<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report: April 28, 2000
- --------------------------------------------------------------------------------
(Date of earliest event reported)
ONYX ACCEPTANCE FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Delaware 333-92245 33-0639768
- ------------------------ --------------------- -------------------
(State of Incorporation) (Commission File No.) (I.R.S. Employer
Identification No.)
27051 Towne Centre Drive, Suite 200
Foothill Ranch, California 92610
- ---------------------------------------- -------------------
(Address of Principal executive offices) (Zip Code)
Registrant's Telephone Number, Including Area Code: (949) 465-3500
<PAGE> 2
Item 5. Other Events.
Reference is hereby made to the Registrant's Registration Statement on
Form S-3 (File No. 333-92245) filed with the Securities and Exchange Commission
(the "Commission") on December 7, 1999, Amendment No. 1 thereto filed with the
Commission on January 18, 2000 and Amendment No. 2 thereto filed with the
Commission on February 10, 2000 (as amended, the "Registration Statement"),
pursuant to which the Registrant registered $2,000,000,000 aggregate principal
amount of its 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 February 23, 2000 and the related Prospectus Supplement dated
April 26, 2000, as filed with the Commission pursuant to Rule 424(b)(5), with
respect to the Registrant's Auto Loan Backed Notes Series 2000-B, consisting of
Class A-1 Auto Loan Backed Notes, Class A-2 Auto Loan Backed Notes, Class A-3
Auto Loan Backed Notes, Class A-4 Auto Loan Backed Notes and Class B Notes (the
"Notes"or the "Offered Notes").
The Offered Notes were sold to Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Chase Securities Inc. ("Chase Securities") and
Salomon Smith Barney Inc. ("Salomon" and, together with Merrill Lynch and Chase
Securities, the "Underwriters") pursuant to the terms of the Underwriting
Agreement dated as of April 26, 2000 (the "Underwriting Agreement") between the
Registrant and Merrill Lynch, as representative of itself, Chase Securities and
Salomon. A copy of the Underwriting Agreement is filed herewith as Exhibit 1.3.
The Notes were issued pursuant to an Indenture dated as of April 1, 2000
(the "Indenture") among ONYX ACCEPTANCE OWNER TRUST 2000-B (the "Trust") and The
Chase Manhattan Bank, as Indenture Trustee. A copy of the Indenture is filed
herewith as Exhibit 4.8.
The Notes are secured by the assets of the Trust pursuant to the
Indenture. The assets of the Trust include primarily a pool of fixed rate motor
vehicle retail installment sales contracts and installment loan agreements (the
"Contracts") secured by new and used automobiles, light-duty trucks and vans
(the "Financed Vehicles"), certain monies due under the Contracts and certain
monies received with respect to the Contracts on or after the related Cut-Off
Date, as defined in the Indenture, security interests in the Financed Vehicles
and certain other property.
Residual Interest Instruments that represent undivided ownership
interests in the Trust were issued pursuant to the Trust Agreement dated as of
February 1, 2000 (the "Trust Agreement") among the Registrant, as Depositor,
Bankers Trust (Delaware), as Owner Trustee, and The Chase Manhattan Bank, as
Trust Agent. A copy of the Trust Agreement is filed herewith as Exhibit 4.9.
The Contracts were sold or will be sold by the Registrant to the Trust
pursuant to the Sale and Servicing Agreement dated as of April 1, 2000 (the
"Sale and Servicing Agreement") among the Trust, the Registrant, as Seller,
Onyx, as Servicer and Custodian, and The Chase Manhattan Bank, as Indenture
Trustee and Trust Agent. A copy of the Sale and Servicing Agreement is filed
herewith as Exhibit 10.2. The Trust acquired certain Contracts (the "Initial
Contracts") with a total principal balance of $243,723,872.48 (the "Initial
Cut-Off Pool Balance") as of April 1, 2000 (the "Initial Cut-Off Date"). The
Trust also acquired certain additional Contracts (the "Subsequent Contracts")
originated or purchased on or after the Initial Cut-Off Date but before April
27, 2000 (the "Subsequent Cut-Off Date") with a total principal balance of
$113,703,887.19 (the "Subsequent
2
<PAGE> 3
Cut-Off Pool Balance"). Additionally, the Seller deposited $92,572,240.33 in a
segregated trust account (the "Prefunding Account") to be used by the Trust to
acquire additional Contracts (the "Prefunding Contracts") during the period on
or after the Subsequent Cut-Off Date until the earliest to occur of (i) the date
on which the balance remaining in the Prefunding Account is less than $2,500,
(ii) the date on which a Servicer Default or Indenture Event of Default (each as
defined in the Sale and Servicing Agreement) occurs or (iii) the close of
business on July 26, 2000.
Set forth below is certain data concerning the Initial Contracts as of
the Initial Cut-Off Date.
COMPOSITION OF THE INITIAL CONTRACTS
Aggregate principal balance.................................$243,723,872.48
Number of Contracts..................................................20,227
Average principal balance outstanding............................$12,049.43
Average original amount financed.................................$12,160.06
Original amount financed (range)....................$1,085.00 to $65,664.45
Weighted average APR................................................ 15.34%
APR (range).................................................7.23% to 25.27%
Weighted average original term...................................57.24 mos.
Original term (range).........................................12 to 72 mos.
Weighted average remaining term.......................................56.50
Remaining term (range).........................................9 to 72 mos.
DISTRIBUTION BY APRS OF THE INITIAL CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF % OF % OF INITIAL
INITIAL INITIAL PRINCIPAL CUT-OFF
APR RANGE CONTRACTS CONTRACTS BALANCE POOL BALANCE
- ----------------- --------- --------- --------------- ------------
<S> <C> <C> <C> <C>
7.001% to 8.000%............. 439 2.17% $ 7,138,529.69 2.93%
8.001% to 9.000%............. 692 3.42 10,658,058.13 4.37
9.001% to 10.000%............ 801 3.96 11,579,293.30 4.75
10.001% to 11.000%............ 783 3.87 10,848,113.52 4.45
11.001% to 12.000%............ 900 4.45 12,018,229.37 4.93
12.001% to 13.000%............ 1,009 4.99 13,084,053.09 5.37
13.001% to 14.000%............ 1,288 6.37 16,523,856.36 6.78
14.001% to 15.000%............ 1,972 9.75 25,267,987.93 10.37
15.001% to 16.000%............ 2,333 11.53 29,187,392.49 11.98
16.001% to 17.000%............ 2,600 12.85 31,499,605.49 12.92
17.001% to 18.000%............ 2,533 12.52 28,619,220.18 11.74
18.001% to 19.000%............ 1,433 7.08 15,446,171.66 6.34
19.001% to 20.000%............ 1,095 5.41 11,154,489.53 4.58
20.001% to 21.000%............ 1,337 6.61 12,621,938.02 5.18
21.001% to 30.000%............ 1,012 5.00 8,076,933.72 3.31
----- ------ --------------- ------
Totals.............. 20,227 100.00%* $243,723,872.48 100.00%*
====== ====== =============== ======
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
3
<PAGE> 4
GEOGRAPHIC CONCENTRATION OF THE INITIAL CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF % OF INITIAL
INITIAL % OF INITIAL PRINCIPAL CUT-OFF
CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------- ------------ --------------- ------------
<S> <C> <C> <C> <C>
Alabama............... 277 1.37% $ 3,441,117.91 1.41%
Arizona............... 681 3.37 8,114,754.38 3.33
California............ 4,171 20.62 52,311,174.25 21.46
Colorado.............. 378 1.87 4,140,366.67 1.70
Delaware.............. 193 0.95 2,158,366.67 0.89
Florida............... 1,350 6.67 15,941,279.41 6.54
Georgia............... 1,337 6.61 17,072,568.87 7.00
Idaho................. 189 0.93 1,932,157.43 0.79
Illinois.............. 995 4.92 12,184,518.56 5.00
Indiana............... 499 2.47 5,965,112.04 2.45
Iowa.................. 77 0.38 904,937.20 0.37
Kentucky.............. 249 1.23 2,909,636.78 1.19
Maryland.............. 631 3.12 8,015,843.56 3.29
Massachusetts ........ 1 0.00 8,968.53 0.00
Michigan.............. 1,027 5.08 12,020,452.85 4.93
Minnesota............. 119 0.59 1,598,064.83 0.66
Mississippi........... 32 0.16 494,614.88 0.20
Missouri.............. 122 0.60 1,376,429.83 0.56
Montana............... 4 0.02 33,425.58 0.01
Nevada................ 429 2.12 4,890,239.25 2.01
New Jersey............ 1,254 6.20 14,772,723.38 6.06
New York.............. 1 0.00 6,591.24 0.00
North Carolina........ 592 2.93 7,473,423.40 3.07
Ohio.................. 1 0.00 10,953.90 0.00
Oklahoma.............. 189 0.93 2,362,277.49 0.97
Oregon................ 445 2.20 4,716,432.30 1.94
Pennsylvania.......... 2,141 10.58 24,356,229.82 9.99
South Carolina........ 324 1.60 3,913,382.35 1.61
Tennessee............. 317 1.57 4,096,506.15 1.68
Texas................. 748 3.70 9,891,748.74 4.06
Utah.................. 49 0.24 556,082.73 0.23
Virginia.............. 769 3.80 9,347,531.12 3.84
Washington............ 636 3.14 6,705,960.58 2.75
------ ------ --------------- ------
Totals...... 20,227 100.00%* $243,723,872.48 100.00%*
====== ====== =============== ======
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
4
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Set forth below is certain data concerning the Subsequent Contracts as
of the Final Cut-Off Date:
COMPOSITION OF THE SUBSEQUENT CONTRACTS
Aggregate principal balance.................................$113,703,887.19
Number of Contracts...................................................9,268
Average principal balance outstanding............................$12,268.44
Average original amount financed.................................$12,268.44
Original amount financed (range)....................$1,625.23 to $47,200.00
Weighted average APR.................................................15.13%
APR (range)..................................................7.00% to25.84%
Weighted average original term...................................57.16 mos.
Original term (range)........................................ 12 to 72 mos.
Weighted average remaining term..................................57.00 mos.
Remaining term (range)........................................11 to 72 mos.
DISTRIBUTION BY APRS OF THE SUBSEQUENT CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF % OF % OF FINAL
SUBSEQUENT SUBSEQUENT PRINCIPAL CUT-OFF
APR RANGE CONTRACTS CONTRACTS BALANCE POOL BALANCE
--------------- ---------- ---------- --------------- ------------
<S> <C> <C> <C> <C>
0.000% to 7.000%............ 2 0.02% $ 35,122.00 0.03%
7.001% to 8.000%............ 193 2.08 3,419,411.28 3.01
8.001% to 9.000%............ 365 3.94 5,868,461.32 5.16
9.001% to 10.000%........... 478 5.16 7,035,178.11 6.19
10.001% to 11.000%........... 409 4.41 5,934,416.72 5.22
11.001% to 12.000%........... 407 4.39 5,583,093.35 4.91
12.001% to 13.000%........... 481 5.19 6,303,293.73 5.54
13.001% to 14.000%........... 593 6.40 7,771,615.27 6.83
14.001% to 15.000%........... 816 8.80 10,172,134.22 8.95
15.001% to 16.000%........... 1,048 11.31 13,220,642.03 11.63
16.001% to 17.000%........... 1,164 12.56 14,183,881.00 12.47
17.001% to 18.000%........... 1,123 12.12 12,791,758.33 11.25
18.001% to 19.000%........... 672 7.25 7,094,770.19 6.24
19.001% to 20.000%........... 548 5.91 5,488,358.23 4.83
20.001% to 21.000%........... 550 5.93 5,479,277.84 4.82
Over 21.000%................. 419 4.52 3,322,473.57 2.92
----- ------ --------------- ------
Totals............. 9,268 100.00%* $113,703,887.19 100.00%*
===== ====== =============== ======
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
5
<PAGE> 6
GEOGRAPHIC CONCENTRATION OF THE SUBSEQUENT CONTRACTS
<TABLE>
<CAPTION>
NUMBER OF % OF % OF FINAL
SUBSEQUENT SUBSEQUENT PRINCIPAL CUT-OFF
CONTRACTS CONTRACTS BALANCE POOL BALANCE
---------- ---------- --------------- -------------
<S> <C> <C> <C> <C>
Alabama.............. 140 1.51% $ 1,767,582.83 1.55%
Arizona.............. 362 3.91 4,238,208.25 3.73
California........... 2,164 23.35 27,726,057.44 24.38
Colorado............. 168 1.81 1,745,663.82 1.54
Delaware............. 58 0.63 679,225.77 0.60
Florida.............. 733 7.91 8,899,246.49 7.83
Georgia.............. 571 6.16 7,480,684.28 6.58
Idaho................ 98 1.06 1,076,835.06 0.95
Illinois............. 505 5.45 6,335,298.71 5.57
Indiana.............. 235 2.54 2,711,507.04 2.38
Iowa................. 46 0.50 532,394.26 0.47
Kentucky............. 160 1.73 1,863,853.00 1.64
Maryland............. 337 3.64 4,260,517.48 3.75
Massachusetts........ 7 0.08 71,008.14 0.06
Michigan............. 537 5.79 6,463,866.68 5.68
Minnesota............ 73 0.79 878,063.35 0.77
Mississippi.......... 17 0.18 269,154.54 0.24
Missouri............. 62 0.67 678,316.13 0.60
Montana.............. 2 0.02 21,369.88 0.02
Nevada............... 198 2.14 2,324,144.12 2.04
New Jersey........... 694 7.49 8,371,853.79 7.36
New York............. 0 0 0 0
North Carolina....... 363 3.92 4,678,847.18 4.11
Ohio................. 0 0 0 0
Oklahoma............. 75 0.81 992,945.50 0.87
Oregon............... 189 2.04 1,985,908.58 1.75
Pennsylvania......... 285 3.08 3,104,667.65 2.73
South Carolina....... 153 1.65 2,006,004.32 1.76
Tennessee............ 161 1.74 2,094,133.55 1.84
Texas................ 238 2.57 3,024,917.73 2.66
Utah................. 35 0.38 459,579.59 0.40
Virginia............. 332 3.58 4,121,647.28 3.62
Washington........... 270 2.91 2,840,384.75 2.50
----- ------ --------------- ------
Totals..... 9,268 100.00%* $113,703,887.19 100.00%*
===== ====== =============== ======
</TABLE>
- ----------------
* Percentages may not add to 100% because of rounding.
6
<PAGE> 7
Item 7. Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
----------- -----------
1.3 Underwriting Agreement dated as of April 26, 2000
by and among the Registrant and Merrill Lynch, as
representative of the Underwriters
4.8 Indenture dated as of April 1, 2000 between Onyx
Acceptance Owner Trust 2000-B and The Chase
Manhattan Bank, as Indenture Trustee
4.9 Trust Agreement dated as of April 1, 2000 among
the Registrant, as Depositor, Bankers Trust
(Delaware), as Owner Trustee, and The Chase
Manhattan Bank, as Trust Agent
10.2 Sale and Servicing Agreement dated as of April 1,
2000 among the Registrant, as Seller, Onyx
Acceptance Corporation, as Servicer and Custodian,
and The Chase Manhattan Bank, as Indenture Trustee
and Trust Agent
7
<PAGE> 8
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
May 10, 2000 By: /s/ Michael A. Krahelski
-----------------------------
Michael A. Krahelski,
Senior Vice President
8
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EXHIBIT INDEX
Exhibit No. Description
----------- -----------
1.3 Underwriting Agreement dated as of April 26, 2000
by and among the Registrant and Merrill Lynch, as
representative of the Underwriters
4.8 Indenture dated as of April 1, 2000 between Onyx
Acceptance Owner Trust 2000-B and The Chase
Manhattan Bank, as Indenture Trustee
4.9 Trust Agreement dated as of April 1, 2000 among
the Registrant, as Depositor, Bankers Trust
(Delaware), as Owner Trustee, and The Chase
Manhattan Bank, as Trust Agent
10.2 Sale and Servicing Agreement dated as of April 1,
2000 among the Registrant, as Seller, Onyx
Acceptance Corporation, as Servicer and Custodian,
and The Chase Manhattan Bank, as Indenture Trustee
and Trust Agent
<PAGE> 1
EXHIBIT 1.3
Onyx Acceptance Owner Trust 2000-B
$77,800,000 6.4125% Auto Loan Backed Notes, Class A-1
$120,000,000 7.02% Auto Loan Backed Notes, Class A-2
$131,000,000 7.29% Auto Loan Backed Notes, Class A-3
$94,200,000 7.38% Auto Loan Backed Notes, Class A-4
$27,000,000 7.56% Auto Loan Backed Notes, Class B
UNDERWRITING AGREEMENT
April 26, 2000
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
as Representative
of the Underwriters
World Financial Center
North Tower, 10th Floor
New York, New York 10281
Ladies and Gentlemen:
1. Introductory. Onyx Acceptance Financial Corporation (the "Company")
proposes to cause Onyx Acceptance Owner Trust 2000-B (the "Trust") to sell to
Merrill Lynch, Pierce, Fenner & Smith Incorporated (the "Representative"), Chase
Securities Inc. and Salomon Smith Barney Inc. (together with the Representative,
the "Underwriters") $77,800,000 aggregate principal amount of 6.4125% Auto Loan
Backed Notes, Class A-1 (the "Class A-1 Notes"), $120,000,000 aggregate
principal amount of 7.02% Auto Loan Backed Notes, Class A-2 (the "Class A-2
Notes"), $131,000,000 aggregate principal amount of 7.29% Auto Loan Backed
Notes, Class A-3 (the "Class A-3 Notes"), $94,200,000 aggregate principal amount
of 7.38% Auto Loan Backed Notes, Class A-4 ("the Class A-4 Notes"), and
$27,000,000 aggregate principal amount of 7.56% Auto Loan Backed Class B Notes
(the "Class B Notes", the Class B Notes and together with the Class A-1 Notes,
Class A-2 Notes, Class A-3 Notes and Class A-4 Notes, the "Notes").
The Notes will be issued pursuant to an Indenture dated as of April 1,
2000 (the "Indenture"), between the Trust and The Chase Manhattan Bank as
Indenture Trustee (the "Indenture Trustee"). Certain securities representing the
"Residual Interest Instruments" of the Trust (as defined in the Servicing
Agreement) will be issued pursuant to a Trust Agreement dated as of April 1,
2000 (the "Trust Agreement") among the Company, Bankers Trust (Delaware) as
Owner Trustee (the "Owner Trustee") and The Chase Manhattan Bank as Trust Agent
(the "Trust Agent").
Pursuant to a Sale and Servicing Agreement dated as of April 1, 2000 (the
"Servicing Agreement") among the Trust, the Company as Seller (the "Seller"),
Onyx Acceptance
<PAGE> 2
Corporation as Servicer and Custodian ("Onyx" or in such capacity, the
"Servicer" or the "Custodian"), The Chase Manhattan Bank in its capacity as
Indenture Trustee and the Trust Agent, the Seller will sell and assign to the
Trust, without recourse, the Seller's entire interest in the Contracts (as
hereinafter defined) and Onyx will act as Servicer of the Contracts. Pursuant to
an Administration Agreement dated as of April 1, 2000 (the "Administration
Agreement") among the Trust, Onyx, the Company, the Indenture Trustee and the
Trust Agent, Onyx will serve as administrator of the Trust. Pursuant to an
Amended and Restated Sale and Servicing Agreement dated as of September 4, 1998
(the "Purchase Agreement"), as amended, Onyx has sold or will sell the Funded
Contracts (as hereinafter defined) and may sell certain Prefunded Contracts (as
hereinafter defined) to the Company. Pursuant to an insurance and reimbursement
agreement (the "Insurance Agreement") among the Company, Onyx (in its individual
capacity and as Servicer) and MBIA Insurance Corporation (the "Insurer") and an
insurer indemnification agreement (the "MBIA Indemnification Agreement" and
together with the Insurance Agreement, the "Insurance Agreements") by and among
Onyx, the Company, the Representative and the Insurer, the Insurer will issue
its financial guarantee insurance policy (the "Guarantee") to the Indenture
Trustee for the benefit of the holders of the Notes (the
"Noteholders")guaranteeing timely payment of interest and ultimate payment of
principal at maturity on the Notes.
As of the Closing Date (as hereinafter defined), the Trust's assets (the
"Trust Property") will include: (i) a pool of fixed rate motor vehicle retail
installment sales contracts and installment loan agreements (the "Contract
Pool"), all of which were purchased from the Seller pursuant to the Servicing
Agreement and secured by new and used automobiles, light-duty trucks and vans
(the "Financed Vehicles"), (ii) certain documents relating to the Funded
Contracts, (iii) with respect to contracts (the "Initial Contracts") originated
prior to April 1, 2000 (the "Initial Cut-Off Date") certain monies received with
respect to the Initial Contracts on or after the Initial Cut-off Date, (iv) with
respect to contracts (the "Subsequent Contracts" and together with the Initial
Contracts, the "Funded Contracts"), originated or purchased on or after the
Initial Cut-Off Date and before April 27, 2000 (the "Subsequent Cut-Off Date"),
certain monies received with respect to the Subsequent Contracts on or after the
Subsequent Cut-Off Date, (v) security interests in the Financed Vehicles and the
rights to receive proceeds from claims on certain insurance policies covering
the Financed Vehicles or the individual obligors under each related Funded
Contract, (vi) all amounts on deposit in the Collection Account, the Payment
Account, the Note Distribution Account, the Spread Account, the Prefunding
Account, the Capitalized Interest Account, and the Payahead Account including
all Eligible Investments credited thereto (but excluding any investment income
from Eligible Investments credited to the Collection Account, which will be paid
to the Servicer and any investment income from Eligible Investments credited to
the Capitalized Interest Account, which may be paid to the Seller under certain
circumstances), (vii) the right of the Company to cause Onyx to repurchase
certain Contracts under certain circumstances, and (viii) all proceeds of the
foregoing. After the Closing Date, the Trust will use the funds in the
Prefunding Account to purchase contracts (the "Prefunded Contracts", and
together with the Funded Contracts, the "Contracts") originated or purchased on
or after the Subsequent Cut-Off Date and on or before the end of the Funding
Period from the Company.
The Notes will be issued in an aggregate principal amount of $450,000,000
which is equal to the outstanding principal balance of the Initial Contracts as
of the Initial Cut-Off Date and the outstanding principal balance of the
Subsequent Contracts as of the Subsequent Cut-Off
2
<PAGE> 3
Date and the amount in the Prefunding Account. The term "Cut-Off Date" as used
herein refers to the Initial Cut-Off Date for the Initial Contracts and the
Subsequent Cut-Off Date for the Subsequent Contracts and the related Prefunding
Cut-Off Date for a Prefunded Contract. 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 (the "Act"), as amended, and has filed with the
Securities and Exchange Commission (the "Commission") a registration
statement (Registration No. 333-92245) on such form, including a
prospectus and forms of prospectus supplements, for registration under the
Act of the offering and sale of the Notes. 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
hereinafter defined), 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 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 shall, except to the extent that the Representative
shall agree in writing to a modification, be in all substantive respects
in the form furnished to the Representative prior to the Execution Time
(as hereinafter defined) or, to the extent not completed at the Execution
Time, shall contain only such specific additional information and other
changes as the Company has advised the Representative, prior to the
Execution Time, will be included or made therein.
For purposes of this Agreement, "Effective Time" means the date and
time as of which such registration statement, or the most recent
post-effective amendment thereto, if any, was declared effective by the
Commission, and "Effective Date" means the date of the Effective Time.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto. Such registration statement,
as amended at the Effective Time, and including the exhibits thereto and
any material incorporated by reference therein (including any ABS Term
Sheets (as defined in Section 4 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,
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
3
<PAGE> 4
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 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, the Prospectus and any Prospectus
Supplement did or will comply in all material respects with the applicable
requirements of the Act, the Exchange Act and the Trust Indenture Act of
1939, as amended (the "Trust Indenture Act"), and the respective rules and
regulations of the Commission thereunder (the "Rules and Regulations"). On
the Effective Date, the Registration Statement did not and will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein not misleading; and, on the Effective Date, the
Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and
on the date of any filing pursuant to Rule 424(b) and on the Closing Date,
the Prospectus, together with any Prospectus Supplement, did not or will
not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representation or warranty as
to the information contained in or omitted from the Registration Statement
or the Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by any Underwriter through the
Representative specifically for use in connection with preparation of the
Registration Statement or the Prospectus.
(iii) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, (i) there has not been any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs, business,
management, financial condition, stockholders' equity, results of
operations, regulatory status or business prospects of the Company or
Onyx, and (ii) neither the Company nor Onyx has entered into any
transaction or agreement (whether or not in the ordinary course of
business) material to it that, in either case, would reasonably be
expected to materially adversely affect the interests of the holders of
the Notes, 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
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<PAGE> 5
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 Funded Contract will satisfy the
representations and warranties set forth in Section 2.02(b) of the
Servicing Agreement.
(vi) As of the related Prefunding Closing Date, the representations
and warranties of the Company in the Servicing Agreement and Trust
Agreement will be true and correct, and each related Prefunded Contract
will satisfy the representations and warranties set forth in Section
2.02(d) of the Servicing Agreement.
(vii) 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.
(viii) The Company is not in violation of its Certificate of
Incorporation or By-Laws or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
agreement or instrument to which it is a party or by which it or its
properties are bound which violation or default would have a material
adverse effect on the transactions contemplated herein or in the
Indenture, the Trust Agreement, the Servicing Agreement, the Purchase
Agreement or the Insurance Agreements. The execution, delivery and
performance by the Company of this Agreement, the Trust Agreement, the
Servicing Agreement, the Purchase Agreement or the Insurance Agreements
and the issuance and sale of the Notes 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 Notes as contemplated by this Agreement, to enter into this
Agreement, the Trust Agreement, the Servicing Agreement, the Purchase
Agreement and the Insurance Agreements and to consummate the transactions
contemplated herein and therein.
(ix) This Agreement has been, and the Servicing Agreement, the Trust
Agreement, and the Insurance Agreements when executed and delivered as
contemplated hereby and thereby will have been, duly authorized, executed
and delivered by the Company, and this Agreement constitutes, and the
Servicing Agreement, the Trust Agreement and the Insurance Agreements,
when executed and delivered as contemplated herein, will constitute,
legal, valid and binding instruments enforceable against the Company in
accordance with their respective terms, subject as to enforceability to
(x)
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<PAGE> 6
applicable bankruptcy, reorganization, insolvency, moratorium or other
similar laws affecting creditors' rights generally, (y) general principles
of equity (regardless of whether enforcement is sought in a proceeding in
equity or at law), and (z) with respect to rights of indemnity under this
Agreement and the MBIA Indemnification Agreement limitations of public
policy under applicable securities laws.
(x) The Notes are duly and validly authorized by the Company and,
when executed, authenticated and delivered in accordance with the
Indenture and the Servicing Agreement, and issued and delivered to and
paid for by the Underwriters, as contemplated hereby, will be entitled to
the benefits provided by the Indenture and the Servicing Agreement.
(xi) The Company is not in violation of any provision of any
existing law or regulation or in default in the performance or observance
of any obligation, agreement, covenant or condition contained in any
contract, indenture, mortgage, deed of trust, loan agreement, note, lease
or other instrument to which it is a party or by which it is bound or to
which any of its property is subject, which violations or defaults
separately or in the aggregate would have a material adverse effect on the
Company or the Trust.
3. Purchase, Sale, Payment and Delivery of Notes. 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 Notes 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 Notes 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 April 28, 2000 or
at such other time not later than seven full business days thereafter as the
Underwriters and the Company determine, such time being herein referred to as
the "Closing Date". The Notes so to be delivered shall be represented by one or
more global notes 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, as applicable, representing the Notes
available for inspection by the Underwriters at the office at which the Notes
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. It is understood that, after the
Registration Statement becomes effective, the Underwriters propose to offer the
Notes for sale to the public (which may include selected brokers and dealers) as
set forth in the Prospectus.
The Underwriters may prepare and provide to prospective investors certain
ABS Term Sheets, in connection with its offering of the Notes, subject to the
following conditions:
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<PAGE> 7
(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 each 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 either Exhibit A-1, Exhibit
A-2 or Exhibit A-3, as applicable. The Company shall have the right to
require specific legends or notations to appear on any ABS Term Sheets,
the right to require changes regarding the use of terminology and the
right to determine the types of information appearing therein.
Notwithstanding the foregoing, this subsection (iii) will be satisfied if
all ABS Term Sheets referred to herein bear a legend in a form previously
approved in writing by the Company.
(iv) Each of 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 each of the Underwriters. The Underwriters shall have
provided to the Company, for filing as part of a current report on Form
8-K as provided in Section 5(xii), copies (in such format as required by
the Company) of all ABS Term Sheets that are required to be filed with the
Commission pursuant to the No-Action Letter. Each of 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. None of the Underwriters shall have
provided to any investor or prospective investor in the Notes 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 Notes structuring
terms that were revised in any material respect prior to the printing of
the Prospectus, each Underwriter shall have prepared revised ABS Term
Sheets based on the final Contract Pool information and structuring
assumptions, shall have circulated such revised ABS Term
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<PAGE> 8
Sheets to all recipients of the preliminary versions thereof that
indicated orally to either of the Underwriters they would purchase all or
any portion of the Notes, 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 Notes is required to be delivered under the
Act, any ABS Term Sheets are determined, in the reasonable judgment of the
Company or either of the Underwriters, to contain a material error or
omission, each Underwriter 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
either of the Underwriters they would purchase all or any portion of the
Notes, or actually purchased all or any portion thereof, and shall deliver
copies of such corrected ABS Term Sheets (marked, "as corrected") to the
Company for filing with the Commission in a subsequent current report on
Form 8-K (subject to the Company's obtaining an accountant's comfort
letter in respect of such corrected ABS Term Sheets).
(vii) The Underwriters shall be deemed to have represented as of the
Closing Date, that, except for ABS Term Sheets provided to the Company
pursuant to subsection (iv) above, the Underwriters did not provide any
prospective investors with any information in written or electronic form
in connection with the offering of the Notes 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
Notes covered thereby and the terms thereof not otherwise specified in the
Basic Prospectus, the price at which such Notes are to be purchased by the
Underwriters, the initial public offering price, the selling concessions
and allowances, and such other information as the Company deems
appropriate and shall furnish a copy to the Representative in accordance
with Section 5(vii) of this Agreement. The Company will transmit the
Prospectus including such
8
<PAGE> 9
Prospectus Supplement to the Commission pursuant to Rule 424(b) by a means
reasonably calculated to result in filing that complies with all
applicable provisions of Rule 424(b). The Company will advise the
Representative promptly of any such filing pursuant to Rule 424(b).
(ii) Prior to the termination of the offering of the Notes, the
Company will not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representative with a copy for its review prior to filing and will not
file any such proposed amendment or supplement without the
Representative's consent, which consent will not unreasonably be withheld.
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 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 Notes is
required to be delivered under the Act, any event occurs as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it is
necessary at any time to amend the Prospectus to comply with the Act, the
Company promptly will prepare and file with the Commission (subject to the
Representative'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 Noteholders and the holders of the
Residual Interest Instruments of the Trust an earnings statement or
statements of the Trust covering a
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<PAGE> 10
period of at least 12 months beginning after the Closing Date which will
satisfy the provisions of Section 11(a) of the Act and Rule 158 of the
Commission promulgated thereunder.
(vii) The Company will furnish to each Underwriter copies of the
Registration Statement, the Prospectus and any preliminary Prospectus
Supplement related thereto and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as
each Underwriter may reasonably request.
(viii) The Company will cooperate with each Underwriter in arranging
for the qualification of the Notes 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 Notes; 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. The Company will
promptly advise the Underwriters of the receipt by the Company of any
notification with respect to the suspension or the qualification of the
Notes for sale in any jurisdiction or the initiation or threat of any
proceeding for such purpose.
(ix) For a period from the date of this Agreement until the
retirement of the Notes, the Company will furnish to the Underwriters
copies of the annual statements of compliance delivered to the Indenture
Trustee pursuant to Section 3.09 of the Indenture and Section 3.10 of the
Servicing Agreement, and the annual independent public accountant's
reports furnished to the Indenture Trustee pursuant to Section 3.11 of the
Servicing Agreement, as soon as practicable after such statements and
reports are furnished to the Indenture Trustee and Owner Trustee
respectively.
(x) So long as any of the Notes 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 Noteholders, (B) all
documents filed, or caused to be filed, by the Company with the Commission
pursuant to the Exchange Act, 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) (a) On or before the Closing Date the Company shall cause its
computer records relating to the Funded Contracts to be marked to show the
Trust's absolute ownership of the Funded Contracts and shall cause the
Servicer to mark its computer records relating to the Funded Contracts to
show the sale to the Company of the Funded Contracts and the subsequent
transfer of the Funded 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 Funded
Contracts, other than as permitted by the Indenture and the Trust
Agreement.
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<PAGE> 11
(b) On or before the related Prefunding Closing Date, the Company
shall cause its computer records for the related Prefunded Contracts to be
marked to show the Trust's absolute ownership of the related Prefunded
Contracts and shall cause the Servicer to mark its computer records for
the related Prefunded Contracts to show the sale to the Company of the
related Prefunded Contracts and the subsequent transfer of the related
Prefunded Contracts to the Trust, and after the related Prefunding Closing
Date, the Company shall not, and shall instruct the Servicer not to, take
any action inconsistent with the Trust's ownership of such Prefunded
Contracts, other than as permitted by the Indenture and the Trust
Agreement.
(xii) The Company will file with the Commission as part of a current
report on Form 8-K each ABS Term Sheet provided to the Company by each of
the Underwriters and identified by each of them 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, each of the Underwriters must comply with
their obligations pursuant to Section 4 and the Company must receive a
letter from PricewaterhouseCoopers, certified public accountants,
satisfactory in form and substance to the Company, to the effect that such
accountants have performed certain specified procedures, all of which have
been agreed to by the Company, as a result of which PricewaterhouseCoopers
have determined that the information included in such ABS Term Sheet (if
any), provided by the Underwriters to the Company for filing on a current
report on Form 8-K pursuant to Section 4 and, if the Company then so
specifies, this subsection (xii), and that the accountants have examined
in accordance with such agreed upon procedures, is accurate except as to
such matters that are not deemed by the Company to be material. The
Company shall file any corrected ABS Term Sheets described in Section
4(vi) as soon as practicable following receipt thereof.
(xiii) The Company will cause Andrews & Kurth L.L.P. to deliver to
the Underwriters on or before the Prefunding Closing Date, the opinions
required to be furnished pursuant to Section 2.01(j) of the Servicing
Agreement, addressed to the Underwriters , with respect to the transfer of
the related Prefunded Contracts substantially in the form of the opinions
delivered by Andrews & Kurth L.L.P. on the Closing Date with respect to
the Funded Contracts.
(xiv) The Company will deliver to the Underwriters (i) on or before
each Prefunding Closing Date, the Officer's Certificate and certificate
from each secured creditor required to be furnished pursuant to Section
2.01(j) of the Servicing Agreement and (ii) on or before each Prefunding
Transfer Date, the Transfer Certificate required to be furnished pursuant
to Section 2.01(c) of the Servicing Agreement.
6. Payment of Expenses. 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 Trust Agent's, the Indenture Trustee's and Owner Trustee's
fees and the fees and disbursements of the counsel to the Trust Agent, the
Indenture Trustee and to the Owner Trustee, (iii) any up-front fees and premiums
payable to the
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<PAGE> 12
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 Notes will be subject to the
accuracy of the representations and warranties on the part of the Company
herein, to the accuracy of the written statements of officers of the Company
made pursuant to the provisions hereof, to the performance by the Company of its
obligations hereunder and to the following additional conditions precedent:
(i) On or prior to the date of this Agreement, the Representative
shall have received a letter, dated the date of this Agreement, of
PricewaterhouseCoopers and substantially in the form heretofore agreed,
which letter shall be in form and substance agreed to by the
Representative.
(ii) The Registration Statement shall have become effective prior to
the Execution Time, and prior to the Closing Date, no stop order
suspending the effectiveness of the Registration Statement shall have been
issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company or the Representative, shall be
contemplated by the Commission or by any authority administering any state
securities or blue sky law; the Prospectus and any supplements thereto
shall have been filed (if required) with the Commission in accordance with
the Rules and Regulations and the applicable paragraphs of Section 5
hereof; if filing of the Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the Prospectus shall be filed in the
manner and within the time period required by Rule 424(b); and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
instituted or threatened.
(iii) Subsequent to the execution and delivery of this Agreement,
there shall have not occurred (a) any change, or any development involving
a prospective change, in or affecting particularly the business or
properties of the Company or Onyx which, in the reasonable judgment of
each of the Underwriters, materially impairs the investment quality of the
Notes; (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 each Underwriter, 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 Notes.
(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:
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<PAGE> 13
(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 Agreements and to consummate the transactions contemplated
herein and therein;
(c) No consent, approval, authorization or order of, or filing
with, any California, Delaware or federal governmental agency or
body or any court is or was required by the Company to perform the
transactions contemplated by this Agreement, the Trust Agreement,
the Servicing Agreement, the Purchase Agreement or the Insurance
Agreements except for (1) filing of a Uniform Commercial Code
financing statement in the State of California with respect to the
transfer of the Contracts to the Trust pursuant to the Trust
Agreement and the Servicing Agreement, and the sale of the Contracts
to the Company pursuant to the Purchase Agreement, (2) such
consents, approvals, authorizations, orders or filings as may be
required under federal law which have been made or obtained and (3)
such consents, approvals, authorizations, orders or filings as may
be required under state securities laws;
(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 Agreements, 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 Notes 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
Agreements conflicts or will conflict with, has resulted or will
result in a breach, violation or acceleration of any of the terms
of, or has constituted or will constitute a default under, the By
Laws or the Certificate of Incorporation of the Company, as amended,
or, to such counsel's knowledge (i) any rule, order, statute or
regulation known to such counsel to be currently applicable to the
Company of any court, regulatory body, administrative agency or
governmental body having jurisdiction over the Company or (ii) the
terms of any material indenture or other material agreement or
instrument known to such counsel to which the Company is a party or
by which it or its properties are bound;
(e) To such counsel's knowledge, 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 Agreements or the
Notes, (2) seeking to prevent the issuance of the Notes or the
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<PAGE> 14
consummation of any of the transactions contemplated by this
Agreement, the Trust Agreement, the Servicing Agreement, the
Purchase Agreement or the Insurance Agreements, (3) seeking
adversely to affect the federal income tax attributes of the Notes
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 Agreements have
each been duly authorized, executed and delivered by the Company;
(g) The Funded Contracts constitute "chattel paper" as defined
in Section 9105(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) [Reserved]
(j) When the Notes have been duly executed by the Owner
Trustee and delivered by the Trust Agent on behalf of the Trust,
authenticated by the Indenture Trustee in accordance with the
Indenture and delivered and paid for pursuant to this Agreement, the
Notes will be the valid, legal and binding obligations of the Trust,
enforceable against the Trust in accordance with their terms,
subject to bankruptcy, insolvency, reorganization, moratorium,
fraudulent or preferential conveyance and other similar laws of
general application relating to or affecting creditors' rights
generally, and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law);
(k) Assuming the authorization, execution and delivery thereof
by each party thereto other than the Company and Onyx, each of the
Trust Agreement, the Purchase Agreement, the Servicing Agreement and
the Insurance Agreements 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
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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;
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
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 Notes, the Indenture, the Trust Agreement, the
Servicing Agreement, the Purchase Agreement, and the Guarantee
conform in all material respects to the descriptions thereof
contained in the Registration Statement and the Prospectus;
(n) The Trust Agreement is not required to be qualified under
the Trust Indenture Act of 1939, as amended;
(o) The Indenture has been duly qualified under the Trust
Indenture Act;
(p) The Company is not, and after giving effect to the
offering and sale of the Notes as contemplated in the Prospectus and
this Agreement and the application of the proceeds thereof as
described in the Prospectus will not be, an "investment company" as
defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act"). Onyx is not an "investment company"
within the meaning of the Investment Company Act;
(q) The Trust is not now, and immediately following the sale
of the Notes pursuant to this Agreement will not be, required to be
registered under the Investment Company Act;
(r) The Indenture, the Servicing Agreement and the
Administration Agreement, assuming that they have been duly
authorized by, and when duly executed and delivered by, the Owner
Trustee on behalf of the Trust, will constitute the legal, valid and
binding obligations of the Trust, enforceable against the Trust in
accordance with their terms, except 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
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<PAGE> 16
principles of equity (regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(s) all actions required to be taken, and all filings required
to be made, by the Company under the Act and the Exchange Act prior
to the sale of the Notes have been duly taken or made; and
(t) to such counsel's knowledge and information, there are no
legal or governmental proceedings pending or threatened that are
required to be disclosed in the Registration Statement, other than
those disclosed therein.
In addition, such counsel shall opine, in form and substance
satisfactory to you, (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 Funded Contracts and (ii) as to the existence of
a valid, perfected, first priority security interest in the Funded
Contracts 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, substantially to
the effect that:
(a) Onyx (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 Funded Contracts;
(b) Onyx has the corporate power and corporate authority to
execute and deliver the Servicing Agreement, the Insurance
Agreements and the Administration Agreement, to the extent
applicable, and at the time it was executed and delivered, had the
power and authority to execute and deliver the Purchase Agreement,
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 to perform the transactions contemplated
by the Insurance Agreements, the Servicing Agreement, the
Administration Agreement or the Purchase Agreement, as applicable,
except for (1) filing of a Uniform Commercial Code financing
statement in the State of California with respect to the sales of
the Contracts to the Company pursuant to the Purchase Agreement and
(2) such consents, approvals, authorizations, orders or filings as
may be required under the federal and state securities laws; the
opinion set forth in this sentence is limited to such
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<PAGE> 17
authorizations, approvals, consents and orders which, in such
counsel's experience, are normally applicable to transactions of the
type contemplated by the Insurance Agreements, the Servicing
Agreement, the Administration Agreement and the Purchase Agreement,
as applicable;
(d) None of the execution, delivery and performance by Onyx of
the Servicing Agreement, the Insurance Agreements, the
Administration Agreement or the Purchase Agreement, as applicable,
or the transfer of the Contracts to the Company, has conflicted with
or will conflict with, has resulted or will result in a breach,
violation or acceleration of any of the terms of, or has constituted
or will constitute a default under, the By Laws or the Certificate
of Incorporation of Onyx, as amended, or, to the best of such
counsel's knowledge, any rule, order, statute or regulation known to
such counsel to be currently applicable to Onyx of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over Onyx or the terms of any material indenture or
other material agreement or instrument known to such counsel to
which Onyx is a party or by which it or its properties are bound;
(e) The Servicing Agreement, the Insurance Agreements, the
Administration Agreement and the Purchase Agreement have each been
duly authorized, executed and delivered by Onyx;
(f) The indemnification agreement dated as of the date hereof,
between Onyx and the Representative 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
Insurance Agreements, the Administration Agreement and the Purchase
Agreement, as applicable, each such agreement constitutes the legal,
valid and binding agreement of Onyx, enforceable against Onyx in
accordance with its terms, subject, as to enforcement, to (1) the
effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent or preferential conveyance and other similar laws of
general application relating to or affecting creditors' rights
generally and general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at
law); and (2) the unenforceability under certain circumstances of
provisions indemnifying a party against liability where such
indemnification is contrary to public policy.
In rendering such opinion, such counsel may rely as to matters of
fact, to the extent deemed proper and as stated therein, on certificates
of responsible officers of Onyx 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
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<PAGE> 18
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 Funded Contracts by Onyx to the
Company as a sale and with respect to the perfection of the Trust's
interests in the Funded Contracts and with respect to the
non-consolidation of the Company with Onyx in the event of bankruptcy
filing with respect to Onyx and with respect to certain other matters.
(vii) The Underwriters shall have received an opinion of Andrews &
Kurth L.L.P., tax counsel to the Company, dated the Closing Date and
satisfactory in form and substance to you substantially to the effect
that:
(a) The Class A 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 of Michael
Krahelski, in-house counsel to the Company and Onyx, dated the Closing
Date and satisfactory in form and substance to you.
