paying Agent therein specified. The Trust Agent shall give such notice to
the Certificate Registrar (if other than the Trust Agent) and the Paying Agent
(if other than the Trust Agent) at the time such notice is given to
Certificateholders. Upon presentation and surrender of the Certificates, the
Paying Agent shall cause to be distributed to Certificateholders amounts
distributable on such Distribution Date pursuant to Section 5.02. In addition,
the Trust Agent shall notify the Rating Agencies upon the final payment of the
Certificates.
(d) In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Trust Agent shall give a second
written notice to the remaining Certificateholders to surrender their Trust
Certificates for cancellation and receive the final distribution with respect
thereto. If within one year after the second notice all the Certificates shall
not have been surrendered for cancellation, the Trust Agent may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Certificateholders concerning surrender of their Certificates, and the
cost thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies shall be distributed by the Trust Agent to the Residual
Interestholders on a pro rata basis.
(e) Upon the winding up of the Trust and its termination, the Owner
Trustee shall cause the Certificate of Trust to be canceled by filing a
certificate of cancellation with the Secretary of State in accordance with the
provisions of Section 3810 of the Business Trust Statute.
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ARTICLE X
SUCCESSOR OWNER TRUSTEES, ADDITIONAL OWNER TRUSTEE AND TRUST AGENT
Section 10.01 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's. 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, 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, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.02.
Section 10.02 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 Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee; provided that the Depositor and the Insurer shall have
received written confirmation from each Rating Agency that the proposed
appointment will not result in an increased capital charge to the Insurer by
either Rating Agency. 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 or the Insurer 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 10.01 and shall fail to resign after
written request therefor by the Administrator or the Insurer, or if at any time
the Owner Trustee shall be legally unable to act, or shall be adjudged 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,
conservation or liquidation, then the Administrator or the Insurer may remove
the Owner Trustee. If the Owner Trustee shall be removed under the authority of
the immediately preceding sentence, the Administrator shall promptly appoint a
successor Owner Trustee acceptable to the Insurer by written instrument, in
duplicate, one copy of which instrument shall be delivered to the outgoing Owner
Trustee so removed and one copy to the successor Owner Trustee, and shall pay
all fees owed to the outgoing Owner Trustee.
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Any resignation or removal of the Owner Trustee and appointment of a
successor Owner Trustee pursuant to any of the provisions of this Section shall
not become effective until acceptance of appointment by the successor Owner
Trustee pursuant to Section 10.03 and payment of all fees and expenses owed to
the outgoing Owner Trustee. The Administrator shall provide notice of such
resignation or removal of the Owner Trustee to each Rating Agency.
Section 10.03 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, the Insurer 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
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Administrator 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 unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all Owners, the
Insurer, the Depositor, the Servicer, the Indenture Trustee, the Noteholders and
each Rating Agency. If the Administrator shall fail to mail such notice within
ten days after acceptance of such appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
Section 10.04 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, 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;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such
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merger or consolidation to each Rating Agency.
Section 10.05 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust Estate or any Financed Vehicle may at the time be located, the
Administrator 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 Administrator, the Insurer and Owner Trustee to act as
co-trustee, jointly with the Owner Trustee, or as separate trustee or separate
trustees, of all or any part of the Trust Estate, and to vest in such Person, in
such capacity, such title to the Trust or any part thereof and, subject to the
other provisions of this Section, such powers, duties, obligations, rights and
trusts as the Administrator and the Owner Trustee may consider necessary or
desirable. If the Administrator shall not have joined in such appointment within
15 days after the receipt by it of a request so to do, the Owner Trustee and the
Insurer 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, provided that such co-trustee or successor trustee
must be acceptable to the Rating Agencies and no notice of the appointment of
any co-trustee or separate trustee shall be required pursuant to Section 10.03.
Section 10.06 Appointment of Trust Agent. Each separate trustee and
co-trustee shall, to the extent permitted by law, be appointed and act subject
to the following provisions and conditions:
(a) 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 Estate 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;
(b) no trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
(c) the Administrator, the Insurer 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
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shall refer to this Agreement 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 appointment,
either jointly with the Owner Trustee or separately, as may be provided therein,
subject to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of, affecting the liability
of or affording protection to, the Owner Trustee. Each such instrument shall be
filed with the Owner Trustee and a copy thereof given to the Administrator and
the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as 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 co-trustee or separate trustee.
The Owner Trustee on behalf of the Trust hereby appoints The Chase
Manhattan Bank as Trust Agent for the purpose of establishing and maintaining
the Certificate Distribution Account and making the distributions therefrom to
the persons entitled thereto pursuant to Section 4.03 of the Sale and Servicing
Agreement and for purposes of performing the other duties specified to be
performed by the Trust Agent under this Agreement and the other Basic Documents.
The Owner Trustee and the Trust Agent each agree that upon the occurrence and
continuation of an Insurer Default, the Trust Agent shall resign and the Owner
Trustee shall assume all rights, duties and obligations of the Trust Agent under
the Sale and Servicing Agreement and this Agreement, including without
limitation, the obligations of the Trust Agent pursuant to Sections 3.02, 3.03,
3.04, 3.05, 3.07, 3.08, 3.09, 3.10, 5.01 and 5.02 hereof. The Trust Agent, in
its capacity as Trust Agent, shall not have any rights, duties or obligations
except as expressly provided in this Agreement and the Sale and Servicing
Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Supplements and Amendments.
(a) This Agreement may be amended by the Depositor, the Owner Trustee
and the Trust Agent, with the prior written consent of the Insurer, but without
the consent of any of the Noteholders or the Owners, to cure any ambiguity, to
correct or supplement any provisions herein which may be inconsistent with any
of the provisions herein or make any other provisions with respect to matters or
questions arising hereunder that shall not be inconsistent with the provisions
of this Agreement; provided, however, that (i) any such action shall not
materially and adversely affect the interests
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of any Noteholder or any Owner; (ii) any such action shall be deemed not to
materially and adversely affect the interest of any Noteholder or
Certificateholder if the Person requesting the amendment obtains (A) a letter
from each Rating Agency to the effect that the amendment would not result in a
downgrading or withdrawal of the ratings then assigned to the Notes and
Certificates by such Rating Agency or (B) an opinion of counsel to such effect;
and (iii) any such action shall be deemed not to materially and adversely affect
the interest of any Residual Interestholder if the Person requesting such
amendment obtains an opinion of counsel to such effect, or Residual
Interestholders representing 100% of the Percentage Interests consent to such
amendment.
(b) Subject to Section 11.14, this Agreement may also be amended from
time to time with the prior written consent of the Insurer by the Depositor, the
Owner Trustee and the Trust Agent, with the consent of (i) for so long as the
Notes are Outstanding, Noteholders representing not less than 51% of the
Outstanding Amount acting together as a single class, and (ii) if no Notes are
Outstanding, the Holders of Certificates evidencing not less than 51% of the
Certificate Balance (which consent of any Holder of a Note or Certificate given
pursuant to this Section or pursuant to any other provision of this Agreement
shall be conclusive and binding on such Holder and on all future Holders of such
Note or Certificate, as the case may be, issued upon the transfer thereof or in
exchange thereof or in lieu thereof whether or not notation of such consent is
made thereon) and, if such amendment materially and adversely affects the
interests of the Residual Interestholders, with the consent of Residual
Interestholders evidencing not less than 51% of the Percentage Interests, for
the purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Agreement, or of modifying in any manner the
rights of the Noteholders or the Owners; provided, however, that no such
amendment may (i) increase or reduce in any manner the amount of, or accelerate
or delay the timing of, collections of payments on Contracts or distributions
that shall be required to be made for the benefit of the Noteholders, the
Certificateholders or Residual Interestholders or (ii) reduce the aforesaid
percentage of the Outstanding Amount of the Notes and the Certificate Balance or
Percentage Interest of the Residual Interestholders required to consent to any
such amendment, without the consent of the Holders of all outstanding Notes,
Certificates and Residual Interest Instruments.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to the Indenture Trustee, the Insurer,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trust Agent shall furnish written notification of the substance of such
amendment or consent to each Owner. It shall not be necessary for the consent of
Certificateholders, Residual Interestholders, Noteholders or the Indenture
Trustee pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be
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sufficient if such consent shall approve the substance thereof. The manner of
obtaining such consents (and any other consents of Owners provided for in this
Agreement or in any other Basic Document) and of evidencing the authorization of
the execution thereof by Owners shall be subject to such reasonable requirements
as the Owner Trustee may prescribe.
(e) Promptly after the execution of any amendment to the Certificate of
Trust, the Owner Trustee shall cause the filing of such amendment with the
Secretary of State.
(f) In connection with the execution of any amendment to this Agreement
or any other Basic Document to which the Issuer is a party and for which
amendment the Owner Trustee's consent is sought, each of the Owner Trustee and
the Trust Agent shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or permitted
by the Basic Documents and that all conditions precedent in the Basic Documents
for the execution and delivery thereof by the Issuer, the Owner Trustee or the
Trust Agent, as the case may be, have been satisfied. The Owner Trustee and the
Trust Agent may, but shall not be obligated to, enter into any such amendment
that affects the Owner Trustee's or the Trust Agent's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02 [RESERVED].
Section 11.03 Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Trust Agent, the Depositor, the Insurer, the Owners, the
Administrator and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement (other than Section
2.07), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 11.04 Notices. All demands, notices and communications under
this Agreement shall be in writing personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt in the case of (a) the Owner Trustee, at the Owner Trustee Corporate
Trust Office; (b) the Depositor, at Onyx Acceptance Financial Corporation, 8001
Irvine Center Drive, 6th Floor, Irvine, California 92618; (c) the Insurer, at
MBIA Insurance Corporation, 113 King Street, Armonk, New York 10504; (d) the
Trust Agent, at The Chase Manhattan Bank, 450 West 33rd Street, New York, New
York 10001-2697; or (e) as to each party, at such other address as shall be
designated by such party in a written notice to each other party. Any notice
required or permitted to be mailed to an Owner shall be given by first-class
mail, postage prepaid, at the address of such Owner as shown in the Certificate
Register. Any notice so mailed within the time prescribed in this Agreement
shall be conclusively presumed to have been duly given, whether or not the Owner
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<PAGE> 44
receives such notice.
Section 11.05 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Trust
Certificates or the rights of the Holders thereof.
Section 11.06 Counterparts. This Agreement 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 11.07 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Insurer, the Owner Trustee, the Trust Agent and their respective
successors and permitted assigns and each Owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by an Owner shall bind the successors and assigns
of such Owner.
Section 11.08 No Petition.
(a) The Depositor will not at any time institute against the Trust any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Trust
Certificates, the Notes, this Agreement or any of the other Basic Documents.
(b) Each of the Owner Trustee and the Trust Agent, by entering into this
Agreement, each Certificateholder and Residual Interestholder, by accepting a
Trust Certificate, and the Indenture Trustee and each Noteholder, by accepting
the benefits of this Agreement, hereby covenant and agree that they will not at
any time institute against the Seller, the Depositor or the Trust, or join in
any institution against the Seller, the Depositor or the Trust of, any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Trust
Certificates, the Notes, this Agreement or any of the other Basic Documents.
Section 11.09 No Recourse. Each Owner by accepting a Trust Certificate
acknowledges that such Owner's Trust Certificates represents a beneficial
interest in the Trust only and does not represent an interest in or obligation
of the Depositor, the Servicer, the Seller, the Administrator, the Owner
Trustee, the Trust Agent, the Indenture Trustee or any of their respective
Affiliates and no recourse may be had against such parties or their assets,
except as may be expressly set forth or contemplated in this Agreement, the
Trust Certificates or the other Basic Documents.
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<PAGE> 45
Section 11.10 Certificates Nonassessable and Fully Paid. Owners shall
not be personally liable for obligations of the Trust. Except as expressly
provided herein, the interests represented by the Trust Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever, and, upon authentication thereof pursuant to Section 3.03, the Trust
Certificates shall be deemed fully paid.
Section 11.11 Headings. The headings of the various Articles and
Sections herein are for convenience of reference only and shall not define or
limit any of the terms or provisions hereof.
Section 11.12 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
Section 11.13 Depositor Payment Obligation. The Depositor shall be
responsible for payment of the Administrator's compensation pursuant to Section
3 of the Administration Agreement and shall reimburse the Administrator for all
expenses and liabilities of the Administrator incurred thereunder.
Section 11.14 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, Certificateholders or Residual Interestholders are entitled to
exercise pursuant to this Agreement, without any consent of such Noteholders,
Certificateholders or Residual Interestholders; provided, however, that without
the consent of each Noteholder, Certificateholder or Residual Interestholder
affected thereby, the Insurer shall not exercise such rights to amend this
Agreement in any manner that would (i) reduce the amount of, or delay the timing
of, collections of payments on the Contracts or distributions which are required
to be made on any Note, Certificate or Residual Interest Instrument, (ii)
adversely affect in any material respect the interests of the Holders of any
Notes, Certificates or Residual Interest Instruments, or (iii) alter the rights
of any such Holder to consent to such amendment.
Notwithstanding any provision in this Agreement 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 Depositor, the Owner Trustee or the
Trust Agent pursuant to the terms of this Agreement, 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 Depositor, the Owner Trustee, the Trust
Agent or the Holders of the Notes, the Certificates, or the Residual Interest
Instruments; provided, that the consent of the Insurer shall be required at all
times with respect to any amendment of this Agreement.
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<PAGE> 46
Section 11.15 Fiduciary Duties. The duties and responsibilities of the
Owner Trustee and the Trust Agent shall be limited to those expressly provided
for in this Agreement. The parties hereto agree that except for the purpose of
the foregoing sentence, neither the Owner Trustee nor the Trust Agent shall have
management responsibilities or owe any fiduciary duties to the Insurer.
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<PAGE> 47
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective officers hereunto duly authorized, as of
the day and year first above written.
ONYX ACCEPTANCE FINANCIAL
CORPORATION, as Depositor
By: /s/ REGAN E. KELLY
--------------------------------
Name: Regan E. Kelly
Title: Executive Vice President
BANKERS TRUST (DELAWARE),
as Owner Trustee
By: /s/ M. LISA WILKINS
--------------------------------
Name: M. Lisa Wilkins
Title: Assistant Secretary
THE CHASE MANHATTAN BANK,
as Trust Agent
By: /s/ TARA SWEENEY
--------------------------------
Name: Tara Sweeney
Title: Trust Officer
<PAGE> 1
EXHIBIT 10.2
SALE AND SERVICING AGREEMENT
between
ONYX ACCEPTANCE OWNER TRUST 1998-C
as Issuer,
ONYX ACCEPTANCE FINANCIAL CORPORATION
as Seller,
ONYX ACCEPTANCE CORPORATION
as Servicer
and
THE CHASE MANHATTAN BANK
as Indenture Trustee and as Trust Agent
Dated as of November 1, 1998
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS................................................................................1
SECTION 1.01. DEFINITIONS.................................................................1
SECTION 1.02. USAGE OF TERMS.............................................................20
SECTION 1.03. SECTION REFERENCES.........................................................20
SECTION 1.04. CALCULATIONS...............................................................20
SECTION 1.05. ACCOUNTING TERMS...........................................................20
ARTICLE II - CONVEYANCE OF CONTRACTS; REPRESENTATIONS
AND WARRANTIES OF THE SELLER........................................................20
SECTION 2.01. CONVEYANCE OF CONTRACTS....................................................20
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............................23
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS............................................28
SECTION 2.04. CUSTODY OF CONTRACT FILES..................................................29
SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS...............................30
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT.............................................31
SECTION 2.07. INDEMNIFICATION............................................................32
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION...........................................32
SECTION 2.09. NONPETITION COVENANT.......................................................33
SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT
THE CLOSING DATE...........................................................33
ARTICLE III - ADMINISTRATION AND SERVICING OF CONTRACTS...............................................33
SECTION 3.01. DUTIES OF SERVICER.........................................................33
SECTION 3.02. COLLECTION OF CONTRACT PAYMENTS............................................36
SECTION 3.03. REALIZATION UPON CONTRACTS.................................................36
SECTION 3.04. INSURANCE..................................................................37
SECTION 3.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.....................37
SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER......................37
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH BY SERVICER..............................39
SECTION 3.08. SERVICING COMPENSATION.....................................................40
SECTION 3.09. REPORTING BY THE SERVICER..................................................40
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE..........................................42
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT....................43
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND
INFORMATION REGARDING CONTRACTS............................................43
SECTION 3.13. FIDELITY BOND..............................................................43
SECTION 3.14. INDEMNIFICATION; THIRD PARTY CLAIMS........................................44
SECTION 3.15. REPORTS TO SECURITYHOLDERS AND THE RATING AGENCIES.........................44
ARTICLE IV - DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS
TO SECURITYHOLDERS..................................................................44
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS............................................44
</TABLE>
i
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TABLE OF CONTENTS (CONT'D.)
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SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION
UPON POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT....................46
SECTION 4.03. DISTRIBUTIONS..............................................................47
SECTION 4.04. SPREAD ACCOUNT.............................................................50
SECTION 4.05. STATEMENTS TO SECURITYHOLDERS..............................................52
ARTICLE V - THE SELLER................................................................................53
SECTION 5.01. LIABILITY OF SELLER; INDEMNITIES...........................................53
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS................................54
SECTION 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS...............................55
SECTION 5.04. SELLER NOT TO RESIGN.......................................................55
SECTION 5.05. SELLER MAY OWN SECURITIES..................................................55
ARTICLE VI - THE SERVICER.............................................................................55
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.........................................55
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER............................56
SECTION 6.03. PERFORMANCE OF OBLIGATIONS.................................................57
SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT.........................................57
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.............................58
ARTICLE VII - DEFAULT.................................................................................58
SECTION 7.01. EVENTS OF DEFAULT..........................................................58
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...................................60
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS.........................61
SECTION 7.04. WAIVER OF PAST DEFAULTS....................................................61
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS................................62
ARTICLE VIII - TERMINATION............................................................................62
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND
DISCHARGE OF THE INDENTURE.................................................62
SECTION 8.02. TRANSFER TO THE INSURER....................................................63
ARTICLE IX - MISCELLANEOUS............................................................................63
SECTION 9.01. AMENDMENT..................................................................63
SECTION 9.02. PROTECTION OF TITLE TO TRUST...............................................64
SECTION 9.03. GOVERNING LAW..............................................................66
SECTION 9.04. NOTICES....................................................................66
SECTION 9.05. SEVERABILITY OF PROVISIONS.................................................67
SECTION 9.06. ASSIGNMENT.................................................................67
SECTION 9.07. THIRD PARTY BENEFICIARIES..................................................68
SECTION 9.08. CERTAIN MATTERS RELATING TO THE INSURER....................................68
SECTION 9.09. HEADINGS...................................................................68
SECTION 9.10. ASSIGNMENT BY ISSUER.......................................................68
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS (CONT'D.)
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SECTION 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE...................................69
</TABLE>
EXHIBITS
Schedule I-A - Schedule of Initial Contracts
Schedule I-B - Schedule of Subsequent Contracts
Schedule II - Location and Account Numbers of Trust Accounts
Exhibit A - Form of Appointment of Custodian
Exhibit B - Form of Policy
iii
<PAGE> 5
This SALE AND SERVICING AGREEMENT, dated as of November 1, 1998 (this
"AGREEMENT"), is between Onyx Acceptance Owner Trust 1998-C (the "ISSUER" or the
"TRUST"), Onyx Acceptance Financial Corporation (the "SELLER"), Onyx Acceptance
Corporation ("ONYX" or, in its capacity as servicer, the "SERVICER") and The
Chase Manhattan Bank, as the Indenture Trustee on behalf of the Noteholders (in
such capacity, the "INDENTURE TRUSTEE"), and as the Trust Agent on behalf of the
Owner Trustee (in such capacity, the "TRUST AGENT") .
In consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ACCELERATED PRINCIPAL COMMENCEMENT DATE" means the first Distribution
Date on which the amount on deposit in the Spread Account is equal to or greater
than the Spread Account Maximum (after giving effect to the distribution
pursuant to Section 4.03(a)(x) of this Agreement on such Distribution Date).
"ACCELERATED PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date occurring on or after the Accelerated Principal Commencement
Date, an amount equal to the lesser of (i) one-twelfth of 2% of the Pool Balance
as of such Distribution Date, (ii) the amount, if any, by which (a) the
Accelerated Principal Target Level as of such Distribution Date (after giving
effect to the distribution of the Regular Principal Distributable Amount on such
Distribution Date) exceeds (b) the Pool Balance as of such Distribution Date,
and (iii) amounts which would remain on deposit in the Payment Account for such
Distribution Date after giving effect to distributions pursuant to Section
4.03(a)(i) through (x) of this Agreement without regard to the inclusion of such
amount as part of the Note Principal Distributable Amount. The Accelerated
Principal Distributable Amount shall only be included in the Note Principal
Distributable Amount until all of the Notes have been paid in full, and shall
not be included in the Certificate Principal Distributable Amount at any time.
