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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: June 17, 1998
(Date of earliest event reported)
ONYX ACCEPTANCE FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
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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
auto loan backed notes and auto loan backed certificates, 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,
dated June 8, 1998, which was previously filed with the Commission pursuant to
Rule 424(b)(2), and the related Prospectus Supplement, dated June 11, 1998
(together with the Prospectus, the "Prospectus"), which was previously filed
with the Commission pursuant to Rule 424(b)(5), with respect to ONYX ACCEPTANCE
OWNER TRUST 1998-A Auto Loan Backed Notes and Auto Loan Backed Certificates,
Series 1998-A, 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 Certificates (the
"Certificates" and, together with the Notes, the "Offered Securities").
The Offered Securities were sold to Merrill Lynch, Pierce, Fenner and
Smith Incorporated ("Merrill Lynch") and Salomon Brothers Inc ("Salomon" and,
together with Merrill Lynch, the "Underwriters") pursuant to the terms of the
Underwriting Agreement dated as of June 11, 1998 (the "Underwriting Agreement")
between the Registrant, Onyx Acceptance Corporation ("Onyx") and Merrill Lynch,
as representative of itself and of Salomon. A copy of the Underwriting Agreement
is filed herewith as Exhibit 1.1.
The Notes were issued pursuant to an Indenture dated as of June 1, 1998
(the "Indenture") among ONYX ACCEPTANCE OWNER TRUST 1998-A (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 4.1.
The Notes are secured by the assets of the Trust pursuant to the
Indenture. The assets of the Trust includes 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 June 1, 1998, 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 June 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
Co-Owner Trustee (the "Co-Owner Trustee"). A copy of the Trust Agreement is
filed herewith as Exhibit 4.2.
The Contracts were sold by the Seller to the Trust pursuant to the Sale
and Servicing Agreement dated as of June 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 Co-Owner Trustee. A copy of
the Sale and Servicing Agreement is filed herewith as Exhibit 10.1.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits
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Exhibit No. Description
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1.1 Underwriting Agreement dated as of June 1, 1998
by and among the Registrant, Onyx Acceptance
Corporation and Merrill Lynch, Pierce, Fenner
and Smith Incorporated
4.1 Indenture dated as of June 1, 1998 by and
between Onyx Acceptance Owner Trust 1998-A and
The Chase Manhattan Bank, as Indenture Trustee
4.2 Trust Agreement dated as of June 1, 1998 by and
among the Registrant, as Depositor, Bankers
Trust (Delaware), as Owner Trustee, and The
Chase Manhattan Bank, as Co-Owner Trustee
10.1 Sale and Servicing Agreement dated as of June
1, 1998 by and among the Registrant, as Seller,
Onyx Acceptance Corporation, as Servicer, and
The Chase Manhattan Bank, as Indenture Trustee
and Co-Owner Trustee
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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
June 30, 1998 By: /s/ REGAN E. KELLY
------------------------------------------
Regan E. Kelly,
Executive Vice President
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INDEX TO EXHIBITS
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Exhibit No. Description
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1.1 Underwriting Agreement dated as of June 1, 1998
by and among the Registrant, Onyx Acceptance
Corporation and Merrill Lynch, Pierce, Fenner
and Smith Incorporated
4.1 Indenture dated as of June 1, 1998 by and
between Onyx Acceptance Owner Trust 1998-A and
The Chase Manhattan Bank, as Indenture Trustee
4.2 Trust Agreement dated as of June 1, 1998 by and
among the Registrant, as Depositor, Bankers
Trust (Delaware), as Owner Trustee, and The
Chase Manhattan Bank, as Co-Owner Trustee
10.1 Sale and Servicing Agreement dated as of June
1, 1998 by and among the Registrant, as Seller,
Onyx Acceptance Corporation, as Servicer, and
The Chase Manhattan Bank, as Indenture Trustee
and Co-Owner Trustee
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EXHIBIT 1.1
Onyx Acceptance Owner Trust 1998-A
$43,600,000 5.60% Auto Loan Backed Notes, Class A-1
$49,600,000 5.75% Auto Loan Backed Notes, Class A-2
$69,500,000 5.85% Auto Loan Backed Notes, Class A-3
$35,600,000 5.93% Auto Loan Backed Notes, Class A-4
$10,459,315 5.99% Auto Loan Backed Certificates
Onyx Acceptance Financial Corporation
as Seller
Onyx Acceptance Corporation
as Servicer
UNDERWRITING AGREEMENT
----------------------
June 11, 1998
Merrill Lynch, Pierce, Fenner & Smith
Incorporated, as representative of
the several Underwriters
World Financial Center
North Tower, 15th Floor
New York, New York l0281-1315
Ladies and Gentlemen:
1. Introductory. Onyx Acceptance Financial Corporation (the
"Company") proposes to cause Onyx Acceptance Owner Trust 1998-A (the "Trust") to
sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated (the
"Representative") and Salomon Brothers Inc (together with the Representative,
the "Underwriters") $43,600,000 5.60% Auto Loan Backed Notes, Class A-1 (the
"Class A-1 Notes"), $49,600,000 5.75% Auto Loan Backed Notes, Class A-2 (the
"Class A-2 Notes"), $69,500,000 5.85% Auto Loan Backed Notes, Class A-3 (the
"Class A-3 Notes"), $35,600,000 5.93% Auto Loan Backed Notes, Class A-4 (the
"Class A-4 Notes," and together with the Class A-1, Class A-2 and Class A-3
Notes, the "Notes"), and $10,459,315 5.99% 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 June 1, 1998 (the "Indenture"),
between the Trust and The Chase Manhattan Bank as Indenture Trustee (the
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"Indenture Trustee"). The Certificates will be issued pursuant to a Trust
Agreement dated as of June 1, 1998 (the "Trust Agreement")among the Company,
Bankers Trust (Delaware) as Owner Trustee (the "Owner Trustee") and The Chase
Manhattan Bank as Co-Owner Trustee (the "Co-Owner Trustee"). Pursuant to a Sale
and Servicing Agreement dated as of June 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
Indenture Trustee and the Co-Owner Trustee, 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 June 1, 1998 (the "Administration Agreement") among the
Trust, Onyx, the Company and the Indenture Trustee, Onyx will serve as
administrator of the Trust. Pursuant to a Purchase Agreement dated as of
September 8, 1994 (the "Onyx Purchase Agreement"), Onyx has sold the Contracts
to the Company. Pursuant to a purchase agreement dated as of the Closing Date
(the "Fundco Purchase Agreement" and together with the Onyx Purchase Agreement
the "Purchase Agreements"), Onyx Acceptance Funding Corporation ("Fundco") sold
certain of the Contracts to Onyx prior to the sale of the Contracts by Onyx to
the Company. Pursuant to an insurance and reimbursement agreement (the
"Insurance Agreement") among the Trust, the Company, Onyx, the Indenture Trustee
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)
certain monies due under such Contracts and certain monies received with respect
to such Contracts on or after the Cut-Off Date, (iv) 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, (v) all amounts on deposit in the Collection
Account, the Note Distribution Account, the Certificate Distribution Account,
and the Spread Account, including all Eligible Investments credited thereto (but
excluding any
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investment income from Eligible Investments, which will be paid to the
Servicer), (vi) the right of the Company to cause Onyx to repurchase certain
Contracts under certain circumstances, and (vii) all proceeds of the foregoing.
The Securities will be issued in an aggregate principal amount of $208,759,315
which is equal to the outstanding principal balance of Contracts as of June 1,
1998 (the "Cut-off Date"). 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:
(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 Representa-
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tive 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 Act
after the Effective Date of the Registration Statement, or the issue
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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
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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 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
Agreements or the Insurance Agreement. The execu-
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tion, delivery and performance by the Company of this Agreement, the
Trust Agreement, the Servicing Agreement, the Purchase Agreements 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 Agreements 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 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 June 17, 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
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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
Certificates, 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. 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
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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 a post-effective amendment to the
Registration Statement 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 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
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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 post-effective amendment to the Registration Statement
(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
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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 Underwrit ers, 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(b) of this Agreement. The Company will
transmit the Prospectus including such Prospectus Supplement to the
Commission pursuant to Rule 424(b) by a means rea sonably 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
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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.
(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
to 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
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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
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 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 In-
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<PAGE> 14
denture 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 a post-effective
amendment setting forth each ABS Terms 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 Coopers
& Lybrand,
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<PAGE> 15
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 Coopers & Lybrand have determined that the
information included in such ABS Term Sheet (if any), provided by the
Underwriters to the Company for filing on a post-effective amendment
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
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<PAGE> 16
Coopers & Lybrand 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 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
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<PAGE> 17
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 and 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
17
<PAGE> 18
under the federal which have been made or obtained and (3) such
consents, approvals, authorizations, orders or filings as may be
required under state securities laws;
(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 the best of such counsel's knowledge, 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 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 the best knowledge of such counsel, 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
18
<PAGE> 19
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 Agreement 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;
(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 Co-Owner Trustee
to authenticate the Certificates has been duly authorized by the
Company and, when the Certificates have been duly executed,
authenticated and delivered by the Co-Owner Trustee 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 and delivered
by the Co-Owner Trustee on behalf of the Trust, authenticated by
the Indenture Trustee
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<PAGE> 20
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 Agreements, 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> 21
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; and
(p) The Company is not, and will not as a result of the
offer and sale of the Securities as contemplated in the
Prospectus and this Agreement become, an "investment company" as
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act")or a company "controlled by" 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.