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<PAGE> 19
(ix) 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 Agreements and the MBIA Indemnification Agreement;
(c) Except as have already been obtained, no authorization,
consent, approval, license, formal exemption or declaration from,
nor any registration or filing with, any court or governmental
agency or body of the United States of America or the State of New
York, which if not obtained would affect or impair the validity or
enforceability of the Guarantee, the Insurance Agreements or the
MBIA Indemnification Agreement against the Insurer, is required in
connection with the execution and delivery by the Insurer of the
Guarantee, the Insurance Agreements or the MBIA Indemnification
Agreement or in connection with the Insurer's performance of its
obligations thereunder;
(d) The Guarantee, the Insurance Agreement and the MBIA
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 Agreements by
the parties thereto (other than the Insurer), the Insurance
Agreements constitute the legally valid and binding obligations of
the Insurer, enforceable in accordance with their respective terms
subject, as to enforcement, to (1) bankruptcy, reorganization,
insolvency, moratorium and other similar laws relating to or
affecting the enforcement of creditors' rights generally, including,
without limitation, laws relating to fraudulent transfers or
conveyances, preferential transfers and equitable subordination,
presently or from time to time in effect and general principles of
equity (regardless of whether such enforcement is considered in a
proceeding in equity or at law), as such laws may be applied in any
such proceeding with respect to the Insurer and (2) the
qualification that the remedy of specific performance may be subject
to equitable defenses and to the discretion of the court before
which any proceedings with respect thereto may be brought; and
(e) The Guarantee is not required to be registered
under the Securities Act of 1933, as amended.
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 (ix) include any supplements thereto.
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<PAGE> 20
(x) The Underwriters shall have received an opinion of Thacher,
Proffitt & Wood, counsel to the Indenture Trustee and Trust Agent, dated
the Closing Date and satisfactory in form and substance to you.
(xi) 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.
(xii) 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.
(xiii) The Representative shall have received from Brown & Wood 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 Notes, 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.
(xiv) The Underwriters shall have received a letter, dated the
Closing Date, of PricewaterhouseCoopers which meets the requirements of
the subsection (i) of this Section 7, except that the specified date
referred to in such subsection will be a date not more than five days
prior to the Closing Date for the purposes of this subsection.
(xv) The Underwriters shall have received evidence
satisfactory to them that the Notes have been rated in the highest
rating category by Moody's Investors Service, Inc. and by Standard &
Poor's Ratings Services.
(xvi) 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.
(xvii) 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,
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<PAGE> 21
to the best of his or her knowledge after reasonable investigation, the
representations and warranties of Onyx in the Purchase Agreement and
Servicing Agreement are true and correct in all material respects on and
as of the Closing Date, that Onyx has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied
thereunder at or prior to the Closing Date, that the representations and
warranties of Onyx, as Servicer, in the Servicing Agreement are true and
correct as of the dates specified in the Servicing Agreement, there has
been no material adverse change in the financial position or results of
operations of Onyx's motor vehicle installment loan business except as set
forth in or contemplated by the Prospectus or as described in such
certificate.
(xviii) 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.
(xix) 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 Supplement 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.
8. Indemnification.
(i) The Company will indemnify and hold harmless each Underwriter
and each person, if any, who controls such Underwriter within the meaning
of Section 15 of the Act against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) (a) arise out of,
or are based upon, any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, or arise out of, or
are based upon, the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading or (b) arise out of, or are based upon,
any untrue statement or alleged untrue statement of any material fact
contained in the Prospectus or arise out of, or are based upon, the
omission or alleged omission to state therein a material fact necessary to
make the statements therein, in light of the circumstances under which
they were made, not misleading; and will reimburse each Underwriter for
any legal or other expenses reasonably incurred, as incurred, by each
Underwriter 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
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<PAGE> 22
statement or omission or alleged omission (x) made in the Registration
Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Underwriters expressly for use therein, or (y) contained in
any ABS Term Sheet to the extent set forth in subsection (ii) of this
Section 8; provided, further, that the Company shall not be liable under
this subsection (i) to the extent that such losses, claims, damages or
liabilities arose out of or are based upon an untrue statement or omission
made in any preliminary prospectus that is corrected in the final
Prospectus (or any amendment or supplement thereto), and the Company has
previously furnished copies thereof in sufficient quantity to the
Underwriters, if the person asserting such loss, claim, damage or
liability was not given the final Prospectus (or any amendment or
supplement thereto) on or prior to the confirmation of the sale of the
Notes.
(ii) Each Underwriter, severally and not 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 the Representative 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 or as a result of any filing pursuant to Section 5(xii);
provided, however that the Underwriters will not be liable in any such
case to the extent that any such loss, claim or damage or liability arises
out of, or is based upon, an untrue statement or omission made in the ABS
Term Sheet or any supplement thereto in reliance upon and in conformity
with (x) information furnished to such Underwriter by the Company or (y)
information contained in the Registration Statement or any preliminary
prospectus or the Prospectus other than information described in clause
(A) above.
(iii) Each indemnified party shall give prompt notice to the
indemnifying party of any action commenced against the indemnified party
in respect of which indemnity may be sought hereunder, but failure to so
notify an indemnifying party shall not relieve such indemnifying party
from any liability which it may have hereunder or otherwise than on
account of this indemnity agreement except and to the extent of any
prejudice to such indemnifying party arising from such failure to provide
such notice. In case any such action shall be brought against an
indemnified party and it shall have notified the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, to assume the
defense thereof, with counsel, satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to
the indemnifying party with respect to such action), and it being
understood that the indemnifying party shall not, in connection
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<PAGE> 23
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 Notes or (ii) if
the allocation provided by clause (i) above is not permitted by applicable law,
in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company on
the one hand and of the related 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 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 the related 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 Notes 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 Notes; (b) any suspension or material limitation of
trading in securities generally on the New York Stock Exchange, or any
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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; (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 Notes; or (e) there shall have occurred such a
material adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets of the
United States shall be such) as to make it, in the judgment of the Underwriters,
impractical or inadvisable to proceed with the public offering or delivery of
the Notes on the terms and in the manner contemplated in the Prospectus.
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 Notes. If for any reason the purchase of the Notes 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 Notes 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 each Underwriter
for all out-of-pocket expenses (including fees and disbursements of counsel)
reasonably incurred by it in connection with the offering of the Notes.
12. Notices. All communications hereunder will be in writing and, if sent
to the Representative, will be mailed, delivered or telegraphed and confirmed to
the Representative at Merrill Lynch, Pierce, Fenner & Smith Incorporated, World
Financial Center, North Tower, 10th Floor, New York, New York 10281 Attention:
Asset-Backed Group, or to such other address as the Representative 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, 27051 Towne Centre Drive, Suite 200, Foothill Ranch, CA 92610,
Attention: Michael A. Krahelski, Esq., Senior Vice President and General
Counsel.
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
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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 Notes 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.
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 Notes hereunder on the Closing Date and the aggregate
principal amount of the Notes that such defaulting Underwriter agreed but failed
to purchase does not exceed 10% of the total principal amount of the Notes, the
Representative may make arrangements satisfactory to the Representative and the
Company for the purchase of such Notes by other persons, including either of the
Underwriters, but if no such arrangements are made by the Closing Date, the
nondefaulting Underwriter(s) shall be obligated, in proportion to its respective
commitment hereunder, to purchase the Notes that such defaulting Underwriter
agreed but failed to purchase. If an Underwriter so defaults and the aggregate
principal amount of the Notes with respect to such default exceeds 10% of the
total principal amount of the Notes and arrangements satisfactory to the
Representative and the Company for the purchase of such Notes 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.
25
<PAGE> 26
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us the enclosed duplicate thereof,
whereupon it will become a binding agreement among the undersigned in accordance
with its terms.
Very truly yours,
ONYX ACCEPTANCE FINANCIAL CORPORATION
By: /s/ DON P. DUFFY
----------------------------------------
Name: Don P. Duffy
Title: Chief Financial Officer
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Chase Securities Inc.
Salomon Smith Barney Inc.
By: MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
as Representative
/s/ THEODORE F. BRECK
---------------------------------------
Name: Theodore F. Breck
Title: Authorized Signatory
26
<PAGE> 27
Exhibit A-1
The information herein is preliminary, and will be superseded by the
applicable prospectus supplement and by any other information subsequently filed
with the Securities and Exchange Commission. The information addresses only
certain aspects of the applicable security's characteristics and thus does not
provide a complete assessment. As such, the information may not reflect the
impact of all structural characteristics of the security. The assumptions
underlying the information, including structure and collateral, may be modified
from time to time to reflect changed circumstances. The attached term sheet is
not intended to be a prospectus and any investment decision with respect to the
Notes should be made by you based solely upon all of the information contained
in the final prospectus and the final prospectus supplement. Under no
circumstances shall the information presented constitute an offer to sell or the
solicitation of an offer to buy nor shall there be any sale of the securities in
any jurisdiction in which such offer, solicitation or sale would be unlawful
prior to registration or qualification under the securities laws of such
jurisdiction. The securities may not be sold nor may an offer to buy be accepted
prior to the delivery of a final prospectus and final prospectus supplement
relating to the securities. All information described herein is preliminary,
limited in nature and subject to completion or amendment. No representation is
made that the above referenced securities will actually perform as described in
any scenario presented. A final prospectus and final prospectus supplement may
be obtained by contacting the Salomon Smith Barney Syndicate Desk at (212)
723-6171.
27
<PAGE> 28
Exhibit A-2
The attached information (the "Term Sheet") is privileged and confidential
and is intended for use by the addressee only. The Term Sheet is furnished to
you solely by Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill
Lynch") and not by the issuer of the securities or any of its affiliates.
Neither Merrill Lynch, the issuer of the securities nor any of its affiliates
makes any representation as to the accuracy or completeness of the information
herein. The information herein is preliminary, and will be superseded by the
applicable prospectus supplement and by any other information subsequently filed
with the Securities and Exchange Commission. The information herein may not be
provided by the addressee to any third party other than the addressee's legal,
tax, financial and/or accounting advisors for the purposes of evaluating said
material.
Although a registration statement (including the prospectus) relating to
the securities discussed in this communication has been filed with the
Securities and Exchange Commission and is effective, the final prospectus
supplement relating to the securities discussed in this communication has not
been filed with the Securities and Exchange Commission. This communication shall
not constitute an offer to sell or the solicitation of any offer to buy nor
shall there be any sale of the securities discussed in this communication in any
state in which such offer, solicitation or sale would be unlawful prior to
registration or qualification under the securities laws of any such state.
Prospective purchasers are referred to the final prospectus and prospectus
supplement relating to the securities discussed in this communication for
definitive information on any matter discussed in this communication. A final
prospectus and prospectus supplement may be obtained by contacting the Merrill
Lynch Trading Desk at (212) 449-3659.
Please be advised that asset-backed securities may not be appropriate for
all investors. Potential investors must be willing to assume, among other
things, market price volatility, prepayments, yield curve and interest rate
risk. Investors should fully consider the risk of any investment in these
securities.
If you have received this communication in error, please notify the
sending party immediately by telephone and return the original to such party by
mail.
28
<PAGE> 29
Exhibit A-3
The information herein is preliminary, and will be superseded by the
applicable prospectus supplement and by any other information subsequently filed
with the Securities and Exchange Commission. The information addresses only
certain aspects of the applicable security's characteristics and thus does not
provide a complete assessment. As such, the information may not reflect the
impact of all structural characteristics of the security. The assumptions
underlying the information, including structure and collateral, may be modified
from time to time to reflect changed circumstances. The attached term sheet is
not intended to be a prospectus and any investment decision with respect to the
Notes should be made by you based solely upon all of the information contained
in the final prospectus and final prospectus supplement. Under no circumstances
shall the information presented constitute an offer to sell or the solicitation
of an offer to buy nor shall there be any sale of the securities in any
jurisdiction in which such offer, solicitation or sale would be unlawful prior
to registration or qualification under the securities laws of such jurisdiction.
The securities may not be sold nor may an offer to buy be accepted prior to the
delivery of a final prospectus and final prospectus supplement relating to the
securities. All information described herein is preliminary, limited in nature
and subject to completion or amendment. No representation is made that the above
referenced securities will actually perform as described in any scenario
presented. A final prospectus and final prospectus supplement may be obtained by
contacting the Chase Securities Trading Desk at (212) 834-3720.
29
<PAGE> 30
SCHEDULE I
<TABLE>
<CAPTION>
OFFERED SECURITY PRINCIPAL AMOUNT PRICE(%)
- ---------------- ---------------- ---------
<S> <C> <C>
Class A-1 Notes
Merrill Lynch, Pierce, Fenner & Smith $25,934,000 99.87000%
Incorporated
Chase Securities Inc. $25,933,000 99.87000%
Salomon Smith Barney Inc. $25,933,000 99.87000%
Class A-2 Notes
Merrill Lynch, Pierce, Fenner & Smith $40,000,000 99.79282%
Incorporated
Chase Securities Inc. $40,000,000 99.79282%
Salomon Smith Barney Inc. $40,000,000 99.79282%
Class A-3 Notes
Merrill Lynch, Pierce, Fenner & Smith $43,668,000 99.75951%
Incorporated
Chase Securities Inc. $43,666,000 99.75951%
Salomon Smith Barney Inc. $43,666,000 99.75951%
Class A-4 Notes
Merrill Lynch, Pierce, Fenner & Smith $31,400,000 99.71258%
Incorporated
Chase Securities Inc. $31,400,000 99.71258%
Salomon Smith Barney Inc. $31,400,000 99.71258%
Class B Notes
Merrill Lynch, Pierce, Fenner & Smith $ 9,000,000 99.55248%
Incorporated
Chase Securities Inc. $ 9,000,000 99.55248%
Salomon Smith Barney Inc. $ 9,000,000 99.55248%
</TABLE>
30
<PAGE> 1
EXHIBIT 4.8
INDENTURE
between
ONYX ACCEPTANCE OWNER TRUST 2000-B,
as Issuer,
and
THE CHASE MANHATTAN BANK,
as Indenture Trustee
-----------------
Dated as of April 1, 2000
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
ARTICLE I - DEFINITIONS AND INCORPORATION BY REFERENCE...................................... 1
Section 1.01 Definitions......................................................... 1
Section 1.02 Incorporation by Reference of Trust Indenture Act................... 7
Section 1.03 Rules of Construction............................................... 7
ARTICLE II - THE NOTES...................................................................... 8
Section 2.01 Form................................................................ 8
Section 2.02 Execution, Authentication and Delivery.............................. 8
Section 2.03 Temporary Notes..................................................... 9
Section 2.04 Registration; Registration of Transfer and Exchange................. 9
Section 2.05 Mutilated, Destroyed, Lost or Stolen Notes.......................... 10
Section 2.06 Persons Deemed Owner................................................ 11
Section 2.07 Payment of Principal and Interest; Defaulted Interest............... 11
Section 2.08 Cancellation........................................................ 13
Section 2.09 Book-Entry Notes.................................................... 13
Section 2.10 Notices to Clearing Agency.......................................... 14
Section 2.11 Definitive Notes.................................................... 14
Section 2.12 Release of Collateral............................................... 14
Section 2.13 Tax Treatment....................................................... 15
Section 2.14 ERISA............................................................... 15
ARTICLE III - COVENANTS..................................................................... 15
Section 3.01 Payment of Principal and Interest................................... 15
Section 3.02 Maintenance of Office or Agency..................................... 15
Section 3.03 Money for Payments to be Held in Trust.............................. 16
Section 3.04 Existence........................................................... 17
Section 3.05 Protection of Trust Estate.......................................... 17
Section 3.06 Opinions as to Collateral........................................... 18
Section 3.07 Performance of Obligations; Servicing of Contracts.................. 19
Section 3.08 Negative Covenants.................................................. 20
Section 3.09 Annual Statement as to Compliance................................... 21
Section 3.10 Issuer May Consolidate, etc. Only on Certain Terms.................. 21
Section 3.11 Successor Transferee................................................ 24
Section 3.12 No Other Business................................................... 24
Section 3.13 Servicer's Obligations.............................................. 24
Section 3.14 Restricted Payments................................................. 24
Section 3.15 Notice of Events of Default......................................... 24
Section 3.16 Further Instruments and Acts........................................ 25
Section 3.17 Compliance with Laws................................................ 25
Section 3.18 Amendments of Sale and Servicing Agreement and Trust Agreement...... 25
ARTICLE IV - SATISFACTION AND DISCHARGE..................................................... 25
Section 4.01 Satisfaction and Discharge of Indenture............................. 25
</TABLE>
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<PAGE> 3
<TABLE>
<S> <C>
Section 4.02 Application of Trust Money.......................................... 26
Section 4.03 Repayment of Monies Held by Paying Agent............................ 26
ARTICLE V - EVENTS OF DEFAULT; REMEDIES..................................................... 27
Section 5.01 Events of Default................................................... 27
Section 5.02 Rights Upon Event of Default........................................ 28
Section 5.03 Collection of Indebtedness and Suits for Enforcement by Indenture
Trustee........................................................... 28
Section 5.04 Remedies............................................................ 30
Section 5.05 Optional Preservation of the Contracts.............................. 32
Section 5.06 Priorities.......................................................... 32
Section 5.07 Limitation of Suits................................................. 33
Section 5.08 Unconditional Rights of Noteholders to Receive Principal and
Interest.......................................................... 34
Section 5.09 Restoration of Rights and Remedies.................................. 34
Section 5.10 Rights and Remedies Cumulative...................................... 34
Section 5.11 Delay or Omission Not a Waiver...................................... 35
Section 5.12 Control by Noteholders.............................................. 35
Section 5.13 Waiver of Past Defaults............................................. 35
Section 5.14 Undertaking for Costs............................................... 36
Section 5.15 Waiver of Stay or Extension Laws.................................... 36
Section 5.16 Action on Notes..................................................... 36
Section 5.17 Performance and Enforcement of Certain Obligations.................. 36
ARTICLE VI - THE INDENTURE TRUSTEE.......................................................... 37
Section 6.01 Duties of Indenture Trustee......................................... 37
Section 6.02 Rights of Indenture Trustee......................................... 39
Section 6.03 Individual Rights of Indenture Trustee.............................. 41
Section 6.04 Indenture Trustee's Disclaimer...................................... 41
Section 6.05 Notice of Defaults.................................................. 41
Section 6.06 Reports by Indenture Trustee to Holders............................. 41
Section 6.07 Compensation and Indemnity.......................................... 41
Section 6.08 Replacement of Indenture Trustee.................................... 42
Section 6.09 Successor Indenture Trustee by Merger............................... 43
Section 6.10 Appointment of Co-Indenture Trustee or Separate Indenture Trustee... 44
Section 6.11 Eligibility; Disqualification....................................... 45
Section 6.12 Preferential Collection of Claims Against Issuer.................... 45
Section 6.13 Representations and Warranties of Indenture Trustee................. 45
ARTICLE VII - NOTEHOLDERS' LISTS AND REPORTS................................................ 46
Section 7.01 Issuer to Furnish Indenture Trustee Names and Addresses of
Noteholders ...................................................... 46
Section 7.02 Preservation of Information; Communications to Noteholders.......... 46
Section 7.03 Reports by Issuer................................................... 46
Section 7.04 Reports by Indenture Trustee........................................ 47
ARTICLE VIII - ACCOUNTS, DISBURSEMENTS AND RELEASES......................................... 47
Section 8.01 Collection of Money................................................. 47
</TABLE>
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<PAGE> 4
<TABLE>
<S> <C>
Section 8.02 Trust Accounts...................................................... 48
Section 8.03 [RESERVED].......................................................... 49
Section 8.04 Release of Collateral............................................... 49
Section 8.05 Opinion of Counsel.................................................. 49
ARTICLE IX - SUPPLEMENTAL INDENTURES........................................................ 50
Section 9.01 Supplemental Indentures Without Consent of Noteholders.............. 50
Section 9.02 Supplemental Indentures With Consent of Noteholders................. 51
Section 9.03 Execution of Supplemental Indentures................................ 52
Section 9.04 Effect of Supplemental Indenture.................................... 53
Section 9.05 Conformity With Trust Indenture Act................................. 53
Section 9.06 Reference in Notes to Supplemental Indentures....................... 53
ARTICLE X - REDEMPTION OF NOTES............................................................. 53
Section 10.01 Redemption......................................................... 53
Section 10.02 Form of Redemption Notice.......................................... 53
Section 10.03 Notes Payable on Redemption Date................................... 54
ARTICLE XI - MISCELLANEOUS.................................................................. 54
Section 11.01 Compliance Certificates and Opinions, etc.......................... 54
Section 11.02 Form of Documents Delivered to Indenture Trustee................... 56
Section 11.03 Acts of Noteholders................................................ 57
Section 11.04 Notices, etc., to Indenture Trustee, Issuer, Insurer and Rating
Agencies ........................................................ 57
Section 11.05 Notices to Noteholders; Waiver..................................... 58
Section 11.06 Alternate Payment and Notice Provisions............................ 58
Section 11.07 Conflict With Trust Indenture Act.................................. 59
Section 11.08 Effect of Headings and Table of Contents........................... 59
Section 11.09 Successors and Assigns............................................. 59
Section 11.10 Separability....................................................... 59
Section 11.11 Benefits of Indenture.............................................. 59
Section 11.12 Legal Holidays..................................................... 59
Section 11.13 Governing Law...................................................... 59
Section 11.14 Counterparts....................................................... 60
Section 11.15 Recording of Indenture............................................. 60
Section 11.16 Trust Obligation................................................... 60
Section 11.17 No Petition........................................................ 60
Section 11.18 Inspection......................................................... 60
Section 11.19 Limitation of Liability of Owner Trustee........................... 61
Section 11.20 Certain Matters Regarding the Insurer.............................. 61
</TABLE>
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<PAGE> 5
EXHIBITS
<TABLE>
<S> <C>
Schedule A - Schedule of Contracts
Exhibit A - Form of Depository Agreement
Exhibit B - Form of Class A-1 Note
Exhibit C - Form of Class A-2 Note
Exhibit D - Form of Class A-3 Note
Exhibit E - Form of Class A-4 Note
Exhibit F - Form of Class B Note
</TABLE>
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<PAGE> 6
This Indenture, dated as of April 1, 2000, is between Onyx Acceptance
Owner Trust 2000-B, 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 6.4125% Auto
Loan Backed Notes, Class A-1 (the "CLASS A-1 NOTES"), 7.02% Auto Loan Backed
Notes, Class A-2 (the "CLASS A-2 NOTES"), 7.29% Auto Loan Backed Notes, Class
A-3 (the "CLASS A-3 NOTES"), 7.38% Auto Loan Backed Notes, Class A-4 (the "CLASS
A-4 NOTES"), and 7.56% Auto Loan Backed Notes, Class B (the "CLASS B NOTES" and,
together with the Class A-1 Notes, the Class A-2 Notes, the Class A-3 Notes and
the Class A-4 Notes, the "NOTES"):
GRANTING CLAUSE
The Issuer hereby Grants to the Indenture Trustee for the benefit of the
Holders of the Notes and the Insurer on the Closing Date, without recourse, all
of the Issuer's right, title and interest in, to and under the Collateral.
The foregoing Grant is made in trust to secure the payment of principal
of and interest on, and any other amounts owing in respect of, the Notes,
equally and ratably without prejudice, priority or distinction, and to secure
compliance with the provisions of this Indenture and the Insurance Agreement,
all as provided in this Indenture and the Insurance Agreement.
The Indenture Trustee, as Indenture Trustee on behalf of the Holders of
the Notes and the Insurer, acknowledges such Grant, accepts the trusts under
this Indenture in accordance with the provisions of this Indenture and agrees to
perform its duties required in this Indenture to the best of its ability to the
end that the interests of the Holders of the Notes may be adequately and
effectively protected.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
Section 1.01 Definitions.
(a) Except as otherwise specified herein or as the context may
otherwise require, (i) capitalized terms that are used herein that are not
otherwise defined herein shall have the meanings assigned to them in the Sale
and Servicing Agreement (as defined below) and (ii) the following terms have the
respective meanings set forth below for all purposes of this Indenture.
"ACT" shall have the meaning specified in Section 11.03(a).
"ADMINISTRATION AGREEMENT" means the Administration Agreement, dated as
of the date hereof, among the Administrator, the Issuer, the Seller, the
Indenture Trustee and the Trust Agent.
<PAGE> 7
"ADMINISTRATOR" means the Servicer, or any successor Administrator under
the Administration Agreement.
"AUTHORIZED OFFICER" means, with respect to the Issuer, any officer of
the Owner Trustee who is authorized to act for the Owner Trustee or the Trust
Agent, as the case may be, in matters relating to the Issuer and who is
identified on the list of Authorized Officers delivered by the Owner Trustee or
the Trust Agent, as the case may be, to the Indenture Trustee on the Closing
Date (as such list may be modified or supplemented from time to time thereafter)
and, so long as the Administration Agreement is in effect, any Vice President or
more senior officer of the Administrator who is authorized to act for the
Administrator in matters relating to the Issuer and to be acted upon by the
Administrator pursuant to the Administration Agreement and who is identified on
a list of Authorized Officers delivered by the Administrator to the Indenture
Trustee on the Closing Date (as such list may be modified or supplemented from
time to time thereafter).
"BASIC DOCUMENTS" means the Certificate of Trust, the Trust Agreement,
the Sale and Servicing Agreement, the Administration Agreement, the Depository
Agreement, the Insurance Agreement, the Policy and this Indenture.
"BENEFIT PLAN" shall have the meaning specified in the Trust Agreement.
"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 NOTES" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes.
"CLASS A-1 NOTES" means the Class A-1 Notes, substantially in the form
of Exhibit B.
"CLASS A-2 NOTES" means the Class A-2 Notes, substantially in the form
of Exhibit C.
"CLASS A-3 NOTES" means the Class A-3 Notes, substantially in the form
of Exhibit D.
"CLASS A-4 NOTES" means the Class A-4 Notes, substantially in the form
of Exhibit E.
"CLASS B NOTES" means the Class B Notes, substantially in the form of
Exhibit F.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" means the Trust Property.
-2-
<PAGE> 8
"CONTROLLING PARTY" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing, and the Indenture Trustee, for so long as
an Insurer Default shall have occurred and be continuing.
"DEFAULT" means any occurrence that is, or with notice or the lapse of
time or both would become, an Event of Default.
"DEFINITIVE NOTES" shall have the meaning specified in Section 2.09.
"DEPOSITORY AGREEMENT" means the agreement dated April 28, 2000, among
the Issuer, the Indenture Trustee and DTC, as the initial Clearing Agency,
relating to the Notes.
"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.
"HOLDER" or "NOTEHOLDER" means, with respect to a Note, the Person in
whose name such Note is registered in the Note Register.
"INDEBTEDNESS" means, with respect to any Person at any time, (i)
indebtedness or liability of such Person for borrowed money whether or not
evidenced by bonds, debentures, notes or other instruments, or for the deferred
purchase price of property or services (including trade obligations); (ii)
obligations of such Person as lessee under leases which should have been or
should be, in 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.
-3-
<PAGE> 9
"INDENTURE" means this Indenture, as amended or supplemented from time
to time.
"INDEPENDENT" when used with respect to any specified Person, means such
a Person who (i) is in fact independent of the Issuer, the Seller and any of
their respective Affiliates, (ii) is not a director, officer or employee of the
Issuer, the Seller or any of their respective Affiliates, (iii) is not a person
related to any officer or director of the Issuer, the Seller or any of their
respective Affiliates, (iv) is not a Holder (directly or indirectly) of more
than 10% of any voting securities of the Issuer, the Seller or any of their
respective Affiliates, and (v) is not connected with the Issuer, the Seller or
any of their respective Affiliates as an officer, employee, promoter,
underwriter, trustee, partner, director or person performing similar functions.
"INDEPENDENT CERTIFICATE" means a certificate or opinion to be delivered
to the Indenture Trustee under the circumstances described in, and otherwise
complying with, the applicable requirements of Section 11.01, made by an
Independent appraiser or other expert appointed by an Issuer Order and approved
by the Indenture Trustee in the exercise of reasonable care, and such opinion or
certificate shall state that the signer has read the definition of "Independent"
in this Indenture and that the signer is Independent within the meaning thereof.
"ISSUER ORDER" and "ISSUER REQUEST" means a written order or request
signed in the name of the Issuer by an Authorized Officer and delivered to the
Indenture Trustee.
"NOTE OWNER" means, with respect to a Book-Entry Note, the Person who is
the owner of such Book-Entry Note, as reflected on the books of the Clearing
Agency, or on the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency participant or as an indirect participant,
in each case in accordance with the rules of such Clearing Agency).
"NOTE REGISTER" and "NOTE REGISTRAR" have the respective meanings
specified in Section 2.04.
"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 canceled by the Note Registrar or
delivered to the Note Registrar for cancellation;
-4-
<PAGE> 10
(ii) Notes or portions thereof the payment for which money in
the necessary amount has been theretofore deposited with the Indenture
Trustee or any Paying Agent in trust for the Holders of such Notes
(provided, however, that if such Notes are to be redeemed, notice of
such redemption has been duly given pursuant to this Indenture or
provision for such notice has been made, satisfactory to the Indenture
Trustee, has been made); and
(iii) Notes in exchange for or in lieu of other Notes which have
been authenticated and delivered pursuant to this Indenture unless proof
satisfactory to the Indenture Trustee is presented that any such Notes
are held by a bona fide purchaser;
provided, however, that in determining whether the Holders of the requisite
Outstanding Amount have given any request, demand, authorization, direction,
notice, consent or waiver hereunder or under any other Basic Document, Notes
owned by the Issuer, the Seller or any of their respective Affiliates shall be
disregarded and deemed not to be Outstanding, except that, in determining
whether the Indenture Trustee shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only Notes
that the Indenture Trustee knows to be so owned shall be so disregarded. Notes
so owned that have been pledged in good faith may be regarded as Outstanding if
the pledgee establishes to the satisfaction of the Indenture Trustee the
pledgee's right so to act with respect to such Notes and that the pledgee is not
the Issuer, the Seller or any of their respective Affiliates.
"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 is investment grade.
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"RATING EVENT" means the qualification, reduction or withdrawal by
either Rating Agency of its then-current rating of any Class of Notes.
"RECORD DATE" means, with respect to a Distribution Date or Redemption
Date, the close of business on the Business Day immediately preceding such
Distribution Date or Redemption Date, or, in the event that Definitive Notes are
issued, the close of business on the last day of the calendar month immediately
preceding the month in which such Distribution Date or Redemption Date occurs.
"REDEMPTION DATE" means the Distribution Date specified by the Servicer
or the Issuer pursuant to Section 10.01.
"REDEMPTION PRICE" means an amount equal to the unpaid principal amount
of the Notes redeemed plus accrued and unpaid interest thereon at the respective
Interest Rates of each Class of Notes being so redeemed to but excluding the
Redemption Date.
"REGISTERED HOLDER" means the Person in whose name a Note is registered
on the Note Register on the applicable Record Date.
"SALE AND SERVICING AGREEMENT" means the Sale and Servicing Agreement,
dated as of the date hereof, between the Issuer, the Seller, the Servicer, the
Indenture Trustee and the Trust Agent.
"STATE" means any one of the 50 states of the United States or the
District of Columbia.
"SUCCESSOR SERVICER" shall have the meaning specified in Section
3.07(e).
"TERMINATION DATE" means the latest of (i) the expiration of the Policy
and the return of the Policy to the Insurer for cancellation, (ii) the date on
which the Insurer shall have received payment and performance of all amounts and
obligations which the Issuer may owe to or on behalf of the Insurer under this
Indenture and (iii) the date on which the Indenture Trustee shall have received
payment and performance of all amounts and obligations which the Issuer may owe
to or on behalf of the Indenture Trustee for the benefit of the Noteholders
under this Indenture or the Notes.
"TRUST AGENT" means The Chase Manhattan Bank, as agent of the Owner
Trustee under the Trust Agreement, and any successor Trust Agent thereunder.
"TRUST AGREEMENT" means the Trust Agreement, dated as of April 1, 2000,
among the Seller, the Owner Trustee and the Trust Agent.
"TRUST INDENTURE ACT" or "TIA" means the Trust Indenture Act of 1939, as
amended, as in force on the date hereof, unless otherwise specifically provided.
"UNITED STATES" means the United States of America.
Section 1.02 Incorporation by Reference of Trust Indenture Act.
Whenever this Indenture refers to a provision of the TIA, the provision is
incorporated by reference in and made
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a part of this Indenture. The following TIA terms used in this Indenture have
the following meanings:
"COMMISSION" means the Securities and Exchange Commission.
"INDENTURE SECURITIES" means the Notes.
"INDENTURE 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, the Class A-4 Notes and the Class B Notes, in each case
together with the Indenture Trustee's certificate of authentication, shall be in
substantially the forms set forth as Exhibits B, 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 B, 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 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) $77,800,000 of Class A-1 Notes, (ii) $120,000,000 of Class
A-2 Notes, (iii) $131,000,000 of Class A-3 Notes, (iv) $94,200,000 of Class A-4
Notes, and (v) $27,000,000 of Class B Notes. The aggregate principal amount of
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and Class B
Notes outstanding at any time may not exceed such respective amounts, except as
otherwise provided in Section 2.05.
Each Note shall be dated the date of its authentication. The Notes shall
be issuable as registered Notes in the minimum denomination of $1,000 and in
integral multiples of $1,000 in excess thereof, except that one Note of each
Class may be issued in a different denomination.
No Note shall be entitled to any benefit under this Indenture or be
valid or obligatory for any purpose, unless there appears on such Note a
certificate of authentication substantially in the form provided for in the
forms of Notes attached as exhibits to this Indenture executed by the Indenture
Trustee by the manual signature of one of its authorized signatories, and such
certificate upon any Note shall be conclusive evidence, and the only evidence,
that such Note has been duly authenticated and delivered hereunder.
Section 2.03 Temporary Notes. Pending the preparation of
definitive Notes, the Issuer may execute, and upon receipt of an Issuer Order
the Indenture Trustee shall authenticate and deliver, temporary Notes that are
printed, lithographed, typewritten, mimeographed or otherwise produced, of the
tenor of the definitive Notes in lieu of which they are issued and with
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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.
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
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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.
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
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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 Notes shall be calculated on the basis of a 360-day year
of twelve 30-day months, except for the Class A-1 Notes, which shall be
calculated on the basis of a 360-day year and the actual number of days in the
related Interest Accrual Period. Any installment of interest or principal, if
any, payable on any Note which is punctually paid or duly provided for by the
Issuer on the applicable Distribution Date shall be paid to the Person in whose
name such Note (or one or more Predecessor Notes) is registered on the Record
Date, by check mailed first-class, postage prepaid to such Person's address as
it appears on the Note Register on such Record Date, except that, unless
Definitive Notes have been issued pursuant to Section 2.11, with respect to
Notes registered on the Record Date in the name of the nominee of the Clearing
Agency (initially, such nominee to be Cede & Co.), payment will be made by wire
transfer in immediately available funds to the account designated by such
nominee and except for the final installment of principal payable with respect
to such Note on a Distribution Date, a Redemption Date or on the related Final
Scheduled Distribution Date, as the case may be (and except for the Redemption
Price for any Note called for redemption pursuant to Section 10.01), which shall
be payable as provided below. The funds represented by any such checks returned
undelivered shall be held in accordance with Section 3.03.
(b) The principal of each Note shall be payable on each
Distribution Date to the extent provided in the form of the related Note set
forth as an Exhibit hereto. Notwithstanding the foregoing, the entire unpaid
principal amount of the Notes of a Class of Notes shall be due and payable, if
not previously paid, on the earlier of:
(i) the Note Final Scheduled Distribution Date of such
Class;
(ii) the Redemption Date;
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(iii) if an Event of Default shall have occurred and be
continuing, so long as an Insurer Default shall not have
occurred and be continuing, the date on which the Insurer shall
have declared the Notes to be immediately due and payable in the
manner provided in Section 5.02; or
(iv) if an Event of Default shall have occurred and be
continuing and if an Insurer Default has occurred and is
continuing, the date on which Holders representing not less than
662/3% of the Outstanding Amount of the Highest Priority Class
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 the Administration Agreement.
Section 2.08 Cancellation. All Notes surrendered for payment,
registration of transfer, exchange or redemption shall, if surrendered to any
Person other than the Indenture Trustee, be delivered to the Indenture Trustee
and shall be promptly canceled by the Indenture Trustee. The Issuer may at any
time deliver to the Indenture Trustee for cancellation any Notes previously
authenticated and delivered hereunder which the Issuer may have acquired in any
manner whatsoever, and all Notes so delivered shall be promptly canceled by the
Indenture Trustee. No Notes shall be authenticated in lieu of or in exchange for
any Notes canceled as provided in this Section, except as expressly permitted by
this Indenture. All canceled Notes may be held or disposed of by the Indenture
Trustee in accordance with its standard retention or disposal policy as in
effect at the time unless the Issuer shall direct by an Issuer Order that they
be destroyed or returned to it; provided that such Issuer Order is timely and
the Notes have not been previously disposed of by the Indenture Trustee.
Section 2.09 Book-Entry Notes. The Notes, upon original issuance,
will be issued in the form of a typewritten Note or Notes representing the
Book-Entry Notes, to be delivered to DTC, the initial Depository, by, or on
behalf of, the Issuer. Such Notes shall initially be registered on the Note
Register in the name of Cede & Co., the nominee of the initial Clearing Agency,
and no Note Owner will receive a Definitive Note representing such Note Owner's
interest in such Note, except as provided in Section 2.11. Unless and until
definitive, fully registered Notes (the "DEFINITIVE NOTES") have been issued to
Note Owners pursuant to Section 2.11:
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(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 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
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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 or other
applicable exemption providing substantially similar relief have been satisfied
or has provided a written representation to the Issuer satisfactory to the
Issuer in lieu thereof.
ARTICLE III
COVENANTS
Section 3.01 Payment of Principal and Interest. The Issuer will
duly and punctually pay the principal of and interest, if any, on the Notes in
accordance with the terms of the Notes and this Indenture. Without limiting the
foregoing, subject to Section 8.02(c), the Issuer will cause to be distributed
all amounts on deposit in the Note Distribution Account on a Distribution Date
deposited therein pursuant to the Sale and Servicing Agreement for the benefit
of (i) the Class A-1 Notes, to the Class A-1 Noteholders, (ii) the Class A-2
Notes, to the Class A- 2 Noteholders, (iii) the Class A-3 Notes, to the Class
A-3 Noteholders, (iv) the Class A-4 Notes, to the Class A-4 Noteholders, and (v)
the Class B Notes, to the Class B Noteholders. Amounts properly withheld under
the Code by any Person from a payment to any Noteholder of interest
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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 Note Distribution Account after required transfers thereto from the
other Trust Accounts shall be made on behalf of the Issuer by the Paying Agent
(including the Indenture Trustee when serving as a Paying Agent), and no amounts
so withdrawn from the Note Distribution Account for payments of Notes shall be
paid over to the Issuer except as provided in this Section.
The Notes shall be non-recourse obligations of the Issuer and shall be
limited in right of payment to amounts available from the Collateral and the
Policy as provided in this Indenture and the Issuer shall not otherwise be
liable for payments on the Notes. No Person shall be personally liable for any
amounts payable under the Notes. If any other provision of this Indenture
conflicts or is deemed to conflict with the provisions of this paragraph, the
provisions of this paragraph shall control.
On the Business Day immediately preceding each Distribution Date, the
Servicer shall cause funds to be withdrawn from the Collection Account and
deposited into the Payment Account pursuant to Section 4.02(e) of the Sale and
Servicing Agreement, and on each Distribution Date, the Indenture Trustee shall
make the deposits to the Note Distribution Account required by Section 4.03(a)
of the Sale and Servicing Agreement.
The Issuer will cause each Paying Agent other than the Indenture Trustee
to execute and deliver to the Indenture Trustee and the Insurer an instrument in
which such Paying Agent shall agree with the Indenture Trustee (and if the
Indenture Trustee acts as Paying Agent, it hereby so agrees), subject to the
provisions of this Section, that such Paying Agent will:
(i) hold all sums held by it for the payment of amounts
due with respect to the Notes in trust for the benefit of the
Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided and pay such
sums to such Persons as herein provided;
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(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).
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
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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 and the
Indenture Trustee shall execute all financing statements, continuation
statements or other instruments required to be executed pursuant to this section
upon written notice and instructions from the Issuer.
Section 3.06 Opinions as to Collateral.
(a) Promptly after the execution and delivery of this Indenture,
the Issuer shall furnish to the Indenture Trustee and the Insurer an Opinion of
Counsel to the effect that, in the opinion of such counsel, either (i) all
financing statements and continuation statements have been executed and filed
that are necessary to create and continue the Indenture Trustee's first priority
perfected security interest in the Collateral (subject to the rights of the
Insurer under the Insurance Agreement) for the benefit of the Noteholders, and
reciting the details of such filings
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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 Closing 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
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perform any of its duties or obligations under the Sale and Servicing Agreement
with respect to the Contracts, the Issuer shall take all reasonable steps
available to it to remedy such failure.
(e) Upon the termination of the Servicer by the Insurer pursuant
to Section 7.01 of the Sale and Servicing Agreement or upon the resignation of
the Servicer pursuant to Section 6.04 of the Sale and Servicing Agreement, the
Insurer shall appoint a successor servicer ("SUCCESSOR SERVICER"). Upon the
termination of the Servicer by the Indenture Trustee or the Noteholders 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 in the
event that the Insurer is not entitled to appoint a successor servicer by
operation of Section 9.08 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 Residual Interest Instruments
evidencing not less than 51% of the Percentage Interests, 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 and the Insurer. As soon as a Successor Servicer is
appointed, the Issuer shall notify the Indenture Trustee and the Insurer of such
appointment, specifying in such notice the name and address of such Successor
Servicer.
(g) The Issuer agrees that it will not waive timely performance
or observance by the Servicer or the Seller of their respective duties under the
Basic Documents: (i) without the prior consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing) or (ii) if the effect thereof
would adversely affect the Holders of the Notes.
Section 3.08 Negative Covenants. Until the Termination Date, the
Issuer shall not:
(i) except as expressly permitted by the Basic
Documents, sell, transfer, exchange or otherwise dispose of any
of the properties or assets of the Issuer, including those
included in the Collateral, unless directed to do so by the
Indenture Trustee with the prior written consent of the Insurer;
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(ii) claim any credit on, or make any deduction from the
principal or interest payable in respect of, the Notes (other
than amounts properly withheld from such payments under the Code
or applicable state law) or assert any claim against any present
or former Noteholder by reason of the payment of the taxes
levied or assessed upon any part of the Collateral;
(iii) (A) permit the validity or effectiveness of this
Indenture to be impaired, or permit the lien created by this
Indenture to be amended, hypothecated, subordinated, terminated
or discharged, or permit any Person to be released from any
covenants or obligations with respect to the Notes under this
Indenture except as may be expressly permitted hereby, (B)
permit any lien, charge, excise, claim, security interest,
mortgage or other encumbrance (other than the lien of this
Indenture) to be created on or extend to or otherwise arise upon
or burden the Collateral or any part thereof or any interest
therein or the proceeds thereof (other than tax liens,
mechanics' liens and other liens that arise by operation of law,
in each case on a Financed Vehicle and arising solely as a
result of an action or omission of the related Obligor), (C)
permit the lien 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, 2000), an Officer's Certificate stating, as to the Authorized
Officer signing such Officer's Certificate, that:
(i) a review of the activities of the Issuer during such
year and of performance under this Indenture has been made under
such Authorized Officer's supervision; and
(ii) to the best of such Authorized Officer's knowledge,
based on such review, the Issuer has complied with all
conditions and covenants under this Indenture throughout such
year, or, if there has been a default in the compliance of any
such condition or covenant, specifying each such default known
to such Authorized Officer and the nature and status thereof.
Section 3.10 Issuer May Consolidate, etc. Only on Certain Terms.