"ACCELERATED PRINCIPAL TARGET LEVEL" means, with respect to any
Distribution Date, an amount equal to the product of (i) 102% multiplied by (ii)
the outstanding aggregate principal amount of the Notes and the Certificates as
of such Distribution Date (after giving effect to the distribution of the
Regular Principal Distributable Amount on such Distribution Date).
"ACTUARIAL CONTRACT" means a Contract pursuant to which the allocation
of each payment between interest and principal is calculated using the Actuarial
Method.
"ACTUARIAL METHOD" means the method of allocating principal and
interest payments on a Contract whereby amortization of the Contract is
determined over a series of fixed level payment
<PAGE> 6
monthly installments, and each monthly installment, including the monthly
installment representing the final payment on the Contract, consists of an
amount of interest equal to 1/12 of the APR of the Contract multiplied by the
unpaid principal balance of the Contract, and an amount of principal equal to
the remainder of the monthly payment.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"AMOUNT FINANCED" means, with respect to a Contract, the aggregate
amount advanced under such Contract toward the purchase price of the related
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, extended service or warranty contracts and
other items customarily financed as part of retail automobile installment sales
contracts.
"APPOINTMENT OF CUSTODIAN" means the letter agreement between the
Indenture Trustee, the Insurer and the Servicer substantially in the form
attached hereto as Exhibit A.
"APR" of a Contract means the annual percentage rate used to determine
the total interest expected to be charged over the term of a Contract as of its
inception, as shown on such Contract.
"BASIC DOCUMENTS" shall have the meaning specified in the Indenture.
"BLANKET INSURANCE POLICY" means the Lender's Blanket Consumer Loan
Insurance Policy covering losses with respect to the Contracts, which policy has
been issued by United Financial Casualty Company and the Seller's rights therein
with respect to the Contracts have been validly assigned to the Indenture
Trustee acting on behalf of the Trust.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or other
day on which commercial banking institutions or savings associations located in
Los Angeles, California or New York, New York are authorized or obligated by
law, regulation, executive order or governmental decree to be closed.
"CALCULATION DAY" means the last day of each calendar month.
"CERTIFICATE" shall have the meaning specified in the Trust Agreement.
"CERTIFICATE BALANCE" will equal the Original Certificate Balance on
the Closing Date and on any date thereafter will equal the Original Certificate
Balance reduced by all distributions of principal previously made in respect of
the Certificates.
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<PAGE> 7
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning specified in
the Trust Agreement.
"CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in April 2005.
"CERTIFICATEHOLDER" means any Holder of a Certificate.
"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Certificate Interest Distributable Amount
for the immediately preceding Distribution Date over the amount in respect of
interest on the Certificates that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Certificate Rate for the Interest
Accrual Period with respect to the Distribution Date for which such Certificate
Interest Carryover Shortfall is being calculated; provided, however, that the
Certificate Interest Carryover Shortfall for the first Distribution Date shall
be zero.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) an amount equal to the interest accrued during
the related Interest Accrual Period at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all distributions of principal on or prior to such Distribution Date (or, in the
case of the first Distribution Date, the Original Certificate Balance) and (ii)
the Certificate Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATE PERCENTAGE" means (i) for each Distribution Date prior to
the Distribution Date on which the principal amount of the Class A-4 Notes is
reduced to zero, 0%; (ii) on the Distribution Date on which the principal amount
of the Class A-4 Notes is reduced to zero, (a) 0% until the principal amount of
the Class A-4 Notes has been reduced to zero and (b) with respect to any
remaining portion of the Regular Principal Distributable Amount, 100%; and (iii)
for each Distribution Date after the Distribution Date on which the principal
amount of the Class A-4 Notes is reduced to zero, 100%.
"CERTIFICATE POOL FACTOR" means, as of any Distribution Date, a
six-digit decimal figure equal to the Certificate Balance (after giving effect
to any reductions therein to be made on such Distribution Date) divided by the
Original Certificate Balance.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
business on any Distribution Date, the excess of the Certificate Principal
Distributable Amount for such Distribution Date over the amount in respect of
principal that is actually deposited in the Certificate Distribution Account on
such Distribution Date.
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<PAGE> 8
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Certificate Percentage of the Regular
Principal Distributable Amount for such Distribution Date and (ii) any
outstanding Certificate Principal Carryover Shortfall for the immediately
preceding Distribution Date; provided, however, that the Certificate Principal
Distributable Amount shall not exceed the Certificate Balance. Notwithstanding
the foregoing, the Certificate Principal Distributable Amount on the Certificate
Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the Certificates to
zero.
"CERTIFICATE RATE" means 6.09% per annum.
"CERTIFICATE REGISTER" shall have the meaning specified in the Trust
Agreement.
"CERTIFICATEHOLDERS" shall have the meaning specified in the Trust
Agreement.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in December 1999.
"CLASS A-1 NOTE" means any Class A-1 Note in the form attached to the
Indenture as Exhibit B.
"CLASS A-1 RATE" means 5.261% per annum.
"CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution
Date occurring in September 2001.
"CLASS A-2 NOTE" means any Class A-2 Note in the form attached to the
Indenture as Exhibit C.
"CLASS A-2 RATE" means 5.55% per annum.
"CLASS A-3 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution
Date occurring in April 2002.
"CLASS A-3 NOTE" means any Class A-3 Note in the form attached to the
Indenture as Exhibit D.
"CLASS A-3 RATE" means 5.65% per annum.
"CLASS A-4 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution
Date occurring in December 2003.
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<PAGE> 9
"CLASS A-4 NOTE" means any Class A-4 Note in the form attached to the
Indenture as Exhibit E.
"CLASS A-4 RATE" means 5.76% per annum.
"CLEARING ACCOUNT" means Account No. 4159359173 in the name of the
Seller maintained at Wells Fargo Bank, N.A.
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLOSING DATE" means November 24, 1998.
"COLLECTION ACCOUNT" means the account established and maintained as
such pursuant to Section 4.01.
"COLLECTION PERIOD" means, with respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs;
provided that with respect to Liquidated Contracts, the Collection Period will
be the period from but excluding the sixth Business Day preceding the
immediately preceding Distribution Date to and including the sixth Business Day
preceding such Distribution Date. With respect to the first Distribution Date
the "Collection Period" for Liquidated Contracts shall be the period from and
including the Cut-Off Date to and including the sixth Business Day preceding
such first Distribution Date.
"CONTRACT" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement and all proceeds
thereof and payments thereunder, which contract or agreement has been executed
by an Obligor and pursuant to which such Obligor purchased or financed the
Financed Vehicle described therein, agreed to pay the deferred purchase price
(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such contract or agreement. Each
Contract shall have been (i) either (A) originated or purchased by a subsidiary
of Onyx and subsequently conveyed to Onyx and then conveyed by Onyx to the
Seller pursuant to the Purchase Agreement or (B) originated by a Dealer and
assigned to Onyx in accordance with the assignment provisions set forth therein
and then conveyed by Onyx to the Seller pursuant to the Purchase Agreement and
(ii) in any case subsequently conveyed by the Seller to the Issuer pursuant to
this Agreement. As used herein, "Contracts" means both the Initial Contracts and
the Subsequent Contracts.
"CONTRACT DOCUMENTS" means, with respect to each Contract, (a) the
Contract and the original credit application fully executed by the Obligor
thereunder; (b) either (i) the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof (or, with respect to certain of the
Financed Vehicles registered in the State of California, evidence of the
electronic Title Document), together with evidence of perfection of the security
interest in the related Financed Vehicle granted by such Contract, as determined
by the Servicer to be permitted or required to perfect such security interest
-5-
<PAGE> 10
under the laws of the applicable jurisdiction, or (ii) written evidence that the
Title Document for such Financed Vehicle showing Onyx or a subsidiary of Onyx as
first lienholder has been applied for; (c) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); (d) any
signed agreement by an Obligor to provide insurance with Onyx or a subsidiary of
Onyx listed as loss payee and (e) any documents specifically relating to the
Obligor or the Financed Vehicle. The documents referred to above, other than the
Contracts, to the extent expressly permitted by the Insurer in writing, may be
maintained in microfiche or electronic form.
"CONTRACT FILES" means all papers and computerized records customarily
kept by the Servicer in servicing contracts and loans comparable to the
Contracts.
"CONTRACT NUMBER" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Servicer, which number is set
forth in the related Schedule of Contracts.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 450 West 33rd Street, New York, New York 10001-2697, Attention:
Structured Finance Services; or at such other address as the Indenture Trustee
may designate from time to time by notice to the Securityholders, the Insurer,
the Servicer and the Seller.
"CRAM DOWN LOSS" means, with respect to a Contract if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on such Contract or otherwise modifying or
restructuring the scheduled payments to be made on such Contract, an amount
equal to (i) the excess of the Principal Balance of such Contract immediately
prior to such order over the Principal Balance of such Contract as so reduced
and/or (ii) if such court shall have issued an order reducing the effective rate
of interest on such Contract, the excess of the Principal Balance of such
Contract immediately prior to such order over the net present value (using as
the discount rate the higher of the annual percentage rate on such Contract or
the rate of interest, if any, specified by the court in such order) of the
scheduled payments as so modified or restructured. A Cram Down Loss shall be
deemed to have occurred on the date of issuance of such order.
"CUSTODIAN" means Bankers Trust Company of California, N.A. until such
time, if any, a Successor Custodian is appointed and thereafter means such
Successor Custodian.
"CUT-OFF DATE" means, as applicable, (i) the Initial Cut-Off Date, with
respect to the Initial Contracts, or (ii) the Final Cut-Off Date, with respect
to the Subsequent Contracts.
"DEALER" means the seller of a Financed Vehicle, which seller
originated and assigned the related Contract.
"DEFAULT" means any occurrence which with the giving of notice or the
lapse of time or both would become a Servicer Default.
"DEFAULTED CONTRACT" means, with respect to any Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in the
amount of at least two monthly installments
-6-
<PAGE> 11
of Monthly P&I or (ii) with respect to which the related Financed Vehicle has
been repossessed or repossession efforts with respect to the related Financed
Vehicle have been commenced.
"DEFICIENCY AMOUNT" means as of any Distribution Date, the amount by
which (i) the sum of the amounts set forth in Section 4.03(a)(i) though (v) and
(vii) with respect to such Distribution Date exceeds (ii) the amount of Net
Collections available with respect to such Distribution Date and the amount on
deposit in the Spread Account as of such Distribution Date.
"DEFICIENCY NOTICE" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 4.02(c) by the Servicer to the Indenture
Trustee, with a copy to the Insurer and the Trust Agent.
"DEFINITIVE SECURITIES" means Notes and/or Certificates issued in fully
registered, certificated form to Securityholders.
"DEPOSITOR" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"DISTRIBUTION DATE" means the 15th day of each month or if such date
shall not be a Business Day, the following Business Day, commencing on December
15, 1998.
"DISTRIBUTION DATE STATEMENT" shall have the meaning specified in
Section 3.09(a).
"DUE DATE" means, as to any Contract, the date upon which an
installment of Monthly P&I is due.
"ELIGIBLE ACCOUNT" means (i) a trust account that is either (a)
maintained by the Indenture Trustee, (b) maintained with a depository
institution or trust company the commercial paper or other short-term debt
obligations of which have credit ratings from Standard & Poor's at least equal
to "A-1" and from Moody's equal to "P-1," which account is fully insured up to
applicable limits by the Federal Deposit Insurance Corporation or (c) maintained
with a depository institution acceptable to the Insurer, as evidenced by a
letter from the Insurer to that effect or (ii) a general ledger account or
deposit account at a depository institution acceptable to the Insurer, as
evidenced by a letter from the Insurer to that effect.
"ELIGIBLE INVESTMENTS" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to
timely payment of principal and interest by, the United States of America 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
and, to the extent, at the time of investment, acceptable to the Insurer and
each Rating Agency for securities having a rating equivalent to the rating of
the Notes at the Closing Date, the direct obligations of, or obligations fully
guaranteed by, the Federal Home Loan Mortgage Corporation and the Federal
National Mortgage Association;
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(b) demand and time deposits in, certificates of deposit of, banker's
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Indenture Trustee or the Owner Trustee)
incorporated under the laws of the United States of America or any State and
subject to supervision and examination by Federal and/or State banking
authorities, so long as at the time of such investment or contractual commitment
providing for such investment either (i) the long-term, unsecured debt
obligations of such depository institution or trust company have credit ratings
from Standard & Poor's at least equal to "AA-" and from Moody's at least equal
to "Aa2" or (ii) such depository institution is acceptable to the Insurer as
evidenced by a letter from the Insurer to the Indenture Trustee;
(c) repurchase obligations with respect to (i) any security described
in clause (a) above or (ii) any other security issued or guaranteed as to timely
payment of principal and interest by an agency or instrumentality of the United
States of America, in either case entered into with any depository institution
or trust company (including the Indenture Trustee and the Owner Trustee), acting
as principal, described in clause (b) above;
(d) 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 thereof which at the time of such investment or contractual commitment
providing for such investment have long-term, unsecured debt obligations rated
by Standard & Poor's "AA-" or better and by Moody's "Aa2" or better; provided,
however, that securities issued by any 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 Trust to exceed 10% of the aggregate Outstanding Principal
Balances of the Contracts and all amounts of Eligible Investments held as part
of the Trust;
(e) commercial paper having the highest rating by Standard & Poor's and
Moody's at the time of such investment;
(f) investments in money market funds or money market mutual funds
having a rating from Standard & Poor's and Moody's in the highest investment
category granted thereby, including funds for which the Indenture Trustee, the
Owner Trustee or any of their respective Affiliates is investment manager or
advisor; and
(g) such other obligations or securities acceptable to the Insurer, as
evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FINAL CUT-OFF DATE" means November 24, 1998.
"FINAL SCHEDULED DISTRIBUTION DATE" means with respect to (i) the
Notes, the Class A-1 Final Scheduled Distribution Date, the Class A-2 Final
Scheduled Distribution Date, the Class A-3 Final Scheduled Distribution Date or
the Class A-4 Final Scheduled Distribution Date, as the case may be, and (ii)
the Certificates, the Certificate Final Scheduled Distribution Date.
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"FINANCED VEHICLE" means, as to any Contract, an automobile, light-duty
truck or van, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"FINCO" means Onyx Acceptance Financial Corporation, and its successors
in interest.
"FISCAL AGENT" shall have the meaning set forth in the Policy.
"FULL PREPAYMENT" means any of the following: (a) with respect to any
Contract other than a Contract referred to in clause (ii), (iii) or (iv) of the
definition of the term "Liquidated Contract", payment by or on behalf of the
Obligor of the total amount required by the terms of such Contract to be paid
thereunder, which amount shall be at least equal to the sum of (i) 100% of the
Principal Balance of such Contract, (ii) interest accrued thereon to the date of
such payment at the APR; and (iii) any overdue amounts; or (b) with respect to
any Contract, payment by the Seller to the Indenture Trustee of the Purchase
Amount of such Contract in connection with the purchase of such Contract
pursuant to Section 2.03, or payment by the Servicer of the Purchase Amount of
such Contract in connection with the purchase of such Contract pursuant to
Section 3.07 or the purchase of all Contracts pursuant to Section 8.01.
"HOLDER" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"INDEMNIFICATION AGREEMENT" shall have the meaning specified in the
Insurance Agreement.
"INDENTURE" means the Indenture, dated as of the date hereof, between
the Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, not in its
individual capacity but solely as the Indenture Trustee under the Indenture, its
successors in interest and any successor Indenture Trustee under the Indenture.
"INITIAL CONTRACTS" means the Contracts designated as such in Schedule
I-A attached hereto.
"INITIAL CUT-OFF DATE" means November 1, 1998.
"INSOLVENCY PROCEEDING" shall have the meaning specified in Section
7.05.
"INSURANCE AGREEMENT" means the Insurance and Reimbursement Agreement,
to be dated as of the Closing Date, among the Insurer, the Seller, Onyx and the
Servicer, as amended, modified or restated from time to time.
"INSURER" means MBIA Insurance Corporation or its successors in
interest.
"INSURER DEFAULT" means the occurrence and continuance of any of the
following:
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(i) the Insurer shall have failed to make a payment required
to be made under the Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (b) made a general assignment for the benefit of its
creditors or (c) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York
Department of Insurance or other competent regulatory authority shall
have entered a final and nonappealable order, judgment or decree (a)
appointing a custodian, trustee, agent or receiver for the Insurer or
for all or any material portion of its property or (b) authorizing the
taking of possession by a custodian, trustee, agent or receiver of the
Insurer (or the taking of possession of all or any material portion of
the property of the Insurer).
"INTEREST ACCRUAL PERIOD" means, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate or the Class A-4 Rate, as the case may be.
"ISSUER" means Onyx Acceptance Owner Trust 1998-C and its successors.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"LIQUIDATED CONTRACT" means a Contract that (i) is the subject of a
Full Prepayment; (ii) is a Defaulted Contract with respect to which Liquidation
Proceeds constituting, in the Servicer's reasonable judgment, the final amounts
recoverable have been received and deposited in the Collection Account; (iii) is
paid in full on or after its Maturity Date; or (iv) has been a Defaulted
Contract for four or more Collection Periods and as to which Liquidation
Proceeds have not been deposited in the Collection Account; provided, however,
that in any event a Contract that is delinquent in the amount of five monthly
installments of Monthly P&I at the end of a Collection Period shall be deemed to
be a Liquidated Contract and shall be deemed to have a Principal Balance of
zero.
"LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Servicer in connection with the realization of the full amounts due under any
Defaulted Contract (including the attempted liquidation of a Contract which is
brought current and is no longer in default during such attempted
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<PAGE> 15
liquidation) and the sale of any property acquired in respect thereof which are
not recoverable as proceeds paid by any insurer under a comprehensive and
collision insurance policy related to the Contract. Liquidation Expenses shall
not include any late fees or other administrative fees and expenses or similar
charges collected with respect to a Contract.
"LIQUIDATION PROCEEDS" means amounts received by the Servicer (before
reimbursement for Liquidation Expenses) in connection with the realization of
the full amounts due and to become due under any Defaulted Contract and the sale
of any property acquired in respect thereof.
"MATURITY DATE" means, with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable as such
date may be extended pursuant to Section 3.02.
"MONTHLY P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"MOODY'S" means Moody's Investors Service, Inc., and its successors in
interest.
"NET COLLECTIONS" means, with respect to any Distribution Date and the
related Collection Period, the sum of (i) all payments of Monthly P&I, all
partial prepayments, all Full Prepayments, Net Liquidation Proceeds and Net
Insurance Proceeds in each case, collected with respect to the Contracts during
such Collection Period, less partial prepayments of Precomputed Contracts
collected with respect to the Contracts during such Collection Period which are
deposited in the Payahead Account pursuant to Section 4.02(a), (ii) amounts
withdrawn from the Payahead Account pursuant to Section 4.01(b) and deposited in
the Collection Account with respect to such Distribution Date, and (iii) the
aggregate Purchase Amount for Purchased Contracts deposited in or credited to
the Collection Account pursuant to Section 4.02(a) on the Business Day preceding
the Servicer Report Date next preceding such Distribution Date.
"NET INSURANCE PROCEEDS" means, with respect to any Contract, proceeds
paid by any insurer under a comprehensive and collision insurance policy related
to such Contract (other than funds used for the repair of the related Financed
Vehicle or otherwise released by Onyx to the related Obligor in accordance with
normal servicing procedures), after reimbursement to the Servicer of expenses
recoverable under such policy.
"NET LIQUIDATION PROCEEDS" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"NET YIELD" means, on any day, the percentage equivalent of (a) four
multiplied by (b) a fraction the numerator of which is equal to (i) the
aggregate of all interest collected on Contracts during the three immediately
preceding Collection Periods minus (ii) the sum of (A) the aggregate outstanding
principal balances of Contracts which became Liquidated Contracts other than by
virtue of a Full Prepayment during such three Collection Periods (less any Net
Liquidation Proceeds received with respect to such Liquidated Contracts during
such three Collection Periods) and (B)
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<PAGE> 16
interest paid to the Securityholders and the Servicing Fees paid to the Servicer
during such three Collection Periods, and the denominator of which is equal to
the average of the Pool Balances as of the last day of each of such three
immediately preceding Collection Periods.
"NOTE" means a Class A-1 Note, a Class A-2 Note, a Class A-3 Note or a
Class A-4 Note.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account established and
maintained as such pursuant to Section 4.01.
"NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the Class A-1 Final
Scheduled Distribution Date, the Class A-2 Final Scheduled Distribution Date,
the Class A-3 Final Scheduled Distribution Date or the Class A-4 Final Scheduled
Distribution Date, as the case may be.
"NOTEHOLDER" shall mean any Holder of a Note.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the Note Interest
Distributable Amount for such Class for the immediately preceding Distribution
Date over the amount in respect of interest that is actually deposited in the
Note Distribution Account with respect to such Class on such preceding
Distribution Date, plus, to the extent permitted by applicable law, interest on
the amount of interest due but not paid to Noteholders of such Class on the
preceding Distribution Date at the related Interest Rate for the related
Interest Accrual Period; provided, however, that the Note Interest Carryover
Shortfall for the first Distribution Date shall be zero.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related
Interest Rate for such Class of Notes on the outstanding principal amount of
such Class of Notes on the immediately preceding Distribution Date, after giving
effect to all payments of principal to Noteholders of such Class on or prior to
such Distribution Date (or, in the case of the first Distribution Date, on the
original principal amount of such Class of Notes) and (ii) the Note Interest
Carryover Shortfall for such Class of Notes for such Distribution Date.