(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
21
<PAGE> 22
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, 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
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<PAGE> 23
to execute and deliver the Servicing Agreement, the
Administration Agreement, and the Purchase Agreements, 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 and the Servicing Agreement, 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 Agreements, as
applicable, except for (1) filing of a Uniform Commercial Code
financing statement in the State of California with respect to
the sale of the Contracts to the Company pursuant to the
Purchase Agreements 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 Agreements, as applicable;
(d) None of the execution, delivery and performance by
Onyx or Fundco of the Servicing Agreement, the Administration
Agreement or the Purchase Agreements, 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
23
<PAGE> 24
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 Agreements 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 Agreements, 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 certifi-
24
<PAGE> 25
cates of responsible officers of Onyx 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 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
25
<PAGE> 26
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.
(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
26
<PAGE> 27
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 among the Underwriters,
Onyx and the Insurer (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
27
<PAGE> 28
(e) The Guarantee is not required to be registered under
the Securities Act of 1933, as amended.
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 Co-Owner Trustee,
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
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<PAGE> 29
Coopers & Lybrand 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 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
29
<PAGE> 30
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.
30
<PAGE> 31
8. Indemnification.
(i) The Company will indemnify and hold harmless each
Underwriter and each person, if any, who controls such Underwriter with
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
31
<PAGE> 32
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 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
32
<PAGE> 33
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 Underwriter on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not permitted by
33
<PAGE> 34
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
34
<PAGE> 35
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 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 & Co., World Financial
Center, Attention: Managing Director, Asset-Backed Securities De-
35
<PAGE> 36
partment, 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 and supersedes all prior agreements and
understandings whatsoever relating to such matters and transactions.
36
<PAGE> 37
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 Certificates, 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.
37
<PAGE> 38
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/ REGAN E. KELLY
--------------------------------
Name: Regan E. Kelly
Title: Executive Vice President
The foregoing Underwriting Agreement is
hereby confirmed and accepted as of the
date first above written.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Salomon Brothers Inc
By: Merrill Lynch, Pierce, Fenner & Smith
Incorporated
/s/ ROBERT J. LITTLE
-----------------------------------
Name: Robert J. Little
Title: Vice President
For themselves and the other several
underwriters named in Schedule I
attached hereto.
38
<PAGE> 1
EXHIBIT 4.1
INDENTURE
between
ONYX ACCEPTANCE OWNER TRUST 1998-A,
as Issuer,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
-----------------
Dated as of June 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
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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 ..................................... 8
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 .................................... 12
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 ......................................................... 14
Section 3.01 Payment of Principal and Interest ................... 14
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 ........................................... 16
Section 3.05 Protection of Trust Estate .......................... 17
Section 3.06 Opinions as to Collateral ........................... 17
Section 3.07 Performance of Obligations; Servicing of Contracts .. 18
Section 3.08 Negative Covenants .................................. 19
Section 3.09 Annual Statement as to Compliance ................... 20
Section 3.10 Issuer May Consolidate, etc.Only on Certain Terms ... 20
Section 3.11 Successor Transferee ................................ 22
Section 3.12 No Other Business ................................... 23
Section 3.13 Servicer's Obligations .............................. 23
</TABLE>
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<TABLE>
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Section 3.14 Restricted Payments ................................. 23
Section 3.15 Notice of Events of Default ......................... 23
Section 3.16 Further Instruments and Acts ........................ 23
Section 3.17 Compliance with Laws ................................ 23
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
REMEDIES .......................................................... 25
Section 5.01 Events of Default ................................... 25
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 .............. 30
Section 5.06 Priorities .......................................... 30
Section 5.07 Limitation of Suits ................................. 31
Section 5.08 Unconditional Rights of Noteholders
to Receive Principal and Interest ................... 32
Section 5.09 Restoration of Rights and Remedies .................. 32
Section 5.10 Rights and Remedies Cumulative ...................... 32
Section 5.11 Delay or Omission Not a Waiver ...................... 33
Section 5.12 Control by Noteholders .............................. 33
Section 5.13 Waiver of Past Defaults ............................. 33
Section 5.14 Undertaking for Costs ............................... 34
Section 5.15 Waiver of Stay or Extension Laws .................... 34
Section 5.16 Action on Notes ..................................... 34
Section 5.17 Performance and Enforcement of Certain Obligations .. 34
ARTICLE VI
THE INDENTURE TRUSTEE ............................................. 35
Section 6.01 Duties of Indenture Trustee ......................... 35
Section 6.02 Rights of Indenture Trustee ......................... 36
Section 6.03 Individual Rights of Indenture Trustee .............. 37
Section 6.04 Indenture Trustee's Disclaimer ...................... 37
Section 6.05 Notice of Defaults .................................. 38
Section 6.06 Reports by Indenture Trustee to Holders ............. 38
Section 6.07 Compensation and Indemnity .......................... 38
</TABLE>
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<TABLE>
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Section 6.08 Replacement of Indenture Trustee .................... 38
Section 6.09 Successor Indenture Trustee by Merger ............... 40
Section 6.10 Appointment of Co-Indenture Trustee or
Separate Indenture Trustee .......................... 40
Section 6.11 Eligibility; Disqualification ....................... 41
Section 6.12 Preferential Collection of Claims Against Issuer .... 41
Section 6.13 Representations and Warranties of Indenture Trustee . 42
ARTICLE VII
NOTEHOLDERS' LISTS AND REPORTS .................................... 42
Section 7.01 Issuer to Furnish Indenture Trustee Names
and Addresses of Noteholders ........................ 42
Section 7.02 Preservation of Information; Communications
to Noteholders ...................................... 42
Section 7.03 Reports by Issuer ................................... 42
Section 7.04 Reports by Indenture Trustee ........................ 43
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES .............................. 43
Section 8.01 Collection of Money ................................. 43
Section 8.02 Trust Accounts ...................................... 44
Section 8.03 General Provisions Regarding Accounts ............... 45
Section 8.04 Release of Collateral ............................... 46
Section 8.05 Opinion of Counsel .................................. 46
ARTICLE IX
SUPPLEMENTAL INDENTURES ........................................... 46
Section 9.01 Supplemental Indentures Without
Consent of Noteholders .............................. 46
Section 9.02 Supplemental Indentures With Consent of Noteholders . 48
Section 9.03 Execution of Supplemental Indentures ................ 49
Section 9.04 Effect of Supplemental Indenture .................... 49
Section 9.05 Conformity With Trust Indenture Act ................. 49
Section 9.06 Reference in Notes to Supplemental Indentures ....... 49
ARTICLE X
REDEMPTION OF NOTES ............................................... 50
Section 10.01 Redemption ......................................... 50
Section 10.02 Form of Redemption Notice .......................... 50
Section 10.03 Notes Payable on Redemption Date ................... 50
ARTICLE XI
MISCELLANEOUS ..................................................... 51
Section 11.01 Compliance Certificates and Opinions, etc .......... 51
</TABLE>
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<TABLE>
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Section 11.02 Form of Documents Delivered to Indenture Trustee ........... 52
Section 11.03 Acts of Noteholders ........................................ 53
Section 11.04 Notices, etc., to Indenture Trustee, Issuer, Insurer and
Rating Agencies ........................................... 53
Section 11.05 Notices to Noteholders; Waiver ............................. 54
Section 11.06 Alternate Payment and Notice Provisions .................... 55
Section 11.07 Conflict With Trust Indenture Act .......................... 55
Section 11.08 Effect of Headings and Table of Contents ................... 55
Section 11.09 Successors and Assigns ..................................... 55
Section 11.10 Separability ............................................... 55
Section 11.11 Benefits of Indenture ...................................... 55
Section 11.12 Legal Holidays ............................................. 56
Section 11.13 Governing Law .............................................. 56
Section 11.14 Counterparts ............................................... 56
Section 11.15 Recording of Indenture ..................................... 56
Section 11.16 Trust Obligation ........................................... 56
Section 11.17 No Petition ................................................ 57
Section 11.18 Inspection ................................................. 57
Section 11.19 Limitation of Liability of Owner Trustee ................... 57
Section 11.20 Certain Matters Regarding the Insurer ...................... 57
</TABLE>
EXHIBITS
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
-5-
<PAGE> 6
This Indenture, dated as of June 1, 1998, is between Onyx Acceptance
Owner Trust 1998-A, 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 5.60% Auto Loan
Backed Notes, Class A-1 (the "Class A-1 Notes"), 5.75% Auto Loan Backed Notes,
Class A-2 (the "Class A-2 Notes"), 5.85% Auto Loan Backed Notes, Class A-3 (the
"Class A-3 Notes") and 5.93% 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 and the
Indenture Trustee.
"Administrator" means the Servicer, or any successor Administrator under
the Administration Agreement.
<PAGE> 7
"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 Co-Owner
Trustee, 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 Co-Owner Trustee, 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 C.
"Class A-2 Notes" means the Class A-2 Notes, substantially in the form
of Exhibit D.
"Class A-3 Notes" means the Class A-3 Notes, substantially in the form
of Exhibit E.
"Class A-4 Notes" means the Class A-4 Notes, substantially in the form
of Exhibit F.
"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.