(a) The Issuer shall not consolidate or merge with or into any
other Person, unless:
(i) the Person (if other than the Issuer) formed by or
surviving such consolidation or merger shall be a Person
organized and existing under the laws of the United States or any
State and shall expressly assume, by an indenture supplemental
hereto, executed and delivered to the Indenture Trustee and the
Insurer, in form and substance satisfactory to the Indenture
Trustee and the Insurer (so long as no Insurer Default shall have
occurred and be continuing), the due and
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punctual payment of the principal of and interest on all Notes
and the performance or observance of every agreement and
covenant of this Indenture and each other Basic Document on the
part of the Issuer to be performed or observed, all as provided
herein;
(ii) immediately after giving effect to such
consolidation or merger, no Default or Event of Default shall
have occurred and be continuing;
(iii) the Rating Agency Condition shall have been
satisfied with respect to such consolidation or merger;
(iv) the Issuer shall have received an Opinion of
Counsel which shall be delivered to and shall be satisfactory to
the Indenture Trustee and the Insurer to the effect that such
consolidation or merger will not have any material adverse tax
consequence to the Trust, the Insurer or any Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been
taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer an Officer's Certificate and an Opinion
of Counsel (which shall describe the actions taken as required
by clause (v) above or that no such actions will be taken) each
stating that such consolidation or merger and such supplemental
indenture comply with this Article Three and that all conditions
precedent herein provided for relating to such transaction have
been compiled with (including any filings required by the
Exchange Act); and
(vii) so long as no Insurer Default shall have occurred
and be continuing, the Issuer shall have given the Insurer
written notice of such consolidation or merger at least 20
Business Days prior to the consummation of such action and shall
have received the prior written approval of the Insurer of such
consolidation or merger and the Issuer or the Person (if other
than the Issuer) formed by or surviving such consolidation or
merger has a net worth, immediately after such consolidation or
merger, that is (A) greater than zero and (B) not less than the
net worth of the Issuer immediately prior to giving effect to
such consolidation or merger.
(b) The Issuer shall not convey or transfer all or substantially
all of its properties or assets, including those included in the Collateral, to
any Person (except as expressly permitted by the Basic Documents), unless:
(i) the Person that acquires by conveyance or transfer
the properties and assets of the Issuer shall (A) be a United
States citizen or a Person organized and existing under the laws
of the United States or any State, (B) expressly assume, by an
indenture supplemental hereto, executed and delivered to the
Indenture Trustee and the Insurer, in form and substance
satisfactory to the Indenture Trustee and the Insurer (so long
as no Insurer Default shall have occurred and be continuing),
the due and punctual payment of the principal of and
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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 or any
Noteholder;
(v) any action as is necessary to maintain the lien and
security interest created by this Indenture shall have been
taken;
(vi) the Issuer shall have delivered to the Indenture
Trustee and the Insurer an Officer's Certificate and an Opinion
of Counsel (which shall describe the actions taken as required
by clause (v) above or that no such actions will be taken) each
stating that such conveyance or transference and such
supplemental indenture comply with this Article Three and that
all conditions precedent herein provided for relating to such
transaction have been complied with (including any filings
required by the Exchange Act); and
(vii) so long as no Insurer Default shall have occurred
and be continuing, the Issuer shall have given the Insurer
written notice of such conveyance or transfer of properties or
assets at least 20 Business Days prior to the consummation of
such action and shall have received the prior written approval
of the Insurer of such conveyance or transfer and the Person
acquiring by conveyance or transference the properties or assets
of the Issuer has a net worth, immediately after such conveyance
or transfer, that is (A) greater than zero and (B) not less than
the net worth of the Issuer immediately prior to giving effect
to such conveyance or transfer.
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Section 3.11 Successor Transferee.
(a) Upon any consolidation or merger of the Issuer in accordance
with Section 3.10(a), the Person formed by or surviving such consolidation or
merger (if other than the Issuer) shall succeed to, and be substituted for, and
may exercise every right and power of, the Issuer under this Indenture with the
same effect as if such Person had been named as the Issuer herein.
(b) Upon a conveyance or transfer of all or substantially all the
assets or properties of the Issuer pursuant to Section 3.10(b), the Issuer will
be released from every covenant and agreement of this Indenture to be observed
or performed on the part of the Issuer with respect to the Notes immediately
upon the delivery of written notice to the Indenture Trustee and the Insurer
stating that the Issuer is to be so released.
Section 3.12 No Other Business. The Issuer shall not engage in
(i) any business other than financing, purchasing, owning, selling and managing
the Contracts in the manner contemplated by this Indenture and the other Basic
Documents and activities incidental thereto or (ii) any other business or
activities as contemplated by Section 2.03 of the Trust Agreement. After the
termination of the Funding Period, the Issuer shall not fund the purchase of any
additional motor vehicle contracts.
Section 3.13 Servicer's Obligations. The Issuer shall cause the
Servicer to comply with the Servicer's obligations under the Sale and Servicing
Agreement.
Section 3.14 Restricted Payments. Except as expressly permitted
by the Basic Documents, the Issuer shall not, directly or indirectly, (i) pay
any dividend or make any distribution (by reduction of capital or otherwise),
whether in cash, property, securities or a combination thereof, to the Owner
Trustee or any owner of a beneficial interest in the Issuer or otherwise with
respect to any ownership or equity interest or security in or of the Issuer or
to the Servicer, (ii) redeem, purchase, retire or otherwise acquire for value
any such ownership or equity interest or security or (iii) set aside or
otherwise segregate any amounts for any such purpose; provided, however, that
the Issuer may make, or cause to be made, (A) distributions to the Servicer, the
Indenture Trustee, the Owner Trustee, the Insurer, the Noteholders 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, the Note Distribution Account, the Capitalized Interest
Account, the Prefunding Account, the Spread Account or the Payahead 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 Trust Agent, the Insurer and each Rating Agency
prompt written notice of each Event of Default hereunder and each default on the
part of the Servicer or the Seller of their respective obligations under the
Sale and Servicing Agreement.
Section 3.16 Further Instruments and Acts. Upon request of the
Indenture Trustee or the Insurer, the Issuer will execute and deliver such
further instruments and do such
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further acts as may be reasonably necessary or proper to carry out more
effectively the purpose of this Indenture.
Section 3.17 Compliance with Laws. The Issuer shall comply with
the requirements of all applicable laws, the non-compliance with which would,
individually or in the aggregate, materially and adversely affect the ability of
the Issuer to perform its obligations under the Notes, this Indenture or any
other Basic Document.
Section 3.18 Amendments of Sale and Servicing Agreement and Trust
Agreement. The Issuer shall not agree to any amendment to Section 9.01 of the
Sale and Servicing Agreement or Section 11.01 of the Trust Agreement to
eliminate the requirements thereunder that the Holders of the Notes consent to
amendments thereto as provided therein.
ARTICLE IV
SATISFACTION AND DISCHARGE
Section 4.01 Satisfaction and Discharge of Indenture. This
Indenture shall cease to be of further effect with respect to the Notes except
as to (i) rights of registration of transfer and exchange, (ii) substitution of
mutilated, destroyed, lost or stolen Notes, (iii) rights of Noteholders to
receive payments of principal thereof and interest thereon, (iv) Sections 3.03,
3.04, 3.05, 3.07, 3.08, 3.10, 3.11, 3.12, 3.17 and 3.18, (v) the rights,
obligations and immunities of the Indenture Trustee hereunder (including the
rights of the Indenture Trustee under Section 6.07 and the obligations of the
Indenture Trustee under Section 4.02), (vi) the rights of Noteholders as
beneficiaries hereof with respect to the property so deposited with the
Indenture Trustee payable to all or any of them and (vii) the obligation of the
Indenture Trustee to make claims under the Policy, which shall survive the Class
B 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 B
Final Scheduled Distribution Date within one
year, or
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(iii) are to be called for redemption within one
year under arrangements satisfactory to the
Indenture Trustee for the giving of notice
of redemption by the Indenture Trustee in
the name, and at the expense, of the Issuer,
and the Issuer, in the case of clauses (i), (ii) or (iii) above, has irrevocably
deposited or caused to be irrevocably deposited with the Indenture Trustee cash
or direct obligations of or obligations guaranteed by the United States (which
will mature prior to the date such amounts are payable), in trust in an Eligible
Account for such purpose, in an amount sufficient to pay and discharge the
entire indebtedness on such Notes not theretofore delivered to the Indenture
Trustee for cancellation when due to the Class B Final Scheduled Distribution
Date or Redemption Date (if Notes shall have been called for redemption pursuant
to Section 10.01), as the case may be;
(B) the Issuer has paid or performed or caused to be paid or
performed all amounts and obligations which the Issuer may owe to or on behalf
of (1) the Indenture Trustee for the benefit of the Noteholders under this
Indenture or the Notes and (2) the Insurer under this Indenture and the Basic
Documents; and
(C) the Issuer has delivered to the Indenture Trustee and the
Insurer an Officer's Certificate, an Opinion of Counsel and (if required by the
TIA, the Indenture Trustee) an Independent Certificate from a firm of certified
public accountants, each meeting the applicable requirements of Section 11.01(a)
and, subject to Section 11.02, each stating that all conditions precedent herein
provided for relating to the satisfaction and discharge of this Indenture have
been complied with and the Rating Agency Condition has been satisfied.
Section 4.02 Application of Trust Money. All monies deposited
with the Indenture Trustee pursuant to Section 4.01 shall be held in trust and
applied by it, in accordance with the provisions of the Notes and this
Indenture, to the payment, either directly or through any Paying Agent, as the
Indenture Trustee may determine, to the Holders of the particular Notes for the
payment or redemption of which such monies have been deposited with the
Indenture Trustee, of all sums due and to become due thereon for principal and
interest; but such monies need not be segregated from other funds except to the
extent required herein or in the Sale and Servicing Agreement or required by
law.
Section 4.03 Repayment of Monies Held by Paying Agent. In
connection with the satisfaction and discharge of this Indenture with respect to
the Notes, all monies then held by any Paying Agent other than the Indenture
Trustee under the provisions of this Indenture with respect to such Notes shall,
upon demand of the Issuer, be paid to the Indenture Trustee to be held and
applied according to Section 3.03 and thereupon such Paying Agent shall be
released from all further liability with respect to such monies.
ARTICLE V
EVENTS OF DEFAULT; REMEDIES
Section 5.01 Events of Default. "EVENT OF DEFAULT," wherever used
herein, means any one of the following events (whatever the reason for such
Event of Default and whether it shall be voluntary or involuntary or be effected
by operation of law or pursuant to any
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judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) the delivery to the Insurer of a claim for payment under the
Policy;
(b) default in the payment of any interest on any Note when the
same becomes due and payable, and such default shall continue for a period of
five days;
(c) default in the payment of any principal due and payable on a
Class of Notes on the Note 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 Note 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 or the lapse of time would become an Event of Default, its
status and what action the Issuer is taking or proposes to take with respect
thereto.
Section 5.02 Rights Upon Event of Default.
(a) So long as no Insurer Default has occurred and is continuing,
if an Event of Default shall have occurred and be continuing, then the Insurer
shall have the right, but not the obligation, upon prior written notice to each
Rating Agency, to declare by written notice to the Issuer and the Indenture
Trustee that the Notes become immediately due and payable, and upon any such
declaration the unpaid principal amount of the Notes, together with accrued and
unpaid interest thereon, shall become immediately due and payable. The Indenture
Trustee will have no discretion with 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 shall have occurred and be continuing, the Indenture
Trustee shall, if so requested in writing by Holders representing at least
662/3% of the aggregate Outstanding Amount of the Highest Priority Class, upon
prior written notice to each Rating Agency, declare that all 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 Holders representing at
least 662/3% of the Outstanding Amount of the Highest Priority Class, as more
particularly provided in Section 5.04, proceed to protect and enforce the rights
of the Noteholders, by such appropriate Proceedings as the Indenture Trustee
shall deem most effective
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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 agents, attorneys and counsel, and all other expenses and
liabilities incurred by the
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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 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 Holders representing at least 662/3% of the Outstanding
Amount of the Highest Priority Class, take one or more of the following actions
as so directed:
(i) institute Proceedings in its own name and as or on
behalf of a trustee of an express trust for the collection of
all amounts then payable on the Notes or under this Indenture
with respect thereto, whether by declaration or otherwise,
enforce any judgment obtained, and collect from the Issuer and
any other obligor upon such Notes monies adjudged due;
(ii) institute Proceedings from time to time for the
complete or partial foreclosure of this Indenture with respect
to the Collateral;
(iii) exercise any remedies of a secured party under the
UCC and any other remedy available to the Indenture Trustee and
take any 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;
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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;
and
(v) maintain possession of the Collateral.
(b) Notwithstanding the foregoing,
(i) in the event that the Indenture Trustee is acting at
the direction of the Insurer, so long as an Insurer Default
shall not have occurred and be continuing, if an Event of
Default 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 Holders representing at least 66 2/3% of
the Outstanding Amount of the Highest Priority Class, the
Noteholders shall not have the right to direct the Indenture
Trustee or the Servicer to, and neither the Indenture Trustee
nor the Servicer shall, liquidate the Collateral in whole or in
part unless (A) an Indenture Event of Default as specified in
Section 5.01(b), (c), (e) or (f) shall have occurred and be
continuing and in any case the Insurer shall have failed to make
a payment required under the Policy in accordance with its terms
or (B) (1) an Indenture Event of Default as specified in Section
5.01(a) or (d) shall have occurred and be continuing, (2) the
Insurer shall not have failed to make a payment required under
the Policy in accordance with its terms and (3) either (x) the
proceeds of such sale or liquidation would be sufficient to pay
all outstanding principal of and accrued interest on the Notes
and all amounts owing to the Insurer pursuant to the terms of
the Insurance Agreement or (y) the holders of Class B Notes
representing 100% of the outstanding principal amount of the
Class B Notes consent to such liquidation and all amounts owed
to the Insurer under the Insurance Agreement shall be paid upon
such sale or liquidation. In the event of a liquidation of the
Collateral pursuant to clause (B), the Policy will not be
available to cover losses to Noteholders resulting from such
liquidation, and the Policy shall be terminated and the Insurer
shall have no further obligation thereunder.
(c) In determining the sufficiency or insufficiency of the
proceeds of a sale or liquidation of the Collateral to pay all amounts required
pursuant to Section 5.04(b)(i) or (ii) above, the Indenture Trustee may, but
need not, at the sole expense of the Issuer obtain and rely upon an opinion of
an Independent investment banking or accounting firm of national reputation as
to the feasibility of such proposed action and as to the sufficiency of the
Collateral for such purpose.
(d) In the event that the Indenture Trustee is directed to sell
or to cause the Servicer to otherwise liquidate the Collateral or any portion
thereof or rights or interests therein
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pursuant to Section 5.04(a)(iv) above, the Indenture Trustee shall, prior to any
such public or private sales, notify all Residual Interestholders of the
proposed sale. The Indenture Trustee shall provide the Residual Interestholders
the right to match the highest liquidation price offered at any such sale.
Section 5.05 Optional Preservation of the Contracts. If the Notes
have been declared to be due and payable under Section 5.02 following an Event
of Default and such declaration and its consequences have not been rescinded and
annulled, the Indenture Trustee shall, absent direction to the contrary from the
Insurer or the Noteholders pursuant to Section 5.04, maintain possession of the
Collateral.
Section 5.06 Priorities.
(a) If the Notes have been declared to be due and payable under
Section 5.02 following an Indenture Event of Default and such declaration and
its consequences have not been rescinded and annulled, any money collected by
the Indenture Trustee with respect to the Collateral or the Notes pursuant to
this Article or otherwise and any money that may then be held or thereafter
received by the Indenture Trustee with respect to the Collateral or the Notes
(excluding any payments made under the Policy), shall be applied in the
following order and priority:
first, to the Servicer, to pay any unpaid Servicing Fee;
second, to pay any accrued and unpaid fees and expenses
of the Owner Trustee, the Indenture Trustee and the Trust Agent
without preference or priority of any kind;
third, to the holders of Class A Notes, to pay accrued
interest on each Class of Class A 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 Class A Notes at
the related Interest Rate for such Class;
fourth, to the holders of Class B Notes, to pay accrued
interest on the Class B Notes (including, to the extent
permitted by applicable law, interest accrued on any interest
accrued but not timely paid) on the Class B Notes at the Class B
Rate;
fifth, to the holders of Class A Notes, to pay principal
on each Class of Class A Notes on a pro rata basis based on the
Outstanding Amount of each Class of Class A Notes, until the
Outstanding Amount of each such Class of Notes is reduced to
zero;
sixth, to the holders of Class B Notes, to pay principal
on the Class B Notes, until the Outstanding Amount of the Class
B Notes is reduced to zero;
seventh, to the Insurer, to pay amounts owing to the
Insurer under the Insurance Agreement (including the Premium);
and
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eighth, any excess amounts remaining after making the
distributions described in clauses first through seventh to the
Spread Account, to be applied in accordance with the Insurance
Agreement.
(b) The Indenture Trustee may fix a record date and payment date
for any payment to Noteholders pursuant to this Section. At least 15 days before
such record date, the Issuer shall mail to each Noteholder and the Indenture
Trustee a notice that states the record date, the payment date and the amount to
be paid.
Section 5.07 Limitation of Suits. No Holder of any Note shall
have any right to institute any Proceeding, judicial or otherwise, with respect
to this Indenture, or for the appointment of a receiver or trustee, or for any
other remedy hereunder, unless:
(i) such Holder has previously given written notice to
the Indenture Trustee of a continuing Event of Default;
(ii) the Holders of not less than 25% of the Outstanding
Amount of the Highest Priority Class 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 Highest Priority 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 shall act at the request of the Holders of the Notes with
the greater Outstanding Amount of Notes; provided, however that if such groups
of Holders of Notes have the same Outstanding Amount of Notes, the Indenture
Trustee in its sole discretion may determine what action, if any, shall be
taken, notwithstanding any other provisions of this Indenture and any such
action shall be binding on all parties.
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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 of the Notes, on or after the
Redemption Date) and to institute suit for the enforcement of any such payment,
and such right shall not be impaired without the consent of such Holder.
Section 5.09 Restoration of Rights and Remedies. If the Indenture
Trustee, the Insurer or any Noteholder has instituted any Proceeding to enforce
any right or remedy under this Indenture and such Proceeding has been
discontinued or abandoned for any reason or has been determined adversely to the
Indenture Trustee, the Insurer or to such Noteholder, then and in every such
case the Issuer, the Indenture Trustee, the Insurer and the Noteholders shall,
subject to any determination in such Proceeding, be restored severally and
respectively to their former positions hereunder, and thereafter all rights and
remedies of the Indenture Trustee and the Noteholders shall continue as though
no such Proceeding had been instituted.
Section 5.10 Rights and Remedies Cumulative. No right or remedy
herein conferred upon or reserved to the Indenture Trustee, the Insurer or to
the Noteholders is intended to be exclusive of any other right or remedy, and
every right and remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 5.11 Delay or Omission Not a Waiver. No delay or omission
of the Indenture Trustee, the Insurer or any Holder of any Note to exercise any
right or remedy accruing upon any Default or Event of Default shall impair any
such right or remedy or constitute a waiver of any such Default or Event of
Default or an 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.
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Notwithstanding the rights of Noteholders set forth in this Section, subject to
Section 6.01, the Indenture Trustee need not take any action that it determines,
in its sole discretion, might involve it in liability or might materially
adversely affect the rights of any Noteholders not consenting to such action.
Section 5.13 Waiver of Past Defaults. Prior to the declaration of
the acceleration of the maturity of the Notes as provided in Section 5.02, the
Insurer or the Holders of Notes representing not less than a majority of the
Highest Priority Class with the consent of the Insurer may waive any past
Default or Event of Default and its consequences except a Default (a) in the
payment of or interest on any of the Notes or (b) in respect of a covenant or
provision hereof that cannot be modified or amended without the consent of the
Holder of each Note, as applicable. In the case of any such waiver, the Issuer,
the Indenture Trustee, the Insurer and the Holders of the Notes shall be
restored to their former positions and rights hereunder, respectively; but no
such waiver shall extend to any subsequent or other Default or impair any right
consequent thereto.
Upon any such waiver, such Default shall cease to exist and be deemed to
have been cured and not to have occurred, and any Event of Default arising
therefrom shall be deemed to have been cured and not to have occurred, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other Default or Event of Default or impair any right consequent thereto.
Section 5.14 Undertaking for Costs. All parties to this Indenture
agree, 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
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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, including the transmission of notices
of default on the part of the Seller or the Servicer thereunder and the
institution of legal or administrative actions or proceedings to compel or
secure performance by the Seller or the Servicer of each of their obligations
under the Sale and Servicing Agreement.
(b) If the Indenture Trustee is the Controlling Party and if an
Event of Default has occurred and is continuing, the Indenture Trustee may, and
at the direction (which direction shall be given in writing and may include a
facsimile) of the Holders of 66 2/3% of the Outstanding Amount of the Notes
shall, exercise all rights, remedies, powers, privileges and claims of the
Issuer against the Seller or the Servicer under or in connection with the Sale
and Servicing Agreement, including the right or power to take any action to
compel or secure performance or observance by the Seller or the Servicer of each
of their obligations to the Issuer thereunder and to give any consent, request,
notice, direction, approval, extension or waiver under the Sale and Servicing
Agreement, and any right of the Issuer to take such action shall be suspended.
ARTICLE VI
THE INDENTURE TRUSTEE
Section 6.01 Duties of Indenture Trustee.
(a) If an Event of Default has occurred and is continuing, and of
which the Indenture Trustee shall have actual knowledge, the Indenture Trustee
shall exercise the rights and powers vested in it by this Indenture and with the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of such person's own
affairs; provided, however, that if the Indenture Trustee shall assume the
duties of the Servicer pursuant to Section 3.07(e), the Indenture Trustee in
performing such duties shall use the degree of care and skill customarily
exercised by a prudent institutional servicer with respect to automobile retail
installment sales contracts that it services for itself or others.
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(b) Except during the continuance of an Event of Default of which
a Responsible Officer of the Indenture Trustee shall have actual knowledge or
written notice:
(i) the Indenture Trustee undertakes to perform such
duties and only such duties as are specifically set forth in
this Indenture and no implied covenants or obligations shall be
read into this Indenture against the Indenture Trustee; and
(ii) in the absence of bad faith on its part, the
Indenture Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the
Indenture Trustee and conforming to the requirements of this
Indenture; however, the Indenture Trustee shall examine the
certificates and opinions to determine whether or not they
conform to the requirements of this Indenture and the other
Basic Documents to which the Indenture Trustee is a party;
provided, however, that the Indenture Trustee shall not be
responsible for the accuracy or content of any of the
aforementioned documents and the Indenture Trustee shall have no
obligation to verify, re-compute or recalculate any numerical
information provided to it pursuant to the Basic Documents.
(c) The Indenture Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act or its own wilful
misconduct, except that:
(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.
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(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 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 Highest Priority Class or a majority of the Outstanding Amount
of Notes, as applicable, relating to the time, method and place of conducting
any proceeding for any remedy available to the Indenture Trustee, or exercising
or omitting to exercise any trust or power conferred upon the Indenture Trustee,
under this Indenture.
(l) The Indenture Trustee shall not be required to take notice or
be deemed to have notice or knowledge of any Default or Event of Default unless
a Responsible Officer of the Indenture Trustee shall have received written
notice thereof. In the absence of receipt of such notice, the Indenture Trustee
may conclusively assume that there is no Default or Event of Default.
(m) Subject to the other provisions of this Indenture, the
Indenture Trustee shall have no duty (i) to see to any recording, filing, or
depositing of this Agreement or any agreement referred to herein or any
financing statement or continuation statement evidencing a security interest, or
to see to the maintenance of any such recording or filing or depositing or to
any rerecording, refiling or redepositing of any thereof, (ii) to see to any
insurance, (iii) to see to the payment or discharge of any tax, assessment, or
other governmental charge or any lien or encumbrance of any kind owing with
respect to, assessed or levied against, any part of the Collateral, or (iv) to
confirm or verify the contents of any reports or certificates delivered to the
Indenture Trustee pursuant to this Indenture believed by the Indenture Trustee
to be genuine and to have been signed or presented by the proper party or
parties.
(n) Anything in this Agreement to the contrary notwithstanding,
in no event shall the Indenture Trustee be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profits), even if the Indenture Trustee has been advised of the
likelihood of such loss or damage regardless of the form of action.
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Section 6.02 Rights of Indenture Trustee.
(a) Except as otherwise provided in the second succeeding
sentence, the Indenture Trustee may conclusively rely and shall be protected in
acting upon or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order, note,
direction, demand, election or other paper or document believed by it to be
genuine and to have been signed or presented by the proper person. The Indenture
Trustee need not investigate any fact or matter stated in the document.
Notwithstanding the foregoing, the Indenture Trustee, subject to Section
6.01(b)(ii) upon receipt of all resolutions, certificates, statements, opinions,
reports, documents, orders or other instruments furnished to the Indenture
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Indenture, shall examine them to determine whether they comply
as to form to the requirements of this Indenture.
(b) Before the Indenture Trustee acts or refrains from acting, it
may require an Officer's Certificate (with respect to factual matters) or an
Opinion of Counsel, as applicable. The Indenture Trustee shall not be liable for
any action it takes or omits to take in good faith in reliance on the Officer's
Certificate or Opinion of Counsel.
(c) The Indenture Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or through
agents or attorneys or a custodian or nominee and the Indenture Trustee shall
not be responsible for any misconduct or negligence on the part of any such
agent, attorney, custodian or nominee appointed by the Indenture Trustee with
due care.
(d) The Indenture Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers; provided, however, that the Indenture Trustee's
conduct does not constitute willful misconduct, negligence or bad faith.
(e) The Indenture Trustee may consult with counsel, and the
advice or opinion of counsel with respect to legal matters relating to this
Indenture and the Notes shall be full and complete authorization and protection
from liability in respect to any action taken, omitted or suffered by it
hereunder in good faith and in accordance with the advice or opinion of such
counsel.
(f) The Indenture Trustee shall be under no obligation to
exercise any of the trusts or powers vested in it by this Indenture or to
institute, conduct or defend any litigation hereunder or in relation hereto at
the request, order or direction of any of the Noteholders, pursuant to the
provisions of this Indenture, unless such Noteholders shall have offered to the
Indenture Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing contained
herein shall, however, relieve the Indenture Trustee of the obligation, during
the continuance of an Event of Default of which a 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.
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(g) The Indenture Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, consent, order,
approval, bond or other paper or document, unless requested in writing to do so
by a majority of Noteholders; provided, however, that if the payment within a
reasonable time to the Indenture Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Indenture Trustee, not reasonably assured to the Indenture
Trustee by the security afforded to it by the terms of this Agreement, the
Indenture Trustee may require reasonable indemnity against such cost, expense or
liability as a condition to taking any such action.
(h) The right of the Indenture Trustee to perform any
discretionary act enumerated in this Indenture shall not be construed as a duty,
and the Indenture Trustee shall not be answerable for other than its willful
misconduct, negligence or bad faith in the performance of such act.
Section 6.03 Individual Rights of Indenture Trustee. The
Indenture Trustee in its individual or any other capacity may become the owner
or pledgee of Notes and may otherwise deal with the Issuer or its Affiliates
with the same rights it would have if it were not Indenture Trustee. Any Paying
Agent, Note Registrar, co-registrar or co-paying agent may do the same with like
rights. However, the Indenture Trustee is required to comply with Sections 6.11
and 6.12.
Section 6.04 Indenture Trustee's Disclaimer. The Indenture
Trustee shall not be responsible for and makes no representation as to the
validity or adequacy of this Indenture, the Collateral or the Notes, it shall
not be accountable for the Issuer's use of the proceeds from the Notes, and it
shall not be responsible for any statement of the Issuer in this Indenture or in
any document issued in connection with the sale of the Notes or in the Notes
other than the Indenture Trustee's certificate of authentication.
Section 6.05 Notice of Defaults. If a Default occurs and is
continuing and a Responsible Officer of the Indenture Trustee has actual
knowledge or has received written notice thereof, the Indenture Trustee shall
mail to each Noteholder and the Insurer notice of the Default within 90 days
after it occurs. Except in the case of a Default in payment of principal of or
interest on any Note (including payments pursuant to the redemption of Notes),
the Indenture Trustee may withhold the notice if and so long as a committee of
its Responsible Officers in good faith determines that withholding the notice is
in the interests of Noteholders.
Section 6.06 Reports by Indenture Trustee to Holders. The
Indenture Trustee shall deliver to each Noteholder such information as may be
required to enable 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,
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counsel, accountants and experts. The Issuer shall, or shall cause the
Administrator to, indemnify the Indenture Trustee against any and all loss,
liability or expense (including attorneys' fees) incurred by it in connection
with the administration of this trust and the performance of its duties
hereunder. The Indenture Trustee shall notify the Issuer and the Administrator
promptly of any claim for which it may seek indemnity. Failure by the Indenture
Trustee to so notify the Issuer and the Administrator shall not relieve the
Issuer or the Administrator of its obligations hereunder. The Issuer shall, or
shall cause the Administrator to, defend any such claim, and the Indenture
Trustee may have separate counsel and the Issuer shall, or shall cause the
Administrator to, pay the fees and expenses of such counsel. Neither the Issuer
nor the Administrator need reimburse any expense or indemnify against any loss,
liability or expense incurred by the Indenture Trustee through the Indenture
Trustee's own willful misconduct, negligence or bad faith.
The Issuer's obligations to the Indenture Trustee pursuant to this
Section shall survive the resignation or removal of the Indenture Trustee and
the discharge of this Indenture. When the Indenture Trustee incurs expenses
after the occurrence of a Default specified in Section 5.01(e) or (f) with
respect to the Issuer, the expenses are intended to constitute expenses of
administration under Title 11 of the United States Code or any other applicable
federal or state bankruptcy, insolvency or similar law.
Section 6.08 Replacement of Indenture Trustee. The Indenture
Trustee may resign at any time by so notifying the Issuer, the Servicer and the
Insurer. The Issuer, may, with the consent of the Insurer, and, at the request
of the Insurer shall, remove the Indenture Trustee, unless an Insurer Default
shall have occurred and be continuing, if:
(i) the Indenture Trustee fails to comply with Section
6.11;
(ii) a court having jurisdiction in the premises in
respect of the Indenture Trustee in an involuntary case or
proceeding under federal or state banking or bankruptcy laws, as
now or hereafter constituted, or any other applicable federal or
state bankruptcy, insolvency or other similar law, shall have
entered a decree or order granting relief or appointing a
receiver, liquidator, assignee, custodian, trustee, conservator,
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
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(iv) the Indenture Trustee otherwise becomes incapable
of acting.
If the Indenture Trustee resigns or is removed or if a vacancy exists in
the office of Indenture Trustee for any reason (the Indenture Trustee in such
event being referred to herein as the retiring Indenture Trustee), the Issuer
shall promptly appoint a successor Indenture Trustee acceptable to the Insurer.
A successor Indenture Trustee shall deliver a written acceptance of its
appointment to the retiring Indenture Trustee and to the Issuer. Thereupon the
resignation or removal of the retiring Indenture Trustee shall become effective,
and the successor Indenture Trustee shall have all the rights, powers and duties
of the Indenture Trustee under this Indenture. The Issuer or the successor
Indenture Trustee shall mail a notice of its succession to Noteholders. The
retiring Indenture Trustee shall promptly transfer all property held by it as
Indenture Trustee to the successor Indenture Trustee.
If a successor Indenture Trustee does not take office within 30 days
after the retiring Indenture Trustee resigns or is removed, the retiring
Indenture Trustee, the Issuer or the Holders of a majority of the Outstanding
Amount of the Notes may petition any court of competent jurisdiction for the
appointment of a successor Indenture Trustee.
If the Indenture Trustee fails to comply with Section 6.11, any
Noteholder may petition any court of competent jurisdiction for the removal of
the Indenture Trustee and the appointment of a successor Indenture Trustee.
Any resignation or removal of the Indenture Trustee and appointment of a
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
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shall have the full force and effect of the certificate of the Indenture Trustee
pursuant to the Notes or this Indenture.
Section 6.10 Appointment of Co-Indenture Trustee or Separate
Indenture Trustee.
(a) Notwithstanding any other provision of this Indenture, at any
time, for the purpose of meeting any legal requirement of any jurisdiction in
which any part of the Collateral may at the time be located, the Indenture
Trustee shall have the power and may execute and deliver all instruments to
appoint one or more Persons to act as a co-trustee or co-trustees, jointly with
the Indenture Trustee, or separate trustee or separate trustees, of all or any
part of the Trust, and to vest in such Person or Persons, in such capacity and
for the benefit of the Noteholders, such title to the Collateral, or any part
hereof, and, subject to the other provisions of this Section, such powers,
duties, obligations, rights and trusts as the Indenture Trustee may consider
necessary or desirable. No co-trustee or separate trustee hereunder shall be
required to meet the terms of eligibility as a successor Indenture Trustee under
Section 6.11 and no notice to Noteholders of the appointment of any co-trustee
or separate trustee shall be required under Section 6.08.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred
or imposed upon the Indenture Trustee shall be conferred or
imposed upon and exercised or performed by the Indenture Trustee
and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not
authorized to act separately without the Indenture Trustee
joining in such act), except to the extent that under any law of
any jurisdiction in which any particular act or acts are to be
performed the Indenture Trustee shall be incompetent or
unqualified to perform such act or acts, in which event such
rights, powers, duties and obligations (including the holding of
title to the Trust or any portion thereof in any such
jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of
the Indenture Trustee;
(ii) no trustee hereunder shall be personally liable by
reason of any act or omission of any other trustee hereunder;
and
(iii) the Indenture Trustee may at any time accept the
resignation of or remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Indenture
Trustee shall be deemed to have been given to each of the then separate trustees
and co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Indenture and
the conditions of this Article. Each separate trustee and co-trustee, upon its
acceptance of the trusts conferred, shall be vested with the estates or property
specified in its instrument of co-appointment, either jointly with the Indenture
Trustee or separately, as may be provided therein, subject to all the provisions
of this Indenture, specifically including
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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 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.
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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 10 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 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 Sections 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
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(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,
2000, mail to the Issuer, the Insurer and each Noteholder as required by TIA
Section 313(c) a brief report dated as of such date that complies with TIA
Section 313(a). The Indenture Trustee also shall comply with TIA Section 313(b).
ARTICLE VIII
ACCOUNTS, DISBURSEMENTS AND RELEASES
Section 8.01 Collection of Money.
(a) General. Except as otherwise expressly provided herein, the
Indenture Trustee may demand payment or delivery of, and shall receive and
collect, directly and without intervention or assistance of any fiscal agent or
other intermediary, all money and other property payable to or receivable by the
Indenture Trustee pursuant to this Indenture. The Indenture Trustee shall apply
all such money received by it as provided in this Indenture. Except as otherwise
expressly provided in this Indenture, if any default occurs in the making of any
payment or performance under any agreement or instrument that is part of the
Collateral, the Indenture Trustee may take such action as may be appropriate to
enforce such payment or performance, including the institution and prosecution
of appropriate Proceedings. Any such action shall be without prejudice to any
right to claim a Default or Event of Default under this Indenture and any right
to proceed thereafter as provided in Article Five.
(b) Claims Under Policy. The Notes 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
Noteholders of principal and interest on the Notes.
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, the Trust Accounts as provided in Section 4.01
of the Sale and Servicing Agreement.
(b) On the Business Day immediately preceding each Distribution
Date, based solely on the Distribution Date Statement, the Servicer shall cause
funds to be withdrawn from the Collection Account equal to the amount of Net
Collections available with respect to such
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Distribution Date and deposited into the Payment Account, as provided in Section
4.02(e) of the Sale and Servicing Agreement. On each Distribution Date, based
solely on the Distribution Date Statement, 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, the Prefunding
Account and the Capitalized Interest 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, based solely on the Distribution
Date Statement, the Indenture Trustee shall distribute all available amounts on
deposit in the Note Distribution Account in respect of such Distribution Date to
Noteholders in the following order of priority:
(i) to the Holders of Class A Notes, the Note Interest
Distributable Amount with respect to the Class A Notes for such
Distribution Date, pro rata;
(ii) to the Holders of Class B Notes, the Note Interest
Distributable Amount with respect to the Class B Notes for such
Distribution Date (after giving effect to the payment, if any,
described in clause (i) above);
(iii) if such Distribution Date is the Note 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;
(iv) 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 (iii) above),
until the Outstanding Amount of the Class A-1 Notes is reduced
to zero;
(v) 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 (iii) and (iv) above),
until the Outstanding Amount of the Class A-2 Notes is reduced
to zero;
(vi) 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 (iii)
through (v) above), until the Outstanding Amount of the Class
A-3 Notes is reduced to zero;
(vii) 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 (iii)
through (vi) above), until the Outstanding Amount of the Class
A-4 Notes is reduced to zero; and
(viii) to the Holders of the Class B Notes, the
remaining Note Principal Distributable Amount (after giving
effect to the payments, if any, described in clauses
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(iii) through (vii) above), until the Outstanding Amount of the
Class B 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.
Section 8.03 [RESERVED].
Section 8.04 Release of Collateral.
(a) Subject to the payment of its fees and expenses pursuant to
Section 6.07, the Indenture Trustee may, and when required by the provisions of
this Indenture shall, execute instruments to release property from the lien of
this Indenture, or convey the Indenture Trustee's interest in the same, in a
manner and under circumstances that are not inconsistent with the provisions of
this Indenture. No party relying upon an instrument executed by the Indenture
Trustee as provided in this Article shall be bound to ascertain the Indenture
Trustee's authority, inquire into the satisfaction of any conditions precedent
or see to the application of any monies.
(b) The Indenture Trustee shall, at such time as there are no
Notes Outstanding and all sums due the Indenture Trustee pursuant to Section
6.07 have been paid, release any remaining portion of the Collateral that
secured the Notes from the lien of this Indenture and release to the Issuer or
any other Person entitled thereto any funds then on deposit in the Trust
Accounts. The Indenture Trustee shall release property from the lien of this
Indenture pursuant to this Section 8.04(b) only upon receipt of an Issuer
Request accompanied by an Officer's Certificate, an Opinion of Counsel and (if
required by the TIA) Independent Certificates in accordance with TIA Sections
314(c) and 314(d)(1) meeting the applicable requirements of Section 11.01.
Section 8.05 Opinion of Counsel. The Indenture Trustee shall
receive at least seven days' notice when requested by the Issuer to take any
action pursuant to Section 8.04(a), accompanied by copies of any instruments
involved, and the Indenture Trustee shall also require, as a condition to such
action, an Opinion of Counsel, in form and substance satisfactory to the
Indenture Trustee (and not at the expense of the Indenture Trustee), stating the
legal effect of any such action, outlining the steps required to complete the
same, and concluding that all conditions precedent to the taking of such action
have been complied with and such action will not materially and adversely impair
the security for the Notes or the rights of the Noteholders in contravention of
the provisions of this Indenture; provided, however, that such Opinion of
Counsel shall not be required to express an opinion as to the fair value of the
Collateral. Counsel rendering any such opinion may rely, without independent
investigation, on the accuracy and validity of any certificate or other
instrument delivered to the Indenture Trustee in connection with any such
action.
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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;
(iii) to add to the covenants of the Issuer, for the
benefit of the Holders of the Notes, or to surrender any right
or power herein conferred upon the Issuer;
(iv) to convey, transfer, assign, mortgage or pledge any
property to or with the Indenture Trustee;
(v) to cure any ambiguity, to correct or supplement any
provision herein or in any supplemental indenture which may be
inconsistent with any other provision herein or in any
supplemental indenture or the Basic Documents or to make any
other provisions with respect to matters or questions arising
under this Indenture or in any supplemental indenture; provided
that such action shall not adversely affect the interests of the
Holders of the Notes;
(vi) to evidence and provide for the acceptance of the
appointment hereunder by a successor trustee with respect to the
Notes and to add to or change any of the provisions of this
Indenture as shall be necessary to facilitate the administration
of the trusts hereunder by more than one trustee, pursuant to
the requirements of Article Six; or
(vii) to modify, eliminate or add to the provisions of
this Indenture to such extent as shall be necessary to effect
the qualification of this Indenture under the TIA or under any
similar federal statute hereafter enacted and to add to this
Indenture such other provisions as may he expressly required by
the TIA.
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The Indenture Trustee is hereby authorized to join in the execution of
any such supplemental indenture and to make any further appropriate agreements
and stipulations that may be therein contained.
(b) The Issuer and the Indenture Trustee, when authorized by an
Issuer Order, may, also without the consent of any of the 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 51% of the Outstanding
Amount of the Notes, by Act of such Holders delivered to the Issuer and the
Indenture Trustee, enter into an indenture or indentures supplemental hereto for
the purpose of adding any provisions to, or changing in any manner or
eliminating any of the provisions of, this Indenture or of modifying in any
manner the rights of the Holders of the Notes under this Indenture; provided,
however, that, subject to the express rights of the Insurer under the Basic
Documents, no such supplemental indenture shall, without the consent of the
Holder of each Outstanding Note affected thereby:
(a) change the date of payment of any installment of principal of
or interest on any Note, or reduce the principal amount thereof, the interest
rate thereon or the Redemption Price with respect thereto, or change any place
of payment where, or the coin or currency in which, any Note or the interest
thereon is payable;
(b) impair the right to institute suit for the enforcement of the
provisions of this Indenture requiring the application of funds available
therefor, as provided in Article Five, to the payment of any such amount due on
the Notes on or after the respective due dates thereof (or, in the case of
redemption, on or after the Redemption Date);
(c) reduce the percentage of the Outstanding Amount of the Notes,
the consent of the Holders of which is required for any such supplemental
indenture, or the consent of the Holders of which is required for any waiver of
compliance with certain provisions of this Indenture or certain defaults
hereunder and their consequences provided for in this Indenture;
(d) modify or alter the provisions of the second proviso to the
definition of the term "Outstanding";
(e) reduce the percentage of the Outstanding Amount of the Notes,
the 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;
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(g) permit the creation of any lien ranking prior to or on a
parity with the lien created by this Indenture with respect to any part of the
Collateral or, except as otherwise permitted or contemplated herein, terminate
the lien created by this Indenture on any property at any time subject hereto or
deprive the Holder of any Note of the security provided by the lien created by
this Indenture.
The Indenture Trustee may in its discretion determine whether or not any
Notes would be affected by any supplemental indenture and any such determination
shall be conclusive upon the Holders of all Notes, whether theretofore or
thereafter authenticated and delivered hereunder. The Indenture Trustee shall
not be liable for any such determination made in good faith.
It shall not be necessary for any act of Noteholders under this Section
to approve the particular form of any proposed supplemental indenture, but it
shall be sufficient if such act shall approve the substance thereof.
Promptly after the execution by the parties hereto of any supplemental
indenture pursuant to this Section, the Indenture Trustee shall mail to the
Holders of the Notes to which such amendment or supplemental indenture relates a
notice setting forth in general terms the substance of such supplemental
indenture. Any failure of the Indenture Trustee to mail such notice, or any
defect therein, shall not, however, in any way impair or affect the validity of
any such supplemental indenture.
Section 9.03 Execution of Supplemental Indentures. In executing,
or permitting the additional trusts created by, any supplemental indenture
permitted by this Article or the modifications thereby of the trusts created by
this Indenture, the Indenture Trustee shall be entitled to receive, and subject
to Sections 6.01 and 6.02 shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Indenture Trustee may, but shall
not be obligated to, enter into any such supplemental indenture that affects the
Indenture Trustee's own rights, duties, liabilities or immunities under this
Indenture or otherwise.
Section 9.04 Effect of Supplemental Indenture. Upon the execution
of any supplemental indenture pursuant to the provisions hereof, this Indenture
shall be and be deemed to be modified and amended in accordance therewith with
respect to the Notes affected thereby, and the respective rights, limitations of
rights, obligations, duties, liabilities and immunities under this Indenture of
the parties hereto and the Holders of the Notes shall thereafter be determined,
exercised and enforced hereunder 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
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the Indenture Trustee as to any matter provided for in such supplemental
indenture. If the Issuer or the Indenture Trustee shall so determine, new notes
so modified as to conform, in the opinion of the Indenture Trustee and the
Issuer, to any such supplemental indenture may be prepared and executed by the
Issuer and authenticated and delivered by the Indenture Trustee in exchange for
Outstanding Notes.