"NOTE PERCENTAGE" means (i) for each Distribution Date prior to the
Distribution Date on which the principal amount of all of the Notes is reduced
to zero, 100%; (ii) for the Distribution Date on which the principal amount of
all of the Notes is reduced to zero, (a) 100% until the principal amount of all
of the Notes has been reduced to zero and (b) with respect to any remaining
portion of the Regular Principal Distributable Amount, 0%; and (iii) for each
Distribution Date after the principal amount of all of the Notes has been
reduced to zero, 0%.
"NOTE POOL FACTOR" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after
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<PAGE> 17
giving effect to any reductions thereof to be made on such Distribution Date)
divided by the original outstanding principal amount of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of the Note Principal Distributable Amount
for such Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account on such Distribution Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Note Percentage of the Regular Principal
Distributable Amount for such Distribution Date, (ii) the Accelerated Principal
Distributable Amount, if any, for such Distribution Date and (iii) any
outstanding Note Principal Carryover Shortfall for the immediately preceding
Distribution Date; provided, however, that the Note Principal Distributable
Amount shall not exceed the aggregate outstanding principal amount of the Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount on each
Note Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the related class of
Notes to zero.
"NOTE REGISTER" shall have the meaning specified in the Indenture.
"OBLIGEE" means, with respect to any Contract, the Person to whom an
Obligor is indebted under such Contract.
"OBLIGOR" means, with respect to any Contract, the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under such Contract.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Servicer.
"ONYX" means Onyx Acceptance Corporation and its successors in
interest.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Seller or the Servicer) acceptable to the Indenture Trustee, the
Owner Trustee or the Trust Agent, as the case may be, and the Insurer.
"ORIGINAL CERTIFICATE BALANCE" means $14,000,000.
"ORIGINAL POOL BALANCE" means $280,000,007.40, which is the aggregate
of the Principal Balances of (i) the Initial Contracts as of the Initial Cut-Off
Date and (ii) the Subsequent Contracts as of the Final Cut-Off Date.
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"OUTSTANDING" means with respect to a Contract and as of the time of
reference thereto, a Contract that has not reached its Maturity Date, has not
been fully prepaid, has not become a Liquidated Contract and has not been
repurchased pursuant to Section 2.03, 3.07 or 8.01.
"OUTSTANDING PRINCIPAL BALANCE" means, as of the Cut-Off Date, (i) with
respect to any Precomputed Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all unpaid Monthly P&I due on or after the Cut-Off Date,
minus any unearned (or earned but unpaid) interest as of the Cut-Off Date
computed in accordance with the Rule of 78's Method or the Actuarial Method, as
applicable, and (ii) with respect to any Simple Interest Contract, the amount
set forth as the Outstanding Principal Balance of such Contract on the Schedule
of Contracts, such amount being the total of all principal payments due on or
after the Cut-Off Date.
"OWNER TRUSTEE" means Bankers Trust (Delaware), not in its individual
capacity but solely as the Owner Trustee under the Trust Agreement acting on
behalf of the Certificateholders, its successors in interest and any successor
Owner Trustee under the Trust Agreement.
"OWNER TRUSTEE CORPORATE TRUST OFFICE" means the principal office of
the Owner Trustee at which at any particular time its corporate trust business
shall be administered, which office at the date of the execution of this
Agreement is located at E.A. Delle Donne Corporate Center, 1011 Centre Road,
Suite 200, Wilmington, Delaware 19805-1266, Attention: Corporate Trust
Administration; or at such other address as the Owner Trustee may designate from
time to time by
notice to the Securityholders, the Insurer, the Servicer and the Seller.
"PAYAHEAD ACCOUNT" means the account established and maintained as such
pursuant to Section 4.01.
"PAYMENT ACCOUNT" means the account established and maintained as such
pursuant to Section 4.01.
"PAYING AGENT" means (i) with respect to the Notes, the Person acting
as the "Paying Agent" under the Indenture and (ii) with respect to the
Certificates, the Person acting as the "Paying Agent" under the Trust Agreement,
the Trust Agent or any other Person that meets the eligibility standards for the
Paying Agent specified in the Trust Agreement and is authorized by the Issuer to
make the distributions from the Certificate Distribution Account, including
distributions of principal of or interest on the Certificates on behalf of the
Issuer.
"PERCENTAGE INTEREST" shall have the meaning specified in Section
4.04(d).
"PERSON" means a legal person, including 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 financial guarantee insurance policy for the
Securities, number 28017, dated November 24, 1998 and issued by the Insurer to
the Indenture Trustee, guaranteeing payment of any Policy Claim Amount, the form
of which is attached hereto as Exhibit B.
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<PAGE> 19
"POLICY AMOUNT" means, with respect to any Distribution Date, the sum
of (a) in the case of the first Distribution Date, the initial aggregate
principal amount of the Notes and the Certificates, or in the case of any
Distribution Date thereafter, the aggregate principal amount of the Notes and
the Certificates outstanding on the immediately preceding Distribution Date
(after giving effect to the payments and distributions of principal on the Notes
and the Certificates on such preceding Distribution Date), (b) the amount of
interest payable in respect of the Notes and the Certificates on such
Distribution Date and (c) the Servicing Fee payable on such Distribution Date.
"POLICY CLAIM AMOUNT" means, with respect to each Distribution Date,
the sum of (i) the Deficiency Amount for such Distribution Date and (ii) the
Preference Amount for such Distribution Date.
"POOL BALANCE" as of the time of determination means the aggregate of
the Principal Balances of the Contracts, exclusive of the Principal Balances of
all Contracts that are not Outstanding at the end of the Collection Period
ending immediately prior to such time of determination.
"POTENTIAL PREFERENCE PARTIES" shall have the meaning specified in
Section 4.04(d).
"PRECOMPUTED CONTRACT" means a Contract as to which, pursuant to the
terms of such Contract, the portion of payments allocable to earned interest and
principal thereunder is determined according to the "Rule of 78's Method" or the
"Actuarial Method".
"PREFERENCE AMOUNT" means any amount previously distributed to an Owner
in respect of the Securities that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy with respect to Onyx, the Seller
or the Trust pursuant to the United Stated Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final nonappealable order of a
court having competent jurisdiction.
"PREFERENCE CLAIM" shall have the meaning specified in Section 7.05.
"PREMIUM" shall have the meaning specified in the Insurance Agreement.
"PRINCIPAL BALANCE" means, with respect to a Contract, as of any date,
the Amount Financed under the terms of such Contract minus (i) that portion of
Monthly P&I in respect of such Contract received on or prior to the end of the
most recently ended Collection Period and allocable to principal as determined
by the Servicer and (ii) any Cram Down Loss incurred in respect of such Contract
on or prior to the end of the most recently ended Collection Period. For
purposes of this definition, allocations of Monthly P&I on each Contract by the
Servicer shall be made in accordance with the terms of such Contract, in the
case of a Simple Interest Contract or an Actuarial Contract, or in accordance
with the Recomputed Actuarial Method, in the case of a Rule of 78's Contract.
"PURCHASE AGREEMENT" means the Amended and Restated Sale and Servicing
Agreement dated as of September 4, 1998 between Onyx, as seller, and the Seller,
as purchaser, as such agreement may have been or may be modified, supplemented
or amended from time to time.
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"PURCHASE AMOUNT" means, with respect to a Purchased Contract, the
Principal Balance of such Contract as of the date of purchase of such Contract
plus interest on such Contract through the date of such purchase, to the extent
not previously collected.
"PURCHASED CONTRACT" means a Contract that (i) has been purchased by
the Servicer or the Seller because of certain material defects in documents
related to such Contract or certain breaches of representations and warranties
regarding such Contract made by the Seller in this Agreement that materially and
adversely affect the interests of the Securityholders or the Insurer, (ii) has
been purchased by the Servicer because of certain breaches of servicing
covenants or (iii) has been purchased by the Servicer in the event of an
optional purchase of all of the Contracts pursuant to Section 8.01
"RATING AGENCIES" means Moody's and Standard & Poor's.
"RECOMPUTED ACTUARIAL METHOD" means a method of accounting pursuant to
which each payment of Monthly P&I due on a Rule of 78's Contract will be deemed
to consist of interest equal to the product of 1/12 of the Recomputed Yield for
such Contract and the Principal Balance of the Contract as of the preceding Due
Date for such Contract and of principal to the extent of the remainder of such
scheduled installment of Monthly P&I, which will cause the Outstanding Principal
Balance as of the Cut-Off Date to be amortized in full at the Recomputed Yield.
"RECOMPUTED YIELD" for any Rule of 78's Contract means the per annum
rate determined as of the Cut-Off Date, such that the net present value of the
remaining scheduled payments due on such Contract, discounted at such rate from
the Due Date for each such scheduled payment to the Due Date for such Contract
immediately preceding the Cut-Off Date, will equal the Outstanding Principal
Balance.
"RECORD DATE" means, with respect to a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, if Definitive Securities are issued, the last day of
the immediately preceding calendar month.
"REGISTRAR OF TITLES" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"REGULAR PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the related Collection Period: (i) collections received on Contracts
(other than Liquidated Contracts and Purchased Contracts) allocable to principal
as determined by the Servicer, including full and partial principal prepayments
(other than partial prepayments on Precomputed Contracts representing payments
not due in such Collection Period which are deposited in the Payahead Account in
accordance with this Agreement), (ii) the Principal Balance (immediately prior
to the reduction thereof to zero as provided in the definition of "Liquidated
Contract") of all Contracts (other than Purchased Contracts) that became
Liquidated Contracts during the related Collection Period, (iii) the portion of
the Purchase Amount allocable to principal of all Contracts that became
Purchased Contracts as of the immediately
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preceding Record Date and (iv) the aggregate amount of Cram Down Losses incurred
during the related Collection Period.
"REPAYMENT AMOUNT" shall have the meaning specified in the Insurance
Agreement.
"RESIDUAL INTEREST" means the residual interest in the Trust, which
represents the right to the amount remaining, if any, after all prior
distributions have been made under this Agreement, the Indenture and the Trust
Agreement on each Distribution Date and certain other rights to receive amounts
hereunder and under the Trust Agreement.
"RESPONSIBLE OFFICER" means any officer of the Indenture Trustee within
the Corporate Trust Office including any vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Indenture Trustee customarily performing functions similar to those performed by
any of the above designated officers with direct responsibility for the
administration of this Agreement.
"RULE OF 78'S CONTRACT" means a Contract pursuant to which the
allocation between interest and principal is calculated using the Rule of 78's
Method.
"RULE OF 78'S METHOD" means the method of allocating principal and
interest payments on a Contract whereby the amount of each payment allocable to
interest on a Contract is determined by multiplying the total amount of add-on
interest payable over the term of the Contract by a fraction, the denominator of
which is equal to the sum of a series of numbers representing the total number
of monthly payments due under the Contract and the numerator of which is the
number of payments remaining before giving effect to the payment to which the
fraction is being applied.
"SCHEDULE OF CONTRACTS" means the list or lists of Contracts attached
as Schedule I-A and Schedule I-B to this Agreement, which Contracts are being
transferred to the Trust as part of the Trust Property, together with
supplemental data regarding the contracts calculated by Salomon Smith Barney
Inc. and verified by the Servicer. The Schedule of Contracts attached hereto as
Schedules I-A and I-B sets forth the Original Pool Balance, as well as the
following information with respect to each Contract in columns:
Contract Number ("Account")
Date of Origination ("Discount Date")
Maturity Date ("Maturity")
Monthly P&I ("Payment")
Original Principal Balance ("Amount Financed")
Outstanding Principal Balance ("Net Balance")
Annual Percentage Rate ("APR")
In addition, the information contained in Schedules I-A and I-B shall also be
contained on a computer disk or tape (the "DISK") that shall be delivered by the
Servicer to the Indenture Trustee not later than the 5th Business Day following
the Closing Date.
"SECURITIES" means the Notes and the Certificates.
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"SECURITYHOLDERS" means the Holders of the Notes and the Certificates.
"SELLER" means Onyx Acceptance Financial Corporation, in its capacity
as the Seller of the Contracts under this Agreement, and each successor thereto
(in the same capacity) pursuant to Section 5.02.
"SERVICER" means Onyx in its capacity as the servicer of the Contracts
under Section 3.01, and, in each case upon succession in accordance herewith,
each successor servicer in the same capacity pursuant to Section 3.01 and each
successor servicer pursuant to Section 7.02.
"SERVICER DEFAULT" means an event specified in Section 7.01.
"SERVICER REPORT DATE" means, with respect to any Distribution Date,
the fifth Business Day prior to such Distribution Date.
"SERVICING FEE" means, as to any Distribution Date, the fee payable to
the Servicer for services rendered during the Collection Period ending
immediately prior to such Distribution Date, which shall be an amount equal to
the product of one-twelfth of 1% per annum multiplied by the Pool Balance as of
the end of the Collection Period preceding the related Collection Period.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Indenture Trustee by
the Servicer pursuant to Section 3.01, as such list may be amended or
supplemented from time to time.
"SERVICING STANDARDS" means at any time the quality of the Servicer's
performance with respect to (i) compliance with the terms of this Agreement and
(ii) adequacy, measured in accordance with industry standards and current and
historical standards of the Servicer, in respect of the servicing of all
Contracts serviced by the Servicer, regardless of whether any such Contract is
owned by the Servicer or otherwise.
"SIMPLE INTEREST CONTRACT" means a Contract as to which the portion of
payments allocable to earned interest and principal thereunder is determined
according to the Simple Interest Method. For such Contracts, interest accrued as
of the Due Date is paid first, and then the remaining payment is applied to the
unpaid principal balance. Accordingly, if an Obligor pays the fixed monthly
installment in advance of the Due Date, the portion of the payment allocable to
interest for the period since the preceding payment will be less than it would
be if the payment were made on the Due Date, and the portion of the payment
allocable to reduce the principal balance will be correspondingly greater.
Conversely, if an Obligor pays the fixed monthly installment after its Due Date,
the portion of the payment allocable to interest for the period since the
preceding payment will be greater than it would be if the payment were made on
the Due Date, and the portion of the payment allocable to reduce the principal
balance will be correspondingly smaller. When necessary, an adjustment will be
made at the maturity of the Contract to the scheduled final payment to reflect
the larger or smaller, as the case may be, allocations of payments to the amount
financed under the Contract as a result of early or late payments, as the case
may be.
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"SIMPLE INTEREST METHOD" means the method for calculating interest on a
Contract whereby interest due is calculated each day based on the actual
principal balance of the Contract on that day.
"SPREAD ACCOUNT" means the account established and maintained as such
pursuant to Section 4.01.
"SPREAD ACCOUNT MAXIMUM" shall have the meaning set forth in the
Insurance Agreement.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors in interest.
"SUBSEQUENT CONTRACTS" means the Contracts designated as such in
Schedule I-B attached hereto.
"SUCCESSOR CUSTODIAN" shall have the meaning set forth in Section
2.04(b).
"TITLE DOCUMENT" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered. For Financed Vehicles registered in the State of
California, the Title Document may consist of electronic evidence of ownership
on the Electronic Lien and Title system of the California Department of Motor
Vehicles.
"TRUST" means the Issuer.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"TRUST ACCOUNTS" shall have the meaning specified in Section 4.01(a).
"TRUST AGENT" means The Chase Manhattan Bank, not in its individual
capacity but solely as the Trust Agent under the Trust Agreement and this
Agreement acting on behalf of the Owner Trustee, its successors in interest, and
any successor Trust Agent under such agreements.
"TRUST AGENT OFFICE" means the principal office of the Trust Agent,
which office at the date of the execution of this Agreement is located at 450 W.
33rd Street, New York, New York 10001- 2697, Attention: Structured Finance
Services; or at such other address as the Trust Agent may designate from time to
time by notice to the Securityholders, the Insurer, the Servicer and the Seller.
"TRUST AGREEMENT" means the Trust Agreement, dated as of November 1,
1998, among the Depositor, the Owner Trustee and the Trust Agent.
"TRUST PROPERTY" has the meaning set forth in Section 2.01 hereof.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
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SECTION 1.02. 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 amendments, modifications and supplements
thereto or any 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 1.03. SECTION REFERENCES.
All section references, unless otherwise indicated, shall be to
Sections in this Agreement.
SECTION 1.04. CALCULATIONS.
Interest on the Notes and the Certificates will be calculated on the
basis of a 360-day year of twelve 30-day months. Collections of interest on Rule
of 78's Contracts shall be calculated as if such Contracts were actuarial
contracts the scheduled principal balances of which are the Principal Balances
thereof, and collections of interest on Simple Interest Contracts and Actuarial
Contracts will be calculated in accordance with the terms thereof.
SECTION 1.05. ACCOUNTING TERMS.
All accounting terms used but not specifically defined herein shall be
construed in accordance with generally accepted accounting principles in the
United States of America.
ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. CONVEYANCE OF CONTRACTS.
(a) In consideration of the Issuer's delivery of the authenticated
Notes and Certificates to or upon the order of the Seller, effective upon the
Closing Date, the Seller hereby sells, grants, transfers, conveys and assigns to
the Issuer, without recourse (except as expressly provided in Section 2.03
hereof), all of the right, title and interest of the Seller in, to and under:
(i) the Contracts listed in the Schedule of Contracts;
(ii) all monies received under the Contracts on or after the
Cut-Off Date;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds
with respect to any Financed Vehicle to which a
Contract relates received on or after the Cut-Off Date;
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(iv) the Contract Documents and Contract Files relating to
the Contracts (except the Contract Documents and
Contract Files for Contracts which have been the
subject of a Full Prepayment received on or after the
Cut-Off Date but no later than two Business Days prior
to the Closing Date, in lieu of which the Seller shall
have deposited in or credited to the Collection Account
on or prior to the Closing Date an amount equal to such
Full Prepayment);
(v) the Trust Accounts and all amounts, financial assets
and investment property held therein or credited
thereto, including, if applicable, all Eligible
Investments credited thereto (but excluding the
Payahead Account and all amounts, financial assets and
investment property held therein or credited thereto,
including all Eligible Investments credited thereto);
(vi) the right of the Seller, as purchaser under the
Purchase Agreement, to cause Onyx as seller thereunder
to repurchase Contracts listed in the Schedule of
Contracts under certain circumstances;
(vii) any and all security interests of the Seller in the
Financed Vehicles and the rights to receive proceeds
from claims on certain insurance policies covering the
Financed Vehicles or the individual Obligors under each
related Contract;
(viii) the Seller's right to proceeds under the Blanket
Insurance Policy with respect to the Contracts; and
(ix) all proceeds in any way delivered with respect to the
foregoing, all rights to payments with respect to the
foregoing and all rights to enforce the foregoing.
The foregoing items of property listed in this Section 2.01, together
with the rights of the Indenture Trustee and the Owner Trustee under the Policy,
are collectively referred to as the "TRUST PROPERTY".
It is the intention of the Seller and the Issuer that the assignment
and transfer herein contemplated constitute (and shall be construed and treated
for all purposes as) a true and complete sale of the Trust Property (other than
the Spread Account and the Policy), conveying good title thereto free and clear
of any liens and encumbrances, from the Seller to the Issuer. However, in the
event that such conveyance is deemed to be a pledge to secure a loan (in spite
of the express intent of the parties hereto that this conveyance constitutes,
and shall be construed and treated for all purposes, as a true and complete
sale), the Seller hereby grants to the Issuer, for the benefit of the
Securityholders and the Insurer, a first priority perfected security interest in
all of the Seller's right, title and interest in the Trust Property whether now
existing or hereafter created and all proceeds of
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the foregoing to secure the loan deemed to be made in connection with such
pledge and, in such event, this Agreement shall constitute a security agreement
under applicable law.
(b) As of the Closing Date, the Issuer acknowledges the conveyance to
it of the Trust Property from the Seller, including all right, title and
interest of the Seller in and to the Trust Property, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery and in exchange
therefor, the Issuer has pledged to the Indenture Trustee, for the benefit of
the Securityholders and the Insurer, the Trust Property and the Indenture
Trustee, pursuant to the written instructions of the Issuer, has executed and
caused to be authenticated and delivered the Notes to the Seller or its
designee, upon the order of the Issuer. In addition, concurrently with such
delivery and in exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered the Certificates to the Seller or its designee, upon the order of
the Seller.