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<PAGE> 8
"Depository Agreement" means the agreement dated June 17, 1998, between
the Issuer, the Indenture Trustee, the Co-Owner Trustee and DTC, as the initial
Clearing Agency, relating to the Notes and the Certificates, substantially in
the form of Exhibit B 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 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
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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.
"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
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(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.
"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.
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"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 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 Co-Owner Trustee.
"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 Agreement" means the Trust Agreement, dated as of June 1, 1998,
between the Seller, the Owner Trustee and the Co-Owner Trustee.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"United States" means the United States of America.
Section 1.02 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the Securities and Exchange Commission.
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"Indenture Securities" means the Notes.
"Indenture Security Holder" means a Noteholder.
"Indenture to be Qualified" means this Indenture.
"Indenture Trustee" or "Institutional Trustee" means the Indenture
Trustee.
"Obligor" on the indenture securities means the Issuer and any other
obligor on the indenture securities.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by Commission rule have
the meaning assigned to them by such definitions.
Section 1.03 Rules of Construction. Unless the context otherwise
requires:
(i) a term has the meaning assigned to it;
(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.
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ARTICLE II
THE NOTES
Section 2.01 Form. The Class A-1 Notes, the Class A-2 Notes, the
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 C, D, E and F 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 C, D, E and F 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 Co-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) $43,600,000 of Class A-1 Notes, (ii) $49,600,000 of Class
A-2 Notes, (iii) $69,500,000 of Class A-3 Notes and (iv) $35,600,000 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 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
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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 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.
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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 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.
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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 Distribution Date, together with, to the extent
permitted by applicable law, interest on such shortfall at the related Interest
Rate. Interest on the Class A-1 Notes shall be calculated on the basis of the
actual number of days elapsed in an Interest Accrual Period and a 360-day year.
Interest on the Class A-2, Class A-3 and Class A-4 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(a)), 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:
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(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 662/3% 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 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 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
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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;
(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
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requesting the same. Upon surrender to the Indenture Trustee of the Note or
Notes evidencing the Book Entry Notes by the Clearing Agency, accompanied by
registration instructions from the Clearing Agency, the Issuer shall execute and
the Indenture Trustee shall authenticate the Definitive Notes and deliver such
Definitive Notes in accordance with the instructions of the Clearing Agency.
None of the Issuer, the Note Registrar or the Indenture Trustee shall be liable
for any delay in delivery of such instructions and may conclusively rely on, and
shall be protected in relying on, such instructions. Upon the issuance of
Definitive Notes of a Class, the Indenture Trustee shall recognize the Holders
of the Definitive Notes as Noteholders hereunder.
The Indenture Trustee shall not be liable if the Indenture Trustee or
the Administrator is unable to locate a qualified successor Clearing Agency. The
Definitive Notes shall be typewritten, printed, lithographed or engraved or
produced by any combination of these methods (with or without 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 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
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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 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 pursuant to Section 8.02(b) 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
Indenture Trustee shall make the deposits to the Payment Account required by
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:
(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
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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 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).
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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 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
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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 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
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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, 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, or upon the resignation of the
Servicer pursuant to Section 6.04 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 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. As soon as a successor Servicer is appointed, the Issuer
shall notify the Indenture Trustee 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;
(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
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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 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, 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
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principal of and interest on all Notes and the performance or
observance of every agreement and covenant of this Indenture and
each other Basic Document on the part of the Issuer to be
performed or observed, all as provided herein;
(ii) immediately after giving effect to such consolidation
or merger, no Default or Event of Default shall have occurred
and be continuing;
(iii) the Rating Agency Condition shall have been satisfied
with respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of Counsel
which shall be delivered to and shall be satisfactory to the
Indenture Trustee and the Insurer (so long as no Insurer Default
shall have occurred and be continuing) 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 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, 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
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payment of the principal of and interest on all Notes and the
performance or observance of every agreement and covenant of
this Indenture and each other Basic Document on the part of the
Issuer to be performed or observed, all as provided herein, (C)
expressly agree by means of such supplemental indenture that all
right, title and interest so conveyed or transferred shall be
subject and subordinate to the rights of 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 an Officer's Certificate and an Opinion of Counsel
(which shall describe the actions taken as required by clause
(v) above or that no such actions will be taken) each stating
that such conveyance or transference and such supplemental
indenture comply with this Article Three and that all conditions
precedent herein provided for relating to such transaction have
been complied with (including any filings required by the
Exchange Act); and
(vii) so long as no Insurer Default shall have occurred and
be continuing, the Issuer shall have given the Insurer written
notice of such conveyance or transfer of properties or assets at
least 20 Business Days prior to the consummation of such action
and shall have received the prior written approval of the
Insurer of such conveyance or transfer and the Person acquiring
by conveyance or transference the properties or assets of the
Issuer has a net worth, immediately after such conveyance or
transfer, that is (A) greater than zero and (B) not less than
the net worth of the Issuer immediately prior to giving effect
to such conveyance or transfer.
Section 3.11 Successor Transferee.
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(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 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 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.
Section 3.15 Notice of Events of Default. The Issuer agrees to
give the Indenture Trustee, the Co-Owner Trustee, the Insurer and each Rating
Agency prompt written notice of each Event of Default hereunder and each default
on the part of the Servicer or the Seller of their respective obligations under
the 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
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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 (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
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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
(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 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
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):
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(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 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.
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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 and the lapse of time would become an Event of Default under
paragraph (d) above, 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 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 662/3% 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 662/3% 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,
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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 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
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agents, attorneys and counsel, and all other expenses and liabilities incurred
by the Indenture Trustee and each predecessor Indenture Trustee except as a
result of negligence or bad faith.
(d) Nothing herein contained shall be deemed to authorize the
Indenture Trustee to authorize or consent to or vote for or accept or adopt on
behalf of any Noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the Notes or the rights of any Holder thereof or to
authorize the Indenture Trustee to vote in respect of the claim of any
Noteholder in any such proceeding except, as aforesaid, to vote for the election
of a trustee in bankruptcy or similar Person.
(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 662/3% of the Outstanding Amount of
the Notes:
(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 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; and
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(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.
(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
662/3% of the Outstanding Amount of the Notes, if an Event of
Default specified in Section 5.01(d) shall have occurred and be
continuing and the Insurer shall not have failed to make a
payment required under the Policy in accordance with its terms,
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) 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 (B) 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.
(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.
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(a) If the Indenture Trustee collects any money or property
pursuant to this Article (excluding any payments made under the Policy), it
shall pay out the money or property 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 Co-Owner Trustee and the Indenture
Trustee 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;
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;
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(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.
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.
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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 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
Holders of Notes representing not less than a majority of the Outstanding Amount
of the Notes 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 Insurer or the Holder of each Notes, 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.
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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, 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 Agreement to the extent and in the
manner directed by the Indenture Trustee,
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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 in the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Indenture Trustee shall assume the
duties of the Servicer pursuant to Section 3.07(e), the Indenture Trustee in
performing such duties shall use the degree of care and skill customarily
exercised by a prudent institutional servicer with respect to automobile retail
installment sales contracts that it services for itself or others.
(b) Except during the continuance of an Event of Default of which
a Responsible Officer of the Indenture Trustee shall have actual knowledge or
written notice:
(i) the Indenture Trustee undertakes to perform such duties
and only such duties as are specifically set forth in this
Indenture and no implied covenants or obligations shall be read
into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the Indenture
Trustee may conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon
certificates or opinions furnished to the Indenture Trustee and
conforming to the requirements of this Indenture; however, the
Indenture Trustee shall examine the certificates and opinions to
determine whether or not they conform to the requirements of
this Indenture and the other Basic Documents to which the
Indenture Trustee is a party; provided, however, that the
Indenture Trustee shall not be responsible for the accuracy or
content of any of the aforementioned documents and the Indenture
Trustee shall have no obligation to verify, re-compute or
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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) 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
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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 and regardless of the form of action.
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
6.02(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.
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(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 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.
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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 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
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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,
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.
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
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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
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.
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(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Indenture Trustee shall be conferred or imposed
upon and exercised or performed by the Indenture Trustee and
such separate trustee or co-trustee jointly (it being understood
that such separate trustee or co-trustee is not authorized to
act separately without the Indenture Trustee joining in such
act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this 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 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.
(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
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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.
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
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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.
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).
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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 Co-Owner Trustee, 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 Indenture Trustee
shall withdraw funds from the Collection Account equal to the amount of Net
Collections available with respect to such Distribution Date and shall deposit
such funds in 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 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:
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(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) through (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) through (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.
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.
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(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 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;
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(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 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 exemption of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the 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:
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(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 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.
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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 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
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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 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
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any such application or request as to which the furnishing of such documents is
specifically required by any provision of this Indenture, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate or
opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such
signatory, such condition or covenant has been complied with.
(b) (i) Prior to the deposit of any 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
(so long as no Insurer Default shall have occurred and be continuing) an
Officer's Certificate certifying or stating the opinion of the signer thereof
such certificate 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 (so long as no Insurer Default
shall have occurred and be continuing) an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value
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(within 90 days of such release) of the property or securities proposed
to be released and stating that in the opinion of such person the
proposed release will not impair the security created by this Indenture
in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating
the opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee and
the Insurer an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property or
securities released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
Officer's Certificates 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 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 (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,
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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 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-A, in care of
Bankers Trust (Delaware), as Owner Trustee, 1011 Centre Road,
Suite 200, Wilmington, Delaware
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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 un 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 conclusion precedent to the validity of
any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event of 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
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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 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.