ARTICLE X
REDEMPTION OF NOTES
Section 10.01 Redemption. In the event that the Servicer pursuant
to Section 8.01(a) of the Sale and Servicing Agreement purchases the corpus of
the Trust, the Notes are subject to redemption in whole, but not in part, on the
Distribution Date on which such repurchase occurs, for a purchase price equal to
the Redemption Price; provided, however, that the Issuer has available funds
sufficient to pay the Redemption Price. The Seller, the Servicer or the Issuer
shall furnish the Insurer and each Rating Agency notice of such redemption. If
the Notes are to be redeemed pursuant to this Section 10.01, the Servicer or the
Issuer shall furnish notice of such election to the Indenture Trustee not later
than 20 days prior to the Redemption Date and the Issuer shall deposit with the
Indenture Trustee in the Note Distribution Account the Redemption Price of the
Notes to be redeemed whereupon all such Notes shall be due and payable on the
Redemption Date upon the furnishing of a notice complying with Section 10.02 to
each Holder of the Notes.
Section 10.02 Form of Redemption Notice. Notice of redemption
under Section 10.01 shall be given by the Indenture Trustee by first-class mail,
postage prepaid, mailed not less than five days prior to the applicable
Redemption Date to each Holder of Notes, as of the close of business on the
Record Date preceding the applicable Redemption Date, at such Holder's address
appearing in the Note Register. In addition, the Administrator shall notify the
Insurer and Rating Agencies upon the redemption of any Class of Notes, pursuant
to Section 1(a)(i)(AA) 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.
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Section 10.03 Notes Payable on Redemption Date. The Notes or
portions thereof to be redeemed shall, following notice of redemption (if any)
as required by Section 10.02, on the Redemption Date become due and payable at
the Redemption Price and (unless the Issuer shall default in the payment of the
Redemption Price) no interest shall accrue on the Redemption Price for any
period after the date to which accrued interest is calculated for purposes of
calculating the Redemption Price.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Compliance Certificates and Opinions, etc.
(a) Upon any application or request by the Issuer to the
Indenture Trustee to take any action under any provision of this Indenture, the
Issuer shall furnish to the Indenture Trustee (i) an Officer's Certificate
stating that all conditions precedent, if any, provided for in this Indenture
relating to the proposed action have been complied with, (ii) an Opinion of
Counsel stating that in the opinion of such counsel all such conditions
precedent, if any, have been complied with and (iii) (if required by the TIA) an
Independent Certificate from a firm of certified public accountants meeting the
applicable requirements of this Section. Notwithstanding the foregoing, in the
case of any such application or request as to which the furnishing of such
documents is specifically required by any provision of this Indenture, no
additional certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance with a condition
or covenant provided for in this Indenture shall include:
(i) a statement that each signatory of such certificate
or opinion has read or has caused to be read such covenant or
condition and the definitions herein relating thereto;
(ii) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(iii) a statement that, in the opinion of each such
signatory, such signatory has made such examination or
investigation as is necessary to enable such signatory to
express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each
such signatory, such condition or covenant has been complied
with.
(b) (i) Prior to the deposit of any Collateral or other property
or securities with the Indenture Trustee that is to be made the basis for the
release of any property subject to the lien created by this Indenture, the
Issuer shall, in addition to any obligation imposed in Section 11.01(a) or
elsewhere in this Indenture, furnish to the Indenture Trustee and the Insurer an
Officer's Certificate certifying or stating the opinion of the signer thereof as
to the fair value
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(within 90 days of such deposit) to the Issuer of the Collateral or other
property or securities to be so deposited.
(ii) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating
the opinion of any signer thereof as to the matters described in clause
(i) above, the Issuer shall also deliver to the Indenture Trustee and
the Insurer an Independent Certificate as to the named matters, if the
fair value to the Issuer of the property to be so deposited and of all
other such property made the basis of any such withdrawal or release
since the commencement of the then-current fiscal year of the Issuer, as
set forth in the Officer's Certificates delivered pursuant to clause (i)
above and this clause (ii), is 10% or more of the Outstanding Amount of
the Notes, but such Officer's Certificate need not be furnished with
respect to any property so deposited, if the fair value thereof to the
Issuer as set forth in the related Officer's Certificate is less than
$25,000 or less than one percent of the Outstanding Amount of the Notes.
(iii) Whenever any property or securities are to be released
from the lien created by this Indenture, the Issuer shall also furnish
to the Indenture Trustee and the Insurer an Officer's Certificate
certifying or stating the opinion of each person signing such
certificate as to the fair value (within 90 days of such release) of the
property or securities proposed to be released and stating that in the
opinion of such person the proposed release will not impair the security
created by this Indenture in contravention of the provisions hereof.
(iv) Whenever the Issuer is required to furnish to the Indenture
Trustee and the Insurer an Officer's Certificate certifying or stating
the opinion of any signer thereof as to the matters described in clause
(iii) above, the Issuer shall also furnish to the Indenture Trustee and
the Insurer an Independent Certificate as to the same matters if the
fair value of the property or securities and of all other property or
securities released from the lien created by this Indenture since the
commencement of the then current fiscal year, as set forth in the
Officer's Certificate required by clause (iii) above and this clause
(iv), equals 10% or more of the Outstanding Amount of the Notes, but
such Officer's Certificate need not be furnished in the case of any
release of property or securities if the fair value thereof as set forth
in the related Officer's Certificate is less than $25,000 or less than
one percent of the then Outstanding Amount of the Notes.
Section 11.02 Form of Documents Delivered to Indenture Trustee.
In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents.
Any certificate or opinion of an Authorized Officer of the Issuer may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is
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based are erroneous. Any such certificate of an Authorized Officer or Opinion of
Counsel may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or officers of the
Servicer, the Seller or the Issuer, stating that the information with respect to
such factual matters is in the possession of the Servicer, the Seller or the
Issuer, unless such officer or counsel knows, or in the exercise of reasonable
care should know, that the certificate or opinion or representations with
respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
Whenever in this Indenture, in connection with any application or
certificate or report to the Indenture Trustee, it is provided that the Issuer
shall deliver any document as a condition of the granting of such application,
or as evidence of the Issuer's compliance with any term hereof, it is intended
that the truth and accuracy, at the time of the granting of such application or
at the effective date of such certificate or report (as the case may be), of the
facts and opinions stated in such document shall in such case be conditions
precedent to the right of the Issuer to have such application granted or to the
sufficiency of such certificate or report. The foregoing shall not, however, be
construed to affect the Indenture Trustee's right to rely upon the truth and
accuracy of any statement or opinion contained in any such document as provided
in Article Six.
Section 11.03 Acts of Noteholders.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Indenture to be given or taken
by Noteholders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Noteholders in person or by agents
duly appointed in writing; and except as herein otherwise expressly provided,
such action shall become effective when such instrument or instruments are
delivered to the Indenture Trustee, and, where it is hereby expressly required,
to the Issuer. Such instrument or instruments (and the action embodied therein
and evidenced thereby) are herein sometimes referred to as the "Act" of the
Noteholders signing such instrument or instruments. Proof of execution of any
such instrument or of a writing appointing any such agent shall be sufficient
for any purpose of this Indenture and (subject to Section 6.01) conclusive in
favor of the Indenture Trustee and the Issuer, if made in the manner provided in
this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner that the Indenture Trustee
deems sufficient.
(c) The ownership of Notes shall be proved by the Note Register.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other action by the Holder of any Notes shall bind the Holder
of every Note issued upon the registration thereof or in exchange therefor or in
lieu thereof, in respect of anything done, omitted or suffered to be done by the
Indenture Trustee or the Issuer in reliance thereon, whether or not notation of
such action is made upon such Note.
Section 11.04 Notices, etc., to Indenture Trustee, Issuer,
Insurer and Rating Agencies.
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(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 2000-B, in care of
Bankers Trust (Delaware), as Owner Trustee, 1011 Centre Road,
Suite 200, Wilmington, Delaware 19805-1266, Attention: Corporate
Trust Administration Department, or at any other address
furnished in writing to the Indenture Trustee by the Issuer; or
(iii) the Insurer by the Issuer or the Indenture Trustee
shall be sufficient for any purpose hereunder if in writing,
personally delivered, sent by facsimile transmission and
confirmed or mailed by overnight service, to the Insurer
addressed to: MBIA Insurance Corporation, 113 King Street,
Armonk, New York 10504, Attention: Insured Portfolio Management,
Structured Finance.
(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, 55 Water Street (41st
Floor), New York, New York 10041, Attention: Asset Backed Surveillance
Department; or as to each of the foregoing, at such other address as shall be
designated by written notice to the other parties.
Section 11.05 Notices to Noteholders; Waiver. Where this
Indenture provides for notice to Noteholders of any event, such notice shall be
sufficiently given (unless otherwise herein expressly provided) if in writing
and mailed, first-class, postage prepaid to each Noteholder affected by such
event, at his address as it appears on the Note Register, not later than the
latest date, and not earlier than the earliest date, prescribed for the giving
of such notice. In any case where notice to Noteholders is given by mail,
neither the failure to mail such notice nor any defect in any notice so mailed
to any particular Noteholder shall affect the sufficiency of such notice with
respect to other Noteholders, and any notice that is mailed in the manner herein
provided shall conclusively be presumed to have been duly given.
Where this Indenture provides for notice in any manner, such notice may
be waived in writing by any Person entitled to receive such notice, either
before or after the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Noteholders shall be filed
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with the Indenture Trustee but such filing shall not be a condition precedent to
the validity of any action taken in reliance upon such a waiver.
In case, by reason of the suspension of regular mail service as a result
of a strike, work stoppage or similar activity, it shall be impractical to mail
notice of any event to Noteholders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Indenture Trustee shall be deemed to be a
sufficient giving of such notice.
Where this Indenture provides for notice to the Rating Agencies, failure
to give such notice shall not affect any other rights or obligations created
hereunder, and shall not under any circumstance constitute a Default or Event of
Default.
Section 11.06 Alternate Payment and Notice Provisions.
Notwithstanding any provision of this Indenture or any of the Notes to the
contrary, the Issuer may enter into any agreement with any Holder of a Note
providing for a method of payment, or notice by the Indenture Trustee or any
Paying Agent to such Holder, that is different from the methods provided for in
this Indenture for such payments or notices. The Issuer will furnish to the
Indenture Trustee a copy of each such agreement and the Indenture Trustee will
cause payments to be made and notices to be given in accordance with such
agreements.
Section 11.07 Conflict With Trust Indenture Act. If any provision
hereof limits, qualifies or conflicts with another provision hereof that is
required to be included in this indenture by any of the provisions of the Trust
Indenture Act, such required provision shall control.
The provisions of TIA Sections 310 through 317 that impose duties on any
Person (including the provisions automatically deemed included herein unless
expressly excluded by this Indenture) are a part of and govern this Indenture,
whether or not physically contained herein.
Section 11.08 Effect of Headings and Table of Contents. The
Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 11.09 Successors and Assigns. All covenants and
agreements in this Indenture and the Notes by the Issuer shall bind its
successors and assigns, whether so expressed or not. All agreements of the
Indenture Trustee in this Indenture shall bind its successors, co- trustees and
agents.
Section 11.10 Separability. In case any provision in this
Indenture or in the Notes shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions shall not in
any way be affected or impaired thereby.
Section 11.11 Benefits of Indenture. The Insurer and its
successors 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,
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shall give to any Person, other than the parties hereto and their successors
hereunder, and the Noteholders, and any other party secured hereunder, and any
other Person with an ownership interest in any part of the Collateral, any
benefit or any legal or equitable right, remedy or claim under this Indenture.
The Insurer may disclaim any of its rights and powers under this Indenture, but
not its duties and obligations under the Policy, upon delivery of a written
notice to the Indenture Trustee.
Section 11.12 Legal Holidays. In any case where the date on which
any payment is due shall not be a Business Day, then (notwithstanding any other
provision of the Notes or this Indenture) payment need not be made on such date,
but may be made on the next succeeding Business Day with the same force and
effect as if made on the date on which nominally due, and no interest shall
accrue for the period from and after any such nominal date.
Section 11.13 Governing Law. THIS INDENTURE SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS INDENTURE SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS.
Section 11.14 Counterparts. This Indenture may be executed in
several counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.15 Recording of Indenture. If this Indenture is
subject to recording in any appropriate public recording offices, such recording
is to be effected by the Issuer and at its expense accompanied by an Opinion of
Counsel (which may be counsel to the Indenture Trustee or any other counsel
reasonably acceptable to the Indenture Trustee and the Insurer) to the effect
that such recording is necessary either for the protection of the Noteholders or
any other Person secured hereunder or for the enforcement of any right or remedy
granted to the Indenture Trustee under this Indenture.
Section 11.16 Trust Obligation. No recourse may be taken,
directly or indirectly, with respect to the obligations of the Issuer, the Owner
Trustee or the Indenture Trustee on the Notes or under this Indenture or any
certificate or other writing delivered in connection herewith or therewith,
against (i) the Indenture Trustee or the Owner Trustee in its individual
capacity, (ii) any owner of a beneficial interest in the Issuer or (iii) any
partner, owner, beneficiary, agent, officer, director, employee or agent of the
Indenture Trustee or the Owner Trustee in its individual capacity, any Holder of
a beneficial interest in the Issuer, the Owner Trustee or the Indenture Trustee
or of any 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.
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Section 11.17 No Petition. The parties hereto, by entering into
this Indenture, and each Noteholder, by accepting a Note or a beneficial
interest in a Note, hereby covenant and agree that they will not at any time
institute against the Seller or the Issuer, or join in any institution against
the Seller or the Issuer of, any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any United
States federal or state bankruptcy or similar law in connection with any
obligations relating to the Notes, this Indenture or any of the other Basic
Documents.
Section 11.18 Inspection. The Issuer agrees that, on reasonable
prior notice, it will permit any representative of the Indenture Trustee or of
the Insurer, during the Issuer's normal business hours, to examine all the books
of account, records, reports and other papers of the Issuer, to make copies and
extracts therefrom, to cause such books to be audited by independent certified
public accountants, and to discuss the Issuer's affairs, finances and accounts
with the Issuer's officers, employees and independent certified public
accountants, all at such reasonable times and as often as may be reasonably
requested. The Indenture Trustee and the Insurer shall and shall cause their
respective representatives to hold in confidence all such information except to
the extent disclosure may be required by law (and all reasonable applications
for confidential treatment are unavailing) and except to the extent that the
Indenture Trustee or the Insurer may reasonably determine that such disclosure
is consistent with its obligations hereunder.
Section 11.19 Limitation of Liability of Owner Trustee.
Notwithstanding anything contained herein to the contrary, this instrument has
been countersigned by Bankers Trust (Delaware) not in its individual capacity
but solely in its capacity as Owner Trustee of the Issuer and in no event shall
Bankers Trust (Delaware) in its individual capacity or any beneficial owner of
the Issuer have any liability for the representations, warranties, covenants,
agreements or other obligations of the Issuer hereunder, as to all of which
recourse shall be had solely to the assets of the Issuer. For all purposes of
this Agreement, in the performance of any duties or obligations of the Issuer
hereunder, the Owner Trustee shall be subject to, and entitled to the benefits
of, the terms and provisions of Articles Six, Seven and Eight of the Trust
Agreement. Notwithstanding anything herein to the contrary, Section 2.07 of the
Trust Agreement 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 or Residual Interestholders are entitled to exercise pursuant to
this Indenture, without any consent of such Noteholders or Residual
Interestholders; provided, however, that without the consent of each Noteholder
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 or Residual Interest
Instrument, (ii) adversely affect in any material respect the interests of the
Holders of any Notes or Residual Interest Instruments, or (iii) alter the rights
of any such Holder to consent to such amendment.
Notwithstanding any provision in this Indenture to the contrary, in the
event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the
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Indenture Trustee, the Owner Trustee or the Trust Agent pursuant to the terms of
this Indenture, nor shall the consent of the Insurer be required with respect to
any action (or waiver of a right to take action) to be taken by the Trust, the
Seller, the Indenture Trustee, the Owner Trustee, the Trust Agent or the Holders
of the Notes 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 2000-B
By: BANKERS TRUST (DELAWARE)
not in its individual capacity but solely on
behalf of the Issuer as Owner Trustee under
the Trust Agreement
By: /s/ PETER BECKER
----------------------------------------
Name: Peter Becker
Title: Attorney-in-Fact
THE CHASE MANHATTAN BANK,
not in its individual capacity but solely as
Indenture Trustee
By: /s/ KRISTEN DRISCOLL
----------------------------------------
Name: Kristen Driscoll
Title: Trust Officer
<PAGE> 66
SCHEDULE A
SCHEDULE OF CONTRACTS
Schedules of Contracts on file at the offices of the Seller, the Servicer, the
Owner Trustee and the Insurer.
<PAGE> 67
EXHIBIT A
FORM OF DEPOSITORY AGREEMENT
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EXHIBIT B
FORM OF CLASS A-1 NOTE
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EXHIBIT C
FORM OF CLASS A-2 NOTE
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EXHIBIT D
FORM OF CLASS A-3 NOTE
[Begins on Next Page]
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EXHIBIT E
FORM OF CLASS A-4 NOTE
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EXHIBIT F
FORM OF CLASS B NOTE
[Begins on Next Page]
<PAGE> 1
EXHIBIT 4.9
TRUST AGREEMENT
among
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Depositor
BANKERS TRUST (DELAWARE),
as Owner Trustee
and
THE CHASE MANHATTAN BANK,
as Trust Agent
Dated as of April 1, 2000
ONYX ACCEPTANCE OWNER TRUST 2000-B
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS.................................................................... 1
Section 1.01 Capitalized Terms................................................... 1
Section 1.02 Other Definitional Provisions....................................... 4
Section 1.03 Usage of Terms...................................................... 4
Section 1.04 Section References.................................................. 4
Section 1.05 Accounting Terms.................................................... 4
ARTICLE II - ORGANIZATION................................................................... 4
Section 2.01 Name................................................................ 4
Section 2.02 Office.............................................................. 4
Section 2.03 Purposes and Powers................................................. 4
Section 2.04 Appointment of Owner Trustee........................................ 5
Section 2.05 Initial Capital Contribution of Owner Trust Estate.................. 5
Section 2.06 Declaration of Trust................................................ 5
Section 2.07 Title to Trust Property............................................. 6
Section 2.08 Situs of Trust...................................................... 6
Section 2.09 Representations and Warranties of the Depositor..................... 6
Section 2.10 Federal Income Tax Allocations...................................... 8
ARTICLE III - RESIDUAL INTEREST INSTRUMENTS AND TRANSFER OF INTERESTS....................... 8
Section 3.01 Initial Ownership................................................... 8
Section 3.02 The Residual Interest Instruments and the Notes..................... 8
Section 3.03 Execution, Authentication and Delivery of Residual Interest
Instruments and Notes............................................. 9
Section 3.04 Registration of Transfer and Exchange of Residual Interest
Instruments....................................................... 9
Section 3.05 Mutilated, Destroyed, Lost or Stolen Residual Interest Instruments.. 10
Section 3.06 Persons Deemed Owners............................................... 10
Section 3.07 Access to List of Owners' Names and Addresses....................... 11
Section 3.08 Maintenance of Office or Agency..................................... 11
Section 3.09 Temporary Residual Interest Instruments............................. 11
Section 3.10 Appointment of Paying Agent......................................... 12
Section 3.11 Restrictions on Transfer of Residual Interest Instruments........... 12
ARTICLE IV - ACTIONS BY OWNER TRUSTEE....................................................... 14
Section 4.01 Prior Notice to Owners with Respect to Certain Matters.............. 14
Section 4.02 Action by Owners with Respect to Certain Matters.................... 15
Section 4.03 Action by Owners with Respect to Bankruptcy......................... 15
Section 4.04 Restrictions on Owners' Power....................................... 15
Section 4.05 Majority Control.................................................... 16
ARTICLE V - APPLICATION OF TRUST FUNDS; CERTAIN DUTIES...................................... 16
Section 5.01 Application of Trust Funds.......................................... 16
Section 5.02 Method of Payment................................................... 16
Section 5.03 No Segregation of Monies; No Interest............................... 17
</TABLE>
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TABLE OF CONTENTS
(Continued)
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Section 5.04 Accounting and Reports to the Noteholders, Owners, the Internal
Revenue Service and Others........................................ 17
Section 5.05 Signature on Returns; Tax Matters Partner........................... 17
ARTICLE VI - AUTHORITY AND DUTIES OF OWNER TRUSTEE AND TRUST AGENT.......................... 17
Section 6.01 General Authority................................................... 17
Section 6.02 General Duties...................................................... 18
Section 6.03 Action Upon Instruction............................................. 18
Section 6.04 No Duties Except as Specified in this Agreement or in Instructions.. 19
Section 6.05 No Action Except Under Specified Documents or Instructions.......... 20
Section 6.06 Restrictions........................................................ 20
ARTICLE VII - CONCERNING THE OWNER TRUSTEE AND THE TRUST AGENT.............................. 20
Section 7.01 Acceptance of Trusts and Duties..................................... 20
Section 7.02 Furnishing of Documents............................................. 22
Section 7.03 Representations and Warranties...................................... 23
Section 7.04 Reliance; Advice of Counsel......................................... 24
Section 7.05 Not Acting in Individual Capacity................................... 24
Section 7.06 Owner Trustee and Trust Agent Not Liable for Residual Interest
Instruments, Notes or Contracts................................... 24
Section 7.07 Owner Trustee and Trust Agent May Own Residual Interest Instruments
and Notes......................................................... 25
ARTICLE VIII - COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE AND TRUST AGENT............ 25
Section 8.01 Owner Trustee's and Trust Agent's Fees and Expenses................. 25
Section 8.02 Indemnification..................................................... 25
Section 8.03 Payments to the Owner Trustee or Trust Agent........................ 26
ARTICLE IX - TERMINATION OF TRUST AGREEMENT................................................. 26
Section 9.01 Termination of Trust Agreement...................................... 26
ARTICLE X - SUCCESSOR OWNER TRUSTEES, ADDITIONAL OWNER TRUSTEE AND TRUST AGENT.............. 27
Section 10.01 Eligibility Requirements for Owner Trustee......................... 27
Section 10.02 Resignation or Removal of Owner Trustee............................ 27
Section 10.03 Successor Owner Trustee............................................ 28
Section 10.04 Merger or Consolidation of Owner Trustee........................... 28
Section 10.05 Appointment of Co-Trustee or Separate Trustee...................... 29
Section 10.06 Appointment of Trust Agent......................................... 29
ARTICLE XI - MISCELLANEOUS.................................................................. 30
Section 11.01 Supplements and Amendments......................................... 30
Section 11.02 [RESERVED]......................................................... 32
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Section 11.03 Limitations on Rights of Others.................................... 32
Section 11.04 Notices............................................................ 32
Section 11.05 Severability of Provisions......................................... 32
Section 11.06 Counterparts....................................................... 32
Section 11.07 Successors and Assigns............................................. 32
Section 11.08 No Petition........................................................ 33
Section 11.09 No Recourse........................................................ 33
Section 11.10 Residual Interest Instruments Nonassessable and Fully Paid......... 33
Section 11.11 Headings........................................................... 33
Section 11.12 Governing Law...................................................... 33
Section 11.13 Depositor Payment Obligation....................................... 33
Section 11.14 Certain Matters Regarding the Insurer.............................. 34
Section 11.15 Fiduciary Duties................................................... 34
</TABLE>
EXHIBITS
Exhibit A - Form of Certificate of Trust
Exhibit B - Form of Residual Interest Instrument
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<PAGE> 5
This TRUST AGREEMENT, dated as of April 1, 2000, is among ONYX
ACCEPTANCE FINANCIAL CORPORATION, a Delaware corporation (the "DEPOSITOR"),
BANKERS TRUST (DELAWARE), a Delaware banking corporation, as owner trustee (the
"OWNER TRUSTEE"), and THE CHASE MANHATTAN BANK, a New York corporation, as agent
of the Owner Trustee for the limited purposes set forth herein (the "TRUST
AGENT").
ARTICLE I
DEFINITIONS
Section 1.01 Capitalized Terms. Except as otherwise provided in this
Agreement, whenever used in this Agreement the following words and phrases,
unless the context otherwise requires, shall have the following meanings:
"ADMINISTRATION AGREEMENT" means the administration agreement, dated as
of April 1, 2000, among the Trust, the Depositor, the Indenture Trustee, the
Trust Agent 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.
"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.
"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 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 A hereto.
"CERTIFICATE REGISTER" and "CERTIFICATE REGISTRAR" mean the register
maintained and the registrar (or any successor thereto) appointed pursuant to
Section 3.04.
"CLOSING DATE" means April 28, 2000.
"CODE" means the Internal Revenue Code of 1986, as amended, and Treasury
Regulations promulgated thereunder.
"COMMISSION" means the United States Securities and Exchange Commission.
"DEPOSITOR" means Onyx Acceptance Financial Corporation in its capacity
as depositor hereunder, and its successors.
<PAGE> 6
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"GRANT" shall have the meaning assigned to such term in Section 2.03.
"INDENTURE" means the indenture dated as of April 1, 2000, between the
Trust, as Issuer, and The Chase Manhattan Bank, as Indenture Trustee.
"INSURER" means MBIA Insurance Corporation, and its successors.
"NOTE DISTRIBUTION ACCOUNT" shall have the meaning assigned to such term
in the Sale and Servicing Agreement.
"NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class A-3
Notes, the Class A-4 Notes and the Class B Notes, in each case issued pursuant
to the Indenture.
"ONYX" means Onyx Acceptance Corporation, and its successors.
"OWNER" means each Person in whose name a Residual Interest Instrument
is registered in the Certificate Register.
"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 Owners, the Servicer, the Depositor
and the Insurer.
"PAYING AGENT" means the Trust Agent or any successor in interest
thereto or any other paying agent or co-paying agent appointed pursuant to
Section 3.10 and authorized by the Issuer to make payments to and distributions
on the Residual Interest Instruments.
"PERCENTAGE INTEREST" means with respect to each Residual Interest
Instrument, 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.
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<PAGE> 7
"RESIDUAL INTEREST" means the right to receive amounts to be distributed
or paid to holders of the "Residual Interests" (as defined in the Sale and
Servicing Agreement), pursuant to the terms of the Sale and Servicing Agreement.
"RESIDUAL INTEREST INSTRUMENT" means an instrument substantially in the
form attached as Exhibit B hereto and evidencing the Residual Interest.
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any
officer within the Owner Trustee Corporate Trust Office, and with respect to the
Trust Agent, any officer within the Trust Agent Office, including any Vice
President, assistant secretary or other officer or assistant officer of the
Owner Trustee or the Trust Agent, as the case may be, customarily performing
functions similar to those performed by the people who at such time shall be
officers and has direct responsibility for the administration of this Agreement.
"SALE AND SERVICING AGREEMENT" means the sale and servicing agreement,
dated as of April 1, 2000, among the Trust, as Issuer, the Depositor, as Seller,
Onyx, as Servicer and Custodian, the Indenture Trustee and the Trust Agent as
the same may be amended or supplemented from time to time.
"SECRETARY OF STATE" means the Secretary of State of the State of
Delaware.
"SELLER" means Onyx Acceptance Financial Corporation, in its capacity as
seller under the Sale and Servicing Agreement, and its successors.
"TREASURY REGULATIONS" means regulations, including proposed or
temporary regulations, promulgated under the Code. References herein to specific
provisions of proposed or temporary regulations shall include analogous
provisions of final Treasury Regulations or other successor Treasury
Regulations.
"TRUST" means the trust established by this Agreement.
"TRUST AGENT" means The Chase Manhattan Bank, a New York corporation,
not in its individual capacity but solely as agent of the Owner Trustee under
this Agreement, and any successor Trust Agent hereunder.
"TRUST AGENT OFFICE" means the office of the Trust Agent at 450 West
33rd Street, 14th Floor, New York, New York 10001-2697, Attention: Capital
Markets Fiduciary Services or such other office at such other address as the
Trust Agent may designate from time to time by notice to the Owners, the
Servicer, the Depositor and the Insurer.
"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 Salomon Smith Barney Inc., Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Chase Securities Inc.
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<PAGE> 8
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 2000-B, in which name the Owner Trustee may conduct the
activities of the Trust, make and execute contracts and other instruments on
behalf of the Trust and sue and be sued, and in which name the Owner Trustee may
perform its duties hereunder.
Section 2.02 Office. The office of the Trust shall be in care of the
Owner Trustee at the Owner Trustee Corporate Trust Office or at such other
address in Delaware as the Owner Trustee may designate by written notice to the
Owners, the Depositor, the Servicer and the Insurer.
Section 2.03 Purposes and Powers. The sole purpose of the Trust is to
conserve the Trust Estate and collect and disburse the periodic income therefrom
for the use and benefit of the Owners, and in furtherance of such purpose to
engage in the following ministerial activities:
(i) to issue the Notes pursuant to the Indenture, to sell the
Notes, and to issue Residual Interest Instruments pursuant to this
Agreement;
(ii) with the proceeds of the sale of the Notes, 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 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;
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<PAGE> 9
(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. The Owner
Trustee is hereby authorized and directed to file the Certificate of Trust with
the Secretary of State.
Section 2.05 Initial Capital Contribution of Owner Trust Estate. The
Depositor hereby sells, assigns, transfers, conveys and sets over to the Owner
Trustee, as of the date hereof, the sum of $1.00. The Owner Trustee hereby
acknowledges receipt in trust from the Depositor, as of the date hereof, of the
foregoing contribution, which shall constitute the initial Trust Estate. The
Depositor shall pay organizational expenses of the Trust as they may arise or
shall, upon the request of the Owner Trustee or the Trust Agent, as applicable,
promptly reimburse the Owner Trustee and the Trust Agent, respectively, for any
such expenses paid by the Owner Trustee or the Trust Agent, as applicable.
Section 2.06 Declaration of Trust. The Owner Trustee hereby declares
that it will hold the Trust Estate in trust upon and subject to the conditions
set forth herein for the sole purpose of conserving the Trust Estate and
collecting and disbursing the periodic income therefrom for the use and benefit
of the Owners, subject to the obligations of the Trust under the Basic
Documents. It is the intention of the parties hereto that the Trust constitute a
business trust under the Business Trust Statute and that this Agreement
constitute the governing instrument of such business trust. It is the intention
of the parties hereto that, solely for income and franchise tax purposes, on and
after the Closing Date (i) so long as there is a sole Residual Interestholder,
the Trust shall be disregarded as an entity separate from the sole Residual
Interestholder, and (ii) if there is more than one Residual Interestholder, 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 Owners 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 Treasury Regulation Section 301.7701-3(a) 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 provided in the second preceding sentence.
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
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<PAGE> 10
sole purpose and to the extent necessary to accomplish the purposes of the Trust
as set forth in Section 2.03.
Section 2.07 Title to Trust Property. Subject to the Indenture, legal
title to all the Trust Estate shall be vested at all times in the Trust as a
separate legal entity except where applicable law in any jurisdiction requires
title to any part of the Trust Estate to be vested in a trustee or trustees, in
which case title shall be deemed to be vested in the Owner Trustee and/or a
separate trustee, as the case may be.
The Owners shall not have legal title to any part of the Trust Estate.
The Owners shall be entitled to receive distributions with respect to their
undivided ownership interest therein only in accordance with Articles Five and
Nine. No transfer, by operation of law or otherwise, of any right, title or
interest of the Owners to and in their ownership interest in the Trust Estate
shall operate to terminate this Agreement or the trusts hereunder or entitle any
transferee to an accounting or to the transfer to it of legal title to any part
of the Trust Estate.
Section 2.08 Situs of Trust. The Trust will be located and administered
in the State of Delaware or the State of New York. All bank accounts maintained
on behalf of the Trust shall be located in the State of California, the State of
Delaware or the State of New York. The Trust shall not have any employees in any
state other than Delaware; provided, however, that nothing herein shall restrict
or prohibit the Owner Trustee from having employees within or without the State
of Delaware. Payments will be received by the Trust only in California, Delaware
or New York and payments will be made by the Trust only from California,
Delaware or New York. The only office of the Trust will be at the Owner Trustee
Corporate Trust Office.
Section 2.09 Representations and Warranties of the Depositor.
(a) The Depositor hereby represents and warrants to the Owner Trustee
and the Insurer that:
(i) The Depositor is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of Delaware, with power and authority to own its properties
and to conduct its business and had at all relevant times, and has,
power, authority and legal right to acquire and own the Contracts.
(ii) The Depositor is duly qualified to do business as a foreign
corporation in good standing and has obtained all necessary licenses and
approvals in all jurisdictions in which the ownership or lease of
property or the conduct of its business requires such qualifications.
(iii) The Depositor has the power and authority to execute and
deliver 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,
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<PAGE> 11
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
Residual Interest Instruments, (B) seeking to prevent the issuance of
the Residual Interest Instruments 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 Residual Interest Instruments or (D)
involving the Depositor and which might materially and adversely affect
the federal income tax or other federal, state or local tax attributes
of the Residual Interest Instruments.
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 among the Owners in proportion
to the Percentage Interest of the Residual Interest of each Owner.
(b) 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
Owners. Any indebtedness allocated pursuant to Treasury Regulation Section
1.752-3(a)(3) shall be allocated to the Residual Interest. The Depositor is
authorized to modify the allocations in this paragraph if necessary or
appropriate, in its sole discretion, for the allocations to fairly reflect the
income, gain, loss and deduction to the Depositor or to the Owners, or as
otherwise required by the Code.
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ARTICLE III
RESIDUAL INTEREST INSTRUMENTS 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 Residual Interest Instruments, the Depositor shall be the sole beneficiary
of the Trust.
Section 3.02 The Residual Interest Instruments and the Notes.
(a) The Residual Interest Instruments shall not be issued with a
principal amount. The Residual Interest Instruments shall be executed by the
Owner Trustee on behalf of the Trust by manual or facsimile signature of an
authorized officer of the Owner Trustee, and authenticated by the Trust Agent by
the manual or facsimile signature of an authorized officer of the Trust Agent
and shall be deemed to have been validly issued when so executed and
authenticated. Residual Interest Instruments bearing the manual or facsimile
signatures of individuals who were, at the time when such signatures were
affixed, authorized to sign on behalf of the Owner Trustee or the Trust Agent
shall be validly issued by the Trust, notwithstanding that such individuals or
any of them have ceased to be so authorized prior to the execution,
authentication and delivery of such Residual Interest Instruments or did not
hold such offices at the date of such Residual Interest Instruments. All
Residual Interest Instruments shall be dated the date of their authentication.
(b) The Notes shall be executed by the Owner Trustee on behalf of the
Trust by manual or facsimile signature of an authorized officer of the Owner
Trustee, and shall be authenticated as provided in the Indenture. Notes bearing
the manual or facsimile signature of an individual who was, at the time when
such signature was affixed, authorized to sign on behalf of the Owner Trustee
shall be deemed to have been validly executed by the Trust, notwithstanding
that such individual has ceased to be so authorized prior to the execution and
delivery of such Notes or did not hold such office at the date of such Notes.
Section 3.03 Execution, Authentication and Delivery of Residual Interest
Instruments and Notes. The Owner Trustee shall cause to be executed,
authenticated and delivered upon the order of the Depositor, in exchange for the
Contracts and the other assets of the Trust, simultaneously with the sale,
assignment and transfer to the Trust of the Contracts, and such other assets,
(a) 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, $77,800,000, (ii) Class A-2 Notes,
$120,000,000, (iii) Class A-3 Notes, $131,000,000, (iv) Class A-4 Notes,
$94,200,000, and (v) Class B Notes, $27,000,000. The Trust Agent is hereby
authorized to direct, on behalf of the Trust, the Indenture Trustee to
authenticate and deliver the Notes upon the order of the Depositor. No Residual
Interest Instrument shall entitle its Owner to any benefit under this Agreement,
or be valid for any purpose, unless there appears on such Residual Interest
Instrument a certificate of authentication substantially in the form set forth
in the form of Residual Interest Instrument attached hereto as Exhibit B,
executed by the Trust Agent or another authenticating agent of the Owner
Trustee, by manual or facsimile signature, and such certificate upon any
Residual Interest Instrument shall be conclusive evidence, and the only
evidence, that
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such Residual Interest Instrument has been duly authenticated and delivered
hereunder. Upon issuance, authorization and delivery pursuant to the terms
hereof, the Residual Interest Instruments will be entitled to the benefits of
this Agreement.
Section 3.04 Registration of Transfer and Exchange of Residual Interest
Instruments.
(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
Residual Interest Instruments and transfers and exchanges of Residual Interest
Instruments as provided herein. The Trust Agent, as agent for the Trust, is
hereby initially appointed Certificate Registrar for the purpose of registering
Residual Interest Instruments and transfers and exchanges of Residual Interest
Instruments as herein provided. In the event that, subsequent to the Closing
Date, the Trust Agent notifies the Administrator that the Trust Agent is unable
to act as Certificate Registrar, the Administrator 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 Residual Interest
Instrument at the office of the Certificate Registrar, the Owner Trustee shall
execute, authenticate and deliver (or shall cause the Trust Agent, as its
authenticating agent, to authenticate and deliver), in the name of the
designated transferee or transferees, one or more new Residual Interest
Instruments in authorized denominations of a like aggregate principal amount.
(c) At the option of a Owner of a Residual Interest Instrument, Residual
Interest Instruments may be exchanged for other Residual Interest Instruments in
authorized denominations of a like Percentage Interest, upon surrender of the
Residual Interest Instruments to be exchanged at the office of the Certificate
Registrar. Whenever any Residual Interest Instruments are so surrendered for
exchange, the Owner Trustee on behalf of the Trust shall execute, authenticate
and deliver (or shall cause the Trust Agent, as its authenticating agent, to
authenticate and deliver) the Residual Interest Instruments that the Owner
making the exchange is entitled to receive. Every Residual Interest Instrument
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in form satisfactory to the
Trust Agent and the Certificate Registrar duly executed by the Owner 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 3.11(a) and (b).
(d) No service charge shall be made for any registration of transfer or
exchange of Residual Interest Instruments, but the Owner Trustee or, on its
behalf, the Trust Agent, may require payment of a sum sufficient to cover any
tax or governmental charge that may be imposed in connection with any transfer
or exchange of Residual Interest Instruments.
(e) All Residual Interest Instruments surrendered for registration of
transfer or exchange, if surrendered to any agent of the Owner Trustee under
this Agreement, shall be delivered to the Trust Agent and promptly canceled by
it, or, if surrendered to the Trust Agent, shall be promptly canceled by it, and
no Residual Interest Instruments shall be issued in lieu
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thereof except as expressly permitted by any of the provisions of this
Agreement. The Trust Agent shall dispose of canceled Residual Interest
Instruments in accordance with the normal industry practice.
Section 3.05 Mutilated, Destroyed, Lost or Stolen Residual Interest
Instruments. If (a) any mutilated Residual Interest Instrument is surrendered to
the Certificate Registrar, or the Certificate Registrar receives evidence to its
satisfaction of the destruction, loss or theft of any Residual Interest
Instrument, and (b) there is delivered to the Certificate Registrar and the
Trust Agent such security or indemnity as may be required by them to save each
of them harmless, then, in the absence of notice that such Residual Interest
Instrument has been acquired by a bona fide purchaser, the Owner Trustee on
behalf of the Trust shall execute and the Trust Agent, as its authenticating
agent, shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Residual Interest Instrument, a new
Residual Interest Instrument of like tenor and fractional undivided interest. In
connection with the issuance of any new Residual Interest Instrument under this
Section, the Owner Trustee or, on its behalf, the Trust Agent, may require the
payment by the Owner of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto. Any duplicate Residual Interest
Instrument 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 Residual Interest Instrument shall
be found at any time.
Section 3.06 Persons Deemed Owners. Prior to due presentation of a
Residual Interest Instrument for registration of transfer, the Owner Trustee,
the Trust Agent, the Certificate Registrar, any Paying Agent and any of their
respective agents may treat the Person in whose name any Residual Interest
Instrument is registered as the owner of such Residual Interest Instrument for
the purpose of receiving distributions pursuant to Section 5.01 and for all
other purposes whatsoever, and none of the Owner Trustee, the Trust Agent, the
Certificate Registrar, any Paying Agent or any of their respective agents shall
be affected by any notice to the contrary.
Section 3.07 Access to List of Owners' Names and Addresses. The Trust
Agent shall furnish or cause to be furnished to the Servicer, the Insurer and
the Depositor, within 15 days after receipt by the Trust Agent of a written
request therefor from the Servicer, the Insurer or the Depositor, a list, in
such form as the Servicer, the Insurer or the Depositor may reasonably require,
of the names and addresses of the Owners as of the most recent Record Date. Each
Owner, by receiving and holding a Residual Interest Instrument, agrees with the
Servicer, the Depositor, the Owner Trustee and the Trust Agent that none of the
Servicer, the Depositor, the Owner Trustee or the Trust Agent shall be held
accountable by reason of the disclosure of any such information as to its name
and address hereunder, regardless of the source from which such information was
derived.
Section 3.08 Maintenance of Office or Agency. The Trust Agent shall
maintain in the City of New York an office or offices or agency or agencies
where Residual Interest Instruments may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trust Agent in
respect of the Residual Interest Instruments and the Basic Documents may be
served. The Trust Agent hereby designates the office of The Chase Manhattan Bank
at the address provided under the definition of the term "TRUST AGENT OFFICE" as
its office for such purposes. The Trust Agent shall give prompt written notice
to the Owner Trustee, the Depositor,
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the Servicer and to the Owners of any change in the location of the Certificate
Register or any such office or agency.
Section 3.09 Temporary Residual Interest Instruments. Pending the
preparation of definitive Residual Interest Instruments, the Owner Trustee, on
behalf of the Trust, may execute, authenticate and deliver, temporary Residual
Interest Instruments that are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Residual Interest Instruments in lieu of which they are
issued. If temporary Residual Interest Instruments are issued, the Depositor
will cause definitive Residual Interest Instruments to be prepared without
unreasonable delay. After the preparation of definitive Residual Interest
Instruments, the temporary Residual Interest Instruments shall be exchangeable
for definitive Residual Interest Instruments upon surrender of the temporary
Residual Interest Instruments at the office or agency to be maintained as
provided in Section 3.08, without charge to the Owner. Upon surrender for
cancellation of any one or more temporary Residual Interest Instruments, the
Owner Trustee shall execute, authenticate and deliver (or shall cause the Trust
Agent, as its authenticating agent, to authenticate and deliver) in exchange
therefor a like principal amount of definitive Residual Interest Instruments in
authorized denominations. Until so exchanged, the temporary Residual Interest
Instruments shall in all respects be entitled to the same benefits hereunder as
definitive Residual Interest Instruments.
Section 3.10 Appointment of Paying Agent. The Owner Trustee, on behalf
of the Trust, hereby appoints the Trust Agent as Paying Agent under this
Agreement. The Paying Agent shall make distributions to Owners pursuant to
Section 5.01 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 Payment 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 Trust Agent
shall no longer be the Paying Agent, the Administrator shall appoint a successor
to act as Paying Agent (which shall be a bank or trust company acceptable to the
Insurer). The Administrator shall cause such successor Paying Agent or any
additional Paying Agent appointed by the Administrator to execute and deliver to
the Trust an instrument in which such successor Paying Agent or additional
Paying Agent shall agree with the Trust that, as Paying Agent, such successor
Paying Agent or additional Paying Agent will hold all sums, if any, held by it
for payment to the Owners in trust for the benefit of the Owners entitled
thereto until such sums shall be paid to the Owners. The Paying Agent shall
return all unclaimed funds to the Trust and upon removal of a Paying Agent such
Paying Agent shall also return all funds in its possession to the Trust. The
provisions of Sections 7.01, 7.03, 7.04 and 8.01 shall apply to the Trust Agent
also in its role as Paying Agent, for so long as the Trust Agent shall act as
Paying Agent and, to the extent applicable, to any other paying agent appointed
hereunder. Any reference in this Agreement to the Paying Agent shall include any
co- paying agent unless the context requires otherwise. Notwithstanding anything
herein to the contrary, the Trust Agent and the Paying Agent shall be the same
entity as the Indenture Trustee under the Indenture and the Sale and Servicing
Agreement, unless an Insurer Default has occurred and is continuing. In such
event, the Trust Agent and the Paying Agent shall resign and the Owner Trustee
shall assume the duties and obligations of the Trust Agent and the Paying Agent
hereunder and under the Sale and Servicing Agreement.
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Section 3.11 Restrictions on Transfer of Residual Interest Instruments.