(c) In connection with the sale of the Contracts pursuant to the
Purchase Agreement, Onyx has filed with the office of the Secretary of State of
the State of California a UCC-1 financing statement naming Onyx as debtor,
naming the Seller as secured party and including the Contracts in the
description of the collateral. In connection with the sale of the Contracts
pursuant to this Agreement, the Seller has filed or caused to be filed with the
Secretary of State of the State of California a UCC-1 financing statement naming
the Seller as debtor, naming the Issuer as secured party, naming the Indenture
Trustee, on behalf of the Noteholders, as assignee, and including the Contracts
in the description of the collateral. In connection with the pledge of the
Contracts pursuant to the Indenture, the Trust has filed with the offices of the
Secretary of State of the State of Delaware UCC-1 financing statements naming
the Trust as debtor and the Indenture Trustee, on behalf of the Noteholders and
the Insurer, as secured party. The grant of a security interest to the Indenture
Trustee and the rights of the Indenture Trustee in the Contracts shall be
governed by the Indenture.
The Seller shall have caused UCC-2 termination statements to have been
filed with the office of Secretary of State of the State of California
terminating any effective UCC-1 financing statements with respect to any
outstanding security interests in the Contracts.
(d) From time to time, the Servicer shall cause to be taken such
actions as are necessary to continue the perfection of the respective interests
of the Trust and the Indenture Trustee in the Contracts and to continue the
first priority security interest of the Indenture Trustee in the Financed
Vehicles and their proceeds (other than, as to such priority, any statutory lien
arising by operation of law after the Closing Date which is prior to such
interest), including, without limitation, the filing of financing statements,
amendments thereto or continuation statements and the making of notations on
records or documents of title.
(e) If any change in the name, identity or corporate structure of the
Seller or Onyx or the relocation of the chief executive office of either of them
would make any financing or continuation statement or notice of lien filed under
this Agreement or the other Basic Documents misleading within the meaning of
applicable provisions of the UCC or any title statute, the Servicer, within the
time period required by applicable law, shall file such financing statements or
amendments as may be required to preserve and protect the interests of the
Trust, the Indenture Trustee, the Securityholders and the Insurer in the
Contracts, the related Financed Vehicles and the proceeds
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thereof. Promptly thereafter, the Servicer shall deliver to the Trust, the
Indenture Trustee and the Insurer an Opinion of Counsel stating that, in the
opinion of such counsel, all financing statements or amendments necessary fully
to preserve and protect the interests of the Trust, the Indenture Trustee, the
Securityholders and the Insurer in the Contracts, the related Financed Vehicles
and the proceeds thereof have been filed, and reciting the details of such
filings.
(f) During the term of this Agreement, the Seller and Onyx shall each
maintain its chief executive office in one of the states of the United States.
(g) The Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby makes the following representations and warranties on
which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(a) As to the Seller:
(i) The Seller is duly organized and validly existing as a
corporation organized and existing and in good standing
under the laws of the State of Delaware, with power and
authority to own its properties and to conduct its
business and had at all relevant times, and has, power,
authority, and legal right to originate or acquire and
own the Contracts.
(ii) The Seller is duly qualified to do business as a
foreign corporation in good standing, and shall have
obtained all necessary licenses and approvals in all
jurisdictions in which the ownership or lease of
property or the conduct of its business requires such
qualifications.
(iii) 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 Issuer and has duly authorized such sale and
assignment to the Issuer by all necessary corporate
action; and the execution, delivery, and performance of
this Agreement has been duly authorized by the Seller
by all necessary corporate action.
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(iv) This Agreement constitutes (A) a valid sale, transfer,
and assignment of the Contracts, enforceable against
creditors of and purchasers from the Seller and (B) a
legal, valid, and binding obligation of the Seller
enforceable in accordance with its terms, except as
such 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) The consummation of the transactions contemplated by
this Agreement and the fulfillment of the terms hereof
shall not conflict with, result in any breach of any of
the terms and provisions of, nor constitute (with or
without notice or lapse of time) a default under, the
certificate of incorporation or bylaws 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 the properties of the Seller pursuant
to the terms of any such indenture, agreement, or other
instrument (other than pursuant to the Basic Documents
to which the Seller is a party); nor violate any law or
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) to the Seller's best knowledge after due inquiry, there
are no proceedings or investigations pending, or
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, the Notes or the Certificates, (B) seeking
to prevent the issuance of the Notes or the
Certificates or the consummation of any of the
transactions contemplated by this Agreement, (C)
seeking any determination or ruling that might
materially and adversely affect the performance by the
Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Notes or the
Certificates, or (D) naming the Seller which might
adversely affect the federal income tax attributes of
the Notes or the Certificates.
(b) As to each Contract (except as noted below as being applicable only
to either Precomputed Contracts or Simple Interest Contracts):
(i) The information pertaining to such Contract set forth
in the related Schedule of Contracts was true and
correct in all material respects at the Closing Date
and the calculations of the Principal Balances
appearing in such Schedule of Contracts for each such
Contract at the
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Cut-Off Date, and in the case of Precomputed Contracts
at each Distribution Date thereafter prior to the
related Maturity Date, have been performed in
accordance with this Agreement and are accurate.
(ii) As of the Closing Date, such Contract was secured by a
valid and enforceable first priority security interest
in favor of Onyx or a subsidiary of Onyx in the related
Financed Vehicle, and such security interest has been
duly perfected and is prior to all other liens upon and
security interests in such Financed Vehicle which now
exist or may hereafter arise or be created (except, as
to priority, for any lien for unpaid taxes or unpaid
storage or repair charges which may arise after the
Closing Date in accordance with the UCC); such security
interest had been assigned by Onyx to the Seller
pursuant to the Purchase Agreement, and, as of the
Closing Date, has been assigned by the Seller to the
Issuer pursuant to Section 2.01(a) hereof.
(iii) (A) If the related Financed Vehicle was originated in a
state in which notation of a security interest on the
Title Document (or in the electronic title records, in
the case of the State of California) is required or
permitted to perfect such security interest, the Title
Document or the electronic title records for such
Financed Vehicle shows, or, if a new or replacement
Title Document is being applied for with respect to
such Financed Vehicle, the Title Document will be
received within 180 days of the Closing Date and will
show, Onyx or a subsidiary of Onyx named as the
original secured party under the related Contract as
the holder of a first priority security interest in
such Financed Vehicle, and (B) if the related Financed
Vehicle was originated in a state in which the filing
of a financing statement under the UCC is required to
perfect a security interest in motor vehicles, such
filings or recordings have been duly made and show Onyx
or a subsidiary of Onyx named as the original secured
party under the related Contract, and in either case,
the Indenture Trustee on behalf of the Securityholders
and the Insurer has the same rights as such secured
party has or would have (if such secured party were
still the owner of such Contract) against all parties
claiming an interest in such Financed Vehicle. With
respect to each Contract for which the Title Document
has not yet been returned from the Registrar of Titles
(or evidenced in the electronic title records, in the
case of the State of California), Onyx has written
evidence that such Title Documents showing Onyx or a
subsidiary of Onyx as first lienholder have been
applied for.
(iv) As of the Closing Date, the Seller had good and
marketable title to and was the sole owner of each
Contract to be transferred to the Issuer pursuant to
Section 2.01 free of liens, claims, encumbrances and
rights of others and, upon transfer of such Contract to
the Issuer
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pursuant to Section 2.01, the Issuer will have good and
marketable title to, will have a first priority
perfected security interest in and will be the sole
owner of such Contract free of liens, encumbrances and
rights of others.
(v) As of the Cut-Off Date, the most recent scheduled
payment due on each such Contract had been made or was
not delinquent more than 30 days and, to the best of
the Seller's knowledge, all payments on the Contract
were made by the related Obligors.
(vi) As of the Closing Date, there is no lien against the
related Financed Vehicle for delinquent taxes.
(vii) As of the Closing Date, there is no right of
rescission, offset, defense or counterclaim to the
obligation of the related Obligor(s) to pay the unpaid
principal or interest due under such Contract; the
operation of the terms of such Contract or the exercise
of any right thereunder will not render such Contract
unenforceable in whole or in part or subject such
Contract to any right of rescission, offset, defense or
counterclaim, and the Seller has no knowledge that such
right of rescission, offset, defense or counterclaim
has been asserted or threatened.
(viii) As of the Closing Date, to the best of the Seller's
knowledge, there are no liens or claims which have been
filed, including liens for work, labor, material or
storage affecting the related Financed Vehicle which
are or may become a lien prior to or equal with the
security interest granted by such Contract.
(ix) Such Contract, and the sale of the Financed Vehicle
sold thereunder, complied, at the time it was made, in
all material respects with all applicable federal,
state and local laws (and regulations thereunder),
including without limitation usury, equal credit
opportunity, fair credit reporting, truth-in-lending or
other similar laws, the Federal Trade Commission Act,
and applicable state laws regulating retail installment
sales contracts and loans in general and motor vehicle
retail installment contracts and loans in particular;
and the consummation of the transactions herein
contemplated, including, without limitation, the
transfer of ownership of the Contracts to the Issuer
and the receipt of interest by the Securityholders,
will not violate any applicable federal, state or local
law.
(x) Such Contract is the legal, valid and binding
obligation of the related Obligor(s) thereunder and is
enforceable in accordance with its terms, except only
as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of
creditors'
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rights generally; each party to such Contract had full
legal capacity to execute and deliver such Contract and
all other documents related thereto and to grant the
security interest purported to be granted thereby; the
terms of such Contract have not been waived, amended or
modified in any respect, except by instruments that are
part of the related Contract Documents, and no such
waiver, amendment or modification has caused such
Contract to fail to meet all of the representations,
warranties and conditions, set forth herein with
respect thereto.
(xi) Such Contract contains customary and enforceable
provisions such as to render the rights and remedies of
the holder or assignee thereof adequate for the
practical realization against the collateral of the
benefits of the security, subject, as to
enforceability, to bankruptcy, insolvency,
reorganization or similar laws affecting the
enforcement of creditors' rights generally.
(xii) As of the Closing Date, there was no default, breach,
violation or event permitting acceleration existing
under such Contract (except payment delinquencies
permitted by subparagraph (v) above) and no event
which, with notice and the expiration of any grace or
cure period, would constitute such a default, breach,
violation or event permitting acceleration under such
Contract, and the Seller has not waived any such
default, breach, violation or event permitting
acceleration except payment delinquencies permitted by
subparagraph (v) above.
(xiii) At the Closing Date each related Financed Vehicle will
be covered by the Blanket Insurance Policy; each of
Onyx and the Seller shall at all times comply with all
of the provisions of such insurance policy applicable
to it so long as such insurance policy is in effect.
(xiv) [RESERVED].
(xv) At the Closing Date, (a) such Contract will require
that the related Obligor(s) obtain and maintain in
effect for the related Financed Vehicle a comprehensive
and collision insurance policy (i) in an amount at
least equal to the lesser of (x) its maximum insurable
value or (y) the principal amount due from the related
Obligor(s) under such Contract, (ii) naming Onyx or a
subsidiary of Onyx as a loss payee and (iii) insuring
against loss and damage due to fire, theft,
transportation, collision and other risks generally
covered by comprehensive and collision coverage and (b)
the Servicer shall have put in place a vendor's single
interest insurance policy providing coverage upon
repossession of the related Financed Vehicle in an
amount equal to the lesser of the actual cash value of
such Financed
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Vehicle, the cost of repair or replacement for such
Financed Vehicle and the unpaid balance of the related
Contract. Each of Onyx and the Seller shall, and Onyx
shall cause any subsidiary of Onyx which originated a
Contract to, at all times comply with all of the
provisions of such insurance policies applicable to
it.
(xvi) Such Contract was either originated by a subsidiary of
Onyx, purchased by a subsidiary of Onyx or acquired by
Onyx from a Dealer with which it ordinarily does
business, and no adverse selection procedures have
been utilized in selecting such Contract from all
other similar contracts purchased or originated by
Onyx or any such subsidiary.
(xvii) Payments under such Contract have been applied in
accordance with the Rule of 78's Method, the Actuarial
Method or the Simple Interest Method, as provided in
the applicable Contract, and are due monthly in
substantially equal amounts through its Maturity Date
sufficient to fully amortize the principal balance of
such Contract by its Maturity Date.
(xviii) There is only one original of such Contract and such
original, together with all other related Contract
Documents, is being held by the Custodian; provided,
however, that upon the execution by the Indenture
Trustee and the Trust with the prior written consent
of the Insurer of a letter agreement revocably
appointing the Servicer as Successor Custodian in
accordance with Section 2.04, such original Contracts
together with all other Contract Documents may be held
by the Servicer.
(xix) As of the Closing Date, the Servicer has clearly
marked its electronic records to indicate that such
Contract is owned by the Issuer.
(xx) At the date of origination of the Contract, the
original principal balance of such Contract was not
greater than the purchase price to the related
Obligor(s) (including taxes, warranties, licenses and
related charges) of the related Financed Vehicle.
(xxi) As of the Cut-Off Date, the Seller has not received
notice that any Obligor under such Contract has filed
for bankruptcy.
(xxii) As of the Cut-Off Date, such Contract had an original
maturity of not more than 72 months and such Contract
has a remaining maturity of 72 months or less;
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(xxiii) The first payment under each Initial Contract is due
on or before December 15, 1998, and the first payment
under each Subsequent Contract is due on or before
January 15, 1999.
(xxiv) As of the Cut-Off Date, such Contract has a remaining
principal balance of at least $500.
(xxv) As of the Cut-Off Date, such Contract is secured by a
Financed Vehicle that has not been repossessed without
reinstatement.
(xxvi) The related Obligor(s) were located in Alabama,
Arizona, California, Colorado, Florida, Georgia,
Idaho, Illinois, Indiana, Iowa, Kansas, Kentucky,
Maryland, Maine, Michigan, Missouri, Montana, Nevada,
New Jersey, New York, North Carolina, Ohio, Oklahoma,
Oregon, South Carolina, Tennessee, Texas, Utah,
Virginia or Washington on the date of origination of
such Contract;
(c) As to all of the Contracts:
(i) The aggregate Outstanding Principal Balance payable by
Obligors of the Contracts as of the Cut-Off Date
equals the Original Pool Balance.
(ii) As of the Cut-Off Date, approximately 20% of the
Outstanding Principal Balance of all Contracts is
attributable to loans involving new Financed Vehicles,
and approximately 80% of the Outstanding Principal
Balance of all Contracts is attributable to loans
involving used Financed Vehicles.
(d) None of the foregoing representations and warranties shall be
construed as, and the Seller is specifically not making, any representations and
warranties regarding the collectibility of the Contracts or the future
performance of the Contracts.
(e) The Seller has not prepared any financial statement which accounts
for the transfer of the Trust Property (other than the Policy and the Spread
Account) hereunder to the Issuer in any manner other than as a sale of the Trust
Property (other than the Policy and the Spread Account) by it to the Issuer, and
the Seller has not in any other non-income tax respect (including, but not
limited to, for accounting purposes) accounted for or treated the transfer of
the Trust Property (other than the Policy and the Spread Account) hereunder in
any manner other than as a sale and absolute assignment to the Issuer of the
Seller's full right, title and ownership interest in the Trust Property (other
than the Policy and the Spread Account) to the Issuer.
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SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS.
The representations and warranties of the Seller set forth in Section
2.02 shall survive the Closing Date and shall continue until the termination of
this Agreement. Upon discovery by the Seller, the Servicer, the Insurer or a
Responsible Officer of the Owner Trustee, the Indenture Trustee or the Trust
Agent that any of such representations and warranties was incorrect or that any
of such conditions was unsatisfied as of the time made or that any of the
Contract Documents relating to any such Contract has not been properly executed
by the Obligor or contains a material defect or has not been received by the
Custodian, such Person making such discovery shall give prompt notice to the
other such Persons. If any such defect, incorrectness or omission materially and
adversely affects the interest of the Noteholders, the Certificateholders, the
Indenture Trustee, the Issuer or the Insurer, the Seller shall cure the defect
or eliminate or otherwise cure the circumstances or condition in respect of
which such representation or warranty was incorrect as of the time made;
provided that if the Seller is unable to do so by the last day of the Collection
Period following the Collection Period (or, if the Seller elects, the last day
of such Collection Period) during which the Seller becomes aware of or receives
written notice from the Servicer, the Insurer or the Indenture Trustee of such
defect, incorrectness or omission, it shall repurchase such Contract on the last
day of the applicable Collection Period from the Issuer at the Purchase Amount.
Upon any such repurchase, the Issuer shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, as shall be necessary
to vest in the Seller any Contract purchased hereunder. The sole remedy of the
Issuer, the Indenture Trustee or the Securityholders with respect to a breach of
the Seller's representations and warranties pursuant to Section 2.02 shall be to
require the Seller to repurchase Contracts pursuant to this Section; provided,
however, that the Seller shall indemnify the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer, the Issuer and the Securityholders against all
costs, expenses, losses, damages, claims and liabilities, including reasonable
fees and expenses of counsel, which may be asserted against or incurred by any
of them as a result of third-party claims arising out of the events or facts
giving rise to such breach.
SECTION 2.04. CUSTODY OF CONTRACT FILES.
(a) Duties of Custodian. The Custodian shall:
(i) maintain continuous custody of the Contract Documents
in secure and fire resistant facilities in accordance
with customary standards for such custody. Such
Contract Documents shall be segregated to show the
Issuer as owner thereof and the Indenture Trustee as
the pledgee thereof, unless the Insurer has waived the
requirement for such segregation by notice in writing
to the Indenture Trustee, the Custodian and the
Servicer.
(ii) with respect to the Contract Documents, (A) act
exclusively as the Custodian for the benefit of the
Indenture Trustee and (B) hold all Contract Documents
for the exclusive use (notwithstanding Sections
2.04(a)(iii) and 2.04(a)(iv) below) and for the
benefit of the Indenture Trustee.
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(iii) to the extent the Servicer directs the Custodian in
writing, deliver certain specified Contract Documents
to the Servicer to enable the Servicer to service the
Contracts pursuant to this Agreement. At such time as
the Servicer returns such Contract Documents to the
Custodian, the Servicer shall provide written notice
of such return to the Custodian. The Custodian shall
acknowledge receipt of the returned materials by
signing the Servicer's notice and shall promptly send
copies of such acknowledgment or receipt to the
Servicer.
(iv) upon reasonable prior written notice, permit the
Servicer, the Indenture Trustee and the Insurer to
examine the Contract Documents in the possession, or
under the control, of the Custodian.
(v) at its own expense, maintain at all times while acting
as Custodian, and keep in full force and effect (A)
fidelity insurance, (B) theft of documents insurance,
(C) fire insurance, and (d) forgery insurance. All
such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary
for similar insurance typically maintained by banks
that act as custodian in similar transactions.
(b) Appointment of Custodian. As of the Closing Date, Bankers Trust
Company of California, N.A. shall be the Custodian of the Contract Documents;
provided, however, that upon the execution by the Indenture Trustee, the Issuer
(or, if the Notes have been paid in full and the Indenture has been satisfied
and discharged, the Issuer alone) and the Servicer of a letter agreement with
the consent of the Insurer (such consent not to be unreasonably withheld)
substantially in the form of Exhibit A attached hereto (the "APPOINTMENT OF
CUSTODIAN"), revocably appointing the Servicer or such other entity acceptable
to the Insurer as agent of and bailee for the Indenture Trustee (or, if
applicable, the Trust) to act as Custodian (the "SUCCESSOR CUSTODIAN") of the
Contract Documents, such Successor Custodian shall be so appointed and shall
from the effective date of such Appointment of Custodian retain custody of the
Contract Documents and any and all other documents relating to a Contract or the
related Obligor or Financed Vehicle. As of the effective date of such
Appointment of Custodian, the Contract Documents and any and all other documents
relating to a Contract or the related Obligor or Financed Vehicle will be
delivered to the Successor Custodian in its capacity as agent of and bailee for
the Indenture Trustee (or, if applicable, the Trust).
If the Servicer is appointed Successor Custodian as of the date
specified in the Appointment of Custodian, the Servicer shall maintain the
Contract Documents held by it in a file area physically separate from the other
installment sales contracts owned or serviced by it or any of its Affiliates,
which area shall be clearly marked to indicate the Issuer as the owner of, and
the Indenture Trustee as the holder of the security interest in, the Contract
Documents; except that if the Insurer has waived the requirement for such
segregation by notice in writing to the Indenture Trustee, the Issuer and the
Servicer, such file area may contain contract documents for other installment
sales contracts serviced by the Servicer.
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SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS.
(a) Safekeeping. The Servicer, in its capacity as servicer, shall hold
the Contract Files and any Contract Documents held by it in accordance with this
Agreement on behalf of the Issuer, the Indenture Trustee and the Insurer for the
use and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer to comply with this Agreement. In
performing its duties as servicer, the Servicer shall act with reasonable care,
using that degree of skill and attention that the Servicer exercises with
respect to the files relating to all comparable automobile contracts that the
Servicer owns or services for itself or others. The Servicer shall (i) conduct,
or cause to be conducted, periodic physical inspections of the Contract Files
(and the Contract Documents, if the Servicer is acting as Custodian) held by it
under this Agreement and of the related accounts, records and computer systems;
(ii) maintain the Contract Files (and the Contract Documents, if the Servicer is
acting as Custodian) in such a manner as shall enable the Issuer, the Indenture
Trustee and the Insurer to verify the accuracy of the Servicer's record keeping;
(iii) promptly report to the Issuer, the Indenture Trustee and the Insurer any
failure on its part to hold the Contract Files (and the Contract Documents, if
the Servicer is acting as Custodian) and maintain its accounts, records and
computer systems as herein provided and (iv) promptly take appropriate action to
remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Contract File (other than the Contract Documents, unless the Servicer is
acting as Custodian) at the address of the Servicer set forth in Section 9.04,
or at such other location as shall be specified to the Issuer, the Indenture
Trustee and the Insurer by 30 days' prior written notice. The Servicer shall
permit the Issuer, the Indenture Trustee and the Insurer or their respective
duly authorized representatives, attorneys or auditors to inspect the Contract
Files and the related accounts, records and computer systems maintained by the
Servicer at such times as such Persons may request.