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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 beneficiary 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 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 shall and shall cause its 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
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to the extent that the Indenture Trustee 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(a) of the Trust Agreement 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 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 Seller, the Owner Trustee or the
Co-Owner Trustee pursuant to the terms of this Indenture, nor shall the consent
of the Insurer be required with respect to any action (or waiver of a right to
take action) to be taken by the Trust, the Seller, the Owner Trustee, the
Co-Owner Trustee or the Holders, 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-A
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/ LOUIS BODI, as attorney in fact
-------------------------------------
Name: Louis Bodi
Title: Vice President
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely as
Indenture Trustee
By: /s/ VADA HAIGHT
------------------------------------------
Name: Vada Haight
Title: Vice President
<PAGE> 1
EXHIBIT 4.2
TRUST AGREEMENT
among
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Depositor
BANKERS TRUST (DELAWARE),
as Owner Trustee
and
THE CHASE MANHATTAN BANK,
as Co-Owner Trustee
Dated as of June 1, 1998
ONYX ACCEPTANCE OWNER TRUST 1998-A
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<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 ....................................... 5
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
Section 4.05 Majority Control .......................................... 19
</TABLE>
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TABLE OF CONTENTS
(Continued)
<TABLE>
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<S> <C>
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
CO-OWNER TRUSTEE .......................................... 21
Section 6.01 General Authority ......................................... 21
Section 6.02 General Duties ............................................ 21
Section 6.03 Action Upon Instruction ................................... 21
Section 6.04 No Duties Except as Specified in this Agreement
or in Instructions ........................................ 22
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
CO-OWNER TRUSTEE .......................................... 23
Section 7.01 Acceptance of Trusts and Duties ........................... 23
Section 7.02 Furnishing of Documents ................................... 25
Section 7.03 Representations and Warranties ............................ 25
Section 7.04 Reliance; Advice of Counsel ............................... 26
Section 7.05 Not Acting in Individual Capacity ......................... 26
Section 7.06 Owner Trustee and Co-Owner Trustee Not Liable
for Trust Certificates, Notes or Contracts ................ 26
Section 7.07 Owner Trustee and Co-Owner Trustee May Own Trust
Certificates and Notes ............................... 27
ARTICLE VIII - COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE
AND CO-OWNER TRUSTEE ...................................... 27
Section 8.01 Owner Trustee's Fees and Expenses ......................... 27
Section 8.02 Indemnification ........................................... 27
Section 8.03 Payments to the Owner Trustee ............................. 28
ARTICLE IX - TERMINATION OF TRUST AGREEMENT ..................................... 28
Section 9.01 Termination of Trust Agreement ............................ 28
</TABLE>
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<PAGE> 4
TABLE OF CONTENTS
(Continued)
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE X - SUCCESSOR OWNER TRUSTEES AND ADDITIONAL
OWNER TRUSTEE ............................................. 29
Section 10.01 Eligibility Requirements for Owner Trustee ............... 29
Section 10.02 Resignation or Removal of Owner Trustee .................. 29
Section 10.03 Successor Owner Trustee .................................. 30
Section 10.04 Merger or Consolidation of Owner Trustee ................. 31
Section 10.05 Appointment of Co-Trustee or Separate Trustee ............ 31
ARTICLE XI - MISCELLANEOUS ...................................................... 33
Section 11.01 Supplements and Amendments ............................... 33
Section 11.02 [RESERVED] ............................................... 34
Section 11.03 Limitations on Rights of Others .......................... 34
Section 11.04 Notices .................................................. 34
Section 11.05 Severability of Provisions ............................... 35
Section 11.06 Counterparts ............................................. 35
Section 11.07 Successors and Assigns ................................... 35
Section 11.08 No Petition .............................................. 35
Section 11.09 No Recourse .............................................. 35
Section 11.10 Certificates Nonassessable and Fully Paid ................ 35
Section 11.11 Headings ................................................. 36
Section 11.12 Governing Law ............................................ 36
Section 11.13 Depositor Payment Obligation ............................. 36
Section 11.14 Certain Matters Regarding the Insurer .................... 36
</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 June 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 co-owner
trustee (the "Co-Owner Trustee").
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 June 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
3.12.
"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
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.
<PAGE> 6
"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 June 17, 1998.
"Code" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"Co-Owner Trustee" means The Chase Manhattan Bank, a New York
corporation, not in its individual capacity but solely as co-owner trustee under
this Agreement, and any successor Co- Owner Trustee hereunder.
"Co-Owner Trustee Corporate Trust Office" means the office of the
Co-Owner Trustee at which its corporate trust business shall be administered,
which initially shall be 450 West 33rd Street, New York, New York 10001-2697,
Attention: Structured Finance Services or such other office at such other
address as the Co-Owner Trustee may designate from time to time by notice to the
Certificateholders, the Residual Interestholders, the Servicer, the Depositor
and the Insurer.
"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 June 17, 1998, among
the Trust, the Co- 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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<PAGE> 7
"ERISA" means the Employment 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 June 1, 1998, among 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 $10,459,315.
"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 Co-Owner Trustee 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 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
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<PAGE> 8
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 distributions, if any, on
each Distribution Date, pursuant to Section 4.03(6) 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
Investment.
"Responsible Officer" means, with respect to the Owner Trustee, any
officer within the Owner Trustee Corporate Trust Office, and with respect to the
Co-Owner Trustee, any officer within the Co-Owner Trustee Corporate Trust
Office, including any Vice President, assistant secretary or other officer or
assistant officer of the Owner Trustee or the Co-Owner Trustee, 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 June 1, 1998, among the Trust, as Issuer, the Depositor, as Seller,
Onyx, as Servicer, the Indenture Trustee and the Co-Owner Trustee 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.
"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 Certificates" means the Certificates and the Residual Interest
Instruments, collectively.
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<PAGE> 9
"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 Brothers 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".
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-A, 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 and
the Co-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 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:
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<PAGE> 10
(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
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.
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 Co-Owner Trustee, as applicable, promptly
reimburse the Owner Trustee and the Co-Owner Trustee, respectively, for any such
expenses paid by the Owner Trustee or the Co-Owner Trustee, as applicable.
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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 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 (which may be the Co-Owner 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 by the Owner Trustee 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 or the Co-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 offices of the Trust will be at the Owner Trustee
Corporate Trust Office and the Co-Owner Trustee Corporate 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:
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(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 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
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificates.
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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 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 Section1.752-3(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.
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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.
(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
Co-Owner Trustee on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Co-Owner Trustee, and authenticated by the Co-Owner
Trustee by the manual or facsimile signature of an authorized officer of the
Co-Owner Trustee and shall be deemed to have been validly issued when so
executed. 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 Co-Owner Trustee 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 Co-Owner Trustee on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Co-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 Co-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 Co-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,
$43,600,000, (ii) Class A-2 Notes, $49,600,000, (iii) Class A-3 Notes,
$69,500,000 and (iv) Class A-4 Notes, $35,600,000. The Co- Owner Trustee 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 Co-Owner
Trustee, as applicable, or an authenticating agent of the Co-Owner Trustee, by
manual or facsimile signature,
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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 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 Co-Owner Trustee, 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 Co-Owner
Trustee notifies the Servicer that the Co-Owner Trustee 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 Co-Owner Trustee shall execute,
authenticate and deliver (or shall cause 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 Co-Owner Trustee on behalf of
the Trust shall execute, authenticate and deliver (or shall cause 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
Co-Owner Trustee 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 Co-Owner Trustee may require payment of
a sum sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Trust Certificates.
(e) All Trust Certificates surrendered for registration of transfer or
exchange, if surrendered to any agent of the Co-Owner Trustee under this
Agreement, shall be delivered to the Co-Owner Trustee and promptly canceled by
it, or, if surrendered to the Co-Owner Trustee, shall be promptly canceled by
it, and no Trust Certificates shall be issued in lieu thereof except as
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expressly permitted by any of the provisions of this Agreement. The Co-Owner
Trustee 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 Co-Owner Trustee such security or indemnity
as may be required by them to save each of them harmless, then, in the absence
of notice that such Trust Certificate has been acquired by a bona fide
purchaser, the Co-Owner Trustee on behalf of the Trust shall execute and the
Co-Owner Trustee or 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 Co-Owner Trustee 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 Co-Owner
Trustee, 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 Co-Owner Trustee, 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 Co-Owner
Trustee shall furnish or cause to be furnished to the Servicer, the Insurer and
the Depositor, within 15 days after receipt by the Co-Owner Trustee 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 Co-Owner
Trustee, 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 Co-Owner
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access, during normal business hours, to the current list
of Certificateholders. Each Owner, by receiving and holding a Trust Certificate,
agrees with the Servicer, the Depositor, the Owner Trustee and the Co-Owner
Trustee that none of the Servicer, the Depositor, the Owner Trustee or the
Co-Owner Trustee 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.