(a) Each prospective purchaser and any subsequent transferee of a
Residual Interest Instrument (each, a "PROSPECTIVE OWNER"), other than the
Depositor, by virtue of its acceptance thereof, shall be deemed to have
represented and warranted to the Owner Trustee, the Trust Agent and the
Certificate Registrar and any of their respective successors that:
(i) Such Person is (A) a "QUALIFIED INSTITUTIONAL BUYER" as
defined in Rule 144A under the Securities Act of 1933, as amended (the
"SECURITIES ACT"), is aware that the seller of the Residual Interest
Instrument may be relying on the exemption from the registration
requirements of the Securities Act provided by Rule 144A and is
acquiring such Residual Interest Instrument for its own account or for
the account of one or more qualified institutional buyers for whom it is
authorized to act, or (B) a Person involved in the organization or
operation of the Trust or an affiliate of such Person within the meaning
of Rule 3a-7 of the Investment Company Act of 1940, as amended
(including, but not limited to, the Depositor and Onyx Acceptance
Corporation).
(ii) Such Person understands that the Residual Interest
Instruments have not been and will not be registered under the
Securities Act and may be offered, sold, pledged or otherwise
transferred only to a person whom the seller reasonably believes is (A)
a qualified institutional buyer (as such term is defined in Rule 144A
under the Securities Act) or (B) a Person involved in the organization
or operation of the Trust or an affiliate of such Person, in a
transaction meeting the requirements of Rule 144A under the Securities
Act and in accordance with any applicable securities laws of any state
of the United States.
(iii) Such person understands that the Residual Interest
Instrument bears a legend to the following effect:
"THE RESIDUAL INTEREST IN THE TRUST REPRESENTED BY THIS RESIDUAL
INTEREST INSTRUMENT HAS NOT BEEN AND WILL NOT BE REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE
SECURITIES LAWS. THIS RESIDUAL INTEREST INSTRUMENT MAY BE
DIRECTLY OR INDIRECTLY OFFERED OR SOLD OR OTHERWISE DISPOSED OF
(INCLUDING PLEDGED) BY THE HOLDER HEREOF ONLY TO (I) A "QUALIFIED
INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A UNDER THE ACT, IN A
TRANSACTION THAT IS REGISTERED UNDER THE ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT IS EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE ACT PURSUANT TO RULE 144A OR (II) A PERSON
INVOLVED IN THE ORGANIZATION OR OPERATION OF THE TRUST OR AN
AFFILIATE OF SUCH A PERSON WITHIN THE MEANING OF RULE 3a-7 OF THE
INVESTMENT COMPANY ACT OF 1940, AS AMENDED (INCLUDING, BUT NOT
LIMITED TO ONYX ACCEPTANCE FINANCIAL CORPORATION AND ONYX
ACCEPTANCE CORPORATION) IN A TRANSACTION THAT IS
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REGISTERED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS OR
THAT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE ACT AND
SUCH LAWS. NO PERSON IS OBLIGATED TO REGISTER THIS RESIDUAL
INTEREST INSTRUMENT UNDER THE ACT OR ANY STATE SECURITIES LAWS.
NO TRANSFER OF THIS RESIDUAL INTEREST INSTRUMENT OR ANY
BENEFICIAL INTEREST THEREIN SHALL BE MADE TO ANY PERSON UNLESS
THE OWNER TRUSTEE HAS RECEIVED A CERTIFICATE FROM THE TRANSFEREE
TO THE EFFECT THAT SUCH TRANSFEREE (I) IS NOT A PERSON WHICH IS
AN EMPLOYEE BENEFIT PLAN, TRUST OR ACCOUNT SUBJECT TO TITLE I OF
THE EMPLOYEE RETIREMENT INCOME SECURITY ACT OF 1974, AS AMENDED
("ERISA") OR SECTION 4975 OF THE CODE OR A GOVERNMENTAL PLAN,
DEFINED IN SECTION 3(32) OF ERISA SUBJECT TO ANY FEDERAL, STATE
OR LOCAL LAW WHICH IS, TO A MATERIAL EXTENT, SIMILAR TO THE
FOREGOING PROVISIONS OF ERISA OR THE CODE (ANY SUCH PERSON BEING
A "PLAN") AND (II) IS NOT AN ENTITY, INCLUDING AN INSURANCE
COMPANY SEPARATE ACCOUNT OR GENERAL ACCOUNT, WHOSE UNDERLYING
ASSETS INCLUDE PLAN ASSETS BY REASON OF A PLAN'S INVESTMENT IN
THE ENTITY."
(iv) Such Person shall comply with the provisions of Section
3.11(b), as applicable, relating to the ERISA restrictions with respect
to the acceptance or acquisition of such Residual Interest Instrument.
(b) The Residual Interest Instruments 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 Residual
Interest Instrument, the Owner shall be deemed to have represented and warranted
that it is not a Benefit Plan.
ARTICLE IV
ACTIONS BY OWNER TRUSTEE
Section 4.01 Prior Notice to Owners with Respect to Certain Matters.
Subject to the provisions and limitations of Section 4.04, with respect to the
following matters, neither the Owner Trustee nor the Trust Agent shall take any
action unless at least 30 days before the taking of such action, the Owner
Trustee or the Trust Agent, as applicable, shall have notified the Owners in
writing of the proposed action and the Owners shall not have notified the Owner
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Trustee or the Trust Agent, as applicable, in writing prior to the 30th day
after such notice is given that such Owners have withheld consent or provided
alternative direction:
(a) the initiation of any claim or lawsuit by the Trust (except claims
or lawsuits brought in connection with the collection of the Contracts) and the
compromise of any action, claim or lawsuit brought by or against the Trust
(except with respect to the aforementioned claims or lawsuits for collection of
the Contracts);
(b) the election by the Trust to file an amendment to the Certificate of
Trust (unless such amendment is required to be filed under the Business Trust
Statute);
(c) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is required;
(d) the amendment of the Indenture by a supplemental indenture in
circumstances where the consent of any Noteholder is not required and such
amendment materially adversely affects the interest of the Owners;
(e) the amendment, change or modification of the Administration
Agreement, except to cure any ambiguity or to amend or supplement any provision
in a manner or add any provision that would not materially adversely affect the
interests of the Owners; or
(f) the appointment pursuant to the Indenture of a successor Note
Registrar, paying agent for the Notes or Indenture Trustee or pursuant to this
Agreement of a successor Certificate Registrar or the Paying Agent, or the
consent to the assignment by the Note Registrar, paying agent for the Notes,
Indenture Trustee, Certificate Registrar or Paying Agent of its obligations
under the Indenture or this Agreement, as applicable.
Section 4.02 Action by Owners with Respect to Certain Matters. Subject
to the provisions and limitations of Section 4.04, neither the Owner Trustee nor
the Trust Agent shall have the power, except upon the direction of the Owners
and with the prior written consent of the Insurer (so long as no Insurer Default
shall have occurred and be continuing), to (a) remove the Administrator pursuant
to Section 8 of the Administration Agreement, (b) appoint a successor
Administrator pursuant to Section 8 of the Administration Agreement, (c) remove
the Servicer pursuant to Section 7.01 of the Sale and Servicing Agreement, (d)
except as expressly provided in the Basic Documents, sell the Contracts after
the termination of the Indenture, (e) initiate any claim, suit or proceeding by
the Trust or compromise any claim, suit or proceeding brought by or against the
Trust, (f) authorize the merger or consolidation of the Trust with or into any
other business trust or entity (other than in accordance with Section 3.10 of
the Indenture) or (g) amend the Certificate of Trust. The Owner Trustee and the
Trust Agent may only take the actions referred to in the preceding sentence upon
written instructions signed by the Owners and, to the extent required by the
preceding sentence, with the prior written consent of the Insurer.
Section 4.03 Action by Owners with Respect to Bankruptcy. Neither the
Owner Trustee nor the Trust Agent shall have the power to commence a voluntary
proceeding in bankruptcy relating to the Trust without the prior written consent
of the Insurer and the unanimous prior approval of all Owners and the delivery
to the Owner Trustee or the Trust
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Agent, as applicable, by each such Owner of a certificate certifying that such
Owner reasonably believes that the Trust is insolvent.
Section 4.04 Restrictions on Owners' Power. The Owners shall not direct
the Owner Trustee or the Trust Agent to take or to refrain from taking any
action if such action or inaction would be contrary to any obligation of the
Trust, or of the Owner Trustee or the Trust Agent, as applicable, under this
Agreement or any of the other Basic Documents or would be contrary to the
purpose of this Trust as set forth in Section 2.03, nor shall the Owner Trustee
or the Trust Agent be obligated to follow any such direction, if given.
Section 4.05 Majority Control. Except as expressly provided herein, any
action that may be taken by the Owners under this Agreement may be taken by
Owners 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 Owners
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 Application of Trust Funds.
(a) On each Distribution Date, the Trust Agent, on behalf of the Owner
Trustee, shall direct the Paying Agent to distribute to the Owners from amounts
on deposit in the Payment Account the distributions as provided in Section
4.04(b) of the Sale and Servicing Agreement with respect to such Distribution
Date.
(b) On each Distribution Date, the Trust Agent, on behalf of the Owner
Trustee, shall cause the Paying Agent to send to each Owner the statement or
statements provided to the Owner Trustee or the Trust Agent by the Servicer
pursuant to Section 4.05 of the Sale and Servicing Agreement with respect to
such Distribution Date.
(c) In the event that any withholding tax is imposed on the Trust's
payment (or allocations of income) to an Owner, such tax shall reduce the amount
otherwise distributable to the Owner in accordance with this Section. The Trust
Agent is hereby authorized and directed to retain from amounts otherwise
distributable to the Owners sufficient funds for the payment of any tax that is
legally owed by the Trust (but such authorization shall not prevent the Owner
Trustee or the Trust Agent from contesting any such tax in appropriate
proceedings, and withholding payment of such tax, if permitted by law, pending
the outcome of such proceedings). The amount of any withholding tax imposed with
respect to an Owner shall be treated as cash distributed to such Owner at the
time it is withheld by the Trust and remitted to the appropriate taxing
authority. If there is a possibility that withholding tax is payable with
respect to a distribution, the Trust Agent shall withhold such amounts in
accordance with this paragraph (c).
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Section 5.02 Method of Payment. Subject to Section 9.01(c) respecting
the final payment upon retirement of each Residual Interest Instrument,
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 Owner
appearing in the Certificate Register (or if requested by the Owner, 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 Residual
Interest Instruments.
Section 5.03 No Segregation of Monies; No Interest. Subject to Section
5.01, monies received by the Trust Agent hereunder need not be segregated in any
manner except to the extent required by law or the Sale and Servicing Agreement
and may be deposited under such general conditions as may be prescribed by law,
and the Trust Agent shall not be liable for any interest thereon.
Section 5.04 Accounting and Reports to the Noteholders, Owners, the
Internal Revenue Service and Others. The Trust Agent shall (a) maintain (or
cause to be maintained) the books of the Trust on a calendar year basis and the
accrual method of accounting, (b) deliver to each Owner, as may be required by
the Code and applicable Treasury Regulations, such information as may be
required (including Schedule K-1) to enable each Owner to prepare its federal
and state income tax returns, (c) file such tax returns relating to the Trust
(including a partnership information return, IRS Form 1065) and make such
elections as from time to time may be required or appropriate under any
applicable state or federal statute or any rule or regulation thereunder so as
to maintain the Trust's characterization as a partnership for federal income tax
purposes, (d) cause such tax returns to be signed in the manner required by law
and (e) collect or cause to be collected any withholding tax as described in and
in accordance with Section 5.01(c) with respect to income or distributions to
Owners. Unless otherwise required by applicable law, the Trust Agent shall elect
under Section 1278 of the Code to include in current income any market discount
that accrues with respect to the Contracts. The Trust Agent shall not make the
election provided under Section 754 of the Code.
Section 5.05 Signature on Returns; Tax Matters Partner.
(a) The 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 otherwise the holder of the
largest Percentage Interest in the Residual Interest Instruments shall sign such
documents.
(b) The Depositor shall be designated the "tax matters partner" of the
Trust pursuant to Section 6231(a)(7)(A) of the Code and applicable Treasury
Regulations, as long as the Depositor holds a Residual Interest Instrument, and
otherwise the owner of the largest Percentage Interest in the Residual Interest
Instruments shall be the "tax matters partner".
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ARTICLE VI
AUTHORITY AND DUTIES OF OWNER TRUSTEE AND TRUST AGENT
Section 6.01 General Authority. Subject to the provisions and
limitations of Sections 2.03 and 2.06, the Owner Trustee is authorized and
directed to execute and deliver on behalf of the Trust the Basic Documents to
which the Trust is to be a party and each certificate or other document attached
as an exhibit to or contemplated by the Basic Documents to which the Trust is to
be a party and any amendment or other agreement, as evidenced conclusively by
the Owner Trustee's execution thereof. In addition to the foregoing, the Owner
Trustee is authorized, but shall not be obligated, to take all actions required
of the Trust pursuant to the Basic Documents. The Owner Trustee is further
authorized from time to time to take such action as the Administrator recommends
with respect to the Basic Documents.
Section 6.02 General Duties. Subject to the provisions and limitations
of Sections 2.03 and 2.06:
(a) it shall be the duty of the Owner Trustee to discharge (or cause to
be discharged through the Administrator or such agents as shall be appointed
with the consent of the Insurer) all of its responsibilities pursuant to the
terms of this Agreement and the other Basic Documents to which the Trust is a
party and to administer the Trust in the interest of the Owners, subject to the
Basic Documents and in accordance with the provisions of this Agreement.
Notwithstanding the foregoing, the Owner Trustee shall be deemed to have
discharged its duties and responsibilities hereunder and under the other Basic
Documents to the extent the Administrator or the Trust Agent has agreed in the
Administration Agreement or this Agreement, respectively, to perform any act or
to discharge any duty of the Owner Trustee or the Trust hereunder or under any
Basic Document, and the Owner Trustee shall not be held liable for the default
or failure of the Administrator or the Trust Agent to carry out its obligations
under the Administration Agreement or this Agreement, respectively; and
(b) it shall be the duty of the Trust Agent to discharge all of its
responsibilities pursuant to the terms of this Agreement and the other Basic
Documents to which the Trust and the Trust Agent are a party and to administer
the Trust in the interest of the Owners, subject to the Basic Documents and in
accordance with the provisions of this Agreement.
Section 6.03 Action Upon Instruction.
(a) Subject to Article Four, in accordance with the terms of the Basic
Documents, the Owners may by written instruction direct the Owner Trustee or the
Trust Agent in the management of the Trust. Such direction may be exercised at
any time by written instruction of the Owners pursuant to Article Four.
(b) Neither the Owner Trustee nor the Trust Agent shall be required to
take any action hereunder or under any other Basic Document if the Owner Trustee
or the Trust Agent, as applicable, shall have reasonably determined, or shall
have been advised by counsel, that such action is likely to result in liability
on the part of the Owner Trustee or the Trust Agent, as
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applicable, or is contrary to the terms hereof or of any other Basic Document or
is otherwise contrary to law.
(c) Whenever the Owner Trustee or the Trust Agent is unable to decide
between alternative courses of action permitted or required by the terms of this
Agreement or under any other Basic Document, the Owner Trustee or the Trust
Agent, as applicable, shall promptly give notice (in such form as shall be
appropriate under the circumstances) to the Owners and the Insurer requesting
instruction as to the course of action to be adopted, and to the extent the
Owner Trustee or the Trust Agent, as applicable, acts in good faith in
accordance with any written instruction from the Owners received, the Owner
Trustee or the Trust Agent, as applicable, shall not be liable on account of
such action to any Person. If the Owner Trustee or the Trust Agent shall not
have received appropriate instruction within ten days of such notice (or within
such shorter period of time as reasonably may be specified in such notice or may
be necessary under the circumstances) it may, but shall be under no duty to,
take or refrain from taking such action not inconsistent with this Agreement and
the other Basic Documents, as it shall deem to be in the best interests of the
Owners, and shall have no liability to any Person for such action or inaction.
(d) In the event that the Owner Trustee or the Trust Agent is unsure as
to the application of any provision of this Agreement or any other Basic
Document or any such provision is ambiguous as to its application, or is, or
appears to be, in conflict with any other applicable provision, or in the event
that this Agreement permits any determination by the Owner Trustee or the Trust
Agent or is silent or is incomplete as to the course of action that the Owner
Trustee is required to take with respect to a particular set of facts, the Owner
Trustee or the Trust Agent may give notice (in such form as shall be appropriate
under the circumstances) to the Owners requesting instruction and, to the extent
that the Owner Trustee or the Trust Agent, as applicable, acts or refrains from
acting in good faith in accordance with any such instruction received, the Owner
Trustee or the Trust Agent, as applicable, shall not be liable, on account of
such action or inaction, to any Person. If the Owner Trustee or the Trust Agent
shall not have received appropriate instruction within ten days of such notice
(or within such shorter period of time as reasonably may be specified in such
notice or may be necessary under the circumstances) it may, but shall be under
no duty to, take or refrain from taking such action not inconsistent with this
Agreement or the other Basic Documents, as it shall deem to be in the best
interests of the Owners, and shall have no liability to any Person for such
action or inaction.
Section 6.04 No Duties Except as Specified in this Agreement or in
Instructions. Neither the Owner Trustee nor the Trust Agent shall have any duty
or obligation to manage, make any payment with respect to, register, record,
sell, dispose of or otherwise deal with the Trust Estate, or to otherwise take
or refrain from taking any action under, or in connection with, any document
contemplated hereby to which the Owner Trustee or the Trust Agent, as
applicable, is a party, except as expressly provided by the terms of this
Agreement or in any document or written instruction received by the Owner
Trustee or the Trust Agent, as applicable, pursuant to Section 6.03; and no
implied duties or obligations shall be read into this Agreement or any other
Basic Document against the Owner Trustee or the Trust Agent. Neither the Owner
Trustee nor the Trust Agent shall have any responsibility for filing any
financing or continuation statement in any public office at any time or to
otherwise perfect or maintain the perfection of any security interest or lien
granted to it hereunder or to prepare or file with the Commission any filing for
the Trust or to record this Agreement or any other Basic Document. Each of the
Owner
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Trustee and the Trust Agent nevertheless agrees that it will, at its own cost
and expense, promptly take all action as may be necessary to discharge any liens
on any part of the Trust Estate that result from actions by, or claims against,
the Owner Trustee or the Trust Agent, as applicable, that are not related to the
ownership or the administration of the Trust Estate or the Grant of any portion
thereof to the Indenture Trustee pursuant to the Indenture.
Section 6.05 No Action Except Under Specified Documents or Instructions.
Neither the Owner Trustee nor the Trust Agent shall manage, control, use, sell,
dispose of or otherwise deal with any part of the Trust Estate except in
accordance with (i) the powers granted to and the authority conferred upon the
Owner Trustee or the Trust Agent, as applicable, pursuant to this Agreement,
(ii) the other Basic Documents and (iii) any document or instruction delivered
to the Owner Trustee or the Trust Agent, as applicable, pursuant to Section
6.03.
Section 6.06 Restrictions. Neither the Owner Trustee nor the Trust Agent
shall take any action (i) that is inconsistent with the purposes of the Trust
set forth in Section 2.03 or (ii) that, to the actual knowledge of the Owner
Trustee or the Trust Agent, as applicable, would result in the Trust's becoming
taxable as a corporation for federal or state income tax purposes. The Owners
shall not direct the Owner Trustee or the Trust Agent to take action that would
violate the provisions of this Section.
ARTICLE VII
CONCERNING THE OWNER TRUSTEE AND THE TRUST AGENT
Section 7.01 Acceptance of Trusts and Duties. The Owner Trustee accepts
the trusts hereby created and agrees to perform its duties hereunder with
respect to such trusts but only upon the terms of this Agreement and the other
Basic Documents. The Trust Agent agrees to perform its duties hereunder upon the
terms of this Agreement and the other Basic Documents. Neither the Owner Trustee
nor the Trust Agent shall be liable except for the performance of such duties
and obligations as are specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the Owner
Trustee or the Trust Agent and, in the absence of bad faith on the part of the
Owner Trustee or the Trust Agent, as applicable, the Owner Trustee and the Trust
Agent may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or opinions
furnished to the Owner Trustee or the Trust Agent and conforming to the
requirements of this Agreement. Each of the Owner Trustee and the Trust Agent
agrees to disburse all monies actually received by it constituting part of the
Trust Estate upon the terms of this Agreement and the other Basic Documents.
Neither the Owner Trustee nor the Trust Agent shall be answerable or accountable
hereunder or under any other Basic Document under any circumstances, except (i)
for its own willful misconduct or negligence or (ii) in the case of the
inaccuracy of any representation or warranty contained in Section 7.03 expressly
made by the Owner Trustee or the Trust Agent, as the case may be. In particular,
but not by way of limitation (and subject to the exceptions set forth in the
preceding sentence):
(a) neither the Owner Trustee nor the Trust Agent shall be liable for
any error of judgment made by a Responsible Officer of the Owner Trustee or the
Trust Agent, respectively;
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(b) neither the Owner Trustee nor the Trust Agent shall be liable with
respect to any action taken or omitted to be taken by it in good faith in
accordance with this Agreement, the Basic Documents or the written direction of
the Administrator or any Owner;
(c) no provision of this Agreement or any other Basic Document shall
require the Owner Trustee or the Trust Agent to expend or risk funds or
otherwise incur any financial liability in the performance of any of its rights
or powers hereunder or under any other Basic Document if the Owner Trustee or
the Trust Agent shall have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or liability is not
reasonably assured or provided to it;
(d) under no circumstances shall the Owner Trustee or the Trust Agent be
liable for indebtedness evidenced by or arising under any of the Basic
Documents, including the principal of and interest on the Notes;
(e) neither the Owner Trustee nor the Trust Agent shall be responsible
for or in respect of the validity or sufficiency of this Agreement or for the
due execution hereof by the Depositor or for the form, character, genuineness,
sufficiency, value or validity of any of the Trust Estate, or for or in respect
of the validity or sufficiency of the Basic Documents, other than the
certificate of authentication on the Residual Interest Instruments, and neither
the Owner Trustee nor the Trust Agent shall assume or incur any liability, duty
or obligation to any Noteholder or to any Owner, other than as expressly
provided for herein or expressly agreed to in the other Basic Documents;
(f) neither the Owner Trustee nor the Trust Agent shall be liable for
the default or misconduct of the Administrator, the Depositor, the Insurer, the
Indenture Trustee or the Servicer under any of the Basic Documents or otherwise
and neither the Owner Trustee nor the Trust Agent shall have any obligation or
liability to perform the obligations of the Trust under this Agreement or the
other Basic Documents that are required to be performed by the Administrator
under the Administration Agreement, the Indenture Trustee under the Indenture or
the Servicer or the Depositor under the Sale and Servicing Agreement;
(g) neither the Owner Trustee nor the Trust Agent shall be under any
obligation to exercise any of the rights or powers vested in it by this
Agreement, or to institute, conduct or defend any litigation under this
Agreement or otherwise or in relation to this Agreement or any other Basic
Document, at the request, order or direction of the Owners, unless such Owners
have offered to the Owner Trustee or the Trust Agent, as applicable, security or
indemnity satisfactory to it against the costs, expenses and liabilities that
may be incurred by the Owner Trustee or the Trust Agent, as applicable, therein
or thereby; the right of the Owner Trustee and the Trust Agent to perform any
discretionary act enumerated in this Agreement or in any other Basic Document
shall not be construed as a duty, and neither the Owner Trustee nor the Trust
Agent shall be answerable for other than its negligence or willful misconduct in
the performance of any such act;
(h) anything in this Agreement to the contrary notwithstanding, in no
event shall the Owner Trustee or Trust Agent be liable for special, indirect or
consequential loss or damage of any kind whatsoever (including but not limited
to lost profit), even if the Owner Trustee or Trust
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Agent has been advised of the likelihood of such loss or damage and regardless
of the form of action;
(i) neither the Owner Trustee nor the Trust Agent shall be required to
take notice or be deemed to have notice or knowledge of any default, any Event
of Default or Servicer Default under any of the Basic Documents unless a
Responsible Officer of the Owner Trustee or the Trust Agent, respectively, shall
have received written notice thereof. In the absence of receipt of such notice,
the Owner Trustee and Trust Agent may conclusively assume that there is no
default, Event of Default or Servicer Default;
(j) [RESERVED].
(k) each of the Owner Trustee and the Trust Agent may rely and shall be
protected in acting or refraining from acting upon any resolution, opinion of
counsel, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal, bond or
other paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(l) each of the Owner Trustee and the Trust Agent may consult with
counsel and any advice or opinion of counsel shall be full and complete
authorization and protection in respect of any action taken or suffered or
omitted by it hereunder in good faith and in accordance with such advice or
opinion of counsel;
(m) neither the Owner Trustee nor the Trust Agent shall be bound to make
any investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
order, approval, bond or other paper or document, unless requested in writing to
do so by the Administrator or Owners; provided, however, that if the payment
within a reasonable time to the Owner Trustee or Trust Agent, as applicable, of
the costs, expenses or liabilities likely to be incurred by it in the making of
such investigation is, in the opinion of the Owner Trustee or Trust Agent, as
applicable, not reasonably assured to it by the security afforded to them by the
terms of this Agreement, the Owner Trustee or Trust Agent, as applicable, may
require reasonable indemnity against such cost, expense or liability as a
condition to taking any such action;
(n) neither the Owner Trustee nor the Trust Agent shall be required to
give any bond or surety in respect of the execution of the Trust created hereby
or the powers granted hereunder; and
(o) each of the Owner Trustee and Trust Agent may execute any of their
respective trusts or powers hereunder or perform any of their respective duties
hereunder either directly or by or through agents, attorneys or custodians, and
neither the Owner Trustee nor the Trust Agent shall be responsible for any
misconduct or negligence on the part of any such agent, attorney or custodian
appointed by the Owner Trustee or Trust Agent, as applicable, with due care.
Section 7.02 Furnishing of Documents. The Owner Trustee shall furnish to
the Trust Agent duplicates or copies of all reports, notices, requests, demands,
certificates, financial statements and any other instruments furnished to the
Owner Trustee under the Basic Documents. The Trust Agent shall furnish to the
Owners promptly upon receipt of a written
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request therefor, duplicates or copies of all reports, notices, requests,
demands, certificates, financial statements and any other instruments furnished
to the Trust Agent under the Basic Documents or furnished to the Trust Agent as
provided in the preceding sentence.
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, to its actual knowledge, any indenture,
mortgage, contract, agreement or instrument to which it is a party or by
which any of its properties may be bound or result in the creation or
imposition of any lien, charge or encumbrance on the Trust Estate
resulting from actions by or claims against the Owner Trustee
individually which are unrelated to this Agreement or the other Basic
Documents.
(b) The Trust Agent hereby represents and warrants to the Depositor and
the Owners:
(i) It is a banking corporation duly organized and validly
existing in good standing under the laws of the State of New York. It
has all requisite corporate power and authority to execute, deliver and
perform its obligations under this Agreement.
(ii) It has taken all corporate action necessary to authorize the
execution and delivery by it of this Agreement, and this Agreement will
be executed and delivered by one of its officers who is duly authorized
to execute and deliver this Agreement on its behalf.
(iii) Neither the execution nor the delivery by it of this
Agreement, nor the consummation by it of the transactions contemplated
hereby nor compliance by it with any of the terms or provisions hereof
will contravene any federal or New York law, governmental rule or
regulation governing the banking or trust powers of the Trust Agent or
any judgment or order binding on it, or constitute 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
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actions by or claims against the Trust Agent individually which are
unrelated to this Agreement or the other Basic Documents.
Section 7.04 Reliance; Advice of Counsel.
(a) Neither the Owner Trustee nor the Trust Agent shall incur liability
to anyone in acting upon any signature, instrument, notice, resolution, request,
consent, order, certificate, report, opinion, bond or other document or paper
believed by it to be genuine and believed by it to be signed by the proper party
or parties. The Owner Trustee and the Trust Agent may accept a certified copy of
a resolution of the board of directors or other governing body of any corporate
party as conclusive evidence that such resolution has been duly adopted by such
body and that the same is in full force and effect. As to any fact or matter the
method of determination of which is not specifically prescribed herein, the
Owner Trustee and the Trust Agent may for all purposes hereof rely on a
certificate, signed by the president or any vice president or by the treasurer
or other authorized officers of the relevant party, as to such fact or matter
and such certificate shall constitute full protection to the Owner Trustee or
the Trust Agent, as applicable, for any action taken or omitted to be taken by
it in good faith in reliance thereon.
(b) In the exercise or administration of the trusts hereunder and in the
performance of its duties and obligations under this Agreement or the other
Basic Documents, the Owner Trustee and the Trust Agent each (i) may act directly
or through its agents or attorneys pursuant to agreements entered into with any
of them, and neither the Owner Trustee nor the Trust Agent shall be liable for
the conduct or misconduct of such agents or attorneys if such agents or
attorneys shall have been selected by the Owner Trustee or the Trust Agent with
reasonable care, and (ii) may consult with counsel, accountants and other
skilled persons to be selected with reasonable care and employed by it at the
sole expense of the Depositor. Neither the Owner Trustee nor the Trust Agent
shall be liable for anything done, suffered or omitted in good faith by it in
accordance with the written opinion or advice of any such counsel, accountants
or other such persons and not contrary to this Agreement or any other Basic
Document.
Section 7.05 Not Acting in Individual Capacity. Except as otherwise
provided in this Article Seven, in accepting the trusts hereby created, Bankers
Trust (Delaware) acts solely as Owner Trustee hereunder and not in its
individual capacity, and The Chase Manhattan Bank acts solely as Trust Agent
hereunder and not in its individual capacity, and all Persons having any claim
against the Owner Trustee or the Trust Agent by reason of the transactions
contemplated by this Agreement or any other Basic Document shall look only to
the Trust Estate for payment or satisfaction thereof.
Section 7.06 Owner Trustee and Trust Agent Not Liable for Residual
Interest Instruments, Notes or Contracts. The recitals contained herein and in
the Residual Interest Instruments (other than the respective signatures of the
Owner Trustee and the Trust Agent, and, in the case of the Trust Agent, the
certificate of authentication on the Residual Interest Instruments) shall be
taken as the statements of the Depositor, and neither the Owner Trustee nor the
Trust Agent assumes responsibility for the correctness thereof. Neither the
Owner Trustee nor the Trust Agent makes any representations as to the validity
or sufficiency of this Agreement, any other Basic Document or the Residual
Interest Instruments (other than the respective signatures of the Owner Trustee
and the Trust Agent, and, in the case of the Trust Agent, the certificate of
authentication on the Residual Interest Instruments) or the Notes, or of any
Contract
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or related documents. The Owner Trustee and the Trust Agent shall at no time
have any responsibility or liability for or with respect to the legality,
validity and enforceability of any Contract, or the perfection and priority of
any security interest created by any Contract in any Financed Vehicle or the
maintenance of any such perfection and priority, or for or with respect to the
sufficiency of the Trust Estate or its ability to generate the payments to be
distributed to Owners under this Agreement or the Noteholders under the
Indenture, including, without limitation, the existence, condition and ownership
of any Financed Vehicle; the existence and enforceability of any insurance
thereon; the existence and contents of any Contract on any computer or other
record thereof; the validity of the assignment of any Contract to the Trust or
of any intervening assignment; the completeness of any Contract; the performance
or enforcement of any Contract; the compliance by the Depositor, the Insurer or
the Servicer with any warranty or representation made under any Basic Document
or in any related document or the accuracy of any such warranty or
representation; or any action of the Administrator, the Indenture Trustee or the
Servicer or any subservicer taken in the name of the Owner Trustee or the Trust
Agent.
Section 7.07 Owner Trustee and Trust Agent May Own Residual Interest
Instruments and Notes. The Owner Trustee and the Trust Agent, each in its
individual or any other capacity, may become the owner or pledgee of Residual
Interest Instruments or Notes and may deal with the Depositor, the Insurer, the
Administrator, the Indenture Trustee and the Servicer in banking transactions
with the same rights as it would have if it were not Owner Trustee or Trust
Agent, as the case may be.
ARTICLE VIII
COMPENSATION AND INDEMNIFICATION OF OWNER TRUSTEE AND TRUST AGENT
Section 8.01 Owner Trustee's and Trust Agent's Fees and Expenses. The
Owner Trustee and the Trust Agent shall receive as compensation for their
respective services hereunder such fees as have been separately agreed upon
before the date hereof between the Depositor and the Owner Trustee and the Trust
Agent, respectively, and the Owner Trustee and the Trust Agent shall be entitled
to be reimbursed by the Servicer for other reasonable expenses hereunder,
including the reasonable compensation, expenses and disbursements of such
agents, representatives, experts and counsel as the Owner Trustee or the Trust
Agent may employ in connection with the exercise and performance of its rights
and its duties hereunder.
Section 8.02 Indemnification. The Owner Trustee and the Trust Agent
shall be entitled to indemnification as provided in the Administration Agreement
and the Sale and Servicing Agreement.
Section 8.03 Payments to the Owner Trustee or Trust Agent. Any amounts
paid to the Owner Trustee or the Trust Agent pursuant to this Article shall be
deemed not to be a part of the Trust Estate immediately after such payment.
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ARTICLE IX
TERMINATION OF TRUST AGREEMENT
Section 9.01 Termination of Trust Agreement.
(a) This Agreement (other than Article Eight) and the Trust shall
terminate and be of no further force or effect upon the earlier of (i) final
distribution of all monies or other property or proceeds of the Trust Estate in
accordance with the terms of the Indenture, the Sale and Servicing Agreement and
Article Five and (ii) the expiration of 21 years from the death of the survivor
of the descendants of Joseph P. Kennedy, the late Ambassador of the United
States to the Court of St. James's, living on the date hereof. The bankruptcy,
liquidation, dissolution, death or incapacity of any Owner shall not (i) operate
to terminate this Agreement or the Trust, (ii) entitle such Owner's legal
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 Owners shall surrender their Residual Interest Instruments to
the Paying Agent for payment of the final distribution and cancellation, shall
be given by the Trust Agent by letter to Owners mailed within five Business Days
of receipt of notice of such termination from the Servicer given pursuant to
Section 8.01(b) of the Sale and Servicing Agreement, stating (i) the
Distribution Date upon or with respect to which final distribution in respect of
the Residual Interest Instruments shall be made upon presentation and surrender
of the Residual Interest Instruments 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
Residual Interest Instruments at the office of the Paying Agent therein
specified. The Trust Agent shall give such notice to the Certificate Registrar
(if other than the Trust Agent) and the Paying Agent (if other than the Trust
Agent) at the time such notice is given to Owners. Upon presentation and
surrender of the Residual Interest Instruments, the Paying Agent shall cause to
be distributed to Owners on a pro rata basis any amounts remaining in the Trust
upon the termination of this Agreement. In addition, the Trust Agent shall
notify the Rating Agencies upon the final distribution in respect of the
Residual Interest Instruments.
(d) In the event that all of the Owners shall not surrender their
Residual Interest Instruments for cancellation within six months after the date
specified in the above-mentioned written notice, the Trust Agent shall give a
second written notice to the remaining Owners to surrender their Residual
Interest Instruments for cancellation and receive the final distribution with
respect thereto. If within one year after the second notice all the Owners shall
not have been surrendered for cancellation, the Trust Agent may take appropriate
steps, or may appoint an agent to take appropriate steps, to contact the
remaining Owners concerning surrender of their Residual Interest Instruments,
and the cost thereof shall be paid out of the funds and other assets that shall
remain subject to this Agreement.
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(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.
ARTICLE X
SUCCESSOR OWNER TRUSTEES, ADDITIONAL OWNER TRUSTEE AND TRUST AGENT
Section 10.01 Eligibility Requirements for Owner Trustee. The Owner
Trustee shall at all times be a corporation satisfying the provisions of Section
3807(a) of the Business Trust Statute; authorized to exercise corporate trust
powers; having a combined capital and surplus of at least $50,000,000 and
subject to supervision or examination by federal or state authorities; and
having (or having a parent that has) a rating of at least Baa3 by Moody's and
A-1 by Standard & Poor's. If such corporation shall publish reports of condition
at least annually pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then for the purpose of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. In case at any time the Owner Trustee shall cease to be eligible
in accordance with the provisions of this Section, the Owner Trustee shall
resign immediately in the manner and with the effect specified in Section 10.02.
Section 10.02 Resignation or Removal of Owner Trustee. The Owner Trustee
may at any time resign and be discharged from the trusts hereby created by
giving written notice thereof to the Administrator and the Insurer. Upon
receiving such notice of resignation, the Administrator shall promptly appoint a
successor Owner Trustee by written instrument, in duplicate, one copy of which
instrument shall be delivered to the resigning Owner Trustee and one copy to the
successor Owner Trustee; provided that the Depositor and the Insurer shall have
received written confirmation from each Rating Agency that the proposed
appointment will not result in an increased capital charge to the Insurer by
either Rating Agency. If no successor Owner Trustee shall have been so appointed
and have accepted appointment within 30 days after the giving of such notice of
resignation, the resigning Owner Trustee or the Insurer may petition any court
of competent jurisdiction for the appointment of a successor Owner Trustee.
If at any time the Owner Trustee shall cease to be eligible in
accordance with the provisions of Section 10.01 and shall fail to resign after
written request therefor by the Administrator or the Insurer, or if at any time
the Owner Trustee shall be legally unable to act, or shall be adjudged bankrupt
or insolvent, or a receiver of the Owner Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Owner
Trustee or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation, or if at any time the Owner Trustee shall have
breached any representation or warranty contained in Section 7.03(a)(iii)
(without regard to any knowledge qualification), then the Administrator or the
Insurer may remove the Owner Trustee. If the Owner Trustee shall be removed
under the authority of the immediately preceding sentence, the Administrator
shall promptly appoint a successor Owner Trustee acceptable to the Insurer by
written instrument, in duplicate, one copy of which
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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.
Section 10.03 Successor Owner Trustee. Any successor Owner Trustee
appointed pursuant to Section 10.02 shall execute, acknowledge and deliver to
the Administrator, the Insurer and to its predecessor Owner Trustee an
instrument accepting such appointment under this Agreement, and thereupon the
resignation or removal of the predecessor Owner Trustee shall become effective,
and such successor Owner Trustee, without any further act, deed or conveyance,
shall become fully vested with all the rights, powers, duties and obligations of
its predecessor under this Agreement, with like effect as if originally named as
Owner Trustee. The predecessor Owner Trustee shall upon payment of its fees and
expenses deliver to the successor Owner Trustee all documents and statements and
monies held by it under this Agreement; and the Administrator and the
predecessor Owner Trustee shall execute and deliver such instruments and do such
other things as may reasonably be required for fully and certainly vesting and
confirming in the successor Owner Trustee all such rights, powers, duties and
obligations.
No successor Owner Trustee shall accept appointment as provided in this
Section unless at the time of such acceptance such successor Owner Trustee shall
be eligible pursuant to Section 10.01.
Upon acceptance of appointment by a successor Owner Trustee pursuant to
this Section, the Administrator shall mail notice thereof to all Owners, the
Insurer, the Depositor, the Servicer, the Indenture Trustee, the Noteholders and
each Rating Agency. If the Administrator shall fail to mail such notice within
ten days after acceptance of such appointment by the successor Owner Trustee,
the successor Owner Trustee shall cause such notice to be mailed at the expense
of the Administrator.
Section 10.04 Merger or Consolidation of Owner Trustee. Any corporation
into which the Owner Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Owner Trustee shall be a party, or any corporation
succeeding to all or substantially all of the corporate trust business of the
Owner Trustee, shall be the successor of the Owner Trustee hereunder, without
the execution or filing of any instrument or any further act on the part of any
of the parties hereto, anything herein to the contrary notwithstanding;
provided, that such corporation shall be eligible pursuant to Section 10.01 and,
provided, further, that the Owner Trustee shall mail notice of such 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
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the Administrator, the Insurer and Owner Trustee to act as co-trustee, jointly
with the Owner Trustee, or as separate trustee or separate trustees, of all or
any part of the Trust Estate, and to vest in such Person, in such capacity, such
title to the Trust or any part thereof and, subject to the other provisions of
this Section, such powers, duties, obligations, rights and trusts as the
Administrator and the Owner Trustee may consider necessary or desirable. If the
Administrator shall not have joined in such appointment within 15 days after the
receipt by it of a request to do so, the Owner Trustee and the Insurer shall
have the power to make such appointment. No co- trustee or separate trustee
under this Agreement shall be required to meet the terms of eligibility as a
successor Owner Trustee, provided that such co-trustee or successor trustee must
be acceptable to the Rating Agencies and no notice of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 10.03.
Section 10.06 Appointment of Trust Agent. Each separate trustee and
co-trustee shall, to the extent permitted by law, be appointed and act subject
to the following provisions and conditions:
(a) all rights, powers, duties and obligations conferred or imposed upon
the Owner Trustee shall be conferred upon and exercised or performed by the
Owner Trustee and such separate trustee or co-trustee jointly (it being
understood that such separate trustee or co-trustee is not authorized to act
separately without the Owner Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed, the Owner Trustee shall be incompetent or unqualified to
perform such act or acts, in which event such rights, powers, duties and
obligations (including the holding of title to the Trust Estate or any portion
thereof in any such jurisdiction) shall be exercised and performed singly by
such separate trustee or co-trustee, but solely at the direction of the Owner
Trustee;
(b) no trustee under this Agreement shall be personally liable by reason
of any act or omission of any other trustee under this Agreement; and
(c) the Administrator, the Insurer and the Owner Trustee acting jointly
may at any time accept the resignation of or remove any separate trustee or
co-trustee.
Any notice, request or other writing given to the Owner Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Owner Trustee or
separately, as may be provided therein, subject to all the provisions of this
Agreement, specifically including every provision of this Agreement relating to
the conduct of, affecting the liability of or affording protection to, the Owner
Trustee. Each such instrument shall be filed with the Owner Trustee and a copy
thereof given to the Administrator and the Insurer.
Any separate trustee or co-trustee may at any time appoint the Owner
Trustee as its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Owner Trustee, to the
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extent permitted by law, without the appointment of a new or successor
co-trustee or separate trustee.
The Owner Trustee on behalf of the Trust hereby appoints The Chase
Manhattan Bank as Trust Agent for the purpose of making the distributions from
the Payment Account to the persons entitled thereto pursuant to Section 4.03 of
the Sale and Servicing Agreement and for purposes of performing the other duties
specified to be performed by the Trust Agent under this Agreement and the other
Basic Documents. The Owner Trustee and the Trust Agent each agree that upon the
occurrence and continuation of an Insurer Default, the Trust Agent shall resign
and the Owner Trustee shall assume all rights, duties and obligations of the
Trust Agent under the Sale and Servicing Agreement and this Agreement, including
without limitation, the obligations of the Trust Agent pursuant to Sections
3.02, 3.03, 3.04, 3.05, 3.07, 3.08, 3.09, 3.10 and 5.01 hereof. The Trust Agent,
in its capacity as Trust Agent, shall not have any rights, duties or obligations
except as expressly provided in this Agreement and the Sale and Servicing
Agreement.
ARTICLE XI
MISCELLANEOUS
Section 11.01 Supplements and Amendments.
(a) This Agreement may be amended by the Depositor, the Owner Trustee
and the Trust Agent, with the prior written consent of the Insurer, but without
the consent of any of the Noteholders or the Owners, to cure any ambiguity, to
correct or supplement any provisions herein which may be inconsistent with any
of the provisions herein or make any other provisions with respect to matters or
questions arising hereunder that shall not be inconsistent with the provisions
of this Agreement; provided, however, that (i) any such action shall not
materially and adversely affect the interests of any Noteholder or Owner; (ii)
any such action shall be deemed not to materially and adversely affect the
interest of any Noteholder 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 by such
Rating Agency or (B) an opinion of counsel to such effect; and (iii) any such
action shall be deemed not to materially and adversely affect the interest of
any Owner if the Person requesting such amendment obtains an opinion of counsel
to such effect, or Owners representing 100% of the Percentage Interests consent
to such amendment.