(c) Release of Documents. If the Servicer is acting as Custodian
pursuant to Section 2.04, upon instruction from the Indenture Trustee (a copy of
which shall be furnished to the Issuer and the Insurer), the Servicer shall
release any document in the Contract Files to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
(d) Monthly Reports. On the Servicer Report Date of each month,
commencing with the month next succeeding the month of the Closing Date, the
Servicer shall deliver to the Issuer, the Indenture Trustee and the Insurer a
certificate of a Servicing Officer stating (i) the Contract Number and
outstanding principal balance of each Contract that has become a Liquidated
Contract since the Business Day immediately preceding the date of the last
certificate delivered pursuant to this subsection (or since the Closing Date in
the case of the first such certificate); (ii) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (a) of the definition of the
term "Full Prepayment" or is a Liquidated Contract pursuant to clause (iii) of
the definition of the term "Liquidated Contract," all proceeds received in
respect thereof have been deposited in or credited to the Collection Account in
accordance with Section 4.02; (iv) that, if such Contract has been the subject
of a Full Prepayment pursuant to clause (b) of the definition of the term "Full
Prepayment," the correct Purchase Amount has been deposited in or credited to
the Collection Account in accordance with Section 2.03, 3.07 or 4.02; (v) that,
if such Contract is a Liquidated Contract
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pursuant to clause (ii) of the definition of the term "Liquidated Contract,"
there have been deposited in or credited to the Collection Account the related
Net Liquidation Proceeds in accordance with Section 4.02; and (vi) that the
Indenture Trustee is authorized to release such Contract and the related
Contract Documents as provided herein.
(e) Schedule of Title Documents. The Servicer shall deliver to the
Indenture Trustee, the Issuer and the Insurer (i) within 60 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles which, as of the
Closing Date, did not show Onyx or a subsidiary of Onyx as first lienholder and
(ii) within 180 days of the Closing Date, as to the Contracts, a schedule of
Title Documents for Financed Vehicles which, as of the date prior to such
delivery, do not show Onyx or a subsidiary of Onyx as first lienholder and as to
which the Seller is obligated to repurchase pursuant to the provisions hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Issuer and shall not
in any way assert or claim an ownership interest in the Contracts. It is
intended that pursuant to the applicable provisions of Sections 2.04 and 2.05
hereof and the Appointment of Custodian, the Custodian on behalf of the
Indenture Trustee and the Insurer shall be deemed to have possession of the
Contract Documents for purposes of Section 9-305 of the UCC of the state in
which the Contract Documents are located.
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. INDEMNIFICATION.
Subject to Section 7.02, the Servicer shall indemnify the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and the Securityholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Issuer, the Owner Trustee, the Trust Agent,
the Indenture Trustee, the Insurer, the Custodian or the Securityholders as the
result of any improper act or omission in any way relating to the maintenance
and custody by the Servicer of the Contract Files, or the failure of the
Servicer to perform its duties and service the Contracts in compliance with the
terms of this Agreement; provided, however, that the Servicer shall not be
liable to the Owner Trustee, the Trust Agent, the Indenture Trustee, the
Custodian or the Insurer for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Custodian or the Insurer, respectively. The
Servicer shall also indemnify and hold harmless the Issuer, the Trust Property,
the Securityholders, the Custodian and the Insurer against any taxes that may be
asserted at any time against any of them with respect to the Contracts,
including any sales, gross receipts, general corporation, personal property,
privilege or license taxes (but exclusive of federal or other income taxes
arising out of payments on the Contracts) and the costs and expenses in
defending against such taxes. The Servicer shall (i)
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immediately notify the Issuer and the Indenture Trustee if a claim is made by a
third party with respect to the Contracts, (ii) assume, with the consent of the
Issuer, the Indenture Trustee and the Insurer, the defense of any such claim,
(iii) pay all expenses in connection therewith, including counsel fees, and (iv)
promptly pay, discharge and satisfy any judgment or decree which may be entered
against the Servicer, the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer, the Custodian or the Securityholders with
respect to such Contracts.
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION.
The appointment of Bankers Trust Company of California, N.A. as
custodian shall become effective as of the Closing Date and shall continue in
full force and effect until the earlier of (i) the execution of the Appointment
of Custodian or (ii) the Certificate Final Scheduled Distribution Date. If Onyx
shall become the Custodian pursuant to the execution of an Appointment of
Custodian and shall subsequently resign as Servicer in accordance with the terms
of this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated pursuant to Section 7.01, any appointment of the Servicer
as Custodian may be terminated by the Insurer, or if an Insurer Default has
occurred and is continuing, (i) if the Notes have not been paid in full, by the
holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, acting together as a single class, or by the Indenture
Trustee or (ii) if the Notes have been paid in full, by the holders of
Certificates evidencing not less than 25% of the outstanding principal amount of
the Certificates. As soon as practicable after any termination of such
appointment, Onyx as Custodian and Onyx as Servicer shall, at the Servicer's
expense, deliver or cause the delivery of all Contract Documents and all
Contract Files (including those held in microfiche or electronic form) to the
Indenture Trustee or its agent (or, if the Indenture has been satisfied and
discharged, as directed by the Trust, with the consent of the Issuer) at such
place or places as the applicable party may reasonably designate and shall
cooperate in good faith to effect such delivery. The foregoing notwithstanding,
if the Servicer is acting as Custodian, the Servicer shall, at the request of
the Insurer, deliver the Contract Documents to the Indenture Trustee in the
event that such delivery is required by any Rating Agency to consider the
Securities investment grade without consideration of the Policy.
SECTION 2.09. NONPETITION COVENANT.
(a) Neither the Seller nor the Servicer shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer 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
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(b) The Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against 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 Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
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SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT THE CLOSING
DATE.
In the case of any Contract in respect of which, in place of a Title
Document, the Custodian received on the Closing Date written evidence from the
Dealer selling the related Financed Vehicle, or from Onyx, that the Title
Document for such Financed Vehicle showing Onyx or a subsidiary of Onyx as first
lienholder has been applied for from the Registrar of Titles, the Servicer shall
use its best efforts to collect (or in the case of California, to obtain
evidence in the electronic title records of) such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing Onyx
or a subsidiary of Onyx as first lienholder is not received by the Servicer (or
in the case of the State of California, verified by the Servicer in the
electronic title records) within 180 days after the Closing Date with respect to
the Contracts, then the representation and warranty in Section 2.02(b)(iii) as
to such Contracts in respect of such Contract shall be deemed to have been
incorrect in a manner that materially and adversely affects the
Certificateholders, and the Seller shall be obligated to repurchase such
Contract in accordance with Section 2.03.
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. DUTIES OF SERVICER.
The Servicer shall manage, service, administer, and make collections on
the Contracts. The Servicer agrees that its servicing of the Contracts shall be
carried out in accordance with reasonable care and, to the extent more exacting,
the procedures used by the Servicer in respect of such contracts serviced by it
for its own account; provided, however, that, subject to Section 3.02 as to
extensions, the Servicer shall not release or waive the right to collect the
unpaid balance of any Contract. The Servicer's duties shall include collection
and posting of all payments, responding to inquiries of Obligors on the
Contracts, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, accounting for collections, furnishing
monthly and annual statements to the Indenture Trustee, the Issuer and the
Insurer with respect to distributions and the preparation of U.S. Partnership
Tax Returns (Form 1065) for the Owner Trustee to sign and file on an annual
basis, based on a tax year for the Issuer that is the calendar year and any
other tax forms required by any federal, state or local tax authority including
with respect to original issue discount, if any. The Servicer shall have,
subject to the terms hereof, full power and authority, acting alone, and subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with such managing, servicing, administration, and
collection that it may deem necessary or desirable; provided, however, that the
Servicer shall commence repossession efforts in respect of any Financed Vehicle
when any payment on the related Contract of which is four or more months
delinquent. Without limiting the generality of the foregoing, but subject to the
provisions of this Agreement, the Servicer is authorized and empowered by the
Indenture Trustee and the Issuer to execute and deliver, on behalf of itself,
the Issuer, the Insurer, the Noteholders, the Certificateholders, 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 the Contracts or to the Financed Vehicles. The Issuer shall
furnish the Servicer any documents necessary or appropriate to enable the
Servicer to carry out its servicing and administrative duties hereunder. The
Servicer may engage agents and subservicers to fulfill its duties hereunder;
provided,
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however, that the Servicer shall remain at all times personally liable for the
acts (and failures to act) of such agents and subservicers.
On or prior to the Closing Date, the Servicer shall deliver to the
Owner Trustee, the Trust Agent, the Indenture Trustee and the Insurer a list of
Servicing Officers of the Servicer involved in, or responsible for, the
administration and servicing of the Contracts, which list shall from time to
time be updated by the Servicer on request of the Owner Trustee, the Trust
Agent, the Indenture Trustee or the Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after the Cut-Off Date and
received by the Servicer at least two Business Days prior to the Closing Date;
(ii) the proceeds of each Full Prepayment of any Contract and all partial
prepayments on Simple Interest Contracts received by the Servicer on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date; and
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds received with
respect to a Financed Vehicle to which a Contract relates received on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date.
Subject to Section 4.02(a) respecting deposits in the Payahead Account,
the Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after the
Cut-Off Date received by it on the Contracts together with the proceeds of all
Full Prepayments on all Contracts and all partial prepayments on Simple Interest
Contracts, and any accompanying interest. The Servicer shall likewise deposit in
the Collection Account within two Business Days of receipt all Net Liquidation
Proceeds and Net Insurance Proceeds. As of the last day of each Collection
Period, all amounts received in each Collection Period shall be applied by the
Servicer with respect to each Contract, first, to the Servicer as additional
servicing compensation any amounts due for late fees, extension fees or similar
charges, second to the payment of Monthly P&I, and third, in the case of partial
prepayments on Precomputed Contracts, to the Payahead Account. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees may, but need not be deposited in the Collection Account and may be
retained by the Servicer as additional servicing compensation.
With respect to payments of Monthly P&I made by Obligors to the
Servicer's lock box, the Servicer shall direct the Person maintaining the lock
box to deposit the amount collected on the Contracts within one Business Day to
the Clearing Account. Such amounts shall be withdrawn from the Clearing Account
and deposited in the Collection Account no later than the next following
Business Day.
In order to facilitate the servicing of the Contracts by the Servicer,
the Servicer shall retain, subject to and only to the extent permitted by the
provisions of this Agreement, all collections on the Contracts prior to the time
they are remitted or credited, in accordance with such provisions, to the
Collection Account or the Payahead Account, as the case may be. The Servicer
acknowledges that the unremitted collections on the Contracts are part of the
Trust Property and the Servicer agrees to act as custodian and bailee of the
Indenture Trustee, the Issuer and the Insurer in holding such monies and
collections. The Servicer agrees, for the benefit of the Indenture Trustee, the
Issuer, the Securityholders and the Insurer, to act as such custodian and
bailee, and to hold and deal with such
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monies and such collections, as custodian and bailee for the Indenture Trustee,
the Issuer and the Insurer, in accordance with the provisions of this Agreement.
The Servicer shall retain all data (including, without limitation,
computerized title records) relating directly to or maintained in connection
with the servicing of the Contracts at the address of the Servicer set forth in
Section 9.04 or, upon 15 days' notice to the Issuer, the Indenture Trustee and
the Insurer, at such other place where the servicing offices of the Servicer are
located, and shall give the Issuer, the Indenture Trustee and the Insurer access
to all data (including, without limitation, computerized title records) at all
reasonable times, and, while a Servicer Default shall be continuing, the
Servicer shall, on demand of the Issuer, the Indenture Trustee or the Insurer
deliver or cause to be delivered to the Issuer, the Indenture Trustee or the
Insurer, as the case may be, all data (including, without limitation,
computerized title records and, to the extent transferable, related operating
software) necessary for the servicing of the Contracts and all monies collected
by it and required to be deposited in or credited to the Collection Account or
the Payahead Account, as the case may be.
All deposits made by the Servicer in any Trust Account shall be made in
immediately available funds.
The Servicer shall be responsible for the payment of the fees of the
Indenture Trustee, the Owner Trustee and the Trust Agent; provided that any such
fees not paid as of a Distribution Date shall be paid as provided in Section
4.03(a)(ii).
SECTION 3.02. COLLECTION OF CONTRACT PAYMENTS.
The Servicer shall use its best efforts to collect all payments called
for under the terms and provisions of the Contracts as and when the same shall
become due and shall use its best efforts to cause each Obligor to make all
payments in respect of his or her Contract to the Servicer. Consistent with the
foregoing, the Servicer may in its discretion (i) waive any late payment charges
in connection with delinquent payments on a Contract or prepayment charges and
(ii) in order to work out a default or an impending default due to the financial
condition of an Obligor, grant up to three extensions of the Due Date of any
payment for periods of 30 days or less, such that the Maturity Date of no
Contract shall, under any circumstances, extend more than 120 days past the
originally scheduled date of the last payment on such Contract and in no event
beyond the Certificate Final Scheduled Distribution Date. The Servicer shall not
extend the Maturity Date of a Contract except as provided in clause (ii) of the
preceding sentence. Except as explicitly permitted by this paragraph, the
Servicer shall not change any material term of a Contract, including but not
limited to the interest rate, the payment amounts or due dates, or the property
securing such Contract.
SECTION 3.03. REALIZATION UPON CONTRACTS.
The Servicer shall use its best efforts, consistent with the servicing
standard specified in Section 3.01, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall
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deem necessary or advisable and as shall be normal and usual for prudent holders
of retail installment sales contracts and as shall be in compliance with all
applicable laws, and, in connection with the repossession of any Financed
Vehicle or any contract in default, may commence and prosecute any proceedings
in respect of such Contract in its own name or, if the Servicer deems it
necessary, in the name of the Issuer or the Indenture Trustee or on behalf of
the Issuer or the Indenture Trustee. The Servicer's obligations under this
Section are subject to the provision that, in the case of damage to a Financed
Vehicle from an uninsured cause, the Servicer shall not be required to expend
its own funds in repairing such motor vehicle unless it shall determine (i) that
such restoration will increase the proceeds of liquidation of the related
Contract, after reimbursement to itself for such expenses and (ii) that such
expenses will be recoverable by it either as Liquidation Expenses or as expenses
recoverable under an applicable insurance policy or under an insurance reserve
established by the Servicer. The Servicer shall be responsible for all other
costs and expenses incurred by it in connection with any action taken in respect
of a Defaulted Contract; provided, however, that it shall be entitled to
reimbursement of such costs and expenses to the extent they constitute
Liquidation Expenses or expenses recoverable under an applicable insurance
policy. All Net Liquidation Proceeds and Net Insurance Proceeds shall be
deposited directly in or credited to the Collection Account (without deposit in
any intervening account) to the extent required by Section 4.02.
SECTION 3.04. INSURANCE.
The Servicer shall cause to be maintained the Blanket Insurance Policy,
and the Servicer shall cause the Indenture Trustee to be the named payee
thereunder with respect to the Contracts; provided, however, that this
obligation may be eliminated or modified in any manner (and this Agreement shall
be amended in accordance with any such elimination or modification as the
parties to the Insurance Agreement and the Rating Agencies may agree) with the
consent of the Insurer but without any requirement to obtain the consent of any
Noteholders or Certificateholders.
SECTION 3.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.
The Servicer shall take such steps as are necessary to maintain
continuous perfection and priority of the security interest created by each
Contract in the related Financed Vehicle, including but not limited to,
obtaining the execution by the related Obligor and the recording, registering,
filing, re-recording, re-registering, and refiling of all security agreements,
financing statements, continuation statements or other instruments as are
necessary to maintain the security interest granted by such Obligor under each
respective Contract. The Issuer and the Indenture Trustee each hereby authorize
the Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer in the event of the relocation of a Financed
Vehicle or for any other reason. In the event that the assignment of a Contract
to the Issuer and the subsequent pledge thereof by the Issuer to the Indenture
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title (or, if applicable, in the case of the State of California,
the electronic title record), or without fulfilling any additional
administrative requirements under the laws of the state in which the Financed
Vehicle is located, to grant to the Issuer a perfected security interest in the
related Financed Vehicle and to pledge such perfected security interest to the
Indenture Trustee, Onyx hereby agrees that the identification of Onyx or a
subsidiary of Onyx as the secured party on the certificate of title (or, if
applicable, in the case of the State of California, the electronic title record)
is deemed to be
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in its capacity as agent of the Indenture Trustee and further agrees to hold
such certificate of title (or, if applicable, in the case of the State of
California, the electronic title record) as the Indenture Trustee's agent and
custodian; provided that, except as provided in Section 7.01 and the Insurance
Agreement, neither the Servicer nor Onyx shall make, nor shall the Issuer or
Securityholders have the right to require that the Servicer or Onyx make, any
such notation on the related Financed Vehicles' certificate of title (or, if
applicable, in the case of the State of California, the electronic title record)
or fulfill any such additional administrative requirement of the laws of the
state in which a Financed Vehicle is located.
SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER.
The Servicer hereby makes the following covenants, representations and
warranties on which (i) the Issuer is deemed to have relied in acquiring the
Contracts and (ii) the Insurer is deemed to have relied in issuing the Policy.
Such covenants, representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Contracts to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(a) The Servicer covenants as to the Contracts:
(i) The Financed Vehicle securing each Contract shall not
be released from the lien granted by the Contract in
whole or in part, except as contemplated herein.
(ii) The Servicer shall not impair the rights of the
Securityholders or the Insurer in the Contracts.
(iii) The Servicer shall not increase the number of payments
under a Contract, nor increase the amount financed
under a Contract, nor extend or forgive payments on a
Contract, except as provided in Section 3.02.
(iv) The Servicer may consent to the sale or transfer by an
Obligor of any Financed Vehicle if the original
Obligor under the related Contract remains liable
under such Contract and the transferee assumes all of
the Obligor's obligations thereunder and upon doing so
the credit profile with respect to such Obligor will
not be changed from adequate to speculative by virtue
of the addition of the transferee's obligation
thereunder.
(b) The Servicer represents and warrants as of the Closing Date:
(i) The Servicer (1) has been duly organized, is validly
existing and in good standing as a corporation
organized and existing under the laws of the State of
Delaware, (2) has qualified to do business as a
foreign corporation and is in good standing in each
jurisdiction where the
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character of its properties or the nature of its
activities makes such qualification necessary, and (3)
has full power, authority and legal right to own its
property, to carry on its business as presently
conducted, and to enter into and perform its
obligations under this Agreement.
(ii) The execution and delivery by the Servicer of this
Agreement are within the corporate power of the
Servicer and have been duly authorized by all
necessary corporate action on the part of the
Servicer. Neither the execution and delivery of this
Agreement, nor the consummation of the transactions
herein contemplated, nor compliance with the
provisions hereof, will conflict with or result in a
breach of, or constitute a default under, any of the
provisions of any law, governmental rule, regulation,
judgment, decree or order binding on the Servicer or
its properties or the Certificate of Incorporation or
Bylaws of the Servicer, or any of the provisions of
any indenture, mortgage, contract or other instrument
to which the Servicer is a party or by which it is
bound or result in the creation or imposition of any
lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage,
contract or other instrument.
(iii) Other than consents that have been obtained prior to
the Closing Date, the Servicer is not required to
obtain the consent of any other party or any consent,
license, approval or authorization, or registration or
declaration with, any governmental authority, bureau
or agency in connection with the execution, delivery,
performance, validity or enforceability of this
Agreement.
(iv) This Agreement has been duly executed and delivered by
the Servicer and, assuming the due authorization,
execution and delivery hereof by the Issuer, the Trust
Agent and the Indenture Trustee, constitutes a legal,
valid and binding obligation of the Servicer
enforceable against the Servicer in accordance with
its terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the
enforcement of creditors' rights generally).
(v) There are no actions, suits or proceedings pending or,
to the knowledge of the Servicer, threatened against
or affecting the Servicer, before or by any court,
administrative agency, arbitrator or governmental body
with respect to any of the transactions contemplated
by this Agreement, or which will, if determined
adversely to the Servicer, materially and adversely
affect it or its business, assets, operations or
condition, financial or otherwise, or materially and
adversely affect the Servicer's ability to perform its
obligations under this Agreement. The Servicer is not
in default with respect to any order of any court,
administrative agency, arbitrator or
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governmental body so as to materially and adversely
affect the transactions contemplated by the
above-mentioned documents.