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Section 3.08 Maintenance of Office or Agency. The Co-Owner Trustee 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 Co-Owner Trustee in
respect of the Trust Certificates and the Basic Documents may be served. The
Co-Owner Trustee hereby designates the office of The Chase Manhattan Bank at the
address provided under the definition of the term "Co-Owner Trustee Corporate
Trust Office" as its office for such purposes. The Co-Owner Trustee 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 Co-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 Co-Owner Trustee shall execute, 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 Co-Owner Trustee 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(a) 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 Agent shall be permitted
to resign as Paying Agent upon 30 days' written notice to the Trust. In the
event that the Co-Owner Trustee 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). 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 Co-Owner Trustee also
in its role as Paying Agent, for so long as the Co-Owner Trustee shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the
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Paying Agent shall include any co-paying agent unless the context requires
otherwise. Notwithstanding anything herein to the contrary, the Co-Owner Trustee
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 Co-Owner Trustee and the Paying
Agent shall resign and the Owner Trustee shall assume the duties and obligations
of the Co-Owner Trustee 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 Co-Owner Trustee, 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;
(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 3.14, 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 Co-Owner Trustee.
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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 Co-Owner Trustee
and (ii) 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 and the Co-Owner 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 (B)
the Seller, the Owner Trustee, the Co-Owner Trustee 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 Co- Owner
Trustee) or the Co-Owner 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 Certificate Owners, then the Co-Owner
Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee on behalf of the Trust shall
execute and the Co-Owner Trustee 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 Co- Owner 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
Trust Certificates, the Co-Owner Trustee shall recognize the Holders of the
Definitive Trust Certificates as Certificateholders hereunder. The Co-Owner
Trustee shall not be liable if the Co-Owner Trustee 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 Co-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 Co-Owner Trustee 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
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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:
"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) 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
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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.
(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 Co-Owner Trustee shall take
any action unless at least 30 days before the taking of such action, the Owner
Trustee or the Co-Owner Trustee, 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 Co-Owner Trustee, 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);
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(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
(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 Co-Owner Trustee 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
Co-Owner Trustee may only take the actions referred to in the preceding sentence
upon written instructions signed by the Owners.
Section 4.03 Action by Owners with Respect to Bankruptcy. Neither the
Owner Trustee nor the Co-Owner Trustee 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 Co-Owner Trustee, 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 Co-Owner Trustee to take or to refrain from taking any
action if such action or inaction would be contrary to any obligation of the
Trust, or if the Owner Trustee or the Co-Owner Trustee, 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 Co-Owner Trustee be obligated to follow any such direction, if given.
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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 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
Co-Owner Trustee shall cause the Servicer, for the benefit of the Owners, to
establish and maintain in the name of the Trust for the benefit of the Co-Owner
Trustee an Eligible Account (the "Certificate Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Owners. 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 Co-Owner Trustee 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
Co-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 Co-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 Co-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 Co-Owner
Trustee by the Servicer pursuant to Section 4.05 of the Sale and Servicing
Agreement with respect to such Distribution Date.
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(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
Co-Owner Trustee is hereby 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 Co-Owner Trustee from contesting any such tax in
appropriate proceedings, and withholding payment of such tax, if permitted by
law, pending the outcome of such proceedings). The amount of any withholding tax
imposed with respect to 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee shall elect under Section 1278 of the Code to
include in income currently any market discount that accrues with respect to the
Contracts. The Co- Owner Trustee shall not make the election provided under
Section 754 of the Code.
Section 5.06 Signature on Returns; Tax Matters Partner.
(a) The Co-Owner Trustee shall sign on behalf of the Trust the tax
returns of the 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
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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 holder 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 CO-
OWNER TRUSTEE
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; provided, however, that the Co-Owner
Trustee is authorized and directed to execute and deliver on behalf of the Trust
the Depository Agreement, as evidenced conclusively by the Co- Owner Trustee's
execution thereof. In addition to the foregoing, each of the Owner Trustee and
the Co-Owner Trustee is authorized, but shall not be obligated, to take all
actions required of the Trust pursuant to the Basic Documents. Each of the Owner
Trustee and the Co-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 Co-Owner Trustee 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 Co-Owner Trustee to carry out its
obligations under the Administration Agreement or this Agreement, respectively;
and
(b) it shall be the duty of the Co-Owner Trustee to discharge all of its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the Trust and the
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Co-Owner Trustee 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
Co-Owner Trustee 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 Co-Owner Trustee shall be required
to take any action hereunder or under any other Basic Document if the Owner
Trustee or the Co-Owner Trustee, 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 Co-Owner Trustee, 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 Co-Owner Trustee 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
Co-Owner Trustee, 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 Co-Owner Trustee, as applicable, acts in good
faith in accordance with any written instruction of the Owners received, the
Owner Trustee or the Co-Owner Trustee, as applicable, shall not be liable on
account of such action to any Person. If the Owner Trustee or the Co-Owner
Trustee 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 Co-Owner Trustee 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
Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, as
applicable, acts or refrains from acting in good faith in accordance with any
such instruction received, the Owner Trustee or the Co-Owner Trustee, as
applicable, shall not be liable, on account of such action or inaction, to any
Person. If the Owner Trustee or the Co-Owner Trustee 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
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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 Co-Owner Trustee 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 Co-Owner
Trustee, 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 Co-Owner Trustee, 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 Co-Owner Trustee. Neither the
Owner Trustee nor the Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, 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 Co-Owner Trustee 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 Co-Owner Trustee, as applicable, pursuant to this
Agreement, (ii) the other Basic Documents and (iii) any document or instruction
delivered to the Owner Trustee or the Co-Owner Trustee, as applicable, pursuant
to Section 6.03.
Section 6.06 Restrictions. Neither the Owner Trustee nor the Co-Owner
Trustee 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 Co-Owner Trustee, 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 Co-Owner Trustee
to take action that would violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE CO-OWNER
TRUSTEE
Section 7.01 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and each of the Owner Trustee and the Co-Owner Trustee
agrees to perform its duties hereunder with respect to such trusts but only upon
the terms of this Agreement and the other Basic Documents. Neither the Owner
Trustee nor the Co-Owner Trustee shall be liable except for the
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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 Co- Owner Trustee and, in the absence of bad
faith on the part of the Owner Trustee or the Co-Owner Trustee, as applicable,
the Owner Trustee and the Co-Owner Trustee may conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed therein,
upon any certifi cates or opinions furnished to the Owner Trustee or the
Co-Owner Trustee and conforming to the requirements of this Agreement. Each of
the Owner Trustee and the Co-Owner Trustee 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
Co-Owner Trustee 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 Co-Owner Trustee, 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 Co-Owner Trustee shall not be
liable for any error of judgment made by a Responsible Officer of the Owner
Trustee or the Co-Owner Trustee, respectively;
(b) neither the Owner Trustee nor the Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner
Trustee be liable for indebtedness evidenced by or arising under any of the
Basic Documents, including the principal of and interest on the Notes;
(e) neither the Owner Trustee nor the Co-Owner Trustee 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 the Insurer 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner
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Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, as applicable,
security or indemnity satisfactory to it against the costs, expenses and
liabilities that may be incurred by the Owner Trustee or the Co- Owner Trustee,
as applicable, therein or thereby; the right of the Owner Trustee and the
Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner 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 Owner Trustee or Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, respectively,
shall have received written notice thereof. In the absence of receipt of such
notice, the Owner Trustee and Co-Owner Trustee may conclusively assume that
there is no default or Servicer Default;
(j) Neither the Owner Trustee nor the Co-Owner Trustee shall be required
to expend or risk its own funds or otherwise incur financial liability for the
performance of any of its duties hereunder or the exercise of any of its rights
or powers if there is reasonable ground for believing that the repayment of such
funds or adequate indemnity against such risk or liability is not reasonably
assured to it;
(k) Each of the Owner Trustee and the Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, as
applicable, of the costs,
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expenses or liabilities likely to be incurred by it in the making of such
investigation is, in the opinion of the Owner Trustee or Co-Owner Trustee, as
applicable, not reasonably assured to it by the security afforded to them by the
terms of this Agreement, the Owner Trustee or Co-Owner Trustee, 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 Co-Owner Trustee 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 Co-Owner Trustee may execute any of
the trusts or powers hereunder or perform any duties hereunder either directly
or by or through agents, attorneys or custodians, and neither the Owner Trustee
nor the Co-Owner Trustee shall be responsible for any misconduct or negligence
on the part of any such agent, attorney or custodian appointed by the Owner
Trustee or Co-Owner Trustee, as applicable, with due care.
Section 7.02 Furnishing of Documents. The Owner Trustee shall furnish to
the Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee
under the Basic Documents or furnished to the Co-Owner Trustee as provided in
the preceding sentence.
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.
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(b) The Co-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 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 Co-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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee 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 Co-Owner Trustee, 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 Co-Owner Trustee 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 Co-Owner Trustee 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
Co-Owner Trustee 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 Co- Owner Trustee shall be liable for anything done, suffered or omitted
in good faith by it in accordance
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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 Co-Owner
Trustee hereunder and not in its individual capacity, and all Persons having any
claim against the Owner Trustee or the Co-Owner Trustee 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.
Section 7.06 Owner Trustee and Co-Owner Trustee Not Liable for Trust
Certificates, Notes or Contracts. The recitals contained herein and in the Trust
Certificates (other than the signature of the Owner Trustee or the Co-Owner
Trustee and the certificate of authentication on the Trust Certificates) shall
be taken as the statements of the Depositor, and neither the Owner Trustee nor
the Co-Owner Trustee assumes responsibility for the correctness thereof. Neither
the Owner Trustee nor the Co-Owner Trustee makes any representations as to the
validity or sufficiency of this Agreement, any other Basic Document or the Trust
Certificates (other than the signature of the Owner Trustee or the Co-Owner
Trustee and the certificate of authentication on the Trust Certificates) or the
Notes, or of any Contract or related documents. The Owner Trustee and the
Co-Owner Trustee 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 Co-Owner Trustee.