(b) Subject to Section 11.14, this Agreement may also be amended from
time to time with the prior written consent of the Insurer by the Depositor, the
Owner Trustee and the Trust Agent, with the consent of Noteholders representing
not less than 51% of the Outstanding Amount acting together as a single class
(which consent of any Holder of a Note 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 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 Owners, with the consent of Owners
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;
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<PAGE> 34
provided, however, that no such amendment may (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of, collections of
payments on Contracts or distributions that shall be required to be made for the
benefit of the Noteholders or Owners or (ii) reduce the aforesaid percentage of
the Outstanding Amount of the Notes or Percentage Interest of the Owners
required to consent to any such amendment, without the consent of the Owners of
all outstanding Notes and Residual Interest Instruments.
(c) Prior to the execution of any such amendment or consent, the Owner
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to the Indenture Trustee, the Insurer,
the Administrator and each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Trust Agent shall furnish written notification of the substance of such
amendment or consent to each Owner. It shall not be necessary for the consent of
Owners, 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 Trust is a party and for which
amendment the Owner Trustee's consent is sought, each of the Owner Trustee and
the Trust Agent shall be entitled to receive and conclusively rely upon an
Opinion of Counsel to the effect that such amendment is authorized or permitted
by the Basic Documents and that all conditions precedent in the Basic Documents
for the execution and delivery thereof by the Trust, the Owner Trustee or the
Trust Agent, as the case may be, have been satisfied. The Owner Trustee and the
Trust Agent may, but shall not be obligated to, enter into any such amendment
that affects the Owner Trustee's or the Trust Agent's own rights, duties or
immunities under this Agreement or otherwise.
Section 11.02 [RESERVED].
Section 11.03 Limitations on Rights of Others. Except for Section 2.07,
the provisions of this Agreement are solely for the benefit of the Owner
Trustee, the Trust Agent, the Depositor, the Insurer, the Owners, the
Administrator and, to the extent expressly provided herein, the Indenture
Trustee and the Noteholders, and nothing in this Agreement (other than Section
2.07), whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Trust Estate or
under or in respect of this Agreement or any covenants, conditions or provisions
contained herein.
Section 11.04 Notices. All demands, notices and communications under
this Agreement shall be in writing personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt in the case of (a) the Owner Trustee, at the Owner Trustee Corporate
Trust Office; (b) the Depositor, at Onyx Acceptance Financial Corporation, 27051
Towne Centre Drive, Suite 200, Foothill Ranch, California 92610;
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<PAGE> 35
(c) the Insurer, at MBIA Insurance Corporation, 113 King Street, Armonk, New
York 10504; (d) the Trust Agent, at The Chase Manhattan Bank, Capital Markets
Fiduciary Services, 450 West 33rd Street, 14th Floor, New York, New York
10001-2697; (e) the Servicer or the Administrator, at Onyx Acceptance
Corporation, 27051 Towne Centre Drive, Suite 100, Foothill Ranch, California
92610 or (f) 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 Residual
Interest Instruments or the rights of the Owners thereof.
Section 11.06 Counterparts. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall
constitute but one and the same instrument.
Section 11.07 Successors and Assigns. All covenants and agreements
contained herein shall be binding upon, and inure to the benefit of, each of the
Depositor, the Insurer, the Owner Trustee, the Trust Agent and their respective
successors and permitted assigns and each Owner and its successors and permitted
assigns, all as herein provided. Any request, notice, direction, consent, waiver
or other instrument or action by an Owner shall bind the successors and assigns
of such Owner.
Section 11.08 No Petition.
(a) The Depositor will not at any time institute against the Trust any
bankruptcy proceedings under any United States federal or state bankruptcy or
similar law in connection with any obligations relating to the Residual Interest
Instruments, the Notes, this Agreement or any of the other Basic Documents.
(b) Each of the Owner Trustee and the Trust Agent, by entering into this
Agreement, each Owner, by accepting a Residual Interest Instrument, 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 Residual Interest Instruments, the Notes,
this Agreement or any of the other Basic Documents.
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<PAGE> 36
Section 11.09 No Recourse. Each Owner by accepting a Residual Interest
Instrument acknowledges that such Owner's Residual Interest Instruments
represent a beneficial interest in the Trust only and does not represent an
interest in or obligation of the Depositor, the Servicer, the Seller, the
Administrator, the Owner Trustee, the Trust Agent, the Indenture Trustee or any
of their respective Affiliates and no recourse may be had against such parties
or their assets, except as may be expressly set forth or contemplated in this
Agreement, the Residual Interest Instruments or the other Basic Documents.
Section 11.10 Residual Interest Instruments 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 Residual Interest
Instruments 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 Residual Interest Instruments 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 Servicer 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 or Owners are entitled to exercise pursuant to this Agreement,
without any consent of such Noteholders or Owners; provided, however, that
without the consent of each Noteholder or Owner 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 or Residual
Interest Instrument, (ii) adversely affect in any material respect the interests
of the Owners of any Notes or Residual Interest Instruments, or (iii) alter the
rights of any such Owner to consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, in the
event an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Depositor, the Owner Trustee or the
Trust Agent pursuant to the terms of this Agreement, nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Depositor, the Owner Trustee, the Trust
Agent or the Owners of the Notes or the Residual Interest Instruments; provided,
that the consent of the Insurer shall be required at all times with respect to
any amendment of this Agreement.
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<PAGE> 37
Section 11.15 Fiduciary Duties. The duties and responsibilities of the
Owner Trustee and the Trust Agent shall be limited to those expressly provided
for in this Agreement. The parties hereto agree that except for the purpose of
the foregoing sentence, neither the Owner Trustee nor the Trust Agent shall have
management responsibilities or owe any fiduciary duties to the Insurer.
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<PAGE> 38
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/ MICHAEL A. KRAHELSKI
------------------------------------
Name: Michael A. Krahelski
Title: Senior Vice President and
Secretary
BANKERS TRUST (DELAWARE),
as Owner Trustee
By: /s/ M. LISA WILKENS
------------------------------------
Name: M. Lisa Wilkens
Title: Assistant Vice President
THE CHASE MANHATTAN BANK,
as Trust Agent
By: /s/ KRISTEN DRISCOLL
------------------------------------
Name: Kristen Driscoll
Title: Trust Officer
<PAGE> 39
EXHIBIT A
FORM OF
CERTIFICATE OF TRUST OF
ONYX ACCEPTANCE OWNER TRUST 2000-B
This Certificate of Trust of Onyx Acceptance Owner Trust 2000-B (the
"TRUST") is being duly executed and filed by the undersigned, as trustees, to
form a business trust under the Delaware Business Trust Act (12 Del. Code,
Section 3801 et seq. (the "ACT")).
1. Name. The name of the business trust formed hereby is Onyx Acceptance
Owner Trust 2000-B.
2. Delaware Trustee. The name and business address of the trustee of the
Trust in the State of Delaware is Bankers Trust Company (Delaware), E.A. Delle
Donne Corporate Center, 1011 Centre Road, Suite 200, Wilmington, Delaware
19805-1266, Attention: Corporate Trust Administration.
3. Effective Date. This Certificate of Trust shall be effective April
__, 2000.
IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
of Trust in accordance with Section 3811(a)(1) of the Act.
BANKERS TRUST COMPANY (DELAWARE),
not in its individual capacity but solely
as Owner Trustee
By:
-------------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE> 40
EXHIBIT B
FORM OF RESIDUAL INTEREST INSTRUMENT
[Begins on Next Page]
<PAGE> 1
EXHIBIT 10.2
SALE AND SERVICING AGREEMENT
between
ONYX ACCEPTANCE OWNER TRUST 2000-B
as Issuer,
ONYX ACCEPTANCE FINANCIAL CORPORATION
as Seller,
ONYX ACCEPTANCE CORPORATION
as Servicer
and
THE CHASE MANHATTAN BANK
as Indenture Trustee and as Trust Agent
Dated as of April 1, 2000
<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........................................................ 20
SECTION 1.03. SECTION REFERENCES.................................................... 20
SECTION 1.04. CALCULATIONS.......................................................... 20
SECTION 1.05. ACCOUNTING TERMS...................................................... 20
ARTICLE II - CONVEYANCE OF CONTRACTS; REPRESENTATIONS AND WARRANTIES OF THE SELLER.......... 21
SECTION 2.01. CONVEYANCE OF CONTRACTS............................................... 21
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER.......................... 26
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS....................................... 37
SECTION 2.04. CUSTODY OF CONTRACT FILES............................................. 38
SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS.......................... 39
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT........................................ 41
SECTION 2.07. INDEMNIFICATION....................................................... 41
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION...................................... 42
SECTION 2.09. NONPETITION COVENANT.................................................. 42
SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT THE CLOSING
DATE.................................................................. 42
ARTICLE III - ADMINISTRATION AND SERVICING OF CONTRACTS..................................... 43
SECTION 3.01. DUTIES OF SERVICER.................................................... 43
SECTION 3.02. COLLECTION OF CONTRACT PAYMENTS....................................... 45
SECTION 3.03. REALIZATION UPON CONTRACTS............................................ 46
SECTION 3.04. INSURANCE............................................................. 46
SECTION 3.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES................ 46
SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER................. 47
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH BY SERVICER......................... 49
SECTION 3.08. SERVICING COMPENSATION................................................ 49
SECTION 3.09. REPORTING BY THE SERVICER............................................. 50
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE..................................... 53
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT............... 53
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
CONTRACTS............................................................. 54
SECTION 3.13. FIDELITY BOND......................................................... 54
SECTION 3.14. INDEMNIFICATION; THIRD PARTY CLAIMS................................... 54
SECTION 3.15. REPORTS TO NOTEHOLDERS AND THE RATING AGENCIES........................ 54
SECTION 3.16. ACCESS TO LIST OF NOTEHOLDERS' NAMES AND ADDRESSES.................... 55
ARTICLE IV - DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO NOTEHOLDERS....................... 55
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS....................................... 55
SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION UPON
POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT.................... 58
</TABLE>
i
<PAGE> 3
TABLE OF CONTENTS (CONT'D.)
<TABLE>
<CAPTION>
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<S> <C>
SECTION 4.03. DISTRIBUTIONS......................................................... 59
SECTION 4.04. SPREAD ACCOUNT........................................................ 60
SECTION 4.05. STATEMENTS TO NOTEHOLDERS............................................. 62
SECTION 4.06. CAPITALIZED INTEREST ACCOUNT.......................................... 64
SECTION 4.07. PREFUNDING ACCOUNT.................................................... 65
SECTION 4.08. REQUIREMENTS RELATING TO PREFUNDING ACCOUNT........................... 66
ARTICLE V - THE SELLER...................................................................... 66
SECTION 5.01. LIABILITY OF SELLER; INDEMNITIES...................................... 66
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE OBLIGATIONS OF,
SELLER; CERTAIN LIMITATIONS........................................... 66
SECTION 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS.......................... 67
SECTION 5.04. SELLER NOT TO RESIGN.................................................. 67
SECTION 5.05. SELLER MAY OWN NOTES.................................................. 67
ARTICLE VI - THE SERVICER................................................................... 67
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.................................... 67
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER....................... 69
SECTION 6.03. PERFORMANCE OF OBLIGATIONS............................................ 69
SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT.................................... 69
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS........................ 70
ARTICLE VII - DEFAULT....................................................................... 71
SECTION 7.01. EVENTS OF DEFAULT..................................................... 71
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.............................. 73
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND RESIDUAL INTERESTHOLDERS.............. 73
SECTION 7.04. WAIVER OF PAST DEFAULTS............................................... 74
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS........................... 74
ARTICLE VIII - TERMINATION.................................................................. 74
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND DISCHARGE
OF THE INDENTURE...................................................... 74
SECTION 8.02. TRANSFER TO THE INSURER............................................... 75
ARTICLE IX - MISCELLANEOUS.................................................................. 75
SECTION 9.01. AMENDMENT............................................................. 76
SECTION 9.02. PROTECTION OF TITLE TO TRUST.......................................... 77
SECTION 9.03. GOVERNING LAW......................................................... 79
SECTION 9.04. NOTICES............................................................... 79
SECTION 9.05. SEVERABILITY OF PROVISIONS............................................ 80
SECTION 9.06. ASSIGNMENT............................................................ 80
SECTION 9.07. THIRD PARTY BENEFICIARIES............................................. 80
SECTION 9.08. CERTAIN MATTERS RELATING TO THE INSURER............................... 80
SECTION 9.09. HEADINGS.............................................................. 81
SECTION 9.10. ASSIGNMENT BY ISSUER.................................................. 81
</TABLE>
ii
<PAGE> 4
TABLE OF CONTENTS (CONT'D.)
<TABLE>
<CAPTION>
PAGE
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<S> <C>
SECTION 9.11. LIMITATION OF LIABILITY OF CERTAIN PARTIES............................ 81
</TABLE>
EXHIBITS
<TABLE>
<S> <C>
Schedule I-A - Schedule of Initial Contracts
Schedule I-B - Schedule of Subsequent Contracts
Schedule II - Location and Account Numbers of Trust Accounts
Exhibit A - Form of Appointment of Custodian
Exhibit B - Form of Policy
Exhibit C-1 - Form of Transfer Certificate
Exhibit C-2 - Form of Prefunding Closing Date Certificate
</TABLE>
iii
<PAGE> 5
This SALE AND SERVICING AGREEMENT, dated as of April 1, 2000 (this
"AGREEMENT"), is between Onyx Acceptance Owner Trust 2000-B (the "ISSUER" or the
"TRUST"), Onyx Acceptance Financial Corporation (the "SELLER"), Onyx Acceptance
Corporation ("ONYX" or, in its capacity as servicer, the "SERVICER" or, in its
capacity as custodian, the "CUSTODIAN") and The Chase Manhattan Bank, as the
Indenture Trustee on behalf of the Noteholders (in such capacity, the "INDENTURE
TRUSTEE"), and as the Trust Agent on behalf of the Owner Trustee (in such
capacity, the "TRUST AGENT").
In consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
"ACCELERATED PRINCIPAL COMMENCEMENT DATE" means the first Distribution
Date on which (i) the Pool Balance as of such Distribution Date is equal to or
less than 15% of the Original Pool Balance and (ii) the amount of cash on
deposit in the Spread Account together with the other components of the Spread
Account is equal to or greater than the Spread Account Maximum (after giving
effect to the distribution pursuant to Section 4.03(viii) 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, the amount which would remain on deposit in the Payment Account for such
Distribution Date after giving effect to distributions pursuant to Section
4.03(i) through (viii) 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 be included in the Note Principal
Distributable Amount until all of the Notes have been paid in full.
"ACTUARIAL CONTRACT" means a Contract pursuant to which the allocation
of each payment between interest and principal is calculated using the Actuarial
Method.
"ACTUARIAL METHOD" means the method of allocating principal and interest
payments on a Contract whereby amortization of the Contract is determined over a
series of fixed level payment monthly installments, and each monthly
installment, including the monthly installment representing the final payment on
the Contract, consists of an amount of interest equal to 1/12 of the APR of the
Contract multiplied by the unpaid principal balance of the Contract, and an
amount of principal equal to the remainder of the monthly payment.
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes of this definition, "control" when used with respect to any specified
Person means the power to direct the management and
<PAGE> 6
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" or
"controlled" have meanings correlative to the foregoing.
"AMOUNT FINANCED" means, with respect to a Contract, the aggregate
amount advanced under such Contract toward the purchase price of the related
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, extended service or warranty contracts and
other items customarily financed as part of retail automobile installment sales
contracts.
"APPOINTMENT OF CUSTODIAN" means the letter agreement between the
Indenture Trustee, the Insurer and the Servicer substantially in the form
attached hereto as Exhibit A.
"APR" of a Contract means the annual percentage rate used to determine
the total interest expected to be charged over the term of a Contract as of its
inception, as shown on such Contract.
"BASIC DOCUMENTS" shall have the meaning specified in the Indenture.
"BLANKET INSURANCE POLICY" means the Creditors Comprehensive Single
Interest Insurance Policy covering losses with respect to the Contracts, which
policy has been issued by Great American Insurance Company and the Seller's
rights in which, 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.
"CAPITALIZED INTEREST ACCOUNT" means the account designated as such and
established pursuant to Section 4.01 and maintained pursuant to Section 4.06.
"CAPITALIZED INTEREST AMOUNT" means, with respect to each Distribution
Date following a Collection Period during which amounts are on deposit in the
Prefunding Account, an amount equal to the greater of:
(a) the sum of the Note Interest Distributable Amount for such
Distribution Date, plus the sum of the fees payable to the Owner
Trustee, the Indenture Trustee and the Trust Agent and the premium
payable to the Insurer for such Distribution Date, in each case,
allocable to the balance in the Prefunding Account at the beginning of
the related Collection Period, on a pro rata basis, minus the earnings
received by the Indenture Trustee on behalf of the Trust during the
related Collection Period from investment of the funds on deposit in the
Prefunding Account; and
(b) the amount, if any, by which (i) the sum of the Servicing
Fees, the Note Interest Distributable Amount, the fees payable to the
Owner Trustee, the Indenture Trustee and the Trust Agent and the premium
payable to the Insurer for such Distribution Date exceeds (ii)
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Net Collections plus the earnings received by the Indenture Trustee on
behalf of the Trust during the related Collection Period from investment
of the funds on deposit in the Prefunding Account.
"CERTIFICATE REGISTER" 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 May 2001.
"CLASS A-1 NOTE" means any Class A-1 Note in the form attached to the
Indenture as Exhibit B.
"CLASS A-1 RATE" means 6.4125% per annum.
"CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in April 2003.
"CLASS A-2 NOTE" means any Class A-2 Note in the form attached to the
Indenture as Exhibit C.
"CLASS A-2 RATE" means 7.02% per annum.
"CLASS A-3 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in August 2004.
"CLASS A-3 NOTE" means any Class A-3 Note in the form attached to the
Indenture as Exhibit D.
"CLASS A-3 RATE" means 7.29% per annum.
"CLASS A-4 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in August 2005.
"CLASS A-4 NOTE" means any Class A-4 Note in the form attached to the
Indenture as Exhibit E.
"CLASS A-4 RATE" means 7.38% per annum.
"CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes.
"CLASS B FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution Date
occurring in March 2007.
"CLASS B NOTE" means any Class B Note in the form attached to the
Indenture as Exhibit F.
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"CLASS B RATE" means 7.56% per annum.
"CLEARING ACCOUNT" means Account No. 4159359173 in the name of the
Seller maintained at Wells Fargo Bank, N.A.
"CLOSING DATE" means April 28, 2000.
"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 related 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) originated by a Dealer and assigned to Onyx in
accordance with the assignment provisions set forth therein, (ii) subsequently
conveyed by Onyx to the Seller pursuant to the Purchase Agreement and (iii)
subsequently conveyed by the Seller to the Issuer pursuant to this Agreement. As
used herein, "Contracts" means the Initial Contracts, the Subsequent Contracts
and the Prefunded Contracts.
"CONTRACT DOCUMENTS" means, with respect to each Contract, (a) the
Contract and the original credit application fully executed by the Obligor
thereunder; (b) either (i) the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof (or, with respect to certain of the
Financed Vehicles registered in the State of California, evidence of the
electronic Title Document), together with evidence of perfection of the security
interest in the related Financed Vehicle granted by such Contract, as determined
by the Servicer to be permitted or required to perfect such security interest
under the laws of the applicable jurisdiction, or (ii) written evidence that the
Title Document for such Financed Vehicle showing 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.
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"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, 14th Floor, New York, New York 10001-2697,
Attention: Capital Market Fiduciary Services; or at such other address as the
Indenture Trustee may designate from time to time by notice to the Noteholders,
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 Onyx until such time, if any, a Successor Custodian is
appointed and thereafter means such Successor Custodian.
"CUT-OFF DATE" means, as applicable, (i) the Initial Cut-Off Date, with
respect to the Initial Contracts, (ii) the Subsequent Cut-Off Date, with respect
to the Subsequent Contracts or (iii) the Prefunding Cut-Off Date with respect to
the Prefunded Contracts.
"DEALER" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract.
"DEFAULT" means any occurrence which with the giving of notice or the
lapse of time or both would become a Servicer Default.
"DEFAULTED CONTRACT" means, with respect to any Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in the
amount of at least two monthly installments of Monthly P&I or (ii) with respect
to which the related Financed Vehicle has been repossessed or repossession
efforts with respect to the related Financed Vehicle have been commenced.
"DEFICIENCY AMOUNT" means as of any Distribution Date, the amount by
which (i) the sum of the amounts set forth in Section 4.03(i) though (iv) with
respect to such Distribution Date exceeds (ii) the amount of Net Collections
(plus amounts transferred from the Prefunding Account representing earnings from
investments therein and amounts transferred from the Capitalized Interest
Account, in each case to the Payment Account) available with respect to such
Distribution Date and the amount on deposit in the Spread Account as of such
Distribution Date.
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"DEFICIENCY NOTICE" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 4.02(c) by the Servicer to the Indenture
Trustee, with a copy to the Insurer and the Trust Agent.
"DEFINITIVE NOTES" means Notes issued in fully registered, certificated
form to Noteholders.
"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 May 15,
2000.
"DISTRIBUTION DATE STATEMENT" shall have the meaning specified in
Section 3.09(a).
"DUE DATE" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.
"ELIGIBLE ACCOUNT" means (i) a trust account that is either (a)
maintained by the Indenture Trustee, (b) maintained with a depository
institution or trust company the commercial paper or other short-term debt
obligations of which have credit ratings from Standard & Poor's at least equal
to "A-1" and from Moody's equal to "P-1," which account is fully insured up to
applicable limits by the Federal Deposit Insurance Corporation or (c) maintained
with a depository institution acceptable to the Insurer, as evidenced by a
letter from the Insurer to that effect or (ii) a general ledger account or
deposit account at a depository institution acceptable to the Insurer, as
evidenced by a letter from the Insurer to that effect.
"ELIGIBLE INVESTMENTS" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America or any agency
or instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America and, to the
extent, at the time of investment, acceptable to the Insurer and each Rating
Agency for securities having a rating equivalent to the rating of the Notes at
the Closing Date, the direct obligations of, or obligations fully guaranteed by,
the Federal Home Loan Mortgage Corporation and the Federal National Mortgage
Association;
(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;
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<PAGE> 11
(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), a copy of which shall
be provided by the Indenture Trustee to the Rating Agencies.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"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.
"FISCAL AGENT" shall have the meaning set forth in the Policy.
"FULL PREPAYMENT" means any of the following: (a) with respect to any
Contract other than a Contract referred to in clause (ii), (iii) or (iv) of the
definition of the term "Liquidated Contract", payment by or on behalf of the
Obligor of the total amount required by the terms of such Contract to be paid
thereunder, which amount shall be at least equal to the sum of (i) 100% of the
Principal Balance of such Contract, (ii) interest accrued thereon to the date of
such payment at the APR; and (iii) any overdue amounts; or (b) with respect to
any Contract, payment by the Seller to the Indenture Trustee of the Purchase
Amount of such Contract in connection with the purchase of such Contract
pursuant to Section 2.03, or payment by the Servicer of the Purchase Amount of
such Contract in connection with the purchase of such Contract pursuant to
Section 3.07 or the purchase of all Contracts pursuant to Section 8.01.
"FUNDED CONTRACTS" means all Initial Contracts and Subsequent Contracts.
"FUNDING PERIOD" shall have the meaning specified in Section 4.08(a).
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"HIGHEST PRIORITY CLASS" means for so long as the principal amount of
the Class A Notes has not been reduced to zero, the Class A Notes, acting
together as a single Class, and thereafter, the Class B Notes.
"HOLDER" or "NOTEHOLDER" means, with respect to a 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 EVENT OF DEFAULT" means an Event of Default as set forth in
Section 5.01 of the Indenture.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, not in its
individual capacity but solely as the Indenture Trustee under the Indenture, its
successors in interest and any successor Indenture Trustee under the Indenture.
"INITIAL CAPITALIZED INTEREST AMOUNT" means $1,345,600.
"INITIAL CONTRACTS" means the Contracts designated as such in Schedule
I-A attached hereto.
"INITIAL CUT-OFF DATE" means April 1, 2000.
"INSOLVENCY PROCEEDING" shall have the meaning specified in Section
7.05.
"INSURANCE AGREEMENT" means the Insurance and Reimbursement Agreement,
to be dated as of the Closing Date, among the Insurer, the Seller, Onyx and the
Servicer, as amended, modified or restated from time to time.
"INSURER" means MBIA Insurance Corporation or its successors in
interest.
"INSURER DEFAULT" means the occurrence and continuance of any of the
following:
(i) the Insurer shall have failed to make a payment required to
be made under the Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
(b) made a general assignment for the benefit of its creditors or (c)
had an order for relief entered against it under the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization
which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order,
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<PAGE> 13
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; in the case
of the first Distribution Date, the Interest Accrual Period will constitute 17
days.
"INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate, the Class A-4 Rate or the Class B Rate, as the case may be.
"ISSUER" means Onyx Acceptance Owner Trust 2000-B and its successors.
"LIEN" means a security interest, lien, charge, pledge, equity or
encumbrance of any kind, other than tax liens, mechanics' liens and any liens
that attach to the respective Contract by operation of law.
"LIQUIDATED CONTRACT" means a Contract that (i) is the subject of a Full
Prepayment; (ii) is a Defaulted Contract with respect to which Liquidation
Proceeds constituting, in the Servicer's reasonable judgment, the final amounts
recoverable have been received and deposited in the Collection Account; (iii) is
paid in full on or after its Maturity Date; or (iv) has been a Defaulted
Contract for four or more Collection Periods and as to which Liquidation
Proceeds have not been deposited in the Collection Account; provided, however,
that in any event a Contract that is delinquent in the amount of five monthly
installments of Monthly P&I at the end of a Collection Period shall be deemed to
be a Liquidated Contract and shall be deemed to have a Principal Balance of
zero.
"LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Servicer in connection with the realization of the full amounts due under any
Defaulted Contract (including the attempted liquidation of a Contract which is
brought current and is no longer in default during such attempted liquidation)
and the sale of any property acquired in respect thereof which are not
recoverable as proceeds paid by any insurer under a comprehensive and collision
insurance policy related to the Contract. Liquidation Expenses shall not include
any late fees or other administrative fees and expenses or similar charges
collected with respect to a Contract.
"LIQUIDATION PROCEEDS" means amounts received by the Servicer (before
reimbursement for Liquidation Expenses) in connection with the realization of
the full amounts due and to become due under any Defaulted Contract and the sale
of any property acquired in respect thereof.
"MANDATORY PARTIAL REDEMPTION AMOUNT" means the balance (excluding
investment earnings) remaining on deposit in the Prefunding Account on the
Mandatory Partial Redemption Date after giving effect to the sale to the Trust
of all Prefunded Contracts sold to the Trust during the Funding Period,
including any such acquisition and conveyance on the date on which the Funding
Period ends.
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<PAGE> 14
"MANDATORY PARTIAL REDEMPTION DATE" means the Distribution Date on which
the Notes are partially prepaid pursuant to Section 4.07, which Distribution
Date shall be the Distribution Date immediately succeeding the date on which the
Funding Period ends in the event that any amount remains on deposit in the
Prefunding Account after giving effect to the sale to the Trust of all Prefunded
Contracts sold to the Trust during the Funding Period, including any acquisition
and conveyance on the date on which the Funding Period ends.
"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.
"MAXIMUM CAPITALIZED INTEREST AMOUNT" means, with respect to each
Distribution Date following a Collection Period during which amounts are on
deposit in the Prefunding Account, an amount equal to the sum of the Note
Interest Distributable Amount (assuming no further reductions in principal on
the Notes) for each remaining Distribution Date during the Funding Period and
for the Distribution Date immediately following the Funding Period, plus the sum
of the fees payable to the Owner Trustee, the Indenture Trustee and the Trust
Agent and the premium payable to the Insurer for each such Distribution Date, in
each case, allocable to the balance in the Prefunding Account on the opening of
business on the first day of the beginning of the month in which the Maximum
Capitalized Interest Amount is being calculated for the Distribution Date in
that same month, on a pro rata basis, minus the earnings to be received by the
Indenture Trustee on behalf of the Trust through July 26, 2000 from investment
of the funds on deposit in the Prefunding Account, assuming that no additional
Prefunded Contracts are conveyed to the Trust and that interest at a rate of
2.5% per annum is earned on amounts on deposit in the Prefunding Account.
"MONTHLY P&I" means, with respect to any Contract, the amount of each
monthly installment of principal and interest payable to the Obligee of such
Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"MOODY'S" means Moody's Investors Service, Inc., and its successors in
interest.
"NET COLLECTIONS" means, with respect to any Distribution Date and the
related Collection Period, the sum of (i) all payments of Monthly P&I, all
partial prepayments, all Full Prepayments, Net Liquidation Proceeds and Net
Insurance Proceeds in each case, collected with respect to the Contracts during
such Collection Period, less partial prepayments of Precomputed Contracts
collected with respect to the Contracts during such Collection Period which are
deposited in the Payahead Account pursuant to Section 4.02(a), (ii) amounts
withdrawn from the Payahead Account pursuant to Section 4.01(b) and deposited in
the Collection Account with respect to such Distribution Date, and (iii) the
aggregate Purchase Amount for Purchased Contracts deposited in or credited to
the Collection Account pursuant to Section 4.02(a) on the Business Day preceding
the Servicer Report Date next preceding such Distribution Date.
"NET INSURANCE PROCEEDS" means, with respect to any Contract, proceeds
paid by any insurer under a comprehensive and collision insurance policy related
to such Contract (other than funds used for the repair of the related Financed
Vehicle or otherwise released by Onyx to the related Obligor in accordance with
normal servicing procedures), after reimbursement to the Servicer of expenses
recoverable under such policy.
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<PAGE> 15
"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 sum of
(x) the aggregate of all interest collected on Contracts during the three
immediately preceding Collection Periods, (y) the investment earnings on amounts
deposited in the Prefunding Account transferred to the Payment Account with
respect to the three immediately preceding Distribution Dates and (z) the
amounts transferred from the Capitalized Interest Account to the Payment Account
with respect to the three immediately preceding Distribution Dates, 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 Noteholders 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, a
Class A-4 Note or a Class B Note, as applicable.
"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, the Class A-4 Final Scheduled
Distribution Date, or the Class B Final Scheduled Distribution Date, as the case
may be.
"NOTEHOLDER" shall mean any Holder of a Note.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the Note Interest
Distributable Amount for such Class for the immediately preceding Distribution
Date over the amount in respect of interest that is actually deposited in the
Note Distribution Account with respect to such Class on such preceding
Distribution Date, plus, to the extent permitted by applicable law, interest on
the amount of interest due but not paid to Noteholders of such Class on the
preceding Distribution Date at the related Interest Rate for the related
Interest Accrual Period; provided, however, that the Note Interest Carryover
Shortfall for the first Distribution Date shall be zero.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related
Interest Rate for such Class of Notes on the outstanding principal amount of
such Class of Notes on the immediately preceding Distribution Date, after giving
effect to all payments of principal to Noteholders of such Class on or prior to
such Distribution Date (or,
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<PAGE> 16
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 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 Note Principal Distributable Amount
for such Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account on such Distribution Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the 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 the Note Final Scheduled
Distribution Date for each Class of Notes shall not be less than the amount that
is necessary to reduce the outstanding principal amount of the related Class of
Notes to zero.
"NOTE REGISTER" shall have the meaning specified in the Indenture.
"OBLIGEE" means, with respect to any Contract, the Person to whom an
Obligor is indebted under such Contract.
"OBLIGOR" means, with respect to any Contract, the purchaser or
co-purchasers of the Financed Vehicle and any other Person who owes payments
under such Contract.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such certificate and delivered to the Person to whom such
certificate is required to be delivered. In the case of an Officers' Certificate
of the Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Servicer.
"ONYX" means Onyx Acceptance Corporation and its successors in interest.
"OPINION OF COUNSEL" means a written opinion of counsel (who may be
counsel to the Seller or the Servicer) acceptable to the Indenture Trustee, the
Owner Trustee or the Trust Agent, as the case may be, and the Insurer.
"ORIGINAL POOL BALANCE" means $450,000,000, which is the sum of (i) the
Principal Balances of the Initial Contracts as of the Initial Cut-Off Date, (ii)
the Principal Balances of the
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Subsequent Contracts as of the Subsequent Cut-Off Date, and (iii) the initial
deposit in the Prefunding Account.
"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 applicable Cut-Off
Date, (i) with respect to any Precomputed Contract, the amount set forth as the
Outstanding Principal Balance of such Contract on the Schedule of Contracts,
such amount being the total of all unpaid Monthly P&I due on or after the
Cut-Off Date, minus any unearned (or earned but unpaid) interest as of the
applicable Cut-Off Date computed in accordance with the Rule of 78's Method or
the Actuarial Method, as applicable, and (ii) with respect to any Simple
Interest Contract, the amount set forth as the Outstanding Principal Balance of
such Contract on the Schedule of Contracts, such amount being the total of all
principal payments due on or after the applicable Cut-Off Date.
"OWNER TRUSTEE" means Bankers Trust (Delaware), not in its individual
capacity but solely as the Owner Trustee under the Trust Agreement, 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 Noteholders, 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 Residual
Interest Instruments, the Person acting as the "Paying Agent" under the Trust
Agreement, the Trust Agent or any other Person that meets the eligibility
standards for the Paying Agent specified in the Trust Agreement and is
authorized by the Issuer to make the distributions from the Payment Account,
including distributions in respect of the Residual Interest Instruments on
behalf of the Issuer.
"PERCENTAGE INTEREST" shall have the meaning specified in Section
4.04(d).
"PERSON" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
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"POLICY" means the financial guarantee insurance policy for the Notes,
number 32055, dated April 28, 2000 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 CLAIM AMOUNT" means, with respect to each Distribution Date, the
sum of (i) the Deficiency Amount for such Distribution Date and (ii) the
Preference Amount for such Distribution Date.
"POOL BALANCE" as of the time of determination means the sum of (i) 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 and (ii) the
amounts on deposit in the Prefunding Account (exclusive of any investment
earnings), if any.
"POTENTIAL PREFERENCE PARTIES" shall have the meaning specified in
Section 4.04(d).
"PRECOMPUTED CONTRACT" means a Contract as to which, pursuant to the
terms of such Contract, the portion of payments allocable to earned interest and
principal thereunder is determined according to the "Rule of 78's Method" or the
"Actuarial Method".
"PREFERENCE AMOUNT" means any amount previously distributed to a Holder
in respect of the Notes that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy with respect to Onyx, the Seller
or the Trust pursuant to the United Stated Bankruptcy Code (11 U.S.C.), as
amended from time to time, in accordance with a final nonappealable order of a
court having competent jurisdiction.
"PREFERENCE CLAIM" shall have the meaning specified in Section 7.05.
"PREFUNDED AMOUNT" means $92,572,240.33, the initial deposit into the
Prefunding Account.
"PREFUNDED CONTRACTS" means the Contracts which are transferred by the
Seller to the Issuer on each Prefunding Transfer Date pursuant to this Agreement
and are identified on the schedule attached to the Transfer Certificate
delivered to the Trust, the Indenture Trustee and the Insurer on the Business
Day immediately preceding the related Prefunding Transfer Date.
"PREFUNDING ACCOUNT" means the account established as such pursuant to
Section 4.01 and maintained pursuant to Section 4.07.
"PREFUNDING CLOSING DATE" means the last day of the Funding Period, or
if such day is not a Business Day, the following Business Day.
"PREFUNDING CLOSING DATE CERTIFICATE" means the certificate of an
officer of the Seller delivered in connection with the Prefunding Closing Date,
substantially in the form attached hereto as Exhibit C-2.
"PREFUNDING CUT-OFF DATE" means the cut-off date specified in the
Transfer Certificate with respect to the Prefunded Contracts transferred on the
related Prefunding Transfer Date.
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"PREFUNDING TRANSFER DATE" means each day on which the Seller conveys
Prefunded Contracts to the Trust.
"PREMIUM" shall have the meaning specified in the Insurance Agreement.
"PRINCIPAL BALANCE" means, with respect to a Contract, as of any date,
the Amount Financed under the terms of such Contract minus (i) that portion of
Monthly P&I in respect of such Contract received on or prior to the end of the
most recently ended Collection Period and allocable to principal as determined
by the Servicer and (ii) any Cram Down Loss incurred in respect of such Contract
on or prior to the end of the most recently ended Collection Period. For
purposes of this definition, allocations of Monthly P&I on each Contract by the
Servicer shall be made in accordance with the terms of such Contract, in the
case of a Simple Interest Contract or an Actuarial Contract, or in accordance
with the Recomputed Actuarial Method, in the case of a Rule of 78's Contract.
"PURCHASE AGREEMENT" means the Amended and Restated Sale and Servicing
Agreement dated as of September 4, 1998 between Onyx, as seller, and the Seller,
as purchaser, as such agreement may have been or may be modified, supplemented
or amended from time to time.
"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 Noteholders or the Insurer, (ii) has been purchased
by the Servicer because of certain breaches of servicing covenants or (iii) has
been purchased by the Servicer in the event of an optional purchase of all of
the Contracts pursuant to Section 8.01
"RATING AGENCIES" means Moody's and Standard & Poor's.
"RECOMPUTED ACTUARIAL METHOD" means a method of accounting pursuant to
which each payment of Monthly P&I due on a Rule of 78's Contract will be deemed
to consist of interest equal to the product of 1/12 of the Recomputed Yield for
such Contract and the Principal Balance of the Contract as of the preceding Due
Date for such Contract and of principal to the extent of the remainder of such
scheduled installment of Monthly P&I, which will cause the Outstanding Principal
Balance as of the related 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 related 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 related Cut-Off Date, will equal the
Outstanding Principal Balance.
"RECORD DATE" means, with respect to a Class of Notes and any
Distribution Date, the Business Day immediately preceding such Distribution Date
or, if Definitive Notes are issued, the last day of the immediately preceding
calendar month.
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"REGISTRAR OF TITLES" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"REGULAR PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the related Collection Period: (i) collections received on Contracts
(other than Liquidated Contracts and Purchased Contracts) allocable to principal
as determined by the Servicer, including full and partial principal prepayments
(other than partial prepayments on Precomputed Contracts representing amounts
not due in such Collection Period which will be deposited into the Payahead
Account in accordance with this Agreement), (ii) the Principal Balance
(immediately prior to the reduction thereof to zero as provided in the
definition of "Liquidated Contract") of all Contracts (other than Purchased
Contracts) that became Liquidated Contracts during the related Collection
Period, (iii) the Principal Balance 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.
"RESIDUAL INTEREST INSTRUMENT" shall have the meaning specified in the
Trust Agreement.
"RESIDUAL INTERESTHOLDER" means each Person in whose name a Residual
Interest Instrument is registered in the Certificate Register.
"RESPONSIBLE OFFICER" means any officer of the Indenture Trustee within
the Corporate Trust Office including any vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Indenture Trustee customarily performing functions similar to those performed by
any of the above designated officers with direct responsibility for the
administration of this Agreement.
"RULE OF 78'S CONTRACT" means a Contract pursuant to which the
allocation between interest and principal is calculated using the Rule of 78's
Method.
"RULE OF 78'S METHOD" means the method of allocating principal and
interest payments on a Contract whereby the amount of each payment allocable to
interest on a Contract is determined by multiplying the total amount of add-on
interest payable over the term of the Contract by a fraction, the denominator of
which is equal to the sum of a series of numbers representing the total number
of monthly payments due under the Contract and the numerator of which is the
number of payments remaining before giving effect to the payment to which the
fraction is being applied.
"SCHEDULE OF CONTRACTS" means the list or lists of Funded Contracts
attached as Schedule I-A and Schedule I-B to this Agreement and each list of
Prefunded Contracts delivered to the Indenture Trustee, the Issuer and the
Insurer on each Prefunding Transfer Date and identified on Schedule I to the
related Transfer Certificate, which Contracts are being transferred to the Trust
as
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part of the Trust Property, together with supplemental data regarding the
contracts calculated by Salomon Smith Barney Inc. and verified by the Servicer.
The Schedule of Contracts attached hereto as Schedules I-A and I-B, together
with the initial deposit into the Prefunding Account, comprises the Original
Pool Balance. The following information with respect to each Funded Contract is
set forth on Schedule I-A and Schedule I-B in columns, and any supplement to the
Schedule of Contracts for Prefunded Contracts will present the information in
the same format:
Contract Number ("Account")
Date of Origination ("Discount Date")
Maturity Date ("Maturity")
Monthly P&I ("Payment")
Original Principal Balance ("Amount Financed")
Outstanding Principal Balance ("Net Balance")
Annual Percentage Rate ("APR")
In addition, the information contained in the Schedule of Contracts shall also
be contained on a computer disk or tape that shall be delivered by the Servicer
to the Indenture Trustee not later than (i) the 5th Business Day following the
Closing Date, with respect to the Funded Contracts and (ii) the 5th Business Day
following the related Prefunding Transfer Date, with respect to the Prefunded
Contracts.
"SELLER" means Onyx Acceptance Financial Corporation, in its capacity as
the Seller of the Contracts under this Agreement, and each successor thereto (in
the same capacity) pursuant to Section 5.02.
"SERVICER" means Onyx in its capacity as the servicer of the Contracts
under Section 3.01, and, in each case upon succession in accordance herewith,
each successor servicer in the same capacity pursuant to Section 3.01 and each
successor servicer pursuant to Section 7.02.
"SERVICER DEFAULT" means an event specified in Section 7.01.
"SERVICER REPORT DATE" means, with respect to any Distribution Date, the
fifth Business Day prior to such Distribution Date.
"SERVICING FEE" means, as to any Distribution Date, the fee payable to
the Servicer for services rendered during the Collection Period ending
immediately prior to such Distribution Date, which shall be an amount equal to
the product of one-twelfth of 1% per annum multiplied by the Pool Balance
(excluding amounts on deposit in the Prefunding Account) as of the end of the
Collection Period preceding the related Collection Period.
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Indenture Trustee by
the Servicer pursuant to Section 3.01, as such list may be amended or
supplemented from time to time.
"SERVICING STANDARDS" means at any time the quality of the Servicer's
performance with respect to (i) compliance with the terms of this Agreement and
(ii) adequacy, measured in accordance with industry standards and current and
historical standards of the Servicer, in respect
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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" shall have the meaning set forth in the
Insurance Agreement.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The McGraw-Hill Companies, Inc., and its successors in interest.
"SUBSEQUENT CONTRACTS" means the Contracts designated as such in
Schedule I-B attached hereto, which have an aggregate Outstanding Principal
Balance of $113,703,887.19.
"SUBSEQUENT CUT-OFF DATE" means April 27, 2000.
"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.
"TRANSFER CERTIFICATE" means the certificate of an officer of the Seller
delivered in connection with the delivery of any Prefunded Contracts on the
Business Day immediately preceding a Prefunding Transfer Date, substantially in
the form attached hereto as Exhibit C-1.
"TRUST" means the Issuer.
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"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"TRUST ACCOUNTS" shall have the meaning specified in Section 4.01(a).
"TRUST AGENT" means The Chase Manhattan Bank, not in its individual
capacity but solely as the Trust Agent under the Trust Agreement and this
Agreement acting on behalf of the Owner Trustee, its successors in interest, and
any successor Trust Agent under such agreements.
"TRUST AGENT OFFICE" means the principal office of the Trust Agent,
which office at the date of the execution of this Agreement is located at 450 W.
33rd Street, 14th Floor, New York, New York 10001-2697, Attention: Capital
Market Fiduciary Services; or at such other address as the Trust Agent may
designate from time to time by notice to the Noteholders, the Insurer, the
Servicer and the Seller.
"TRUST AGREEMENT" means the Trust Agreement, dated as of April 1, 2000,
among the Depositor, the Owner Trustee and the Trust Agent.
"TRUST PROPERTY" has the meaning set forth in Section 2.01(b) 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 Notes will be calculated on the basis of a 360-day year
of twelve 30-day months, except that interest on the Class A-1 Notes will be
calculated on the basis of a 360-day year and the actual number of days in the
related Interest Accrual Period. Collections of interest on Rule of 78's
Contracts shall be calculated as if such Contracts were actuarial contracts the
scheduled principal balances of which are the Principal Balances thereof, and
collections of interest on Simple Interest Contracts and Actuarial Contracts
will be calculated in accordance with the terms thereof.