(vi) The Servicer has obtained or made all necessary
consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental persons,
in each case, in connection with the execution and
delivery of this Agreement, and the consummation of
all the transactions herein contemplated.
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH BY SERVICER.
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the covenants, representations and warranties set forth in Section
3.06 or of the covenants set forth in Sections 3.02 or 3.05. Unless the breach
shall have been cured within 30 days following such discovery or receipt of
notice of such breach, the Servicer shall purchase any Contract materially and
adversely affected by such breach from the Issuer. As consideration for the
Contract, the Servicer shall remit the Purchase Amount on the Business Day
preceding the Servicer Report Date next succeeding the end of such 30-day cure
period in the manner specified in Section 4.02(a). The sole remedy of the
Issuer, the Indenture Trustee, or the Securityholders with respect to a breach
of Section 3.02, 3.05 or 3.06 shall be to require the Servicer to purchase
Contracts pursuant to this Section 3.07; provided, however, that the Servicer
shall indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the
Issuer, the Custodian and the Securityholders against all costs, expenses,
losses damages, claims and liabilities, including reasonable fees and expenses
of counsel, which may be asserted against or incurred by any of them as a result
of third-party claims arising out of the events or facts giving rise to such
breach.
Any successor Servicer appointed pursuant to Section 7.02 shall not be
obligated to purchase Contracts pursuant to this Section 3.07 with respect to
any breaches by any prior Servicer.
SECTION 3.08. SERVICING COMPENSATION.
As compensation for the performance of its obligations under this
Agreement and subject to the terms of this Section, the Servicer shall be
entitled to receive on each Distribution Date the Servicing Fee in respect of
each Contract that was Outstanding at the beginning of the Collection Period
ending immediately prior to such Distribution Date; provided, however, that with
respect to the first Distribution Date the Servicer will be entitled to receive
the Servicing Fee in respect of each Outstanding Contract as of the Cut-Off
Date. As servicing compensation in addition to the Servicing Fee, the Servicer
shall be entitled (i) to retain all late payment charges, extension fees and
similar items paid in respect of Contracts, (ii) to receive, in respect of each
Precomputed Contract that is prepaid in full prior to its Maturity Date, the
amount by which the outstanding principal balance of such Contract (determined
in accordance with the Rule of 78's Method or the Actuarial Method, as
applicable) exceeds the Principal Balance of such Contract at the time of such
prepayment and (iii) to receive all investment earnings on funds credited to the
Collection Account and the Payahead Account; provided, however, that the
Servicer agrees that each amount payable to it pursuant to clause (ii) of this
Section shall be deposited in the Spread Account and applied in accordance with
the Insurance Agreement. The Servicer shall pay all expenses incurred by it in
connection with its
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servicing activities hereunder and shall not be entitled to reimbursement of
such expenses except to the extent provided in Section 3.03.
SECTION 3.09. REPORTING BY THE SERVICER.
(a) No later than 3:00 p.m. New York City time on each Servicer Report
Date, the Servicer shall deliver (by telex, facsimile, electronic transmission,
first class mail, overnight courier or personal delivery) to the Issuer, the
Trust Agent, the Indenture Trustee and the Insurer a statement (the
"DISTRIBUTION DATE STATEMENT") setting forth with respect to the next succeeding
Distribution Date:
(i) the Certificate Interest Distributable Amount and the
Note Interest Distributable Amount for such
Distribution Date;
(ii) the Certificate Principal Distributable Amount and the
Note Principal Distributable Amount for such
Distribution Date and the portion thereof constituting
the Accelerated Principal Distributable Amount;
(iii) the Certificate Distributable Amount and the Note
Distributable Amount for such Distribution Date;
(iv) the Premium payable to the Insurer;
(v) the amount to be on deposit in the Spread Account on
such Distribution Date, before and after giving effect
to deposits thereto and withdrawals therefrom to be
made in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any, required to be
made from the Spread Account by the Indenture Trustee
pursuant to Section 4.04(b);
(vii) the aggregate Servicing Fee with respect to the
Contracts for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee, the
Indenture Trustee and Trust Agent with respect to the
related Collection Period;
(ix) the amount of any Note Interest Carryover Shortfall,
Note Principal Carryover Shortfall, Certificate
Interest Carryover Shortfall and Certificate Principal
Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the
immediately preceding Distribution Date;
(x) the number of, and aggregate amount of, monthly
principal and interest payments due on the Contracts
which are delinquent as of the
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end of the related Collection Period presented on a
30-day, 60-day and 90-day basis;
(xi) the Net Collections and the Policy Claim Amount, if
any, for such Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received
for Defaulted Contracts;
(xiii) the net credit losses and Cram Down Losses for the
Collection Period;
(xiv) the number and net outstanding balance of Contracts
for which the Financed Vehicle has been repossessed;
and
(xv) the Pool Balance.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Servicer, which Officers' Certificate shall state that the
computations reflected in such statement were made in conformity with the
requirements of this Agreement.
(b) On each Servicer Report Date, the Servicer shall deliver to the
Issuer, the Trust Agent, the Indenture Trustee and the Insurer a report, in
respect of the immediately preceding Collection Period, setting forth the
following:
(i) the aggregate amount, if any, paid by or due from it
for the purchases of Contracts which the Seller or the
Servicer has become obligated to repurchase or
purchase pursuant to Sections 2.03 or 3.07;
(ii) the net amount of funds which have been deposited in
or credited to the Collection Account or the Payahead
Account in respect of such Collection Period
(including amounts, if any, collected during the next
preceding Collection Period and deposited in the
Payahead Account pursuant to Section 4.02) after
giving effect to all permitted deductions therefrom
pursuant to Section 4.02;
(iii) with respect to each Contract that became a Liquidated
Contract during the Collection Period, the following
information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
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(C) its Monthly P&I and Principal Balance as of the close of
business on the last day of the preceding Collection Period (or as
of the Closing Date in the case of the first Distribution Date);
and
(D) if less than 100% of the outstanding principal balance of
and accrued and unpaid interest was recovered on such Liquidated
Contract, the amount of the Net Liquidation Proceeds or Net
Insurance Proceeds;
(iv) with respect to each Contract which was the subject of
a Full Prepayment during such Collection Period, the
following information:
(A) its Contract Number; and
(B) the date of such Full Prepayment;
(v) the Contract Numbers, Monthly P&I, Principal Balances
and Maturity Dates of all Contracts which became
Defaulted Contracts during such Collection Period;
(vi) any other information relating to the Contracts
reasonably requested by the Owner Trustee, the Trust
Agent, the Indenture Trustee or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net
Insurance Proceeds which have been deposited in or
credited to the Collection Account in respect of the
Collection Period ending immediately prior to such
Servicer Report Date and the cumulative amount of Net
Liquidation Proceeds and Net Insurance Proceeds
deposited in or credited to the Collection Account
during the preceding Collection Periods.
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Servicer shall deliver to the Issuer, the Trust Agent, the
Indenture Trustee and the Insurer, on or before March 15, 1999 and on or before
March 15 of each fiscal year thereafter, an Officers' Certificate of the
Servicer stating that (i) a review of the activities of the Servicer during the
preceding fiscal year (since the Closing Date in the case of the first of such
Officers' Certificates required to be delivered) and of its performance under
this Agreement has been made under such officers' supervision and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year and that
no default under this Agreement has occurred and is continuing, 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.
(b) The Servicer shall deliver to the Issuer, the Trust Agent, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event
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later than five Business Days thereafter, an Officer's Certificate specifying
any event which with the giving of notice or lapse of time, or both, would
become a Servicer Default under Section 7.01.
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT.
On or before March 15, 1999 and on or before March 15 of each fiscal
year thereafter, the Servicer at its expense shall cause a firm of nationally
recognized independent certified public accountants (who may also render other
services to the Servicer) to furnish a report to the Issuer, the Trust Agent,
the Indenture Trustee and the Insurer to the effect that (i) they have audited
the balance sheet of the Servicer as of the last day of said fiscal year and the
related statements of operations, retained earnings and cash flows for such
fiscal year and have issued an opinion thereon, specifying the date thereof,
(ii) they have also reviewed the reports delivered by the Servicer pursuant to
Section 3.09(b) and certain other documents and the records relating to the
servicing of the Contracts and the distributions on the Notes and Certificates
under this Agreement, (iii) their audit and review as described under clauses
(i) and (ii) above was made in accordance with generally accepted auditing
standards and accordingly included such tests of the accounting records and such
other auditing procedures as they considered necessary in the circumstances, and
(iv) their audits and reviews described under clauses (i) and (ii) above
disclosed no exceptions which, in their opinion, were material, relating to the
servicing of such Contracts in accordance with this Agreement and the making of
distributions on the Notes and Certificates in accordance with this Agreement,
or, if any such exceptions were disclosed thereby, setting forth those
exceptions which, in their opinion, were material.
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
CONTRACTS.
If the Servicer is acting as Custodian, the Servicer shall provide to
the Securityholders, the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee and the Insurer reasonable access to the Contract Files and
Contract Documents. Access shall be afforded without charge, but only upon
reasonable request and during normal business hours at designated 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.
SECTION 3.13. FIDELITY BOND.
The Servicer shall maintain a fidelity bond in such form and amount as
is customary for banks acting as custodian of funds and documents in respect of
mortgage loans or consumer contracts on behalf of institutional investors.
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SECTION 3.14. INDEMNIFICATION; THIRD PARTY CLAIMS.
Subject to Section 7.02, the Servicer agrees to indemnify and hold the
Issuer, the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer,
the Custodian and the Securityholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any reasonable other costs, fees and expenses that the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian or Securityholders may sustain because of the failure of the Servicer
to perform its duties and service the Contracts in compliance with the terms of
this Agreement. The Servicer shall (i) immediately notify the Issuer and the
Indenture Trustee if a claim is made by a third party with respect to the
Contracts, (ii) assume, with the consent of the Issuer, the Indenture Trustee
and the Insurer, the defense of any such claim, (iii) pay all expenses in
connection therewith, including counsel fees, and (iv) promptly pay, discharge
and satisfy any judgment or decree which may be entered with respect to such
claim against the Servicer, the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer, the Custodian or the Securityholders.
SECTION 3.15. REPORTS TO SECURITYHOLDERS AND THE RATING AGENCIES.
(a) The Indenture Trustee at its own expense shall provide to each
Securityholder a copy of each Distribution Date Statement described in Section
3.09(a) concurrently with the delivery of the statement described in Section
4.05 below.
(b) The Indenture Trustee shall provide to any Securityholder who so
requests in writing (addressed to the Corporate Trust Office of the Indenture
Trustee) a copy of the annual audit statement described in Section 3.10, or the
annual audit report described in Section 3.11. The Indenture Trustee may require
the Certificateholder to pay a reasonable sum to cover the cost of the Indenture
Trustee's complying with such request.
(c) The Indenture Trustee shall forward to the Rating Agencies and the
Insurer the statement to Securityholders described in Section 4.05 and any other
reports it may receive pursuant to this Agreement to (i) Standard & Poor's
Ratings Services, Asset-Backed Surveillance Group, 26 Broadway, Fifteenth Floor,
New York, New York 10004, (ii) Moody's Investors Service, Inc., ABS Monitoring
Dept., 99 Church Street, 4th Floor, New York, New York 10007, and (iii) the
address of the Insurer at the address set forth in the Insurance Agreement.
ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS.
(a) Prior to the Closing Date, the Servicer shall open, at a depository
institution (which may be the same depository institution which is acting in the
capacity as Indenture Trustee), the following accounts:
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(i) an account denominated "Collection Account - OT
1998-C, The Chase Manhattan Bank, Indenture Trustee"
(the "COLLECTION ACCOUNT");
(ii) an account denominated "Payahead Account - OT 1998-C,
The Chase Manhattan Bank, as agent" (the "PAYAHEAD
ACCOUNT");
(iii) an account denominated "Spread Account - OT 1998-C,
The Chase Manhattan Bank, Indenture Trustee" (the
"SPREAD ACCOUNT");
(iv) an account denominated "Note Distribution Account - OT
1998-C, The Chase Manhattan Bank, Indenture Trustee"
(the "NOTE DISTRIBUTION ACCOUNT"); and
(v) an account denominated "Certificate Distribution
Account - OT 1998-C, The Chase Manhattan Bank, Trust
Agent" (the "CERTIFICATE DISTRIBUTION ACCOUNT").
In addition, the Indenture Trustee shall establish a trust account to
be maintained in the Corporate Trust Office of the Indenture Trustee denominated
"Payment Account - OT 1998-C, The Chase Manhattan Bank, Indenture Trustee" (the
"PAYMENT ACCOUNT" and, together with the accounts described in clauses (i)
through (v) above, the "TRUST ACCOUNTS"). The Trust Accounts shall be Eligible
Accounts (subject to the requirement that the Payment Account must be maintained
as provided in the immediately preceding sentence) and relate solely to the
Securities and to the Contracts and, if applicable, the related Eligible
Investments. The location and account numbers of the Trust Accounts as of the
Closing Date are set forth on Schedule II. The Servicer shall give the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee and the Insurer at
least five Business Days' written notice of any change in the location of any
Trust Account and any related account identification information. All amounts,
financial assets and investment property held in, deposited in or credited to,
from time to time, the Trust Accounts (other than the Payahead Account) shall be
part of the Trust Property and all amounts, financial assets and investment
property held in, deposited in or credited to, from time to time, the Collection
Account and the Spread Account shall be invested by the Indenture Trustee in
Eligible Investments pursuant to Section 4.01(c).
(b) If as of the last day of a Collection Period a payment in an amount
less than the scheduled payment of Monthly P&I has been made for a Precomputed
Contract with respect to which amounts have been deposited in or credited to the
Payahead Account in a preceding Collection Period in accordance with Sections
3.01 and 4.02(a), the Servicer shall withdraw from the Payahead Account and
deposit into the Collection Account by the fifth Business Day preceding the
Distribution Date immediately succeeding such Collection Period the amount equal
to the difference between such scheduled payment of Monthly P&I and such actual
payment, to the extent available from amounts deposited in or credited to the
Payahead Account with respect to such Contract. Amounts on deposit in the
Payahead Account shall be invested by the depository institution maintaining the
Payahead Account upon the written direction of the Servicer in Eligible
Investments which mature not later than the fifth Business Day prior to the
Distribution Date to which such amounts relate, and any earnings on such
Eligible Investments shall be payable to the Servicer
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monthly. The Payahead Account and all amounts on deposit therein or credited
thereto shall not be considered part of the Trust Property.
(c) All funds in the Collection Account and the Spread Account shall be
invested by the Indenture Trustee (if the Indenture Trustee maintains the
applicable account), or on behalf of the Indenture Trustee by the depository
institution maintaining such account, in Eligible Investments only upon the
written direction from the Servicer or the Insurer, as described below. Subject
to the limitations set forth herein, the Servicer may direct the depository
institution maintaining the Collection Account and the Spread Account in writing
(with a copy of such direction to the Indenture Trustee, if the Indenture
Trustee is not the applicable depository institution) to invest funds in the
Collection Account and the Spread Account in Eligible Investments; provided that
(i) in the absence of such directions from the Servicer, the Insurer may so
direct, and (ii) at any time during the continuance of a Servicer Default, only
the Insurer, or for so long as an Insurer Default shall have occurred and be
continuing, only the Issuer, may give such investment directions. All such
investments shall be in the name of the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders, as applicable. All income or other gain
from investment of monies deposited in or credited to the Collection Account
shall be paid by the depository institution maintaining the Collection Account
to the Servicer monthly. All income or other gain from investment of monies
deposited in or credited to the Spread Account shall be deposited in or credited
to the Spread Account immediately upon receipt, and any loss resulting from such
investment shall be charged to the Spread Account. The maximum permissible
maturities of any investments of funds in the Collection Account and the Spread
Account on any date shall not be later than the Servicer Report Date immediately
preceding the Distribution Date next succeeding the date of such investment;
provided, however, that if the Indenture Trustee is maintaining the applicable
account, such funds may be invested by the Indenture Trustee in Eligible
Investments of the entity that is serving as Indenture Trustee (or an entity
which meets the criteria in clauses (i)(b) or (i)(c) of the definition of
Eligible Account) that mature on the Business Day prior to such Distribution
Date. No investment in Eligible Investments may be sold prior to its maturity.
The funds on deposit in the Payment Account, the Note Distribution and the
Certificate Distribution Account shall remain uninvested.
(d) In the absence of written direction as provided above, all funds
held in the Spread Account and the Collection Account shall remain uninvested.
In addition, if the applicable depository institution receives what it perceives
to be conflicting directions regarding the investment of funds in the Collection
Account or the Spread Account, the directions of the Insurer shall control
unless an Insurer Default shall have occurred and be continuing, in which case
the directions of the Servicer shall control unless a Servicer Default shall
have occurred and be continuing, in which case the directions of the Issuer
shall control. In addition, the Indenture Trustee shall not in any way be held
liable by reason of any insufficiency in any of the foregoing Trust Accounts
held by or on behalf of the Indenture Trustee resulting from any investment loss
on any Eligible Investments.
SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION
UPON POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT.
(a) Subject to the last sentence of this Section 4.02(a), the Servicer
shall remit or credit all payments on a daily basis, within two Business Days of
receipt, by or on behalf of Obligors on the Contracts, and all Net Liquidation
Proceeds and Net Insurance Proceeds and other monies as
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required to the Collection Account. Prior to the Servicer Report Date, amounts
with respect to Precomputed Contracts which are otherwise required to be
deposited in or credited to the Collection Account pursuant to the immediately
preceding sentence shall instead be deposited in or credited to the Payahead
Account to the extent that such amounts are installments of Monthly P&I which
are due in a Collection Period relating to a Distribution Date subsequent to the
Distribution Date immediately succeeding the date of receipt. The Servicer or
the Seller, as the case may be, each shall remit or credit to the Collection
Account each Purchase Amount to be remitted by it with respect to Purchased
Contracts on the Business Day preceding the Servicer Report Date next succeeding
(i) the end of the Collection Period in which the applicable Contract is
repurchased by the Seller pursuant to Section 2.03, in the case of the Seller or
(ii) the last day of the related cure period specified in Section 3.07, in the
case of the Servicer.
(b) On the Servicer Report Date, the Servicer shall determine the
Policy Claim Amount, if any, which exists with respect to the related
Distribution Date.
(c) The Indenture Trustee or the Trust Agent shall, no later than 12:00
p.m., New York City time, on the third Business Day prior to each Distribution
Date, make a claim under the Policy for the Policy Claim Amount, if any, for
such Distribution Date by delivering to the Fiscal Agent, with a copy to the
Insurer, the Trust Agent and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "DEFICIENCY NOTICE") specifying the Policy
Claim Amount, if any, for such Distribution Date, separately identifying the
amount of the Policy Claim Amount payable in respect of each Class of Notes and
the Certificates. In addition, the Indenture Trustee shall make claims under the
Policy for Preference Amounts as provided in the Policy. Each Deficiency Notice
shall direct the Insurer to remit such Policy Claim Amount to the Indenture
Trustee for deposit in the Payment Account. In making any such claim, the
Indenture Trustee or the Trust Agent, as applicable, shall comply with all the
terms and conditions of the Policy. Upon receipt of the Policy Claim Amount, the
Indenture Trustee shall apply the portion thereof, if any, representing the
Deficiency Amount with respect to a Distribution Date as provided in Section
4.03(a). Any amounts received by the Indenture Trustee under the Policy that
represent Preference Amounts shall be paid, in accordance with the Policy, to
the applicable Noteholder(s) and Certificateholder(s).
(d) So long as Onyx is the Servicer, the Servicer may make deposits in
or credits to the Collection Account net of amounts to be paid to the Servicer
under this Agreement. Notwithstanding the foregoing, the Servicer shall maintain
the records and accounts for such deposits and credits on a gross basis.
(e) On the Business Day immediately preceding each Distribution Date,
based solely on the Distribution Date Statement, the Servicer shall cause funds
equal to the amount of Net Collections available with respect to such
Distribution Date on deposit in the Collection Account to be withdrawn from the
Collection Account and deposited into the Payment Account to be distributed
pursuant to Section 4.03(a).
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SECTION 4.03. DISTRIBUTIONS.