Section 7.07 Owner Trustee and Co-Owner Trustee May Own Trust
Certificates and Notes. The Owner Trustee and the Co-Owner Trustee, 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 Co-Owner
Trustee, as the case may be.
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ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER
TRUSTEE AND CO-OWNER TRUSTEE
Section 8.01 Owner Trustee's Fees and Expenses. The Owner Trustee and
the Co-Owner Trustee 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 Co-Owner Trustee,
respectively, and the Owner Trustee and the Co-Owner Trustee 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
Co-Owner Trustee 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 Co-Owner Trustee, each
other 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, Co-Owner
Trustee, 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 third
sentence of Section 7.01. The indemnities contained in this Section shall
survive the resignation or termination of the Owner Trustee or the Co-Owner
Trustee 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 Co-Owner Trustee, 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. Any amounts paid to the
Owner Trustee or the Co-Owner Trustee 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
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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 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 Co-Owner Trustee by letter to Certificateholders mailed within five
Business Days of receipt of notice of such termination from the Servicer given
pursuant to Section 9.01(c) 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 Co-Owner Trustee shall give such notice
to the Certificate Registrar (if other than the Co-Owner Trustee) and the Paying
Agent (if other than the Co-Owner Trustee) 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 Co-Owner Trustee 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 Co- Owner Trustee 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 Co-Owner Trustee may take
appropriate steps, or may appoint an agent to take appropriate steps, to contact
the remaining Certificateholders concerning surrender of their Certificates, and
the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement. Any funds remaining in the Trust after
exhaustion of such remedies shall be distributed by the Co-Owner Trustee 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 AND ADDITIONAL OWNER
TRUSTEE
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 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 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 may remove the Owner
Trustee. If the Administrator shall remove the Owner Trustee under the authority
of the immediately preceding sentence, the Administrator shall promptly appoint
a successor Owner Trustee 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.
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.
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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 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 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 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 alone shall have the
power to make such appointment. No co-trustee or separate trustee under this
Agreement shall be required to meet the terms of eligibility as a successor
Owner Trustee, provided that such co-trustee or successor trustee
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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.
The Owner Trustee on behalf of the Trust hereby appoints The Chase
Manhattan Bank as Co- Owner Trustee 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 Co-Owner Trustee under this Agreement and the
other Basic Documents. The Owner Trustee and the Co-Owner Trustee each agree
that upon the occurrence and continuation of an Insurer Default, the Co-Owner
Trustee shall resign and the Owner Trustee shall assume all rights, duties and
obligations of the Co-Owner Trustee under the Sale and Servicing Agreement and
this Agreement, including without limitation, the obligations of the Co-Owner
Trustee 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.
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; provided, that the Co-Owner Trustee, in performing its duties and
obligations under the Sale and Servicing Agreement, may act separately in its
capacity as Co-Owner Trustee without the Owner Trustee joining in such acts;
(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 and the Owner Trustee acting jointly may at any
time accept the resignation of or remove any separate trustee or co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. 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.
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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 Co-Owner Trustee, in its capacity as Co-Owner Trustee, 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 Co- Owner Trustee, 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 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 effect the interest of any Residual
Interestholder of the Person requesting such amendment obtains an opinion of
counsel to such effect, or Residual Interestholder 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 Co-Owner Trustee, 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
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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 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
Co-Owner Trustee 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 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 Co-Owner Trustee 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
Co-Owner Trustee, as the case may be, have been satisfied. The Owner Trustee and
the Co-Owner Trustee may, but shall not be obligated to, enter into any such
amendment that affects the Owner Trustee's or the Co-Owner Trustee'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 Co-Owner Trustee, the Depositor, 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.
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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
Co-Owner Trustee, 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
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 Co-Owner Trustee 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 Co-Owner Trustee, 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.
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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 Co-Owner Trustee, 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.
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
Co-Owner Trustee 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
Co-Owner Trustee or the Holders, the Notes, the
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<PAGE> 42
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.
Section 11.15 Fiduciary Duties. The duties and responsibilities of the
Owner Trustee and the Co-Owner Trustee 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 Co-Owner
Trustee shall have management responsibilities or owe any fiduciary duties to
the Insurer.
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<PAGE> 43
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 Co-Owner Trustee
By: /s/ Vada Haight
-------------------------------------------
Name: Vada Haight
Title: Vice President
<PAGE> 1
EXHIBIT 10.1
SALE AND SERVICING AGREEMENT
between
ONYX ACCEPTANCE OWNER TRUST 1998-A
as Issuer,
ONYX ACCEPTANCE FINANCIAL CORPORATION
as Seller,
ONYX ACCEPTANCE CORPORATION
as Servicer
and
THE CHASE MANHATTAN BANK
as Indenture Trustee and as Co-Owner Trustee
Dated as of June 1, 1998
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE I - DEFINITIONS ..................................................... 1
SECTION 1.01. DEFINITIONS ........................................... 1
SECTION 1.02. USAGE OF TERMS ........................................ 19
SECTION 1.03. SECTION REFERENCES .................................... 19
SECTION 1.04. CALCULATIONS .......................................... 19
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 .......... 22
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS ....................... 28
SECTION 2.04. CUSTODY OF CONTRACT FILES ............................. 28
SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS .......... 29
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT ........................ 31
SECTION 2.07. INDEMNIFICATION ....................................... 31
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION ...................... 32
SECTION 2.09. NONPETITION COVENANT .................................. 32
SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT
THE CLOSING DATE ............................... 32
ARTICLE III - ADMINISTRATION AND SERVICING OF CONTRACTS ..................... 33
SECTION 3.01. DUTIES OF SERVICER .................................... 33
SECTION 3.02. COLLECTION OF CONTRACT PAYMENTS ....................... 35
SECTION 3.03. REALIZATION UPON CONTRACTS ............................ 35
SECTION 3.04. INSURANCE ............................................. 36
SECTION 3.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES 36
SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER . 37
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH OF COVENANT ......... 38
SECTION 3.08. SERVICING COMPENSATION ................................ 39
SECTION 3.09. REPORTING BY THE SERVICER ............................. 39
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE ..................... 41
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT 42
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION
REGARDING CONTRACTS ............................ 42
SECTION 3.13. FIDELITY BOND ......................................... 42
SECTION 3.14. INDEMNIFICATION; THIRD PARTY CLAIMS ................... 43
SECTION 3.15. REPORTS TO SECURITYHOLDERS AND THE RATING AGENCIES .... 43
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS(CONT'D.)
<TABLE>
<CAPTION>
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<S> <C>
ARTICLE IV - DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS
TO SECURITYHOLDERS .................................... 43
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS ....................... 43
SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT;
REALIZATION UPON POLICY; NET DEPOSITS .......... 45
SECTION 4.03. DISTRIBUTIONS ......................................... 46
SECTION 4.04. SPREAD ACCOUNT ........................................ 48
SECTION 4.05. STATEMENTS TO SECURITYHOLDERS ......................... 49
ARTICLE V - THE SELLER ...................................................... 51
SECTION 5.01. LIABILITY OF SELLER; INDEMNITIES ...................... 51
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS .... 52
SECTION 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS .......... 52
SECTION 5.04. SELLER NOT TO RESIGN .................................. 52
SECTION 5.05. SELLER MAY OWN SECURITIES ............................. 52
ARTICLE VI - THE SERVICER ................................................... 53
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES .................... 53
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER ....... 54
SECTION 6.03. PERFORMANCE OF OBLIGATIONS ............................ 54
SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT .................... 55
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS ........ 55
ARTICLE VII - DEFAULT ....................................................... 56
SECTION 7.01. EVENTS OF DEFAULT ..................................... 56
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR .............. 58
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS .... 59
SECTION 7.04. WAIVER OF PAST DEFAULTS ............................... 59
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS ........... 59
ARTICLE VIII - TERMINATION .................................................. 60
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND
DISCHARGE OF THE INDENTURE ..................... 60
SECTION 8.02. TRANSFER TO THE INSURER ............................... 60
ARTICLE IX - MISCELLANEOUS .................................................. 61
SECTION 9.01. AMENDMENT ............................................. 61
SECTION 9.02. PROTECTION OF TITLE TO TRUST .......................... 62
SECTION 9.03. GOVERNING LAW ......................................... 64
SECTION 9.04. NOTICES ............................................... 64
SECTION 9.05. SEVERABILITY OF PROVISIONS ............................ 65
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS(CONT'D.)
<TABLE>
<CAPTION>
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<S> <C>
SECTION 9.06. ASSIGNMENT ............................................ 65
SECTION 9.07. THIRD PARTY BENEFICIARIES ............................. 65
SECTION 9.08. CERTAIN MATTERS RELATING TO THE INSURER ............... 65
SECTION 9.09. HEADINGS .............................................. 66
SECTION 9.10. ASSIGNMENT BY ISSUER .................................. 66
SECTION 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE .............. 66
</TABLE>
iii
<PAGE> 5
This SALE AND SERVICING AGREEMENT, dated as of June 1, 1998 (this
"AGREEMENT"), is between Onyx Acceptance Owner Trust 1998-A (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 Co-Owner Trustee on behalf
of the Certificateholders (in such capacity, the "CO-OWNER TRUSTEE") .