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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 authenticated Notes, in
an aggregate amount equal to $450,000,000, 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 Funded Contracts listed in the Schedule of
Contracts;
(ii) all monies received under the Funded Contracts on or
after the related Cut-Off Date;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds
with respect to any Financed Vehicle to which a Funded
Contract relates received on or after the related
Cut-Off Date;
(iv) the Contract Documents and Contract Files relating to
the Funded Contracts (except the Contract Documents and
Contract Files for Funded Contracts which have been the
subject of a Full Prepayment received on or after the
related Cut-Off Date but no later than two Business Days
prior to the Closing Date, in lieu of which the Seller
shall have deposited in or credited to the Collection
Account on or prior to the Closing Date an amount equal
to such Full Prepayment);
(v) the Trust Accounts and all amounts, financial assets and
investment property held therein or credited thereto,
including, if applicable, all Eligible Investments
credited thereto (but excluding (A) the Payahead Account
and all amounts, financial assets and investment
property held therein or credited thereto, including all
Eligible Investments credited thereto and (B) investment
income credited to the Collection Account);
(vi) the right of the Seller, as purchaser under the Purchase
Agreement, to cause Onyx as seller thereunder to
repurchase Funded Contracts listed in the Schedule of
Contracts under certain circumstances;
(vii) any and all security interests of the Seller in the
Financed Vehicles and the rights to receive proceeds
from claims on certain insurance policies covering the
Financed Vehicles or the individual Obligors under each
related Funded Contract;
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(viii) the Seller's right to proceeds under the Blanket
Insurance Policy with respect to the Funded Contracts;
and
(ix) all proceeds in any way delivered with respect to the
foregoing, all rights to payments with respect to the
foregoing and all rights to enforce the foregoing.
(b) Subject to the conditions set forth in Section 2.01(c), in
consideration of the Issuer's delivery of authenticated Notes, in an aggregate
amount equal to $450,000,000, 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) effective upon delivery to the Issuer on the related Prefunding
Transfer Date against payment therefor from the Prefunding Account in accordance
Section 4.07(b), all of the right, title and interest of the Seller in, to and
under:
(i) all Prefunded Contracts listed on each Transfer
Certificate;
(ii) all monies received under the Prefunded Contracts on or
after the related Prefunding Cut-Off Date;
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds
with respect to any Financed Vehicle to which a
Prefunded Contract relates received on or after the
related Prefunding Cut-Off Date;
(iv) the Contract Documents and Contract Files relating to
the Prefunded Contracts;
(v) the right of the Seller, as purchaser under the Purchase
Agreement, to cause Onyx as seller thereunder to
repurchase Prefunded Contracts listed on any Transfer
Certificate under certain circumstances;
(vi) any and all security interests of the Seller in the
related Financed Vehicles and the rights to receive
proceeds from claims on certain insurance policies
covering such Financed Vehicles or the individual
Obligors under each related Prefunded Contract;
(vii) the Seller's right to proceeds under the Blanket
Insurance Policy with respect to the Prefunded
Contracts; and
(viii) 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.
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The foregoing items of property listed in Sections 2.01(a) and (b),
together with the rights of the Indenture Trustee under the Policy, are
collectively referred to as the "TRUST PROPERTY". In addition, on or prior to
the Closing Date, the Seller shall cause the Insurer to deliver the Policy to
the Indenture Trustee for the benefit of the Noteholders.
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 Noteholders 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.
(c) The sale and assignment of the Prefunded Contracts and the other
property and rights related thereto described in Section 2.01(b) shall be
subject to the satisfaction of each of the following conditions, as well as the
conditions set forth in Section 4.08, as of the related Prefunding Transfer
Date, as applicable:
(i) the Seller shall have delivered to the Custodian, on
behalf of the Issuer, the Prefunded Contracts, and the
Seller shall have delivered to the Issuer, the Indenture
Trustee and the Insurer, on the Business Day immediately
preceding the related Prefunding Transfer Date, a duly
executed Transfer Certificate, substantially in the form
of Exhibit C- 1;
(ii) the Servicer and the Seller shall certify to the
Indenture Trustee and the Insurer that, as of the
Prefunding Transfer Date, the Servicer and the Seller,
respectively, were not insolvent nor were they made
insolvent by such transfer nor were they aware of any
such pending insolvency;
(iii) the Seller shall certify to the Indenture Trustee and
the Insurer that the addition of such Prefunded
Contracts will not result in a material adverse tax
consequence to the Issuer or the Noteholders;
(iv) the Funding Period shall not have terminated;
(v) the Seller and the Servicer shall certify to the
Indenture Trustee and the Insurer that no selection
procedures believed by the Seller or the Servicer to be
adverse to the interests of the Noteholders or the
Insurer shall have been utilized in selecting the
Prefunded Contracts;
(vi) the Seller and the Insurer shall not have been advised
by either Rating Agency on or before the Business Day
immediately preceding such
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Prefunding Transfer Date that the conveyance of the
Prefunded Contracts would result in a qualification,
modification or withdrawal of its then current rating of
the Notes without regard to the Policy;
(vii) the weighted average APR (using the Recomputed Yield for
the Rule of 78's Contracts) of the Contracts (after
giving effect to the purchase of the related Prefunded
Contracts) shall not be less than 15.00%;
(viii) less than 20% of the Prefunded Contracts transferred by
the Seller to the Issuer since the Closing Date,
including all Prefunded Contracts being transferred on
such Prefunding Transfer Date, shall have an original
term to maturity of more than 60 months and the weighted
average remaining term of all Contracts (including the
Prefunded Contracts) as of such Prefunding Transfer Date
shall not be greater than 59 months;
(ix) if the balance in the Prefunding Account prior to such
Prefunding Transfer Date exceeds $30,000,000, the
aggregate Outstanding Principal Balance, as of the
related Prefunding Cut-Off Date, of the Prefunded
Contracts to be conveyed by the Seller to the Issuer on
such Prefunding Transfer Date shall equal or exceed
$10,000,000 and the Insurer shall have consented to such
transfer;
(x) at least three Business Days prior to each Prefunding
Transfer Date, the Seller shall have delivered to the
Rating Agencies and the Insurer pool stratification data
(including data with respect to when the first scheduled
payment is due under each such Prefunded Contract)
relating to the Prefunded Contracts to be conveyed by
the Seller to the Issuer on such Prefunding Transfer
Date, in the form of stratification data delivered to
the Rating Agencies and the Insurer with respect to the
Funded Contracts, and, as of the related Prefunding
Cut-Off Date, shall have certified that the information
contained therein is true and correct; and
(xi) The first scheduled monthly payment for at least 50% of
the Prefunded Contracts (by Outstanding Principal
Balance as of the related Prefunding Cut-Off Date) shall
be due on or before June 30, 2000.
(d) As of the Closing Date, the Issuer acknowledges the conveyance to it
of the Trust Property from the Seller, including all right, title and interest
of the Seller in and to the Trust Property, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery and in exchange
therefor, the Issuer has pledged to the Indenture Trustee, for the benefit of
the Noteholders 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.
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(e) In connection with the sale of the Contracts pursuant to the
Purchase Agreement, Onyx has filed with the office of the Secretary of State of
the State of California a UCC-1 financing statement naming Onyx as debtor,
naming the Seller as secured party and including the Contracts in the
description of the collateral. In connection with the sale of the Contracts
pursuant to this Agreement, the Seller has filed or caused to be filed with the
Secretary of State of the State of California a UCC-1 financing statement naming
the Seller as debtor, naming the Issuer as secured party, naming the Indenture
Trustee, on behalf of the Noteholders, as assignee, and including the Contracts
in the description of the collateral. In connection with the pledge of the
Contracts pursuant to the Indenture, the Trust has filed with the offices of the
Secretary of State of the State of Delaware UCC-1 financing statements naming
the Trust as debtor and the Indenture Trustee, on behalf of the Noteholders and
the Insurer, as secured party. The grant of a security interest to the Indenture
Trustee and the rights of the Indenture Trustee in the Contracts shall be
governed by the Indenture.
The Seller shall have caused UCC-2 termination statements to have been
filed with the office of Secretary of State of the State of California
terminating any effective UCC-1 financing statements with respect to any
outstanding security interests in the Contracts.
(f) 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.
(g) 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 Noteholders 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 Noteholders and the Insurer in the
Contracts, the related Financed Vehicles and the proceeds thereof have been
filed, and reciting the details of such filings.
(h) 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.
(i) 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.
(j) On the Prefunding Closing Date, the Seller shall:
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(i) deliver a certificate from each secured creditor of the
Seller confirming that such creditor has no claim of any
security interest in any of the Prefunded Contracts
transferred during the Funding Period;
(ii) deliver to each Rating Agency, the Insurer and the
Indenture Trustee a Prefunding Closing Date Certificate;
(iii) deliver to each Rating Agency, the Insurer and the
Indenture Trustee an Opinion of Counsel with respect to
the absence of negative tax consequences to the Trust,
the characterization of the transfer of the Prefunded
Contracts and the perfection of the Indenture Trustee's
interest on behalf of the Noteholders;
(iv) deliver to each Rating Agency, the Insurer and the
Indenture Trustee with respect to any state (other than
California) in which 10% or more of the Contracts
(including the Prefunded Contracts), by Outstanding
Principal Balance, were originated, an opinion with
respect to the perfection of the security interest of
the Indenture Trustee in the Financed Vehicles securing
the Contracts originated in such state; and
(v) deliver to the Insurer an Opinion of Counsel to the
effect that Onyx is duly qualified as a foreign
corporation to do business, and is in good standing, in
each of the states in which Prefunded Contracts have
been originated.
Failure to comply with any of the conditions set forth in this Section
2.01(j) on the Prefunding Closing Date shall be deemed to be a breach of a
representation and warranty with respect to each of the Prefunded Contracts to
which such failed conditions relate as of the Prefunding Closing Date.
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller 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; provided such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date with respect to Sections 2.02(a), (b) and
(c), and as of each Prefunding Transfer Date (with respect to the Prefunded
Contracts conveyed to the Trust on such date) with respect to Sections 2.02(a)
and (d), but shall survive the sale, transfer and assignment of the Contracts to
the Issuer and the pledge thereof to the Indenture Trustee pursuant to the
Indenture.
(a) As to the Seller:
(i) The Seller is duly organized and validly existing as a
corporation organized and existing and in good standing
under the laws of the State of Delaware, with power and
authority to own its properties and
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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, (B) seeking to prevent the
issuance of the Notes or the consummation of any of
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the transactions contemplated by this Agreement, (C)
seeking any determination or ruling that might
materially and adversely affect the performance by the
Seller of its obligations under, or the validity or
enforceability of, this Agreement, the Notes, or (D)
naming the Seller which might adversely affect the
federal income tax attributes of the Notes.
(b) As to each Funded Contract (except as noted below as being
applicable only to either Precomputed Contracts or Simple Interest Contracts):
(i) The information pertaining to such Contract set forth in
the related Schedule of Contracts was true and correct
in all material respects at the Closing Date.
(ii) As of the Closing Date, such Contract was secured by a
valid and enforceable first priority security interest
in favor 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 is
assignable, had been assigned by Onyx to the Seller
pursuant to the Purchase Agreement, and, as of the
Closing Date, has been assigned by the Seller to the
Issuer pursuant to Section 2.01(a) hereof.
(iii) (A) If the related Contract 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 the security interest in the
related Financed Vehicle, 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 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 Contract 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 named as
the original secured party under the related Contract,
and in either case, the Indenture Trustee on behalf of
the Noteholders and the Insurer has the same rights as
such secured party has or would have (if such secured
party were still the owner of such Contract) against all
parties claiming an interest in such Financed Vehicle.
With respect to each Contract for which the Title
Document has not yet been returned from the Registrar of
Titles (or evidenced in the electronic title records, in
the case of the State of California), Onyx has written
evidence that
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such Title Documents showing 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 such
Contract to be transferred to the Issuer pursuant to
Section 2.01 free of liens, claims, encumbrances and
rights of others and, upon transfer of such Contract to
the Issuer 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 related 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,
storage or unpaid taxes affecting the related Financed
Vehicle which are or may become a lien prior to, or
equal or coordinate 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, the Fair Debt
Collection Practices Act, the Fair Credit Billing Act,
the Magnuson-Moss Warranty Act, the Federal Reserve
Board's Regulations B and Z, the Soldiers' and Sailors'
Civil Relief Act of 1940, state adoptions of the
National Consumer Act and the Uniform Consumer Credit
Code, and other applicable state laws regulating retail
installment sales contracts and loans in general and
motor vehicle retail installment contracts and
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loans in particular; and the consummation of the
transactions herein contemplated, including, without
limitation, the transfer of ownership of such Contracts
to the Issuer and the receipt of interest by the
Noteholders, 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.
(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, (a) there was no default,
breach, violation or event permitting acceleration
existing under such Contract (except payment
delinquencies permitted by subparagraph (v) above), (b)
there does not exist any continuing condition that with
notice or lapse of time would constitute a default,
breach, violation or event permitting acceleration
existing under such Contract, and (c) the Seller has not
waived any such default, breach, violation or event
permitting acceleration except payment delinquencies
permitted by subparagraph (v) above.
(xiii) As of 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) As of 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 as a
loss payee and (iii) insuring against loss and damage
due to fire, theft, transportation, collision and
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<PAGE> 34
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 at all times comply with all of the
provisions of such insurance policies applicable to it.
(xv) Such Contract was 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 subsidiary.
(xvi) Payments under such Contract have been applied in
accordance with the Rule of 78's Method, the Actuarial
Method or the Simple Interest Method, as provided in the
applicable Contract, and are due monthly in
substantially equal amounts through its Maturity Date
sufficient to fully amortize the principal balance of
such Contract by its Maturity Date.
(xvii) There is only one original of such Contract and such
original, together with all other related Contract
Documents, is being held by the Custodian.
(xviii) As of the Closing Date, the Servicer has clearly marked
its electronic records to indicate that such Contract is
owned by the Issuer.
(xix) 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.
(xx) As of the related Cut-Off Date, the Seller has not
received notice that any Obligor under such Contract has
filed for bankruptcy.
(xxi) Such Contract had an original maturity of not more than
72 months and as of the related Cut-Off Date, such
Contract has a remaining maturity of 72 months or less;
(xxii) The first scheduled monthly payment for at least 80% of
the Initial Contracts (by Outstanding Principal Balance)
is due on or before April 30, 2000, and the first
scheduled monthly payment for at least 90% of the
Subsequent Contracts (by Outstanding Principal Balance)
is due on or before May 31, 2000.
(xxiii) As of the related Cut-Off Date, such Contract has a
remaining principal balance of at least $500.
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(xxiv) As of the related Cut-Off Date, such Contract is secured
by a Financed Vehicle that has not been repossessed
without reinstatement.
(xxv) The related Obligor(s) were located in Alabama, Arizona,
California, Colorado, Delaware, Florida, Georgia, Idaho,
Illinois, Indiana, Iowa, Kentucky, Maryland,
Massachusetts, Michigan, Minnesota, Mississippi,
Missouri, Montana, Nevada, New Jersey, New York, North
Carolina, Ohio, Oklahoma, Oregon, Pennsylvania, South
Carolina, Tennessee, Texas, Utah, Virginia or Washington
on the date of origination of such Contract.
(xxvi) The Obligor on such Contract is either (a) a natural
person residing in any state or (b) another entity,
provided that a natural person is a joint and several
Obligor with respect to such Contract.
(c) As to all of the Funded Contracts:
(i) The aggregate Outstanding Principal Balance payable by
Obligors of the Funded Contracts as of the related
Cut-Off Date plus the initial deposit into the
Prefunding Account equals the Original Pool Balance.
(ii) As of the related Cut-Off Date, approximately 13.10% of
the Outstanding Principal Balance of all Funded
Contracts is attributable to loans involving new
Financed Vehicles, and approximately 86.90% of the
Outstanding Principal Balance of all Funded Contracts is
attributable to loans involving used Financed Vehicles.
(iii) As of the related Cut-Off Date, the aggregate
Outstanding Principal Balance of all Funded Contracts
originated in any single state, other than California,
did not equal or exceed 10%.
(d) As to each Prefunded Contract (except as noted below as being
applicable only to either Precomputed Contracts or Simple Interest Contracts),
as of the related Prefunding Transfer Date (except as otherwise noted):
(i) The information pertaining to such Contract set forth in
the related Transfer Certificate is true and correct in
all material respects as of the related Prefunding
Transfer Date.
(ii) As of the related Prefunding Transfer Date, such
Contract was secured by a valid and enforceable first
priority security interest in favor of Onyx in the
related Financed Vehicle, and such security interest is
duly perfected and is prior to all other liens upon and
security interests in such Financed Vehicle which exist
or may hereafter arise or be created (except, as to
priority, for any lien for
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<PAGE> 36
unpaid taxes or unpaid storage or repair charges which
may arise after the Prefunding Transfer Date in
accordance with the UCC); such security interest is
assignable, has been assigned by Onyx to the Seller
pursuant to the Purchase Agreement and, as of the
Prefunding Transfer Date, has been assigned by the
Seller to the Issuer pursuant to Section 2.01(b) hereof.
(iii) (A) If the related Contract is 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 the security interest in the
related Financed Vehicle, the Title Document or the
electronic title records for such Financed Vehicle show,
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
related Prefunding Transfer Date and will show, 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 Contract is 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 named as the original secured party under
the related Contract as of the related Prefunding
Transfer Date, and in either case, the Indenture Trustee
on behalf of the Noteholders and the Insurer has the
same rights as such secured party has or would have (if
such secured party were still the owner of the 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 received written evidence that such Title
Documents showing Onyx as first lienholder have been
applied for as of the related Prefunding Transfer Date.
(iv) As of the related Prefunding Transfer 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(b) free of liens, claims,
encumbrances and rights of others and, upon transfer of
such Contract to the Issuer pursuant to Section 2.01(b),
the Issuer will have good and marketable title to, will
have a first 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 related Prefunding Cut-Off Date, the most
recent scheduled payment due on each such Contract has
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.
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<PAGE> 37
(vi) As of the related Prefunding Transfer Date, there is no
lien against the related Financed Vehicle for delinquent
taxes.
(vii) As of the related Prefunding Transfer Date, there is no
right of rescission, offset, defense or counterclaim to
the obligation of the 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 related Prefunding Transfer 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, storage or unpaid taxes affecting the related
Financed Vehicle which are or may become a lien prior
to, or equal or coordinate with, the security interest
granted by such Contract.
(ix) Such Contract, and the sale of the related 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, the Fair Debt Collection Practices
Act, the Fair Credit Billing Act, the Magnuson-Moss
Warranty Act, the Federal Reserve Bond's Regulations B
and Z and, the Soldiers' and Sailors' Civil Relief Act
of 1940, state adoptions of the National Consumer Act
and the Uniform Consumer Credit Code, and other
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 such Contract to the Issuer and
the receipt of interest by the Noteholders, 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
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<PAGE> 38
related Contract Documents, and no such waiver,
amendment or modification has caused such Contract to
fail to meet all of the representations, warranties and
conditions set forth herein with respect thereto.
(xi) Such Contract contains customary and enforceable
provisions such as to render the rights and remedies of
the holder or assignee thereof adequate for the
practical realization against the collateral of the
benefits of the security, subject, as to enforceability,
to bankruptcy, insolvency, reorganization or similar
laws affecting the enforcement of creditors' rights
generally.
(xii) As of the related Prefunding Transfer Date, (a) there is
no default, breach, violation or event permitting
acceleration existing under such Contract (except
payment delinquencies permitted by subparagraph (v)
above), (b) there does not exist any continuing
condition that with notice or lapse of time would
constitute a default, breach, violation or event
permitting acceleration existing under such Contract,
and (c) the Seller has not waived any such default,
breach, violation or event permitting acceleration
except payment delinquencies permitted by subparagraph
(v) above.
(xiii) As of the related Prefunding Transfer 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) As of the related Prefunding Transfer 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
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 at all times comply with all of the
provisions of such insurance policies applicable to it.
(xv) Such Contract was acquired by Onyx from a Dealer with
which it ordinarily does business, and no adverse
selection procedures have
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<PAGE> 39
been utilized in selecting such Contract from all other
similar contracts purchased or originated by Onyx or any
subsidiary.
(xvi) Payments under such Contract have been applied in
accordance with Rule of 78's Method, the Actuarial
Method or the Simple Interest Method, as provided in the
applicable Contract, and are due monthly in
substantially equal amounts through its Maturity Date
sufficient to fully amortize the principal balance of
such Contract by its Maturity Date.
(xvii) There is only one original of such Contract and such
original, together with all other related Contract
Documents, is being held by the Custodian.
(xviii) As of the related Prefunding Transfer Date, the Servicer
has clearly marked its electronic records to indicate
that such Contract is then owned by the Issuer.
(xix) 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.
(xx) As of the related Prefunding Cut-Off Date, the Seller
has not received notice that any Obligor under such
Contract has filed for bankruptcy.
(xxi) Such Contract has an original maturity of not more than
72 months, and as of the related Prefunding Cut-Off
Date, such Contract has a remaining maturity of 72
months or less.
(xxii) As of the related Prefunding Cut-Off Date, such Contract
has a remaining principal balance of at least $500.
(xxiii) As of the related Prefunding Cut-Off Date, such Contract
is secured by a Financed Vehicle that has not been
repossessed without reinstatement.
(xxiv) The Obligor on such Contract is either (a) a natural
person residing in any state or (b) another entity,
provided that a natural person is a joint and several
Obligor with respect to such Contract.
(xxv) No more than 50% of the Prefunded Contracts transferred
to the Issuer as of any Prefunding Transfer Date shall
be originated in any one state.
(e) 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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(f) The Seller has not prepared any financial statement which accounts
for the transfer of the Trust Property (other than the Policy and the Spread
Account) hereunder to the Issuer in any manner other than as a sale of the Trust
Property (other than the Policy and the Spread Account ) by it to the Issuer,
and the Seller has not in any other non-income tax respect (including, but not
limited to, for accounting purposes) accounted for or treated the transfer of
the Trust Property (other than the Policy and the Spread Account) hereunder in
any manner other than as a sale and absolute assignment to the Issuer of the
Seller's full right, title and ownership interest in the Trust Property (other
than the Policy and the Spread Account) to the Issuer.
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS.
The representations and warranties of the Seller set forth in Section
2.02 with respect to each Contract and each of the conditions set forth in
Section 2.01(c) with respect to each transfer of Prefunded Contracts and Section
2.01(j) with respect to the Prefunding Closing Date and sale of Prefunded
Contracts shall survive delivery of the Contract Documents and shall continue
until the termination of this Agreement. Upon discovery by the Seller, the
Servicer, the Insurer or a Responsible Officer of the Owner Trustee, the
Indenture Trustee or the Trust Agent that any of such representations and
warranties was incorrect or that any of such conditions was unsatisfied as of
the time made or that any of the Contract Documents relating to any such
Contract has not been properly executed by the Obligor or contains a material
defect or has not been received by the Custodian, such Person making such
discovery shall give prompt notice to the other such Persons. If any such
defect, incorrectness or omission materially and adversely affects the interest
of the Noteholders, the Indenture Trustee, the Issuer or the Insurer, the Seller
shall cure the defect or eliminate or otherwise cure the circumstances or
condition in respect of which such representation or warranty was incorrect as
of the time made; provided that if the Seller is unable to do so by the last day
of the Collection Period following the Collection Period (or, if the Seller
elects, the last day of such Collection Period) during which the Seller becomes
aware of or receives written notice from the Servicer, the Insurer or the
Indenture Trustee of such defect, incorrectness or omission, it shall repurchase
such Contract on the last day of the applicable Collection Period from the
Issuer at the Purchase Amount. Upon any such repurchase, the Issuer shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in the Seller any Contract
purchased hereunder. The sole remedy of the Issuer, the Indenture Trustee or the
Noteholders with respect to a breach of the Seller's representations and
warranties pursuant to Section 2.02 shall be to require the Seller to repurchase
Contracts pursuant to this Section; provided, however, that the Seller shall
indemnify the Owner Trustee, the Trust Agent, the Indenture Trustee, the
Insurer, the Issuer and the Noteholders 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 not be segregated to
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show the Issuer as owner thereof and the Indenture
Trustee as the pledgee thereof, unless the Insurer
requires such segregation.
(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) in the event that the Servicer is not the Custodian, 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, Onyx shall be the
Custodian of the Contract Documents; provided, however, that (i) the Indenture
Trustee (if the Notes have not been paid in full and the Indenture has not been
satisfied and discharged) and the Issuer, with the consent of the Insurer, or
(ii) the Insurer, may terminate such appointment at any time, with or without
cause by written notice to the Custodian, and upon the execution by the
Indenture Trustee at the direction of the Insurer (or, if the Notes have been
paid in full and the Indenture has been satisfied and discharged, the Issuer at
the direction of the Insurer) of a letter agreement substantially in the form of
Exhibit A attached hereto (the "APPOINTMENT OF CUSTODIAN"), revocably appointing
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).
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For so long as the Servicer is the Custodian of the Contract Documents,
the Servicer need not maintain the Contract Documents held by it in a file area
physically separate from the other installment sales contracts or loans owned or
serviced by it or any of its Affiliates, unless the Insurer requires such
segregation.
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 Noteholders, 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
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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; (iii) that, if such Contract has been the subject
of a Full Prepayment pursuant to clause (b) of the definition of the term "Full
Prepayment," the correct Purchase Amount has been deposited in or credited to
the Collection Account in accordance with Section 2.03, 3.07 or 4.02; (iv) 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 (v) 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 with respect to the Funded Contracts and within 60 days of the Prefunding
Closing Date with respect to the Prefunded Contracts, a schedule of Title
Documents for Financed Vehicles which, as of the Closing Date or the Prefunding
Closing Date, as applicable, did not show Onyx as first lienholder and (ii)
within 180 days of the Closing Date with respect to the Funded Contracts and
within 180 days of the Prefunding Closing Date with respect to the Prefunded
Contracts, a schedule of Title Documents for Financed Vehicles which, as of the
date prior to such delivery, do not show Onyx as first lienholder and as to
which the Seller is obligated to repurchase pursuant to the provisions hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Issuer and shall not
in any way assert or claim an ownership interest in the Contracts. It is
intended that pursuant to the applicable provisions of Sections 2.04 and 2.05
hereof and the Appointment of Custodian, the Custodian on behalf of the
Indenture Trustee and the Insurer shall be deemed to have possession of the
Contract Documents for purposes of Section 9-305 of the UCC of the state in
which the Contract Documents are located.
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. INDEMNIFICATION.
Subject to Section 7.02, the Servicer shall indemnify the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and the Noteholders for any and all liabilities, obligations, losses,
compensatory damages, payments, costs or expenses of any kind whatsoever
(including the reasonable fees and expenses of counsel) that may be imposed on,
incurred by or asserted against the Issuer, the Owner Trustee, the Trust Agent,
the Indenture Trustee, the Insurer, the Custodian or the Noteholders as the
result of any improper act or omission in any way relating to the maintenance
and custody by the Servicer of the Contract Files, or the failure of the
Servicer to perform its duties and service the Contracts in compliance with the
terms of this Agreement; provided, however, that the Servicer shall not be
liable to the Owner Trustee, the Trust Agent, the Indenture Trustee, the
Custodian or the Insurer for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Custodian or the Insurer, respectively. The
Servicer shall also indemnify and hold harmless the Issuer, the Trust Property,
the Noteholders, the Custodian, the Indenture Trustee, the Trust Agent 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 Trust Agent, the Indenture Trustee, the Insurer, the Custodian or the
Noteholders with respect to such Contracts.
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION.
The appointment of Onyx 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 Class B Final
Scheduled Distribution Date. If Onyx 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,
the appointment of the Servicer as Custodian may be terminated by the Insurer,
or if an Insurer Default has occurred and is continuing, by Holders evidencing
not less than 25% of the outstanding principal amount of the Highest Priority
Class, or by the Indenture Trustee. 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 Insurer) 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 Notes
investment grade without consideration of the Policy.
SECTION 2.09. NONPETITION COVENANT.
(a) Neither the Seller nor the Servicer shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Issuer under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(b) The Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
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SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT THE CLOSING
DATE.
In the case of any Funded Contract or Prefunded Contract in respect of
which, in place of a Title Document, the Custodian received on the Closing Date
or the Prefunding Closing Date, as applicable, written evidence from the Dealer
selling the related Financed Vehicle that, or otherwise in respect of which, the
Title Document for such Financed Vehicle showing 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 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 Funded Contracts or within 180 days after
the Prefunding Closing Date with respect to the Prefunded Contracts, then the
representation and warranty in Section 2.02(b)(iii) as to any such Funded
Contracts or the representation and warranty in Section 2.02(d)(iii) as to any
such Prefunded Contracts in respect of such Contract shall be deemed to have
been incorrect in a manner that materially and adversely affects the
Noteholders, and the Seller shall be obligated to repurchase such Contract in
accordance with Section 2.03.
ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. DUTIES OF SERVICER.
The Servicer shall manage, service, administer, and make collections on
the Contracts. The Servicer agrees that its servicing of the Contracts shall be
carried out in accordance with reasonable care and, to the extent more exacting,
the procedures used by the Servicer in respect of such contracts serviced by it
for its own account; provided, however, that, subject to Section 3.02 as to
extensions, the Servicer shall not release or waive the right to collect the
unpaid balance of any Contract. The Servicer's duties shall include collection
and posting of all payments, responding to inquiries of Obligors on the
Contracts, investigating delinquencies, sending payment coupons to Obligors,
reporting tax information to Obligors, accounting for collections, furnishing
monthly and annual statements to the Indenture Trustee, the Issuer and the
Insurer with respect to distributions and the preparation of U.S. Partnership
Tax Returns (Form 1065) for the Owner Trustee to sign and file on an annual
basis, based on a tax year for the Issuer that is the calendar year and any
other tax forms required by any federal, state or local tax authority including
with respect to original issue discount, if any. The Servicer shall have,
subject to the terms hereof, full power and authority, acting alone, and subject
only to the specific requirements and prohibitions of this Agreement, to do any
and all things in connection with such managing, servicing, administration, and
collection that it may deem necessary or desirable; provided, however, that the
Servicer shall commence repossession efforts in respect of any Financed Vehicle
when any payment on the related Contract of which is four or more months
delinquent. Without limiting the generality of the foregoing, but subject to the
provisions of this Agreement, the Servicer is authorized and empowered by the
Indenture Trustee and the Issuer to execute and deliver, on behalf of itself,
the Issuer, the Insurer, the Noteholders, the Indenture Trustee or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to the
Contracts or to the Financed Vehicles. The Issuer shall furnish the Servicer any
documents necessary or appropriate to enable the Servicer to carry out its
servicing and administrative duties
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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 Trust Agent, the Indenture Trustee and the Insurer a list of
Servicing Officers of the Servicer involved in, or responsible for, the
administration and servicing of the Contracts, which list shall from time to
time be updated by the Servicer on request of the Owner Trustee, the Trust
Agent, the Indenture Trustee or the Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after the Initial 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 Initial 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 an Initial Contract relates
received on or after the Initial Cut-Off Date and at least two Business Days
prior to the Closing Date.
On each Prefunding Transfer Date, the Servicer shall deposit in the
Collection Account (i) all installments of Monthly P&I due on or after the
related Prefunding Cut-Off Date and received by the Servicer at least two
Business Days prior to such Prefunding Transfer Date; (ii) the proceeds of each
Full Prepayment of any Prefunded Contract and all partial prepayments on Simple
Interest Contracts received by the Servicer on or after the related Prefunding
Cut-Off Date and at least two Business Days prior to such Prefunding Transfer
Date; and (iii) all Net Liquidation Proceeds and Net Insurance Proceeds received
with respect to a Financed Vehicle to which a Prefunded Contract being
transferred on such date relates, received on or after the related Prefunding
Cut-Off Date and at least two Business Days prior to such Prefunding Transfer
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
related Cut-Off Date received by it on the Contracts together with the proceeds
of all Full Prepayments on all Contracts and all partial prepayments on Simple
Interest Contracts, and any accompanying interest. The Servicer shall likewise
deposit in the Collection Account within two Business Days of receipt all Net
Liquidation Proceeds and Net Insurance Proceeds. As of the last day of each
Collection Period, all amounts received in each Collection Period shall be
applied by the Servicer with respect to each Contract, first, to the Servicer as
additional servicing compensation any amounts due for late fees, extension fees
or similar charges, second to the payment of Monthly P&I, and third, in the case
of partial prepayments on Precomputed Contracts, to the Payahead Account. The
foregoing requirements for deposit in the Collection Account are exclusive, it
being understood that collections in the nature of late payment charges or
extension fees may, but need not be deposited in the Collection Account and may
be retained by the Servicer as additional servicing compensation.
With respect to payments of Monthly P&I made by Obligors to the
Servicer's lock box, the Servicer shall direct the Person maintaining the lock
box to deposit the amount collected on the Contracts within one Business Day to
the Clearing Account. Such amounts shall be withdrawn from
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the Clearing Account and deposited in the Collection Account no later than the
next following Business Day.
In order to facilitate the servicing of the Contracts by the Servicer,
the Servicer shall retain, subject to and only to the extent permitted by the
provisions of this Agreement, all collections on the Contracts prior to the time
they are remitted or credited, in accordance with such provisions, to the
Collection Account or the Payahead Account, as the case may be. The Servicer
acknowledges that the unremitted collections on the Contracts are part of the
Trust Property and the Servicer agrees to act as custodian and bailee of the
Indenture Trustee, the Issuer and the Insurer in holding such monies and
collections. The Servicer agrees, for the benefit of the Indenture Trustee, the
Issuer, the Noteholders 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 Trust Agent; provided that any such
fees not paid as of a Distribution Date shall be paid as provided in Section
4.03(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 Class B Final Scheduled Distribution Date. The Servicer shall not
extend the Maturity Date of a Contract except as provided in clause (ii) of the
preceding sentence. Except as explicitly permitted by this paragraph,
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the Servicer shall not change any material term of a Contract, including but not
limited to the interest rate, the payment amounts or due dates, or the property
securing such Contract.
SECTION 3.03. REALIZATION UPON CONTRACTS.
The Servicer shall use its best efforts, consistent with the servicing
standard specified in Section 3.01, to repossess or otherwise convert the
ownership of the Financed Vehicle securing any Contract as to which no
satisfactory arrangements can be made for collection of delinquent payments.
Such servicing procedures may include reasonable efforts to realize upon any
recourse to Dealers and selling the Financed Vehicle at public or private sale.
In connection with such repossession or other conversion, the Servicer shall
follow such practices and procedures as it shall deem necessary or advisable and
as shall be normal and usual for prudent holders of retail installment sales
contracts and as shall be in compliance with all applicable laws, and, in
connection with the repossession of any Financed Vehicle or any contract in
default, may commence and prosecute any proceedings in respect of such Contract
in its own name or, if the Servicer deems it necessary, in the name of the
Issuer or the Indenture Trustee or on behalf of the Issuer or the Indenture
Trustee. The Servicer's obligations under this Section are subject to the
provision that, in the case of damage to a Financed Vehicle from an uninsured
cause, the Servicer shall not be required to expend its own funds in repairing
such motor vehicle unless it shall determine (i) that such restoration will
increase the proceeds of liquidation of the related Contract, after
reimbursement to itself for such expenses and (ii) that such expenses will be
recoverable by it either as Liquidation Expenses or as expenses recoverable
under an applicable insurance policy or under an insurance reserve established
by the Servicer. The Servicer shall be responsible for all other costs and
expenses incurred by it in connection with any action taken in respect of a
Defaulted Contract; provided, however, that it shall be entitled to
reimbursement of such costs and expenses to the extent they constitute
Liquidation Expenses or expenses recoverable under an applicable insurance
policy. All Net Liquidation Proceeds and Net Insurance Proceeds shall be
deposited directly in or credited to the Collection Account (without deposit in
any intervening account) to the extent required by Section 4.02.
SECTION 3.04. INSURANCE.
The Servicer shall cause to be maintained the Blanket Insurance Policy,
and the Servicer shall cause the Indenture Trustee to be the named payee
thereunder with respect to the Contracts; provided, however, that this
obligation may be eliminated or modified in any manner (and this Agreement shall
be amended in accordance with any such elimination or modification as the
parties to the Insurance Agreement and the Rating Agencies may agree) with the
consent of the Insurer but without any requirement to obtain the consent of any
Noteholders.
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 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 and the Insurance Agreement, neither the
Servicer nor Onyx shall make, nor shall the Issuer or Noteholders 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 or the related Prefunding
Transfer Date, as applicable, 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
Noteholders 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.
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(b) The Servicer represents and warrants as of the Closing Date:
(i) The Servicer (1) has been duly organized, is validly
existing and in good standing as a corporation organized
and existing under the laws of the State of Delaware,
(2) has qualified to do business as a foreign
corporation and is in good standing in each jurisdiction
where the character of its properties or the nature of
its activities makes such qualification necessary, and
(3) has full power, authority and legal right to own its
property, to carry on its business as presently
conducted, and to enter into and perform its obligations
under this Agreement.
(ii) The execution and delivery by the Servicer of this
Agreement are within the corporate power of the Servicer
and have been duly authorized by all necessary corporate
action on the part of the Servicer. Neither the
execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated,
nor compliance with the provisions hereof, will conflict
with or result in a breach of, or constitute a default
under, any of the provisions of any law, governmental
rule, regulation, judgment, decree or order binding on
the Servicer or its properties or the Certificate of
Incorporation or Bylaws of the Servicer, or any of the
provisions of any indenture, mortgage, contract or other
instrument to which the Servicer is a party or by which
it is bound or result in the creation or imposition of
any lien, charge or encumbrance upon any of its property
pursuant to the terms of any such indenture, mortgage,
contract or other instrument.
(iii) Other than consents that have been obtained prior to the
Closing Date, the Servicer is not required to obtain the
consent of any other party or any consent, license,
approval or authorization, or registration or
declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery,
performance, validity or enforceability of this
Agreement.
(iv) This Agreement has been duly executed and delivered by
the Servicer and, assuming the due authorization,
execution and delivery hereof by the Issuer, the Trust
Agent and the Indenture Trustee, constitutes a legal,
valid and binding obligation of the Servicer enforceable
against the Servicer in accordance with its terms
(subject to applicable bankruptcy and insolvency laws
and other similar laws affecting the enforcement of
creditors' rights generally).
(v) There are no actions, suits or proceedings pending or,
to the knowledge of the Servicer, threatened against or
affecting the Servicer, before or by any court,
administrative agency, arbitrator or governmental body
with respect to any of the transactions contemplated by
this Agreement, or which will, if determined
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adversely to the Servicer, materially and adversely
affect it or its business, assets, operations or
condition, financial or otherwise, or materially and
adversely affect the Servicer's ability to perform its
obligations under this Agreement. The Servicer is not in
default with respect to any order of any court,
administrative agency, arbitrator or governmental body
so as to materially and adversely affect the
transactions contemplated by the above-mentioned
documents.
(vi) The Servicer has obtained or made all necessary
consents, approvals, waivers and notifications of
creditors, lessors and other nongovernmental persons, in
each case, in connection with the execution and delivery
of this Agreement, and the consummation of all the
transactions herein contemplated.
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH BY SERVICER.
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the covenants, representations and warranties set forth in Section
3.06 or of the covenants set forth in Sections 3.02 or 3.05. Unless the breach
shall have been cured within 30 days following such discovery or receipt of
notice of such breach, the Servicer shall purchase any Contract materially and
adversely affected by such breach from the Issuer. As consideration for the
Contract, the Servicer shall remit the Purchase Amount on the Business Day
preceding the Servicer Report Date next succeeding the end of such 30-day cure
period in the manner specified in Section 4.02(a). The sole remedy of the
Issuer, the Indenture Trustee, or the Noteholders with respect to a breach of
Section 3.02, 3.05 or 3.06 shall be to require the Servicer to purchase
Contracts pursuant to this Section 3.07; provided, however, that the Servicer
shall indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the
Issuer, the Custodian and the Noteholders 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 Initial Contract as of the
Initial 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;
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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.
SECTION 3.09. REPORTING BY THE SERVICER.
(a) No later than 3:00 p.m. New York City time on each Servicer Report
Date, the Servicer shall deliver (by telex, facsimile, electronic transmission,
first class mail, overnight courier or personal delivery) to the Issuer, the
Trust Agent, the Indenture Trustee and the Insurer a statement (the
"DISTRIBUTION DATE STATEMENT") setting forth with respect to the next succeeding
Distribution Date:
(i) the Note Interest Distributable Amount for such
Distribution Date;
(ii) the Note Principal Distributable Amount for such
Distribution Date and the portion of the Note Principal
Distributable Amount, if any, constituting the
Accelerated Principal Distributable Amount;
(iii) the Note Distributable Amount for such Distribution
Date;
(iv) the Premium payable to the Insurer;
(v) the amount to be on deposit in the Spread Account on
such Distribution Date, before and after giving effect
to deposits thereto and withdrawals therefrom to be made
in respect of such Distribution Date;
(vi) the amount of the withdrawal, if any, required to be
made from the Spread Account by the Indenture Trustee
pursuant to Section 4.04(b);
(vii) the aggregate Servicing Fee with respect to the
Contracts for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee, the
Indenture Trustee and Trust Agent with respect to the
related Collection Period;
(ix) the amount of any Note Interest Carryover Shortfall and
Note 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;
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(xi) the Net Collections and the Policy Claim Amount, if any,
for such Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received
for Defaulted Contracts;
(xiii) the net credit losses and Cram Down Losses for the
Collection Period;
(xiv) the number and net outstanding balance of Contracts for
which the Financed Vehicle has been repossessed;
(xv) the Pool Balance;
(xvi) for each Distribution Date occurring during and
immediately following the end of the Funding Period, the
amount on deposit in each of the Prefunding Account and
the Capitalized Interest Account on such Distribution
Date, before and after giving effect to withdrawals
therefrom to be made in respect of such Distribution
Date; and
(xvii) for the Mandatory Partial Redemption Date, the Mandatory
Partial Redemption Amount, if any.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Servicer, which Officers' Certificate shall state that the
computations reflected in such statement were made in conformity with the
requirements of this Agreement.
(b) On each Servicer Report Date, the Servicer shall deliver to the
Issuer, the Trust Agent, the Indenture Trustee and the Insurer a report, in
respect of the immediately preceding Collection Period, setting forth the
following:
(i) the aggregate amount, if any, paid by or due from it for
the purchases of Contracts which the Seller or the
Servicer has become obligated to repurchase or purchase
pursuant to Sections 2.03 or 3.07;
(ii) the net amount of funds which have been deposited in or
credited to the Collection Account or the Payahead
Account in respect of such Collection Period (including
amounts, if any, collected during the next preceding
Collection Period and deposited in the Payahead Account
pursuant to Section 4.02) after giving effect to all
permitted deductions therefrom pursuant to Section 4.02;
(iii) with respect to each Contract that became a Liquidated
Contract during the Collection Period, the following
information:
(A) its Contract Number;
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(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:
(A) its Contract Number; and
(B) the date of such Full Prepayment;
(v) the Contract Numbers, Monthly P&I, Principal Balances
and Maturity Dates of all Contracts which became
Defaulted Contracts during such Collection Period;
(vi) any other information relating to the Contracts
reasonably requested by the Owner Trustee, the Trust
Agent, the Indenture Trustee or the Insurer;
(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;
(viii) with respect to each Distribution Date during and
immediately following the end of the Funding Period, the
Capitalized Interest Amount, if any, with respect to the
related Collection Period and the amount, if any,
withdrawn from the Capitalized Interest Account pursuant
to this Agreement;
(ix) during the Funding Period, the remaining balance in the
Prefunding Account; and
(x) for the Mandatory Partial Redemption Date, the Mandatory
Partial Redemption Amount, if any.
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SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Servicer shall deliver to the Issuer, the Trust Agent, the
Indenture Trustee and the Insurer, on or before March 31, 2001 and on or before
March 31 of each fiscal year thereafter, an Officers' Certificate of the
Servicer stating that (i) a review of the activities of the Servicer during the
preceding fiscal year (since the Closing Date in the case of the first of such
Officers' Certificates required to be delivered) and of its performance under
this Agreement has been made under such officers' supervision and (ii) to the
best of such officers' knowledge, based on such review, the Servicer has
fulfilled all its obligations under this Agreement throughout such year and that
no default under this Agreement has occurred and is continuing, or, if there has
been a default in the fulfillment of any such obligation, specifying each such
default known to such officer and the nature and status thereof.