(a) On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee will apply the Net Collections available from
the Payment Account with respect to such Distribution Date to make the following
deposits and distributions in the following amounts and order of priority:
(i) to the Servicer, from Net Collections, the Servicing
Fee, including any unpaid Servicing Fees with respect
to one or more prior Collection Periods;
(ii) to the Indenture Trustee, the Owner Trustee and the
Trust Agent, from Net Collections (after giving effect
to the reduction in Net Collections described in
clause (i) above), any accrued and unpaid fees of the
Indenture Trustee, the Owner Trustee and the Trust
Agent, in each case to the extent such fees have not
been previously paid by the Servicer;
(iii) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net
Collections described in clauses (i) and (ii) above),
the Note Interest Distributable Amount to be paid to
the holders of the Notes at their respective Interest
Rates;
(iv) to the Note Distribution Account, if such Distribution
Date is a Note Final Scheduled Distribution Date for
any Cass of Notes, the Note Principal Distributable
Amount to the extent of the remaining principal amount
of such Class of Notes, from Net Collections (after
giving effect to the reduction in Net Collections
described in clauses (i) through (iii) above), to be
paid to the holders of such Class of Notes;
(v) to the Certificate Distribution Account, from Net
Collections (after giving effect to the reduction in
Net Collections described in clauses (i) through (iv)
above), the Certificate Interest Distributable Amount,
to be distributed to the holders of the Certificates;
(vi) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net
Collections described in clauses (i) through (v)
above), the remaining Note Principal Distributable
Amount (after giving effect to the payment, if any,
described in clause (iv) above), to be paid first to
the holders of the Class A-1 Notes until the principal
amount of the Class A-1 Notes has been reduced to
zero, second, to the holders of the Class A-2 Notes
until the principal amount of the Class A-2 Notes has
been reduced to zero, third, to the holders of the
Class A-3 Notes until the principal amount of the
Class A-3 Notes has been reduced to zero, and fourth,
to the holders of the
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Class A-4 Notes until the principal amount of the
Class A-4 Notes has been reduced to zero.
(vii) to the Certificate Distribution Account, if such
Distribution Date is the Certificate Final Scheduled
Distribution Date, from Net Collections (after giving
effect to the reduction in Net Collections described
in clauses (i) through (vi) above), the Certificate
Principal Distributable Amount to the extent of the
Certificate Balance, to be distributed to the holders
of the Certificates;
(viii) to the Certificate Distribution Account, if such
Distribution Date is not the Certificate Final
Scheduled Distribution Date, from Net Collections
(after giving effect to the reduction in Net
Collections described in clauses (i) through (vi)
above), the remaining Certificate Principal
Distributable Amount to the extent of the Certificate
Balance, to be distributed to the holders of the
Certificates;
(ix) to the Insurer, from Net Collections (after giving
effect to the reduction in Net Collections described
in clauses (i) through (viii) above), any amounts,
including the Premium, owing to the Insurer under the
Insurance Agreement;
(x) to the Spread Account, from Net Collections (after
giving effect to the reduction in Net Collections
described in clauses (i) through (ix) above), the
amount, if any, required to increase the amount
therein to the Spread Account Maximum; and
(xi) any Net Collections remaining after distribution of
the Accelerated Principal Distributable Amount as part
of the Note Principal Distributable Amount shall be
deposited into the Spread Account.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date and any amounts received by the Indenture Trustee as a
result of a claim under the Policy that represent the Deficiency Amount with
respect to such Distribution Date shall be applied by the Indenture Trustee
solely to make the deposits and distributions referred to in clauses (i) through
(v) and (vii) above, in that order of priority, but only to the extent that the
Net Collections with respect to such Distribution Date, after application as
provided above, were insufficient to make such deposit or distribution. In
addition, if the Insurer pays any amounts to the Indenture Trustee with respect
to a Distribution Date in connection with the Insurer's election to pay, as
provided in the Policy, all or a portion of any shortfalls in the amount of Net
Collections with respect to such Distribution Date available to distribute the
amounts referred to in clauses (vi) and (viii) above, the Indenture Trustee
shall distribute the amounts so received from the Insurer as provided in such
clauses.
(b) On each Distribution Date, based solely on the Distribution Date
Statement, the Trust Agent shall distribute all amounts on deposit in the
Certificate Distribution Account to
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Certificateholders in respect of the Certificates to the extent of amounts due
and unpaid on the Certificates for principal and interest in the following
amounts and order of priority:
(i) the Certificate Interest Distributable Amount;
(ii) if such Distribution Date is the Certificate Final
Scheduled Distribution Date, after giving effect to
the reduction in the amount on deposit in the
Certificate Distribution Account described in clause
(i) above, the Certificate Principal Distributable
Amount to the extent of the Certificate Balance;
(iii) after giving effect to the reduction in the amount on
deposit in the Certificate Distribution Account
described in clauses (i) and (ii) above, the remaining
Certificate Principal Distributable Amount to the
extent of the Certificate Balance;
In addition, any amounts deposited in the Certificate Distribution Account on a
Distribution Date for distribution to holders of the Residual Interests as
provided in Section 4.04(b) shall be so distributed on such Distribution Date by
the Trust Agent. All distributions to Certificateholders or holders of the
Residual Interests shall be made pro rata by check mailed to each
Certificateholder of record on the Record Date next preceding the Distribution
Date for such distribution; provided, that if so directed by the Servicer, in
the case of Certificates registered in the name of a Clearing Agency, such
distribution shall be made by wire transfer in immediately available funds.
(c) Interest accrued but not paid on any Distribution Date shall be due
and payable on the immediately succeeding Distribution Date, together with, to
the extent permitted by applicable law, interest on such amount at the
Certificate Rate.
SECTION 4.04. SPREAD ACCOUNT.
(a) The Spread Account will be held for the benefit of the
Securityholders and the Insurer in order to effectuate the subordination of the
rights of the Securityholders to the extent described above.
(b) On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee shall withdraw funds from the Spread Account,
to the extent funds are on deposit therein, equal to the amount by which the sum
of the amounts set forth in Section 4.03(a), clauses (i) though (v) and (vii)
with respect to such Distribution Date exceeds the amount of Net Collections
available with respect to such Distribution Date. The Indenture Trustee shall
deposit any such funds withdrawn from the Spread Account into the Payment
Account to be distributed pursuant to Section 4.03(a). Funds shall also be
withdrawn from the Spread Account by the Indenture Trustee, as directed by the
Insurer to reimburse the Insurer for draws with respect to any Preference
Amount. If the amount of cash on deposit in the Spread Account on any
Distribution Date (after giving effect to all deposits thereto or withdrawals
therefrom on such Distribution Date other than withdrawals relating to
distributions to be made pursuant to this sentence) exceeds the maximum amount
of the cash component of the Spread Account, as specified in the definition of
"Spread Account Maximum"
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set forth in the Insurance Agreement, the Indenture Trustee shall, based solely
on the Distribution Date Statement, distribute any excess first, to the Insurer,
to the extent of any amounts owing to the Insurer pursuant to the Insurance
Agreement, and second, to the Certificate Distribution Account for distribution
to holders of the Residual Interests. Upon any such distributions to the Insurer
or the holders of the Residual Interests, the Securityholders will have no
further rights in, or claims to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 4.01(c), and such investments shall be made in accordance
with written instructions from the Servicer; provided that, if the Indenture
Trustee does not receive any such written instructions prior to any date on
which an investment decision must be made, the funds held in the Spread Account
will remain uninvested. All such investments shall be made in the name of the
Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Ninety-one (91) days following the termination of the Trust
pursuant to Section 9.01 of the Trust Agreement, any amounts on deposit in the
Spread Account, after payments of amounts due to the Securityholders or the
Insurer pursuant to the Insurance Agreement, shall be paid to the holders of the
Residual Interests; provided, however, that if an insolvency event of the type
described in Section 7.01(d) or (e) with respect to any of the Seller, the
Servicer, the Indenture Trustee or the Securityholders (collectively, the
"POTENTIAL PREFERENCE PARTIES") shall have occurred during the period ending
ninety-one (91) days after payment in full to the Securityholders of all amounts
payable with respect to the Securities and the payment in full of the Repayment
Amount then the funds on deposit in the Spread Account shall be retained until
the date all applicable statute of limitation periods with respect to all
applicable preference actions and periods have expired and during which time no
preference action or similar proceeding at law or in equity is commenced, at
which time, the Insurer shall direct the Indenture Trustee in writing to release
all amounts in the Spread Account to the holders of the Residual Interests, pro
rata in proportion to percentage portion of the Residual Interest (the
"PERCENTAGE INTEREST") of each such holder of the Residual Interests. In the
event that any preference action referred to above is commenced during any
applicable statute of limitations period, funds deposited in the Spread Account
shall be retained until the date on which there is a final determination by a
court of competent jurisdiction as to whether any payment or payments made
pursuant to this Agreement, the Indenture, the Indemnification Agreement or the
Insurance Agreement is recoverable from any of the Insurer, the Noteholders or
the Certificateholders. If it is so determined that a payment is so recoverable,
funds deposited in the Spread Account shall be applied by the Indenture Trustee
at the written direction of the Insurer first to pay any and all such claims
with respect to such preference actions as the Securityholders and the Insurer
may be required to pay and then to the holders of the Residual Interests, pro
rata in proportion to their Percentage Interests. If it is determined that any
such payment is not recoverable, the Insurer shall direct the Indenture Trustee
in writing to release all amounts on deposit in the Spread Account to the
holders of the Residual Interests, pro rata in proportion to their Percentage
Interests, upon receipt by the Insurer of both a final order determining that
such payments are not recoverable and an opinion of nationally recognized
bankruptcy counsel to the effect that such appeal is final and not subject to
appeal. For purposes of compliance with this Section 4.04(d), the Indenture
Trustee shall be entitled to rely on written instructions from the Insurer.
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(e) In the event any of the holders of the Residual Interests seek to
have the amounts remaining on deposit in the Spread Account released to holders
of the Residual Interests prior to the expiration of the ninety-one (91) day
period specified in Section 4.04(d) above, then, if (i) amounts payable with
respect to the Notes and the Certificates have been fully paid to the
Noteholders and the Certificateholders, respectively, (ii) the Repayment Amount
and all other amounts owing to the Insurer pursuant to the Insurance Agreement
have been paid in full, (iii) no case or proceeding described in Sections
7.01(d) or (e) has occurred with respect to the Potential Preference Parties,
and (iv) either (A) the long term unsecured debt of the Seller and the Servicer
is rated BBB- or better by Standard & Poor's and Baa3 or better by Moody's, (B)
the Insurer shall have received a favorable opinion or opinions, satisfactory in
form and substance to the Insurer, from counsel to Onyx, the Seller and the
Servicer, to the effect that in the event a case or proceeding described in
Sections 7.01(d) or (e) were to occur with respect to the Potential Preference
Parties, no payment pursuant to this Agreement or the Insurance Agreement would
be recoverable from either the Insurer or the Securityholders, and such other
matters as the Insurer may reasonably request, or (C) the Insurer, in its sole
discretion, elects to have the remaining amounts on deposit in the Spread
Account paid to the holders of the Residual Interests, then, in any such event,
all remaining amounts on deposit in the Spread Account shall be paid to the
holders of the Residual Interests, pro rata in proportion to their Percentage
Interests.
SECTION 4.05. STATEMENTS TO SECURITYHOLDERS.
(a) On each Distribution Date, (i) the Indenture Trustee shall include
with each distribution to each Noteholder of record as of the related Record
Date, and (ii) the Trust Agent shall include with each distribution to each
Certificateholder of record as of the related Record Date, a statement, prepared
by the Servicer, based on the information in the Distribution Date Statement
furnished pursuant to Section 3.09, setting forth for such Distribution Date the
following information as of the related Record Date or such Distribution Date,
as the case may be:
(i) the amount of such distribution allocable to principal
(stated separately for each Class of Notes and the
Certificates), separately identifying the aggregate
amount included therein of any (i) Full Prepayments of
principal on Precomputed Contracts and (ii) Full
Prepayments and partial prepayments of principal on
Simple Interest Contracts;
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes and the
Certificates);
(iii) the Note Percentage and the Certificate Percentage as
of the close of business on the last day of such
Collection Period;
(iv) the Certificate Distributable Amount and the Note
Distributable Amount for such Distribution Date;
(v) the Premium payable to the Insurer;
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(vi) the amount to be on deposit in the Spread Account on
such Distribution Date, before and after giving effect
to deposits thereto and withdrawals therefrom to be
made in respect of such Distribution Date;
(vii) the amount of the withdrawal, if any, required to be
made from the Spread Account by the Indenture Trustee
pursuant to Section 4.04(b);
(viii) the aggregate Servicing Fee with respect to the
Contracts for the related Collection Period;
(ix) the amount of fees paid to the Owner Trustee, the
Trust Agent and the Indenture Trustee, with respect to
the related Collection Period;
(x) the amount of any Note Interest Carryover Shortfall,
Note Principal Carryover Shortfall, Certificate
Interest Carryover Shortfall and Certificate Principal
Carryover Shortfall on such Distribution Date and the
change in such amounts from those with respect to the
immediately preceding Distribution Date;
(xi) the number of, and aggregate amount of, monthly
principal and interest payments due on the Contracts
which are delinquent as of the end of the related
Collection Period presented on a 30-day, 60-day and
90-day basis;
(xii) the Net Collections and the Policy Claim Amount, if
any, for such Distribution Date;
(xiii) the aggregate amount of Liquidation Proceeds received
for Defaulted Contracts;
(xiv) the net credit losses and Cram Down Losses for the
Collection Period;
(xv) the number and net outstanding balance of Contracts
for which the Financed Vehicle has been repossessed;
and
(xvi) the Pool Balance, the Note Pool Factor for each Class
of Notes and the Certificate Pool Factor as of such
Distribution Date after giving effect to the
distribution made on such Distribution Date.
Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of original principal amount of a
Note or original Certificate Balance, as the case may be.
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(b) Within a reasonable period of time after the end of each calendar
year, but not later than the latest date permitted by law, the Servicer shall
prepare and furnish to the Issuer, the Indenture Trustee and each Paying Agent,
and the Paying Agent for the Notes and the Paying Agent for the Certificates
shall furnish to each Person who on any Record Date during such calendar year
shall have been a Holder of a Note or a Certificate, respectively, a statement
or statements containing the sum of the amounts set forth in clauses (i) and
(ii) above for such calendar year and such other information as is reasonably
necessary for the preparation of such Person's federal income tax return in
respect of the Notes or Certificates or, in the event such Person shall have
been a Holder of a Note or a Certificate during a portion of such calendar year,
for the applicable portion of such year, for the purposes of such Noteholder's
or Certificateholder's preparation of federal income tax returns.
ARTICLE V
THE SELLER
SECTION 5.01. 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.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Servicer, the Custodian and their respective officers, directors, agents and
employees from and against any taxes that may at any time be asserted against
any such Person with respect to the transactions contemplated herein and in the
other Basic Documents, including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, not including (i)
in the case of the Issuer, any taxes asserted with respect to, and as of the
date of, the sale of the Contracts to the Issuer or the issuance and original
sale of the Securities, or (ii) any taxes asserted with respect to ownership of
the Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian their respective officers, directors, agents and employees and the
Securityholders from and against any loss, liability or expense incurred by
reason of the Seller's willful misfeasance, bad faith or negligence (other than
errors in judgment) in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees 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 and, in the case of the Owner Trustee and the Trust
Agent, in the Trust Agreement and, in the case of the Indenture Trustee, in the
Indenture, except to the extent that such cost, expense, loss, claim, damage or
liability, in the case of (i) the Owner Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Owner Trustee or shall arise from
the breach by the
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Owner Trustee of any of its representations or warranties set forth in the Trust
Agreement, (ii) the Trust Agent, shall be due to the willful misfeasance, bad
faith or negligence of the Trust Agent or shall arise from the breach by the
Trust Agent of any of its representations or warranties set forth in the Trust
Agreement, (iii) the Indenture Trustee, shall be due to the willful misfeasance,
bad faith or negligence of the Indenture Trustee or (iv) the Insurer or the
Custodian, shall be due to the willful misfeasance, bad faith or negligence of
the Insurer or the Custodian, respectively.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this section and the
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to the Seller, without interest.
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS.
The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Issuer, the Trust Agent, the Indenture Trustee and the Insurer
an agreement in form and substance reasonably satisfactory to the Issuer, the
Trust Agent, the Indenture Trustee and the Insurer, which contains an assumption
by such successor entity of the due and punctual performance and observance of
each covenant and condition to be performed or observed by the Seller under this
Agreement.
SECTION 5.03. 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 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.
SECTION 5.04. SELLER NOT TO RESIGN.
Subject to the provisions of Section 5.02, the Seller shall not resign
from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. SELLER MAY OWN SECURITIES.
The Seller and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Securities with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Securities so owned by or
pledged to the Seller or such Affiliate shall have an equal and proportionate
benefit
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under the provisions of this Agreement, without preference, priority or
distinction as among all of the Notes or Certificates, as the case may be.
ARTICLE VI
THE SERVICER
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.
Subject to Section 7.02, the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement. Such obligations shall include the following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian, their respective officers, directors, agents and employees, and the
Securityholders 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.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted against the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer or the
Custodian with respect to the transactions contemplated herein, including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege or license taxes (but, not including (i) in the
case of the Issuer, any taxes asserted with respect to, and as of the date of,
the sale of the Contracts to the Issuer or the issuance and original sale of the
Securities, or (ii) any taxes asserted with respect to ownership of the
Contracts, or (iii) any federal or other income taxes arising out of
distributions on the Securities) and costs and expenses in defending against the
same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian, their respective officers, directors, agents and employees and the
Securityholders from and against any and all costs, expenses, losses, claims,
damages and liabilities to the extent that such cost, expense, loss, claim,
damage or liability arose out of, or was imposed upon any such Person through,
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees from
and against any and 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 (i) shall be due to the willful
misfeasance, bad faith or negligence of the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer or the Custodian, as the case may be; (ii)
relates to any tax other than the taxes with respect to which either the
Servicer shall be required to indemnify the Issuer, the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Insurer or the
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Custodian; (iii) shall arise from the Trust Agent's, the Owner Trustee's or the
Indenture Trustee's breach of any of their respective representations or
warranties set forth herein, in the Trust Agreement or in the Indenture; or (iv)
shall be one as to which the Seller is required to indemnify the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer or the
Custodian, as the case may be.
Indemnification under this Section shall include, without limitation,
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
Person shall promptly repay such amounts to the Servicer, without interest.
This Section 6.01 shall survive the resignation or removal of the Owner
Trustee, the Trust Agent, the Custodian and the Indenture Trustee and the
termination of this Agreement.
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person or engage in any corporate transaction pursuant to
which the surviving or successor entity is not Onyx Acceptance Corporation,
unless (i) such entity is at least rated investment grade by the Rating
Agencies, (ii) the Insurer shall have consented thereto in writing and (iii)
such entity executes and delivers to the Issuer, the Indenture Trustee and the
Insurer an agreement in form and substance reasonably satisfactory to the
Issuer, the Indenture Trustee and the Insurer, which contains an assumption by
such successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Servicer under this
Agreement.
SECTION 6.03. PERFORMANCE OF OBLIGATIONS.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to be
taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Property, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
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SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) The Servicer shall not resign from the duties and obligations
hereby imposed on it except upon determination by its Board of Directors that by
reason of change in applicable legal requirements the continued performance by
the Servicer of its duties hereunder would cause it to be in violation of such
legal requirements in a manner which would result in a material adverse effect
on the Servicer or its financial condition, said determination to be evidenced
by a resolution of its Board of Directors to such effect accompanied by an
Opinion of Counsel, satisfactory to the Issuer, the Insurer and the Indenture
Trustee, to such effect. No such resignation shall become effective unless and
until (i) the Indenture Trustee assumes all of the Servicer's obligations under
this Agreement or (ii) a new servicer acceptable to the Issuer, the Indenture
Trustee and the Insurer is willing to service the Contracts and enters into a
servicing agreement with the Issuer, the Indenture Trustee and the Insurer in
form and substance substantially similar to this Agreement and satisfactory to
the Issuer, the Indenture Trustee and the Insurer, and each Rating Agency
confirms that the selection of such new servicer will not result in the
qualification, reduction or withdrawal of its then-current rating of each Class
of Notes and the Certificates assigned by such Rating Agency. No such
resignation by the Servicer shall affect the obligation of the Servicer to
repurchase Contracts pursuant to Section 3.07.
(b) Except as specifically permitted in this Agreement, the Servicer
may not assign this Agreement or any of its rights, powers, duties or
obligations hereunder; provided that (i) the Servicer may assign this Agreement
in connection with a consolidation, merger, conveyance, transfer or lease made
in compliance with Section 6.02(b).
(c) Except as provided in Sections 6.04(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 or the Trust
shall have been terminated as provided by the terms of the Trust Agreement, and
shall survive the exercise by the Issuer, the Indenture Trustee or the Insurer
of any right or remedy under this Agreement, or the enforcement by the Issuer,
the Indenture Trustee, any Certificateholder or Noteholder, or the Insurer of
any provision of the Notes, the Certificates, the Insurance Agreement or this
Agreement.
(d) The resignation of the Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Servicer resigns
pursuant to this Section, its appointment as custodian may be terminated
pursuant to Section 2.08.
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders or the Certificateholders, except as provided under this Agreement,
for any action taken or for refraining from the taking of any action pursuant to
this Agreement or for errors in judgment; 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 (except errors in judgment) in the performance of duties or by reason
of reckless disregard of obligations and duties under this Agreement. The
Servicer and any director, officer, employee or agent of the Servicer may rely
in good faith on any document of
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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 Contracts in accordance with this
Agreement, and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Securityholders under this
Agreement and the other Basic Documents.
ARTICLE VII
DEFAULT
SECTION 7.01. EVENTS OF DEFAULT.