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 3% 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).
"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,
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<PAGE> 6
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, service, warranty contracts, other items
customarily financed as part of retail automobile installment sales contracts,
and related costs.
"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
"BANK" means the institution designated as such pursuant to the
Insurance Agreement, or a successor Person pursuant to the Insurance Agreement,
and thereafter "Bank" shall mean such successor Person.
"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 Servicer'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.
"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.
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<PAGE> 7
"CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in January, 2005.
"CERTIFICATEHOLDER" means any Holder of a Certificate.
"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the sum of the Certificate Interest
Distributable Amount for the immediately preceding Distribution Date and any
outstanding Certificate Interest Carryover Shortfall on such 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.
"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 of any Distribution Date, the excess of the sum of the Certificate
Principal Distributable Amount and any outstanding Certificate Principal
Carryover Shortfall for the immediately preceding Distribution Date, over the
amount in respect of principal that is actually deposited in the Certificate
Distribution Account on such Distribution Date.
"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
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<PAGE> 8
not be less than the amount that is necessary to reduce the outstanding
principal amount of the Certificates to zero.
"CERTIFICATE RATE" means 5.99% 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 June 1999.
"CLASS A-1 NOTE" means any Class A-1 Note in the form attached to the
Indenture as Exhibit C.
"CLASS A-1 RATE" means 5.60% per annum.
"CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution Date
occurring in January 2001.
"CLASS A-2 NOTE" means any Class A-2 Note in the form attached to the
Indenture as Exhibit D.
"CLASS A-2 RATE" means 5.75% per annum.
"CLASS A-3 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution Date
occurring in August 2002.
"CLASS A-3 NOTE" means any Class A-3 Note in the form attached to the
Indenture as Exhibit E.
"CLASS A-3 RATE" means 5.85% per annum.
"CLASS A-4 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in June 2003.
"CLASS A-4 NOTE" means any Class A-4 Note in the form attached to the
Indenture as Exhibit F.
"CLASS A-4 RATE" means 5.93% per annum.
"CLEARING ACCOUNT" means Account No. 4159359173 in the name of the
Seller maintained at Wells Fargo Bank, N.A.
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<PAGE> 9
"CLEARING AGENCY" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Exchange Act.
"CLOSING DATE" means June 17, 1998.
"CO-OWNER TRUSTEE" means The Chase Manhattan Bank, not in its individual
capacity but solely as the Co-Owner Trustee under the Trust Agreement, the
Indenture and this Agreement acting on behalf of the Certificateholders, its
successors in interest, and any successor Co-Owner Trustee under such
agreements.
"CO-OWNER TRUSTEE CORPORATE TRUST OFFICE" means the principal office of
the Co-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 450 W. 33rd Street, New York, New York 10001-2697,
Attention: Structured Finance Services; or at such other address as the Co-
Owner Trustee may designate from time to time by notice to the Securityholders,
the Insurer, the Servicer and the Seller
"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.
"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
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<PAGE> 10
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 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 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 June 1, 1998.
"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.
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<PAGE> 11
"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 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 means as of any Distribution Date, the amount
by which (i) the sum of the amounts set forth in Section 4.03(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 Co-Owner Trustee.
"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 July 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
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<PAGE> 12
direct obligations of, or obligations fully guaranteed by, the Federal Home Loan
Mortgage Corporation and the Federal National Mortgage Association;
(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 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 2.04, 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.
"INSOLVENCY PROCEEDING" shall have the meaning specified in Section
7.06.
"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:
(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
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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-A 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 is a Liquidated
Contract.
"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 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.
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"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 Rule of 78's 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) 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.
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<PAGE> 16
"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 sum of the
Note Interest Distributable Amount for such Class for the immediately preceding
Distribution Date and any outstanding Note Interest Carryover Shortfall for such
Class on such 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.
"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 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 sum of the Note Principal
Distributable Amount for such Distribution Date and any outstanding Note
Principal Carryover Shortfall for the immediately
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<PAGE> 17
preceding 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 Co-Owner Trustee, as the case may be, and the Insurer.
"ORIGINAL CERTIFICATE BALANCE" means $10,459,315.
"ORIGINAL POOL BALANCE" means $208,759,315, which is the aggregate of
the Principal Balances of the Contracts as of the Cut-Off Date .
"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 Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract
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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,
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 Co-Owner Trustee or any other Person that meets the eligibility standards
for the Co-Owner Trustee 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.
"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 26693 dated June 17, 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.
"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.
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"POLICY CLAIM AMOUNT" means, with respect to each Distribution Date, 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.
"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 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 7.06.
"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 in accordance with the Recomputed
Actuarial Method, in the case of a Rule of 78's Contract.
"PURCHASE AGREEMENT" means the Sale and Servicing Agreement dated as of
September 8, 1994 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.
"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.
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"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,
(ii) the Principal Balance 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 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 as to which the portion of
payments allocable to earned interest and principal thereunder is determined
according to the "Rule of 78's." Under the
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"Rule of 78's," 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 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 Merrill Lynch & Co. and verified by the Servicer. The
Schedule of Contracts attached hereto as Schedule I sets forth the Original Pool
Balance, as well as the following information with respect to Contract in
columns:
Contract Number ("ACCT NBR")
Date of Origination ("ORG DT")
Maturity Date ("MAT DT")
Monthly P&I ("P&I") Original Principal
Balance ("ORIG AMT")
Outstanding Principal Balance ("PRIN BAL")
Annual Percentage Rate ("APR")
In addition, the information contained in Schedule I 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.
"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 5.03.
"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.
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"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.
"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" means, on any day, an amount equal to 2% of the
outstanding principal amount of the Securities as of the Cut-Off Date; provided,
however, that if the Net Yield is less than 2.5%, the Spread Account Maximum
shall be the greater of (a) 5% of the current aggregate outstanding amount of
the Securities and (b) 2% of the outstanding principal amount of the Securities
as of the Cut-Off Date; and provided further, however, that if a Trigger Event
(as defined in the Insurance Agreement) has occurred and is continuing, or if
the Net Yield is less than 2%, the Spread Account Maximum shall equal the Policy
Amount with respect to such Distribution Date. The foregoing notwithstanding,
the Spread Account Maximum may be calculated pursuant to any other formula as
the parties to the Insurance Agreement and the Rating Agencies may agree, and
may include any other provisions or contain any additional requirements as the
parties to the Insurance Agreement may agree, which the Rating Agencies may
require to maintain the ratings of the Securities, and to maintain the rating of
the transactions contemplated in the Insurance Agreement and this Agreement,
without consideration of the Policy, at not less than investment grade, as
defined by the Rating Agencies.
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"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., and its successors in interest.
"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 AGREEMENT" means the Trust Agreement, dated as of June 1, 1998,
between the Depositor, the Owner Trustee and the Co-Owner Trustee.
"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.
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 Class A-1 Notes will be calculated on the basis of the
actual number of days elapsed in an Interest Accrual Period and a 360-day year.
Interest on the Class A-2 Notes, the Class A-3 Notes, the Class A-4 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
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such Contracts were actuarial contracts the scheduled principal balances of
which are the Principal Balances thereof, and collections of interest on Simple
Interest 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 including,
without limitation, all payments of Monthly P&I due on or after the
Cut-Off Date, 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 and all other proceeds received on
or after the Cut-Off Date in respect of such Contracts and any and all
security interests in the Financed Vehicles;
(ii) the Contract Documents relating to the Contracts (except
the Contract Documents 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);
(iii) 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);
(iv) 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;
(v) the security interest 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;
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(vi) the Seller's right to proceeds under the Blanket Insurance
Policy with respect to the Contracts; and
(vii) 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 Co-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 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, including from the Seller 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 Co-Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Co-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
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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 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.
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(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.
(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
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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 Rule of 78's 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 Cut-Off Date, and in the case of Rule of 78's 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)(i) 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 Trustee on behalf of the Trust 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
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Issuer 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 Certificateholders, 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'
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.
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(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 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 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.
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(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 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;
(xxiii)The first payment under such Contract is due on or before
July 15, 1998.
(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 either Arizona,
California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois,
Indiana, Iowa, Michigan, Missouri, Montana, North Carolina, Nevada,
Oregon, Tennessee, Texas, Utah or Washington on the date or 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 16.14% of the
Outstanding Principal Balance of all Contracts is attributable to loans
involving new Financed Vehicles, and approximately 83.16% 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.
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(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 respect (including, but not limited to, for
accounting and tax reporting 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.
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 or the Co-Owner Trustee 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 in the manner set forth
in Section 2.03. Upon any such purchase, 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 Co-Owner Trustee, 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
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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.
(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
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Servicer, such file area may contain contract documents for other installment
sales contracts serviced by the Servicer.
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
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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 3.07 or 4.05; (v)
that, if such Contract is a Liquidated Contract 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 Co- Owner Trustee, 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 Co-Owner
Trustee, 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 Co-Owner Trustee, 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 Co-Owner Trustee, 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
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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) 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 Co-Owner Trustee, 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
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or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Seller.
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 Co-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, the Issuer or any of them, any and all instruments of satisfaction or
cancellation, or partial or full release or discharge, and all other
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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, 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 Co- Owner Trustee, 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 Co-Owner
Trustee, 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 Rule of 78's 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
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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
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 Co-Owner Trustee; 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 Final 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.