If any one of the following events (each, a "SERVICER DEFAULT") shall
occur and be continuing:
(a) any failure by the Servicer to deposit or credit to the Collection
Account or the Payahead Account any amount required under this Agreement to be
so deposited or credited that shall continue unremedied for a period of three
Business Days after written notice of such failure is received by the Servicer
from the Issuer, the Indenture Trustee or the Insurer or after discovery of such
failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee, the Issuer or the Trust Agent
shall not have received a report in accordance with Section 3.09 by the Servicer
Report Date with respect to which such report is due;
(c) failure on the part of the Seller or the Servicer duly to observe
or to perform in any material respect any other covenants or agreements of the
Seller or the Servicer set forth in this Agreement or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of the
Securityholders, the Insurer, the Issuer or the Indenture Trustee and (ii)
continue unremedied for a period of 30 days after the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
(A) to the Seller or the Servicer, as the case may be, by the Insurer, the
Issuer or the Indenture Trustee or (B) to the Seller or the Servicer, as the
case may be, and to the Issuer and the Indenture Trustee by the Holders of
Notes, acting together as a single class, evidencing in the aggregate not less
than 25% of the outstanding amount of the Notes or, if the Notes have been paid
in full, by Certificateholders evidencing not less than 25% of the Certificate
Balance, or, so long as no Insurer Default has occurred and is continuing, by
the Insurer;
(d) the entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer or the Seller in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or the Seller
or of any substantial part
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of its property, or ordering the winding up or liquidation of the affairs of the
Servicer or the Seller and the continuance of any such decree or order unstayed
and in effect for a period of 60 consecutive days or the commencement of an
involuntary case under the federal bankruptcy laws, as now or hereinafter in
effect, or another present or future federal or state bankruptcy, insolvency or
similar law and such case is not dismissed within 60 days;
(e) the commencement by the Servicer or the Seller of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law, or
the consent by the Servicer or the Seller to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Servicer or the Seller or of any substantial
part of its property or the making by the Servicer or the Seller of an
assignment for the benefit of creditors or the failure by the Servicer or the
Seller generally to pay its debts as such debts become due or the taking of
corporate action by the Servicer or the Seller in furtherance of any of the
foregoing;
(f) any change of control of the Servicer in violation of the covenant
set forth in Section 6.02 hereof;
(g) the Servicer shall have failed in the reasonable opinion of the
Insurer to service the Contracts in accordance with the Servicing Standards and
such failure shall have continued unremedied for 30 days after written notice of
such failure shall have been delivered to the Servicer by the Insurer;
(h) any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty as to which Section 2.03 or 3.07 shall be applicable
so long as the Servicer or the Seller shall be in compliance with Section 2.03
or 3.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Securityholders or
the Insurer and, within 30 days after written notice thereof shall have been
given to the Servicer or the Seller by the Indenture Trustee or the Issuer or by
the Holders of Notes, acting together as a single class, evidencing in the
aggregate not less than 25% of the outstanding amount of the Notes, or, if the
outstanding amount of the Notes has been reduced to zero, the Certificateholders
evidencing in the aggregate not less than 25% of the Certificate Balance or, so
long as no Insurer Default has occurred, by the Insurer, the circumstance or
condition in respect of which such representation, warranty or statement was
incorrect shall not have been eliminated or otherwise cured;
then and in each and every case, so long as such Servicer Default shall not have
been remedied, either (i) the Insurer, provided no Insurer Default has occurred
and is continuing or (ii) if an Insurer Default has occurred and is continuing
(a) if the Notes have not been paid in full, the holders of Notes evidencing not
less than 25% of the outstanding amount of the Notes, acting together as a
single Class or the Indenture Trustee acting on behalf of the Noteholders, and
not the Seller or the Certificateholders or (b) if the Notes have been paid in
full and the Indenture has been discharged in accordance with its terms, the
Holders of Certificates evidencing not less than 25% of the outstanding
principal amount of the Certificates, by notice then given in writing to the
Servicer (and
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to the Insurer, the Indenture Trustee and the Issuer if given by the Noteholders
or the Certificateholders) may terminate all the rights and obligations of the
Servicer under this Agreement. Upon such termination, termination of the
Servicer as custodian, if the Servicer is acting as such, can be made pursuant
to Section 2.08. 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 Notes, the Certificates, the Contracts or otherwise, shall,
without further action, pass to and be vested in the Indenture Trustee or such
Successor Servicer as may be appointed under Section 7.02; and, without
limitation, the Indenture Trustee and the Issuer are hereby authorized and
empowered to execute and deliver on behalf of the 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 Contracts and related documents, or otherwise. The Servicer
shall cooperate with the Indenture Trustee and the Issuer in effecting the
termination of the responsibilities and rights of the Servicer under this
Agreement, including the transfer to the Indenture Trustee for administration by
it of all cash amounts that (i) shall at the time be held by the Servicer for
deposit in, or shall have been deposited by the Servicer in, the Collection
Account or Payahead Account or (ii) shall thereafter be received by it with
respect to any Contract.
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
Upon the termination of the Servicer by the Insurer pursuant to Section
7.01 or resignation of the Servicer pursuant to Section 6.04, the Insurer shall
appoint a successor servicer ("SUCCESSOR SERVICER"). Upon the termination of the
Servicer by the Indenture Trustee, the Noteholders or the Certificateholders
pursuant to Section 7.01, or upon the resignation of the Servicer pursuant to
Section 6.04 in the event that the Insurer is not entitled to appoint a
successor servicer by operation of Section 9.08, (i) if the Notes have not been
paid in full, the Indenture Trustee shall be the Successor Servicer, and (ii) if
the Notes have been paid in full, the Owner Trustee, acting at the direction of
the Holders of Certificates evidencing not less than 51% of the outstanding
principal amount of the Certificates, shall appoint a Successor Servicer. The
Successor Servicer shall succeed to all the responsibilities, duties and
liabilities of the Servicer under this Agreement, except that such Successor
Servicer shall not be obligated to purchase Contracts pursuant to Section 3.07.
If the Indenture Trustee acts as Successor Servicer, the Indenture Trustee shall
be entitled to such compensation (whether payable out of the Collection Account
or otherwise) as the Servicer would have been entitled to under this Agreement
if no such notice of termination shall have been given. Notwithstanding the
foregoing, if the Notes have not been paid in full, the Indenture Trustee may,
if it shall be unwilling to act, or shall, if it shall be legally unable to so
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
retail installment sales contracts, as the successor to the Servicer under this
Agreement. Pending appointment of any such Successor Servicer, the Indenture
Trustee shall act in such capacity as provided above. In connection with such
appointment, the Indenture Trustee or any other Successor Servicer may make such
arrangements for the compensation of such successor out of payments on Contracts
as it, the Insurer and such successor shall agree; provided, however, (i) that
such amount shall equal the product of a fixed percentage rate and the Principal
Balance, as of the commencement of each Collection Period, of each Contract and
(ii) that no such compensation shall be in excess of that previously permitted
the Servicer under this Agreement. The Indenture Trustee and such
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successor shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession.
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS.
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article, the Trust Agent shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register.
SECTION 7.04. WAIVER OF PAST DEFAULTS.
Upon the occurrence of a Servicer Default, unless an Insurer Default
shall have occurred and be continuing, the Insurer, and only the Insurer, may
waive any default by the Servicer in the performance of its obligations under
this Agreement except a Servicer Default in making any required deposits to or
payment from the Trust Accounts in accordance with this Agreement. Upon the
occurrence of a Servicer Default, if an Insurer Default has occurred and is
continuing, (i) the Holders of Notes evidencing not less than 51% of the
outstanding principal amount of the Notes, on behalf of all Securityholders, or
(ii) if all the Notes have been paid in full and the Indenture has been
discharged in accordance with its terms, Holders of Certificates evidencing not
less than 25% of the outstanding principal amount of the Certificates, on behalf
of all of the Certificateholders, shall have the right to waive any default by
the Servicer in the performance of its obligations under this Agreement except a
Servicer Default in making any required deposits to or payment from the Trust
Accounts in accordance with this Agreement, which may only be waived if provided
in clauses (i) and (ii) above by Holders evidencing 100% of the outstanding
principal amount of the Notes or Certificates, as applicable. No such waiver
shall impair the Insurer's or the Securityholders' rights with respect to
subsequent defaults.
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS.
The Indenture Trustee, upon the actual knowledge of a Responsible
Officer of the Indenture Trustee, shall promptly notify the Insurer of (i) the
commencement of any of the events or proceedings (individually, an "INSOLVENCY
PROCEEDING") described in the Section 7.01(d) or 7.01(e) hereof and (ii) the
making of any claim in connection with any Insolvency Proceeding seeking the
avoidance as a preferential transfer (a "PREFERENCE CLAIM") of any payment of
principal of, or interest on, any Notes or Certificates. Any Preference Amounts
paid by the Insurer shall be reimbursed to the Insurer as provided in Section
4.03(a) and 4.04(b). Each Noteholder, by its purchase of Notes, each
Certificateholder, by its purchase of Certificates, the Owner Trustee, the Trust
Agent and the Indenture Trustee hereby agree that, so long as no Insurer Default
has occurred and is continuing, the Insurer may at any time during the
continuation of an Insolvency Proceeding direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim and (iii) the posting of any surety or performance bond
pending any such appeal. The Insurer shall be subrogated to the rights of the
Indenture Trustee, the Owner Trustee, the Trust Agent and each Securityholder in
the conduct of any Insolvency Proceeding, including, without
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limitation, all rights of any party to an adversary proceeding action with
respect to any court order issued in connection with any such Insolvency
Proceeding.
ARTICLE VIII
TERMINATION
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND
DISCHARGE OF THE INDENTURE.
(a) On each Distribution Date as of which the Pool Balance is 10% or
less of the Original Pool Balance, the Servicer shall have the option to
purchase the remaining Contracts from the Trust. Notice of the exercise of such
option shall be given by the Servicer to the Issuer, the Trust Agent, the
Indenture Trustee and the Insurer not later than the 10th day prior to the
specified Distribution Date and not earlier than the 15th day of the month prior
to the month of the specified Distribution Date. To exercise such option, the
Servicer shall pay to the Indenture Trustee for the benefit of the
Securityholders, by deposit in the Collection Account on the Business Day
immediately preceding the related Distribution Date, the greater of (i) the sum
of (x) the Pool Balance on the date of repurchase plus (y) accrued and unpaid
interest on the Contracts and (ii) the sum of (x) the aggregate unpaid principal
amount of the Securities plus (y) accrued and unpaid interest thereon plus (z)
all amounts due to the Insurer under the Insurance Agreement. Such purchase
shall be deemed to have occurred on the last day of the related Collection
Period.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee and the Trust Agent, the Insurer and the Indenture
Trustee as soon as practicable after the Servicer has received notice thereof.
Such notice shall conform to the notice described in Section 9.01(c) of the
Trust Agreement.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee and, on its behalf, the Trust Agent, will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement; provided, however, that the Indenture Trustee shall continue to make
claims under the Policy as provided herein.
SECTION 8.02. TRANSFER TO THE INSURER.
If (i) there is one or more Outstanding Contracts at the end of the
Collection Period ending immediately prior to the Certificate Final Scheduled
Distribution Date and (ii) an amount sufficient to pay the Certificate
Distributable Amount on the Certificate Final Scheduled Distribution Date has
been deposited with the Indenture Trustee by the Insurer for the benefit of the
Certificateholders, then on the Certificate Final Scheduled Distribution Date
the Certificates shall be deemed to be transferred by the Certificateholders to
the Insurer or its designee as purchaser thereof at the opening of business on
the Certificate Final Scheduled Distribution Date and the Owner Trustee, on
behalf of the Trust, shall execute, and the Trust Agent shall authenticate and
deliver to the Insurer or its designee, in the name of the Insurer or its
designee, as the case may be, a new Certificate evidencing
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the entire Certificate Balance. Such new Certificate shall have the same terms
as the Certificates deemed transferred by the Certificateholders. No service
charge shall be made for the issuance of such Certificate to the Insurer or its
designee, but the Owner Trustee or Trust Agent may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. Such transfer shall not diminish or restrict the Insurer's rights
hereunder or under the Insurance Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENT.
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, collectively, with the
prior written consent of the Insurer, but without the consent of any
Securityholders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement which are inconsistent with the provisions herein, or to make
any other provisions with respect to matters or questions arising under this
Agreement which are not inconsistent with the provisions of this Agreement;
provided, however, that any such action shall not materially and adversely
affect the interests of any Securityholder; and provided, further, that any such
amendment shall be deemed not to materially and adversely affect the interests
of any Securityholder if the Person requesting the amendment obtains a letter
from each Rating Agency to the effect that such amendment would not result in a
downgrading or withdrawal of the ratings then assigned to the applicable
Securities by such Rating Agency.
(b) This Agreement may also be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, with the consent of the
Insurer and the Holders of Notes evidencing in the aggregate not less than 51%
of the principal amount of the Notes then outstanding, acting together as a
single Class, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders or the Certificateholders; provided,
however, that no such amendment shall (i) increase or reduce in any manner the
amount of, or accelerate or delay the timing of, collections of payments on the
Contracts or distributions that shall be required to be made for the benefit of
the Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of
the outstanding amount of the Notes the Holders of which are required to consent
to any such amendment, without the consent of the Holders of all Notes.
(c) Promptly after the execution of any such amendment or consent, the
Trust Agent and the Indenture Trustee, as the case may be, shall furnish the
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively.
(d) It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 9.01(b) 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 by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Trust
Agent or the
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Indenture Trustee may prescribe. Any consent by a Securityholder to an amendment
of the Agreement shall be conclusive and binding on such Securityholder and upon
all future Securityholders of such Security and of any Security issued upon the
transfer thereof or in exchange thereof or in lieu thereof whether or not
notation of such consent is made upon such Security.
(e) The Trust Agent and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trust Agent's or
the Indenture Trustee's own rights, duties or immunities under this Agreement or
otherwise and any such amendment shall be unenforceable in its entirety absent
the execution of such amendment by the Trust Agent and the Indenture Trustee.
SECTION 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer 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 Issuer, the Securityholders, the Indenture Trustee,
the Trust Agent and the Insurer in the Contracts and in the proceeds thereof.
The Servicer shall deliver (or cause to be delivered) to the Trust Agent 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 in accordance with Section
9.02(a) seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given the Insurer, the Trust Agent and the Indenture
Trustee at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Trust Agent
and the Indenture Trustee at least 60 days' prior written notice of any
relocation of the principal executive office of the Seller and the Servicer 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. The Servicer shall at
all times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, 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
Contract and the amounts from time to time deposited in or credited to the
Collection Account and the Payahead Account in respect of such Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts to the Issuer, the Servicer's master computer records (including any
backup archives) that shall refer to a Contract indicate clearly the interest of
the Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee.
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(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
retail installment sales contracts to any prospective purchaser, lender or other
transferee, the Servicer shall give or cause to be given 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 Contract, shall indicate clearly that such Contract has
been sold and is owned by the Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trustee, the Trust Agent, the
Indenture Trustee and the Insurer and their respective agents, at any time
during normal business hours, to inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee, the
Trust Agent, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Property, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
(i) The Servicer shall deliver to the Trust Agent, the Indenture
Trustee and the Insurer:
(i) promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of
Counsel 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 Issuer and
the Indenture Trustee in the Contracts, 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
(ii) within 90 days after the beginning of each calendar
year beginning with the first calendar year beginning
more than three months after the Cut-Off 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 Issuer and the Indenture Trustee in
the Contracts, 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.
(j) The Seller shall, to the extent required by applicable law, cause
the Certificates and the Notes to be registered with the Securities and Exchange
Commission pursuant to Section 12(b)
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or Section 12(g) of the Securities Exchange Act of 1934, as amended, within the
time periods specified in such sections.
(k) 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 counterpart shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 9.03. GOVERNING LAW.
THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS, AND REMEDIES OF THE PARTIES
UNDER THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT
THAT THE DUTIES OF THE TRUST AGENT AND THE INDENTURE TRUSTEE SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.04. NOTICES.
All demands, notices and communications under this Agreement shall be
in writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case
of
(i) the Seller, at 8001 Irvine Center Drive, 6th Floor,
Irvine, CA 92618, Attention: President, facsimile
(714) 450-5530;
(ii) the Servicer, at 8001 Irvine Center Drive, 5th Floor,
Irvine, CA 92618, Attention: Regan E. Kelly, Executive
Vice President, facsimile (714) 450-5530;
(iii) the Insurer, at 113 King Street, Armonk, New York
10504, Attention: Insured Portfolio Management,
Structured Finance, facsimile (914) 765-3163;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee
Corporate Trust Office (with, in the case of the
Issuer, a copy to the Seller);
(v) the Trust Agent, at the Trust Agent Office;
(vi) the Indenture Trustee, at the Corporate Trust Office;
(vii) Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New
York 10007;
(viii) Standard & Poor's, to Standard & Poor's Ratings
Services, 26 Broadway (15th Floor), New York, New York
10004, Attention: Asset Backed Surveillance
Department; and
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(ix) the Custodian, to Bankers Trust Company of California,
N.A., 3 Park Plaza, 16th Floor, Irvine, California
92614, Attention: Mortgage Custody - ONYX 98-C,
facsimile (949) 253-7577.
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be to
be mailed to a Securityholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Note Register or the
Certificate Register, as the case may be. Any notice so mailed within the time
prescribed herein shall be conclusively presumed to have been duly given,
whether or not such Securityholder shall receive such notice.
SECTION 9.05. SEVERABILITY OF PROVISIONS.
If the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or Certificates or the rights of the Holders thereof.
SECTION 9.06. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.02 and 6.02, neither the Seller nor the Servicer may
transfer or assign all, or a portion of, its rights, obligations and duties
under this Agreement unless such transfer or assignment (i) (A) will not result
in a reduction or withdrawal by any Rating Agency of the rating then assigned by
it to the Certificates or the Notes and (B) the Issuer, the Indenture Trustee
and the Insurer have consented to such transfer or assignment, or (ii) the
Insurer, the Issuer, the Indenture Trustee and Holders of Notes of each Class
evidencing not less than 51% of the outstanding amount of Notes of such Class
and Certificateholders evidencing not less than 51% of the Certificate Balance
consent thereto. Any transfer or assignment with respect to the Servicer of all
of its rights, obligations and duties will not become effective until a
Successor Servicer has assumed the Servicer's rights, duties and obligations
under this Agreement. In the event of a transfer or assignment pursuant to
clause (ii) above, each Rating Agency shall be provided with notice of such
transfer or assignment.
SECTION 9.07. THIRD PARTY BENEFICIARIES.
Except as otherwise specifically provided herein, the parties to this
Agreement hereby manifest their intent that no third party other than the
Insurer shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement.
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SECTION 9.08. CERTAIN MATTERS RELATING TO 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 Agreement, without any consent of such Noteholders or
Certificateholders; provided, however, that without the consent of each
Noteholder, Certificateholder or Residual Interestholder affected thereby, the
Insurer shall not exercise such rights to amend this Agreement in any manner
that would (i) reduce the amount of, or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Note, Certificate or Residual Interest Instrument, (ii) adversely affect in any
material respect the interests of the Holders of any Notes, Certificates or
Residual Interest Instruments or (iii) alter the rights of any such Holder to
consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, for so
long as 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, the
Servicer or the Trust Agent pursuant to the terms of this Agreement, 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 Servicer, the Trust Agent or the Holders of the Notes or the
Certificates; provided, that the consent of the Insurer shall be required at all
times with respect to any amendment of this Agreement.
SECTION 9.09. HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 9.10. ASSIGNMENT BY ISSUER.
The Seller hereby acknowledges and consents to any mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Noteholders and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by Bankers Trust (Delaware) not in its individual
capacity but in its capacity as Owner Trustee of the Issuer and by The Chase
Manhattan Bank not in its individual capacity but in its capacity as Indenture
Trustee and Trust Agent, and in no event shall Bankers Trust (Delaware) in its
individual capacity, The Chase Manhattan Bank 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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ONYX ACCEPTANCE OWNER TRUST 1998-C
as Issuer
By: Bankers Trust (Delaware), not in its
individual capacity but solely as
Owner Trustee
By: /s/ PETER BECKER
-------------------------------------
Name: Peter Becker
Title: Attorney-in-fact
ONYX ACCEPTANCE FINANCIAL
CORPORATION, as Seller
By: /s/ REGAN E. KELLY
-------------------------------------
Name: Regan E. Kelly
Title: Executive Vice President
ONYX ACCEPTANCE CORPORATION, as Servicer
By: /s/ DON P. DUFFY
-------------------------------------
Name: Don P. Duffy
Title: Chief Financial Officer
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Indenture
Trustee and as Trust Agent
By: /s/ TARA SWEENEY
-------------------------------------
Name: Tara Sweeney
Title: Trust Officer
ACKNOWLEDGED AND AGREED TO
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solely with respect to the rights and duties
of the Custodian
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Custodian
By:
-----------------------------------
Name:
Title:
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