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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 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 may cause to be maintained the Blanket Insurance Policy,
and to the extent such Blanket Insurance Policy is maintained, 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) 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
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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 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, 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:
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(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 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 Co-Owner Trustee 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 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 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
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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 OF COVENANT.
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 representation and warranties set forth in Section 3.06 or of
the covenants set forth in Section 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 pursuant to Section 3.02, 3.05 (other
than as specified therein) 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
Rule of 78's 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) 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 servicing activities
hereunder and shall not be entitled to reimbursement of such expenses except to
the extent provided in Section 3.03.
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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
Co-Owner Trustee, 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
Co-Owner Trustee and the Indenture Trustee, 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 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;
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(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 Co-Owner Trustee, 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;
(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:
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(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 Co-Owner Trustee, 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 Co-Owner Trustee, 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 Co-Owner Trustee, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event 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 Co-Owner
Trustee, 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
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the Contracts and the distributions on the Notes and Certificates under this
Agreement, 4(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 Co-Owner Trustee, the Indenture Trustee and
the Insurer reasonable access to the Contract Files. 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.
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 Co-Owner Trustee, 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 Co-Owner Trustee, 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 Co-Owner
Trustee, the Indenture Trustee, the Insurer, the Custodian or the
Securityholders.
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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:
(i) an account denominated "Collection Account - OT 1998-A, The
Chase Manhattan Bank, Indenture Trustee" (the "COLLECTION ACCOUNT");
(ii) an account denominated "Payahead Account - OT 1998-A, The
Chase Manhattan Bank, as agent" (the "PAYAHEAD ACCOUNT");
(iii) an account denominated "Spread Account - OT 1998-A, The
Chase Manhattan Bank, Indenture Trustee" (the "SPREAD ACCOUNT");
(iv) an account denominated "Note Distribution Account - OT
1998-A, The Chase Manhattan Bank, Indenture Trustee") (the "NOTE
DISTRIBUTION ACCOUNT"); and
(v) an account denominated "Certificate Distribution Account -
OT 1998-A, The Chase Manhattan Bank, Co-Owner Trustee" (the "CERTIFICATE
DISTRIBUTION ACCOUNT").
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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-A, 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 Co-Owner Trustee, 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 Rule of 78's
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 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
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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 Day 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 Section 4.05, 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 required to the Collection Account. Prior to the
Servicer Report Date, amounts with respect to Rule of 78's 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 and 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 Co-Owner Trustee 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
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Agent and the Bank, with a copy to the Insurer, the Co-Owner Trustee 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
Insurer shall make claims under the Policy for Preference Amounts (other than
those with respect to a particular Distribution Date) 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 Co-Owner Trustee, 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 Indenture Trustee shall
withdraw funds from the Collection Account equal to the amount of Net
Collections available with respect to such Distribution Date on deposit in the
Collection Account. The Indenture Trustee shall deposit such funds withdrawn
from the Collection Account into the Payment Account to be distributed pursuant
to Section 4.03(a).
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
Co-Owner Trustee, 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
Co-Owner Trustee, 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
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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 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) in the event that the distributions described in clauses
(i) through (x) above have been funded exclusively from Net Collections,
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 Section 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
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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 (vii) 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 Co- Owner Trustee shall distribute all amounts on deposit in the
Certificate Distribution Account to 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
Certificate Distribution Account described in clauses (i) above, the
Certificate Principal Distributable Amount to the extent of the
Certificate Balance;
(iii) after giving effect to the reduction in Net Collections
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 Co-Owner Trustee. 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.
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(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 on deposit in the Spread Account on any Distribution Date
(after giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Spread Account Maximum, 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) Upon termination of the Trust pursuant to Section 8.01, any amounts
on deposit in the Spread Account, after payments of amounts due to the
Securityholders or the Insurer pursuant to the Insurance Agreement, will be paid
to the Seller; 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 shall have occurred
during the period ending one year and one day 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 Seller.
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 either 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 Seller. 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 Seller
upon receipt by the Insurer of both a final order determining that such payments
are not recoverable and an opinion of nationally recognized
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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.
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 CO-OWNER TRUSTEE 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 Rule of 78's 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;
(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 Co-Owner
Trustee 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;
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(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), (ii) or (v) 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.
(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), (ii)
and (v) 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.
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The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Co- Owner Trustee, the Indenture Trustee, 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, in the case of the Issuer,
not including 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 asserted with respect to ownership of the Contracts, or federal
or other income taxes arising out of distributions on the Certificates or the
Notes) and costs and expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Co- Owner Trustee, the Indenture Trustee, 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 Co- Owner Trustee, the Indenture Trustee, 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 Co-Owner Trustee, 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 Owner Trustee of any of its representations or warranties set forth in the
Trust Agreement, (ii) the Co-Owner Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Co-Owner Trustee or shall arise from
the breach by the Co-Owner Trustee of any of its representations or warranties
set forth in the Trust Agreement or (iii) the Indenture Trustee, shall be due to
the willful misfeasance, bad faith or negligence of the Indenture Trustee.
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.
(a) 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 Co-Owner
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Trustee, the Indenture Trustee and the Insurer an agreement in form and
substance reasonably satisfactory to the Issuer, the Co-Owner Trustee, 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 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 Co-Owner Trustee, 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 Co-Owner Trustee, the Indenture Trustee, the Insurer, the
Custodian and their respective
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officers, directors, agents and employees from and against any taxes that may at
any time be asserted against the Issuer, the Owner Trustee, the Co-Owner
Trustee, the Indenture Trustee or the Insurer 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 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 asserted with respect to ownership of the Contracts, or 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 Co-Owner Trustee, 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 Co-Owner Trustee, 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 Co-Owner Trustee,
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
Co-Owner Trustee, the Indenture Trustee, the Insurer or the Custodian; (iii)
shall arise from the Co-Owner Trustee'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 Co-Owner Trustee, 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 Co- Owner Trustee, 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
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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.
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 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
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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 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:
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(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 Co-Owner
Trustee 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 default under the Policy has occurred and is
continuing and no insolvency of the Insurer has occurred, 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 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 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 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 o any of the foregoing;
(f) any change of control of the Servicer in violation of the covenant
set forth in Section 7.02 hereof;
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(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 to which Section 2.02 or 3.06 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
Certificateholders evidencing in the aggregate not less than 25% of the
Certificate Balance or, so long as no default has occurred under the Policy and
is continuing and 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 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.
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SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
Upon the termination of the Servicer by the Insurer pursuant to Section
7.01, 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, (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, compensation therefor, 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 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 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 CO-OWNER TRUSTEE 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
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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 or any such
event or proceeding applicable to an Obligor under a Contract 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, a Contract or any Notes or Certificates. Any
Preference Amounts paid by the Insurer shall be reimbursed to the Insurer as
provided in Section 4.04(b). Each Noteholder, by its purchase of Notes, each
Certificateholder, by its purchase of Certificates, the Owner Trustee, the
Co-Owner Trustee and the Indenture Trustee hereby agree that, so long as neither
a default under the Policy nor an 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 Co-Owner Trustee and each Securityholder in the conduct of any
Insolvency Proceeding, including, without 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 Co-Owner Trustee, 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
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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 such Collection Period.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee and the Co-Owner Trustee, 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 Co-Owner Trustee 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 Co-Owner Trustee, on
behalf of the Trust, shall execute, and the Co-Owner Trustee 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 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 Co-Owner Trustee 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 Co-Owner Trustee, 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
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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 Co-Owner Trustee, 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
Co-Owner Trustee 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
Co-Owner Trustee or the 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 Co-Owner Trustee and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Co-Owner Trustee'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 Co-Owner Trustee 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 Co-Owner Trustee and the Insurer in the Contracts and in the proceeds
thereof. The Servicer shall deliver (or cause to be delivered) to the Co-Owner
Trustee and the Indenture Trustee file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
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(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 Co-Owner Trustee and the Indenture
Trustee at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Co-Owner
Trustee 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.
(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 Co-Owner Trustee,
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
Co-Owner Trustee, 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.
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(i) The Servicer shall deliver to the Co-Owner Trustee, 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) 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 CO-OWNER TRUSTEE 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;
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(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 Co-Owner Trustee, at the Co-Owner Trustee Corporate
Trust 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; and
(viii) Standard & Poor's, to Standard & Poor's Ratings Services,
26 Broadway (15th Floor), New York, New York 10004, Attention: Asset
Backed Surveillance Department;
(ix) the Custodian, to Bankers Trust Company of California,
N.A., 3 Park Plaza, 16th Floor, Irvine, California 92614, Attention:
Mortgage Custody - ONYX 98-A, 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.
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
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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.
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 Depositor, the Owner Trustee or the
Co-Owner Trustee 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
Co-Owner Trustee or the Holders, the Notes, 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.
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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 Co-Owner Trustee, 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-A
as Issuer
By: Bankers Trust (Delaware), not in its individual
capacity but solely as Owner Trustee
By: /s/ Louis Bodi, as attorney in fact
----------------------------------------------------
Name: Louis Bodi
Title: Vice President
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 Co-Owner Trustee
By: /s/ Vada Haight
----------------------------------------------------
Name: Vada Haight
Title: Vice President
<PAGE> 74
ACKNOWLEDGED AND AGREED TO
solely with respect to the rights and duties
of the Custodian
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Custodian
By: /s/ Jerome W. Hamey
----------------------------------------------
Name: Jerome W. Hamey
Title: Assistant Vice President