(b) The Servicer shall deliver to the Issuer, the Trust Agent, the
Indenture Trustee, the Insurer and each Rating Agency promptly after having
obtained knowledge thereof, but in no event 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 31, 2001 and on or before March 31 of each fiscal
year thereafter, the Servicer at its expense shall cause a firm of nationally
recognized independent certified public accountants (who may also render other
services to the Servicer) to furnish a report to the Issuer, the Trust Agent,
the Indenture Trustee and the Insurer to the effect that (i) they have audited
the balance sheet of the Servicer as of the last day of said fiscal year and the
related statements of operations, retained earnings and cash flows for such
fiscal year and have issued an opinion thereon, specifying the date thereof,
(ii) they have also reviewed the reports delivered by the Servicer pursuant to
Section 3.09(b) and certain other documents and the records relating to the
servicing of the Contracts and the distributions on the Notes under this
Agreement, (iii) their audit and review as described under clauses (i) and (ii)
above was made in accordance with generally accepted auditing standards and
accordingly included such tests of the accounting records and such other
auditing procedures as they considered necessary in the circumstances, and (iv)
their audits and reviews described under clauses (i) and (ii) above disclosed no
exceptions which, in their opinion, were material, relating to the servicing of
such Contracts in accordance with this Agreement and the making of distributions
on the Notes 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 Noteholders, the Issuer, the Owner Trustee, the Trust Agent, the Indenture
Trustee and the Insurer reasonable access to the Contract Files and Contract
Documents. Access shall be afforded without charge, but only upon reasonable
request and during normal business hours at designated offices of the Servicer.
Nothing in this Section shall affect the obligation of the Servicer to observe
any applicable law prohibiting disclosure of information regarding the Obligors,
and the failure of the Servicer to provide access to information as a result of
such obligation shall not constitute a breach of this Section.
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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 Trust Agent, the Indenture Trustee, the Insurer,
the Custodian and the Noteholders harmless against any and all claims, losses,
penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any reasonable other costs, fees and expenses that the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian or Noteholders 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 in writing if a claim is made by a third party with respect to
the Contracts, (ii) assume, with the consent of the Issuer, the Indenture
Trustee and the Insurer, the defense of any such claim, (iii) pay all expenses
in connection therewith, including counsel fees, and (iv) promptly pay,
discharge and satisfy any judgment or decree which may be entered with respect
to such claim against the Servicer, the Issuer, the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Insurer, the Custodian or the Noteholders.
SECTION 3.15. REPORTS TO NOTEHOLDERS AND THE RATING AGENCIES.
(a) The Indenture Trustee at its own expense shall provide to each
Noteholder 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 Noteholder 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 Noteholder 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 Noteholders 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, 55 Water Street, New York,
New York 10041, (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.
SECTION 3.16. ACCESS TO LIST OF NOTEHOLDERS' NAMES AND ADDRESSES.
The Indenture Trustee shall furnish or cause to be furnished to the
Servicer, the Insurer and the Seller, within 15 days after receipt by the
Indenture Trustee of a written request therefor from the Servicer, the Insurer
or the Seller, a list, in such form as the Servicer, the Insurer or the Seller
may reasonably require, of the names and addresses of the Noteholders as of the
most recent Record Date. If three or more Noteholders, or one or more
Noteholders evidencing not less than 25% of the
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aggregate outstanding principal balance of the Notes (hereinafter referred to as
"Applicants"), apply in writing to the Indenture Trustee, and such application
states that the Applicants desire to communicate with other Noteholders with
respect to their rights hereunder or under the Notes and such application is
accompanied by a copy of the communication that such Applicants propose to
transmit, then the Indenture 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 Noteholders. Each Noteholder, by
receiving and holding a Note, agrees with the Servicer, the Seller and the
Indenture Trustee that none of the Servicer, the Seller or the Indenture 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.
ARTICLE IV
DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO NOTEHOLDERS
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 2000-B,
The Chase Manhattan Bank, Indenture Trustee" (the
"COLLECTION ACCOUNT");
(ii) an account denominated "Payahead Account - OT 2000-B,
The Chase Manhattan Bank, as agent" (the "PAYAHEAD
ACCOUNT");
(iii) an account denominated "Spread Account - OT 2000-B, The
Chase Manhattan Bank, Indenture Trustee" (the "SPREAD
ACCOUNT");
(iv) an account denominated "Note Distribution Account - OT
2000-B, The Chase Manhattan Bank, Indenture Trustee"
(the "NOTE DISTRIBUTION ACCOUNT");
(v) an account denominated "Prefunding Account - OT 2000-B,
The Chase Manhattan Bank, Indenture Trustee" (the
"PREFUNDING ACCOUNT"); and
(vi) an account denominated "Capitalized Interest Account -
OT 2000-B, The Chase Manhattan Bank, Indenture Trustee"
(the "CAPITALIZED INTEREST ACCOUNT").
In addition, the Indenture Trustee shall establish a trust account to be
maintained in the Corporate Trust Office of the Indenture Trustee denominated
"Payment Account - OT 2000-B, The Chase Manhattan Bank, Indenture Trustee" (the
"PAYMENT ACCOUNT" and, together with the accounts described in clauses (i)
through (vi) above, the "TRUST ACCOUNTS"). The Trust Accounts shall be
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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 Notes and to the Contracts and, if applicable, the related Eligible
Investments. The location and account numbers of the Trust Accounts as of the
Closing Date are set forth on Schedule II. The Servicer shall give the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee and the Insurer at
least five Business Days' written notice of any change in the location of any
Trust Account and any related account identification information. All amounts,
financial assets and investment property held in, deposited in or credited to,
from time to time, the Trust Accounts (other than the Payahead Account and
investment income credited to the Collection Account and the Capitalized
Interest 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, the Spread Account, the Prefunding Account and
the Capitalized Interest Account shall be invested by the Indenture Trustee in
Eligible Investments pursuant to Section 4.01(c).
(b) If as of the last day of a Collection Period a payment in an amount
less than the scheduled payment of Monthly P&I has been made for a Precomputed
Contract with respect to which amounts have been deposited in or credited to the
Payahead Account in a preceding Collection Period in accordance with Sections
3.01 and 4.02(a), the Servicer shall withdraw from the Payahead Account and
deposit into the Collection Account by the fifth Business Day preceding the
Distribution Date immediately succeeding such Collection Period the amount equal
to the difference between such scheduled payment of Monthly P&I and such actual
payment, to the extent available from amounts deposited in or credited to the
Payahead Account with respect to such Contract. Amounts on deposit in the
Payahead Account shall be invested by the depository institution maintaining the
Payahead Account upon the written direction of the Servicer in Eligible
Investments which mature not later than the fifth Business Day prior to the
Distribution Date to which such amounts relate, and any earnings on such
Eligible Investments shall be payable to the Servicer 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, the Spread Account, the
Prefunding Account and the Capitalized Interest 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, the Spread Account, the Prefunding Account and the
Capitalized Interest 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, the Spread Account, the
Prefunding Account and the Capitalized Interest 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. All income or other gain from investment of
monies deposited in or credited to the Collection Account shall be paid by the
depository institution maintaining the Collection Account to the Servicer
monthly. All income or other gain from investment of monies deposited in or
credited to the Spread Account, the Prefunding Account and the Capitalized
Interest Account shall be deposited in or credited to such account immediately
upon receipt, and any loss resulting from such investment shall be charged to
such account. The
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maximum permissible maturities of any investments of funds in the Collection
Account, the Spread Account and the Capitalized Interest Account on any date
shall not be later than the Servicer Report Date immediately preceding the
Distribution Date next succeeding the date of such investment; provided,
however, that if the Indenture Trustee is maintaining the applicable account,
such funds may be invested by the Indenture Trustee in Eligible Investments of
the entity that is serving as Indenture Trustee (or an entity which meets the
criteria in clauses (i)(b) or (i)(c) of the definition of Eligible Account) that
mature on the Business Day prior to such Distribution Date. The maximum
permissible maturity of any investments of funds in the Prefunding Account on
any date shall not be later than the next Business Day. No investment in
Eligible Investments may be sold prior to its maturity. The funds on deposit in
the Payment Account and the Note Distribution Account shall remain uninvested.
(d) In the absence of written direction as provided above, all funds
held in the Spread Account, the Collection Account, the Prefunding Account and
the Capitalized Interest 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, the
Spread Account, the Prefunding Account or the Capitalized Interest Account, the
directions of the Insurer shall control unless an Insurer Default shall have
occurred and be continuing, in which case the directions of the Servicer shall
control unless a Servicer Default shall have occurred and be continuing, in
which case the directions of the Issuer shall control. In addition, the
Indenture Trustee shall not in any way be held liable by reason of any
insufficiency in any of the foregoing Trust Accounts held by or on behalf of the
Indenture Trustee resulting from any investment loss on any Eligible
Investments.
SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION
UPON POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT.
(a) Subject to the last sentence of this Section 4.02(a), the Servicer
shall remit or credit all payments on a daily basis, within two Business Days of
receipt, by or on behalf of Obligors on the Contracts, and all Net Liquidation
Proceeds and Net Insurance Proceeds and other monies as required to the
Collection Account. Prior to the Servicer Report Date, amounts with respect to
Precomputed Contracts which are otherwise required to be deposited in or
credited to the Collection Account pursuant to the immediately preceding
sentence shall instead be deposited in or credited to the Payahead Account to
the extent that such amounts are installments of Monthly P&I which are due in a
Collection Period relating to a Distribution Date subsequent to the Distribution
Date immediately succeeding the date of receipt. The Servicer or the Seller, as
the case may be, each shall remit or credit to the Collection Account each
Purchase Amount to be remitted by it with respect to Purchased Contracts on the
Business Day preceding the Servicer Report Date next succeeding (i) the end of
the Collection Period in which the applicable Contract is repurchased by the
Seller pursuant to Section 2.03, in the case of the Seller or (ii) the last day
of the related cure period specified in Section 3.07, in the case of the
Servicer.
(b) On the Servicer Report Date, the Servicer shall determine the Policy
Claim Amount, if any, which exists with respect to the related Distribution Date
and submit a Distribution Date Statement pursuant to Section 3.09.
(c) The Indenture Trustee shall, no later than 12:00 p.m., New York City
time, on the third Business Day prior to each Distribution Date (based solely on
the information contained in the
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Distribution Date Statement, delivered on the applicable Servicer Report Date),
make a claim under the Policy for the Policy Claim Amount, if any, for such
Distribution Date by delivering to the Fiscal Agent, with a copy to the Insurer,
the Trust Agent and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "DEFICIENCY NOTICE") specifying the Policy
Claim Amount, if any, for such Distribution Date, separately identifying the
amount of the Policy Claim Amount payable in respect of each Class of Notes.
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 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. 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).
(d) So long as Onyx is the Servicer, the Servicer may make deposits in
or credits to the Collection Account net of amounts to be paid to the Servicer
under this Agreement. Notwithstanding the foregoing, the Servicer shall maintain
the records and accounts for such deposits and credits on a gross basis.
(e) On the Business Day immediately preceding each Distribution Date,
based solely on the Distribution Date Statement, the Servicer shall cause funds
equal to the amount of Net Collections available with respect to such
Distribution Date on deposit in the Collection Account to be withdrawn from the
Collection Account and deposited into the Payment Account to be distributed
pursuant to Section 4.03.
SECTION 4.03. DISTRIBUTIONS.
On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee will apply the Net Collections available from
the Payment Account, along with any amounts deposited into the Payment Account
from the Prefunding Account and the Capitalized Interest 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, the Servicing Fee, including any
accrued and unpaid Servicing Fees with respect to one or
more prior Collection Periods;
(ii) to the Indenture Trustee, the Owner Trustee and the
Trust Agent, any accrued and unpaid fees of the
Indenture Trustee, the Owner Trustee and the Trust
Agent, in each case to the extent such fees have not
been previously paid by the Servicer or the
Administrator;
(iii) to the Note Distribution Account, the Note Interest
Distributable Amount to be paid first to the Holders of
the Class A Notes at their respective Interest Rates and
second to the Holders of the Class B Notes;
(iv) to the Note Distribution Account, if such Distribution
Date is a Note Final Scheduled Distribution Date for any
Class of Notes, the Note Principal Distributable Amount
to the extent of the remaining
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principal amount of such Class of Notes, to be paid to
the Holders of such Class of Notes;
(v) if such Distribution Date is the Mandatory Partial
Redemption Date, to the Note Distribution Account, the
Mandatory Partial Redemption Amount, to be distributed
to the Holders of the Class A-1 Notes if such amount is
less than or equal to $50,000, and to be distributed to
the Holders of all Notes, pro rata based on the then
outstanding principal balance of the Notes, if such
amount exceeds $50,000;
(vi) to the Note Distribution Account, solely from Net
Collections (plus amounts transferred from the
Prefunding Account representing earnings from
investments therein and amounts transferred from the
Capitalized Interest Account, if any) remaining after
giving effect to the distributions 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, 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,
and fifth, to the Holders of the Class B Notes until the
principal amount of the Class B Notes has been reduced
to zero;
(vii) to the Insurer, after giving effect to the distributions
described in clauses (i) through (vi) above, any
amounts, including the Premium, owing to the Insurer
under the Insurance Agreement;
(viii) to the Spread Account, after giving effect to the
distributions described in clauses (i) through (vii)
above, the amount, if any, required to increase the
amount therein to the Spread Account Maximum for such
Distribution Date; and
(ix) any amounts remaining after distribution of the
Accelerated Principal Distributable Amount as part of
the Note Principal Distributable Amount, if applicable,
shall be deposited into the Spread Account.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date and any amounts received by the Indenture Trustee as a
result of a claim under the Policy that represent the Deficiency Amount with
respect to such Distribution Date shall be applied by the Indenture Trustee
solely to make the deposits and distributions referred to in clauses (i) through
(iv) above, in that order of priority, but only to the extent that the Net
Collections (plus amounts transferred to the Payment Account from the Prefunding
Account, representing earnings from investments therein, and amounts transferred
to the Payment Account from the Capitalized Interest Account, if any) with
respect to such Distribution Date, after application as provided above, were
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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 (plus amounts
transferred to the Payment Account from the Prefunding Account, representing
earnings from investments therein, and amounts transferred to the Payment
Account from the Capitalized Interest Account, if any) with respect to such
Distribution Date available to distribute the amounts referred to in clause (vi)
above, the Indenture Trustee shall distribute the amounts so received from the
Insurer as provided in such clause.
SECTION 4.04. SPREAD ACCOUNT.
(a) The Spread Account will be held for the benefit of the Noteholders
and the Insurer.
(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, clauses (i) though (iv) with respect
to such Distribution Date exceeds the amount of Net Collections (plus amounts
transferred to the Payment Account from the Prefunding Account, representing
earnings from investments therein, and amounts transferred to the Payment
Account from the Capitalized Interest Account, if any) 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. Funds shall also be withdrawn from the Spread Account
by the Indenture Trustee, as directed by the Insurer to reimburse the Insurer
for draws with respect to any Preference Amount. If the amount of cash on
deposit in the Spread Account on any Distribution Date (after giving effect to
all deposits thereto or withdrawals therefrom on such Distribution Date other
than withdrawals relating to distributions to be made pursuant to this sentence)
exceeds the maximum amount of the cash component of the Spread Account, as
specified in the definition of "Spread Account Maximum" set forth in the
Insurance Agreement, the Indenture Trustee shall, based solely on the
Distribution Date Statement, distribute any excess first, to the Insurer, to the
extent of any amounts owing to the Insurer pursuant to the Insurance Agreement,
and second, to the Note 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 Noteholders will have no further rights in, or
claims to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 4.01(c), and such investments shall be made in accordance
with written instructions from the Servicer; provided that, if the Indenture
Trustee does not receive any such written instructions prior to any date on
which an investment decision must be made, the funds held in the Spread Account
will remain uninvested. All such investments shall be made in the name of the
Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
(d) Ninety-one (91) days following the termination of the Trust pursuant
to Section 9.01 of the Trust Agreement, any amounts on deposit in the Spread
Account, after payments of amounts due to the Noteholders or the Insurer
pursuant to the Insurance Agreement, shall be paid to the holders of the
Residual Interests; provided, however, that if an insolvency event of the type
described in Section 7.01(d) or (e) with respect to any of the Seller, the
Servicer, the Indenture Trustee or the Noteholders (collectively, the "POTENTIAL
PREFERENCE PARTIES") shall have occurred during the period ending ninety-one
(91) days after payment in full to the Noteholders of all amounts payable with
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respect to the Notes and the payment in full of the Repayment Amount then the
funds on deposit in the Spread Account shall be retained until the date all
applicable statute of limitation periods with respect to all applicable
preference actions and periods have expired and during which time no preference
action or similar proceeding at law or in equity is commenced, at which time,
the Insurer shall direct the Indenture Trustee in writing to release all amounts
in the Spread Account to the holders of the Residual Interests, pro rata in
proportion to percentage portion of the Residual Interest (the "PERCENTAGE
INTEREST") of each such holder of the Residual Interests. In the event that any
preference action referred to above is commenced during any applicable statute
of limitations period, funds deposited in the Spread Account shall be retained
until the date on which there is a final determination by a court of competent
jurisdiction as to whether any payment or payments made pursuant to this
Agreement, the Indenture, the Indemnification Agreement or the Insurance
Agreement is recoverable from any of the Insurer or the Noteholders. 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 Noteholders and the Insurer may be required to pay and then to
the holders of the Residual Interests, pro rata in proportion to their
Percentage Interests. If it is determined that any such payment is not
recoverable, the Insurer shall direct the Indenture Trustee in writing to
release all amounts on deposit in the Spread Account to the holders of the
Residual Interests, pro rata in proportion to their Percentage Interests, upon
receipt by the Insurer of both a final order determining that such payments are
not recoverable and an opinion of nationally recognized bankruptcy counsel to
the effect that such appeal is final and not subject to appeal. For purposes of
compliance with this Section 4.04(d), the Indenture Trustee shall be entitled to
rely on written instructions from the Insurer.
(e) In the event any of the holders of the Residual Interests seek to
have the amounts remaining on deposit in the Spread Account released to holders
of the Residual Interests prior to the expiration of the ninety-one (91) day
period specified in Section 4.04(d) above, then, if (i) amounts payable with
respect to the Notes have been fully paid to the Noteholders, (ii) the Repayment
Amount and all other amounts owing to the Insurer pursuant to the Insurance
Agreement have been paid in full, (iii) no case or proceeding described in
Sections 7.01(d) or (e) has occurred with respect to the Potential Preference
Parties, and (iv) either (A) the long term unsecured debt of the Seller and the
Servicer is rated "BBB-" or better by Standard & Poor's and "Baa3" or better by
Moody's, (B) the Insurer shall have received a favorable opinion or opinions,
satisfactory in form and substance to the Insurer, from counsel to Onyx, the
Seller and the Servicer, to the effect that in the event a case or proceeding
described in Sections 7.01(d) or (e) were to occur with respect to the Potential
Preference Parties, no payment pursuant to this Agreement or the Insurance
Agreement would be recoverable from either the Insurer or the Noteholders, and
such other matters as the Insurer may reasonably request, or (C) the Insurer, in
its sole discretion, elects to have the remaining amounts on deposit in the
Spread Account paid to the holders of the Residual Interests, then, in any such
event, all remaining amounts on deposit in the Spread Account shall be paid to
the holders of the Residual Interests, pro rata in proportion to their
Percentage Interests.
SECTION 4.05. STATEMENTS TO NOTEHOLDERS.
(a) On each Distribution Date, the Indenture Trustee shall include with
each distribution to each Noteholder 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,
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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), separately
identifying the aggregate amount included therein of any
(i) Full Prepayments of principal on Precomputed
Contracts and (ii) Full Prepayments and partial
prepayments of principal on Simple Interest Contracts;
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes);
(iii) 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,
specifying as to whether such amount is to be (A)
deposited into the Payment Account, (B) paid to the
Insurer or (C) deposited into the Note Distribution
Account for distribution to the holders of the Residual
Interests pursuant to Section 4.04;
(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 Trust
Agent and the Indenture Trustee, with respect to the
related Collection Period;
(ix) the amount of any Note Interest Carryover Shortfall and
Note 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;
(xv) the Pool Balance and the Note Pool Factor for each Class
of Notes as of such Distribution Date after giving
effect to the distribution made on such Distribution
Date;
(xvi) on each Distribution Date occurring during and
immediately following the end of the Funding Period, the
amount on deposit in each of the Prefunding Account and
the Capitalized Interest Account on such Distribution
Date, before and after giving effect to withdrawals
therefrom to be made in respect of such Distribution
Date;
(xvii) on each Distribution Date occurring during and
immediately following the end of the Funding Period, the
amounts of investment earnings and other amounts
transferred from the Prefunding Account and the amounts
transferred from the Capitalized Interest Account to the
Payment Account; and
(xviii) on the Distribution Date immediately following the end
of the Funding Period, the Mandatory Partial Redemption
Amount.
Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of original principal amount of a
Note.
(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 Residual
Interest Instruments shall furnish to each Person who on any Record Date during
such calendar year shall have been a Holder of a Note or a Residual Interest
Instrument, respectively, a statement or statements containing the sum of the
amounts set forth in clauses (i) and (ii) above for such calendar year and such
other information as is reasonably necessary for the preparation of such
Person's federal income tax return in respect of the Notes or Residual Interest
Instruments or, in the event such Person shall have been a Holder of a Note or a
Residual Interest Instrument during a portion of such calendar year, for the
applicable portion of such year, for the purposes of such Noteholder's or
Residual Interestholder's preparation of federal income tax returns.
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SECTION 4.06. CAPITALIZED INTEREST ACCOUNT.
(a) Pursuant to Section 4.01, the Servicer shall establish the
Capitalized Interest Account in the name of the Indenture Trustee for the
benefit of the Noteholders and the Insurer.
(b) On the Closing Date, the Seller shall deposit the Initial
Capitalized Interest Amount into the Capitalized Interest Account.
(c) On the Business Day immediately preceding each Distribution Date,
based solely on the Distribution Date Statement, the Indenture Trustee shall
withdraw or cause to be withdrawn funds equal to the Capitalized Interest Amount
with respect to such Distribution Date from amounts on deposit in the
Capitalized Interest Account and deposit or cause to be deposited such funds
into the Payment Account, to be distributed pursuant to Section 4.03.
(d) On each Distribution Date during and immediately following the
Funding Period, based on the written instructions of the Servicer, the Indenture
Trustee shall release to the Seller from the Capitalized Interest Account an
amount such that the balance remaining in the Capitalized Interest Account after
such release and after any transfer of the Capitalized Interest Amount to the
Payment Account pursuant to Section 4.06(c) will equal the Maximum Capitalized
Interest Amount. On the Distribution Date following the Mandatory Partial
Redemption Date, the Indenture Trustee shall release to the Seller any amounts
remaining on deposit in the Capitalized Interest Account after giving effect to
the required distribution to Noteholders on such date.
SECTION 4.07. PREFUNDING ACCOUNT.
(a) Pursuant to Section 4.01, the Servicer shall establish the
Prefunding Account in the name of the Indenture Trustee for the benefit of the
Noteholders and the Insurer.
(b) On the Closing Date, the Seller shall deposit into the Prefunding
Account an amount equal to the Prefunded Amount from the proceeds of the sale of
the Notes. Provided the Indenture Trustee has received the related Transfer
Certificate on the Business Day immediately preceding the Prefunding Transfer
Date, the Indenture Trustee shall withdraw from the Prefunding Account an amount
equal to the Outstanding Principal Balance of the Prefunded Contracts (as
indicated in the Transfer Certificate and determined as of the related
Prefunding Cut-Off Date) that have been delivered to the Custodian, on behalf of
the Indenture Trustee, and wire such amount by federal funds to the Seller's
account listed in the Transfer Certificate relating to such Prefunding Transfer
Date by 1:00 p.m. California time on such Prefunding Transfer Date.
(c) If any amount remains on deposit in the Prefunding Account on the
last day of the Funding Period, such amount shall be invested at the written
instruction of the Servicer in a single Eligible Investment which matures on the
Business Day preceding the Mandatory Partial Redemption Date; provided, that in
the event no such Eligible Investment is available, such amount shall not be
invested but shall be held in the Prefunding Account uninvested.
(d) On the Business Day preceding the Mandatory Partial Redemption Date,
the Servicer shall instruct the Indenture Trustee in writing to withdraw the
Mandatory Partial Redemption Amount from the Prefunding Account and deposit such
amount in the Payment Account on such Business Day.
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(e) On the Business Day immediately preceding each Distribution Date
following a Collection Period during which amounts are on deposit in the
Prefunding Account, the Indenture Trustee shall withdraw the earnings on all
investments in the Prefunding Account and deposit such amount in the Payment
Account on such Business Day.
SECTION 4.08. REQUIREMENTS RELATING TO PREFUNDING ACCOUNT.
The transfer of Prefunded Contracts to the Trust shall be subject to
each of, and Prefunded Contracts shall not be transferred to the Trust to the
extent such transfer would result in the violation of any of, the following
restrictions and limitations, as well as the conditions set forth in Section
2.01(c):
(a) The period during which Prefunded Contracts may be transferred to
the Trust (the "FUNDING PERIOD") shall begin on the Closing Date and end no
later than the earliest to occur of: (i) the date on which the balance in the
Prefunding Account is less than $2,500.00; (ii) the date on which a Servicer
Default or an Indenture Event of Default occurs; or (iii) the close of business
on July 26, 2000.
(b) The aggregate principal amount of the Prefunded Contracts shall not
exceed 25% of the principal balance of the Notes offered as of the Closing Date.
(c) Each of the Prefunded Contracts shall meet the same terms and
conditions for eligibility as those of the Funded Contracts; provided, that the
terms and conditions for determining the eligibility of a Prefunded Contract may
be changed if such changes receive prior approval by the Insurer, with notice
given to each Rating Agency.
(d) The transfer of Prefunded Contracts shall not result in any Note
receiving a lower credit rating from a Rating Agency upon termination of the
Funding Period than the rating obtained as of the time of the initial issuance
of the Notes by the Trust without regard to the Policy.
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.
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS.
The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the
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obligations of the Seller hereunder and executes and delivers to the Issuer, the
Trust Agent, the Indenture Trustee and the Insurer an agreement in form and
substance reasonably satisfactory to the Issuer, the Trust Agent, the Indenture
Trustee and the Insurer, which contains an assumption by such successor entity
of the due and punctual performance and observance of each covenant and
condition to be performed or observed by the Seller under this Agreement.
SECTION 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS.
The Seller and any director or officer or employee or agent of the
Seller may rely in good faith on any document of any kind, prima facie properly
executed and submitted by any Person respecting any matters arising hereunder.
The Seller shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 5.04. SELLER NOT TO RESIGN.
Subject to the provisions of Section 5.02, the Seller shall not resign
from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. SELLER MAY OWN NOTES.
The Seller and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Notes 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. Notes 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 Classes of the Notes.
ARTICLE VI
THE SERVICER
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.
Subject to Section 7.02, the Servicer shall be liable in accordance
herewith only to the extent of the obligations specifically undertaken by the
Servicer under this Agreement. Such obligations shall include the following:
(a) The Servicer shall defend, indemnify and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian, their respective officers, directors, agents and employees, and the
Noteholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian (if the Custodian is not the Servicer) and their respective officers,
directors, agents and employees from and against any taxes that may at any time
be asserted against the Issuer, the Owner Trustee, the Trust Agent, the
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Indenture Trustee, the Insurer or the Custodian with respect to the transactions
contemplated herein and in the other Basic Documents, including, without
limitation, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, not including (i) in the case of the
Issuer, any taxes asserted with respect to, and as of the date of, the sale of
the Contracts to the Issuer or the issuance and original sale of the Notes, or
(ii) any taxes asserted with respect to ownership of the Contracts, or (iii) any
federal or other income taxes arising out of distributions on the Notes) and
costs and expenses in defending against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian (if the Custodian is not the Servicer), their respective officers,
directors, agents and employees and the Noteholders 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 (other than errors in judgment),
willful misfeasance or bad faith of the Servicer or the Seller in the
performance of their respective duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian (if the Custodian is not the Servicer) 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 and, in the
case of the Owner Trustee and the Trust Agent, in the Trust Agreement and, in
the case of the Indenture Trustee, in the Indenture, except to the extent that
such cost, expense, loss, claim, damage or liability (i) shall be due to the
willful misfeasance, bad faith or negligence of the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Insurer or the Custodian, as the case may be;
(ii) relates to any tax other than the taxes with respect to which either the
Servicer shall be required to indemnify the Issuer, the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Insurer or the Custodian; or (iii) shall arise
from the Trust Agent's, the Owner Trustee's or the Indenture Trustee's breach of
any of their respective representations or warranties set forth herein, in the
Trust Agreement or in the Indenture.
(e) In addition to the indemnification obligations set forth above, and
without duplication, the Servicer shall indemnify the Owner Trustee, the Trust
Agent, each co-trustee and their respective officers, directors, employees,
successors, assigns, agents and servants 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 in any way relating
to or arising out of the Trust Agreement, the other Basic Documents, the Trust
Estate (as defined in the Trust Agreement), the administration of the Trust
Estate or the action or inaction of the Owner Trustee, Trust Agent or any
co-trustee under the Trust Agreement, except to the extent that such
liabilities, obligations, losses, damages, taxes, claims, actions, suits, costs,
expenses and disbursements (i) shall be due to the willful misconduct or
negligence of the Owner Trustee, the Trust Agent, a co-trustee or such other
party seeking indemnification, as the case may be, or (ii) shall arise from the
inaccuracy of any representation or warranty contained in Section 7.03 of the
Trust Agreement expressly made by the Owner Trustee or the Trust Agent, as the
case may be. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 6.01(e), the choice of legal counsel by
the Owner Trustee or the Trust Agent, as applicable, shall be subject to the
approval of the Servicer, which approval shall not be unreasonably withheld.
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(f) 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.
(g) This Section 6.01 shall survive the resignation or removal of the
Owner Trustee, the Trust Agent, the Custodian and the Indenture Trustee and the
termination of this Agreement, the Trust Agreement and the Indenture.
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or substantially all of its assets
as an entirety to any Person or engage in any corporate transaction pursuant to
which the surviving or successor entity is not Onyx Acceptance Corporation,
unless (i) such entity is at least rated investment grade by the Rating
Agencies, (ii) the Insurer shall have consented thereto in writing and (iii)
such entity executes and delivers to the Issuer, the Indenture Trustee and the
Insurer an agreement in form and substance reasonably satisfactory to the
Issuer, the Indenture Trustee and the Insurer, which contains an assumption by
such successor entity of the due and punctual performance and observance of each
covenant and condition to be performed or observed by the Servicer under this
Agreement.
SECTION 6.03. PERFORMANCE OF OBLIGATIONS.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to be
taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Property, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT.
(a) The Servicer shall not resign from the duties and obligations hereby
imposed on it except upon determination by its Board of Directors that by reason
of change in applicable legal requirements the continued performance by the
Servicer of its duties hereunder would cause it to be in violation of such legal
requirements in a manner which would result in a material adverse effect on the
Servicer or its financial condition, said determination to be evidenced by a
resolution of its Board of Directors to such effect accompanied by an Opinion of
Counsel, satisfactory to the Issuer, the Insurer and the Indenture Trustee, to
such effect. No such resignation shall become effective
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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 assigned by such Rating Agency. No such resignation by
the Servicer shall affect the obligation of the Servicer to repurchase Contracts
pursuant to Section 3.07.
(b) Except as specifically permitted in this Agreement, the Servicer may
not assign this Agreement or any of its rights, powers, duties or obligations
hereunder; provided that (i) the Servicer may assign this Agreement in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with Section 6.02(b).
(c) Except as provided in Sections 6.04(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 or the Trust
shall have been terminated as provided by the terms of the Trust Agreement, and
shall survive the exercise by the Issuer, the Indenture Trustee or the Insurer
of any right or remedy under this Agreement, or the enforcement by the Issuer,
the Indenture Trustee or any Noteholder, or the Insurer of any provision of the
Notes, 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 or the
Noteholders, except as provided under this Agreement, for any action taken or
for refraining from the taking of any action pursuant to this Agreement 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 Noteholders under this Agreement
and the other Basic Documents.
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ARTICLE VII
DEFAULT
SECTION 7.01. EVENTS OF DEFAULT.
If any one of the following events (each, a "SERVICER DEFAULT") shall
occur and be continuing:
(a) any failure by the Servicer to deposit or credit to the Collection
Account or the Payahead Account any amount required under this Agreement to be
so deposited or credited that shall continue unremedied for a period of three
Business Days after written notice of such failure is received by the Servicer
from the Issuer, the Indenture Trustee or the Insurer or after discovery of such
failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee, the Issuer or the Trust Agent
shall not have received a report in accordance with Section 3.09 by the Servicer
Report Date with respect to which such report is due;
(c) any 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 Noteholders, the Insurer, the Issuer, the Owner Trustee 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, the Owner Trustee 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
(2) so long as no Insurer Default has occurred and is continuing, by the
Insurer;
(d) the entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer or the Seller in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or the Seller
or of any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Servicer or the Seller and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days or the commencement of an involuntary case under the federal bankruptcy
laws, as now or hereinafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law and such case is not dismissed
within 60 days;
(e) the commencement by the Servicer or the Seller of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law, or
the consent by the Servicer or the Seller to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian, sequestrator
or other similar official of the Servicer or the Seller or of any substantial
part of its property or the making by the Servicer or the Seller of an
assignment for the benefit of creditors or the failure by the
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Servicer or the Seller generally to pay its debts as such debts become due or
the taking of corporate action by the Servicer or the Seller in furtherance of
any of the foregoing;
(f) any change of control of the Servicer in violation of the covenant
set forth in Section 6.02 hereof;
(g) any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty as to which Section 2.03 or 3.07 shall be applicable
so long as the Servicer or the Seller shall be in compliance with Section 2.03
or 3.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Noteholders 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
Holders evidencing in the aggregate not less than 25% of the outstanding amount
of the Highest Priority Class or, so long as no Insurer Default has occurred and
is continuing, 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;
(h) a Trigger Event (as defined in the Insurance Agreement) shall have
occurred;
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
Holders evidencing not less than 25% of the outstanding principal amount of the
Highest Priority Class, acting together as a single class or the Indenture
Trustee acting on behalf of the Noteholders, and not the Seller, by notice then
given in writing to the Servicer (and to the Insurer, the Indenture Trustee and
the Issuer if given by the Noteholders) 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 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.
Notwithstanding the foregoing, in the event that Onyx is not the
Servicer, then all references to the Seller in this Section 7.01 shall be of no
force and effect, and no act of Seller shall constitute a Servicer Default
hereunder.
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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 or resignation of the Servicer pursuant to Section 6.04, the Insurer shall
appoint a successor servicer ("SUCCESSOR SERVICER"). Upon the termination of the
Servicer by the Indenture Trustee or the Noteholders pursuant to Section 7.01,
or upon the resignation of the Servicer pursuant to Section 6.04 in the event
that the Insurer is not entitled to appoint a successor servicer by operation of
Section 9.08, (i) if the Notes have not been paid in full, the Indenture Trustee
shall be the Successor Servicer, and (ii) if the Notes have been paid in full,
the Owner Trustee, acting at the direction of the Holders of Residual Interest
Instruments evidencing not less than 51% of the Percentage Interests shall
appoint a Successor Servicer. The Successor Servicer shall succeed to all the
responsibilities, duties and liabilities of the Servicer under this Agreement,
except that such Successor Servicer shall not be obligated to purchase Contracts
pursuant to Section 3.07. If the Indenture Trustee acts as Successor Servicer,
the Indenture Trustee shall be entitled to such compensation (whether payable
out of the Collection Account or otherwise) as the Servicer would have been
entitled to under this Agreement if no such notice of termination shall have
been given. Notwithstanding the foregoing, if the Notes have not been paid in
full, the Indenture Trustee may, if it shall be unwilling to act, or shall, if
it shall be legally unable to so act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution, having a net
worth of not less than $50,000,000 and whose regular business shall include the
servicing of automotive retail installment sales contracts, as the successor to
the Servicer under this Agreement. Pending appointment of any such Successor
Servicer, the Indenture Trustee shall act in such capacity as provided above. In
connection with such appointment, the Indenture Trustee or any other Successor
Servicer may make such arrangements for the compensation of such successor out
of payments on Contracts as it, the Insurer and such successor shall agree;
provided, however, (i) that such amount shall equal the product of a fixed
percentage rate and the Principal Balance, as of the commencement of each
Collection Period, of each Contract and (ii) that no such compensation shall be
in excess of that previously permitted the Servicer under this Agreement. The
Indenture Trustee and such 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 RESIDUAL INTERESTHOLDERS.
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article, the Trust Agent shall give prompt written notice
thereof to Residual Interestholders 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 or the Seller, as the case may be, 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, Holders evidencing not less than 51% of
the outstanding principal amount of the Highest Priority Class, on behalf of all
Noteholders, shall have the right to waive any default by the Servicer or the
Seller, as the case may be, in the performance of its obligations under this
Agreement
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except a Servicer Default in making any required deposits to or payment from the
Trust Accounts in accordance with this Agreement. A Servicer Default in making
any required deposits to or payment from the Trust Accounts in accordance with
this Agreement may only be waived with the consent of the Insurer (if no Insurer
Default shall have occurred and be continuing) and Holders evidencing 100% of
the outstanding principal amount of the Notes. No such waiver shall impair the
Insurer's or the Noteholders' rights with respect to subsequent defaults.
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS.
The Indenture Trustee, upon the actual knowledge of a Responsible
Officer of the Indenture Trustee, shall promptly notify the Insurer of (i) the
commencement of any of the events or proceedings (individually, an "INSOLVENCY
PROCEEDING") described in the Section 7.01(d) or 7.01(e) hereof and (ii) the
making of any claim in connection with any Insolvency Proceeding seeking the
avoidance as a preferential transfer (a "PREFERENCE CLAIM") of any payment of
principal of, or interest on, any Notes. Any Preference Amounts paid by the
Insurer shall be reimbursed to the Insurer as provided in Section 4.03 and
4.04(b). Each Noteholder, by its purchase of Notes, the Owner Trustee, the Trust
Agent and the Indenture Trustee hereby agree that, so long as no Insurer Default
has occurred and is continuing, the Insurer may at any time during the
continuation of an Insolvency Proceeding direct all matters relating to such
Insolvency Proceeding, including, without limitation, (i) all matters relating
to any Preference Claim, (ii) the direction of any appeal of any order relating
to any Preference Claim and (iii) the posting of any surety or performance bond
pending any such appeal. The Insurer shall be subrogated to the rights of the
Indenture Trustee, the Owner Trustee, the Trust Agent and each Noteholder 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 Trust Agent, the
Indenture Trustee and the Insurer not later than the 10th day prior to the
specified Distribution Date and not earlier than the 15th day of the month prior
to the month of the specified Distribution Date. To exercise such option, the
Servicer shall pay to the Indenture Trustee for the benefit of the Noteholders,
by deposit in the Collection Account on the Business Day immediately preceding
the related Distribution Date, the greater of (i) the sum of (x) the Pool
Balance on the date of repurchase plus (y) accrued and unpaid interest on the
Contracts and (ii) the sum of (x) the aggregate unpaid principal amount of the
Notes plus (y) accrued and unpaid interest thereon plus (z) all amounts due to
the Insurer under the Insurance Agreement. Such purchase shall be deemed to have
occurred on the last day of the related Collection Period.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee, the Trust Agent, the Insurer and the Indenture
Trustee as soon as practicable after the
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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 Residual
Interestholders will succeed to the rights of the Noteholders hereunder and the
Owner Trustee and, on its behalf, the Trust Agent, will succeed to the rights
of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement.
SECTION 8.02. TRANSFER TO THE INSURER.
If (i) there are one or more Outstanding Contracts at the end of the
Collection Period ending immediately prior to the Class B Final Scheduled
Distribution Date and (ii) an amount sufficient to pay the Note Distributable
Amount on the Class B Final Scheduled Distribution Date has been deposited with
the Indenture Trustee by the Insurer for the benefit of the Noteholders, then on
the Class B Final Scheduled Distribution Date, the Class B Notes shall be deemed
to be transferred by the Class B Noteholders to the Insurer or its designee as
purchaser thereof at the opening of business on the Class B Final Scheduled
Distribution Date and the Indenture Trustee shall execute, and the Trust Agent
shall authenticate and deliver to the Insurer or its designee, in the name of
the Insurer or its designee, as the case may be, a new Class B Note evidencing
the entire outstanding principal amount of the Class B Notes. Such new Class B
Note shall have the same terms as the Class B Notes deemed transferred by the
Class B Noteholders. No service charge shall be made for the issuance of such
Class B Note to the Insurer or its designee, but the Indenture Trustee or Trust
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge imposed in connection therewith. Such transfer shall not
diminish or restrict the Insurer's rights hereunder or under the Insurance
Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENT.
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, collectively, with the
prior written consent of the Insurer, but without the consent of any
Noteholders, 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 Noteholder; and provided, further, that any such
amendment shall be deemed not to materially and adversely affect the interests
of any Noteholder if the Person requesting the amendment obtains a letter or
confirmation 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 Notes by such Rating Agency.
(b) This Agreement may also be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, with the consent of the
Insurer and the Holders of Notes evidencing in the aggregate not less than 51%
of the principal amount of the Notes then outstanding, acting together as a
single class, for the purpose of adding any provisions to or changing in any
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manner or eliminating any of the provisions of this Agreement, or of modifying
in any manner the rights of the Noteholders; 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 (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 all affected Noteholders.
(c) Promptly after the execution of any such amendment or consent, the
Indenture Trustee shall furnish the written notification of the substance of
such amendment or consent to each Noteholder, respectively.
(d) It shall not be necessary for the consent of Noteholders 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 of the execution thereof shall be subject to such
reasonable requirements as the Indenture Trustee may prescribe. Any consent by a
Noteholder to an amendment of the Agreement shall be conclusive and binding on
such Noteholder and upon all future Noteholders of such Note and of any Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon such Note.
(e) The Trust Agent and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trust Agent's or
the Indenture Trustee's own rights, duties or immunities under this Agreement or
otherwise and any such amendment shall be unenforceable in its entirety absent
the execution of such amendment by the Trust Agent and the Indenture Trustee.
SECTION 9.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Issuer, the Noteholders, the Indenture Trustee, the
Trust Agent and the Insurer in the Contracts and in the proceeds thereof. The
Servicer shall deliver (or cause to be delivered) to the Trust Agent and the
Indenture Trustee file- stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name, identity
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed in accordance with Section
9.02(a) seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given the Insurer, the Trust Agent and the Indenture
Trustee at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Trust Agent
and the Indenture Trustee at least 60 days' prior written notice of any
relocation of the principal executive office of the Seller and the Servicer if,
as a result of such relocation, the applicable provisions of the UCC would
require the filing of any amendment of any previously filed financing or
continuation statement or of any new financing statement. The Servicer shall at
all times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.
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(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 or installment loan agreements to any
prospective purchaser, lender or other transferee, the Servicer shall give or
cause to be given to such prospective purchaser, lender or other transferee
computer tapes, records or print-outs (including any restored from back-up
archives) that, if they shall refer in any manner whatsoever to any Contract,
shall indicate clearly that such Contract has been sold and is owned by the
Issuer and has been pledged to the Indenture Trustee.
(g) The Servicer shall permit the Owner Trustee, the Trust Agent, the
Indenture Trustee and the Insurer and their respective agents, at any time
during normal business hours, to inspect, audit and make copies of and abstracts
from the Servicer's records regarding any Contract.
(h) Upon request, the Servicer shall furnish to the Owner Trustee, the
Trust Agent, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Property, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
(i) The Servicer shall deliver to the Trust Agent, the Indenture Trustee
and the Insurer:
(i) promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of
Counsel stating that, in the opinion of such counsel,
all financing statements and continuation statements
have been executed and filed that are necessary fully to
preserve and protect the interest of the Issuer and the
Indenture Trustee in the Contracts, and reciting the
details of such filings or referring to prior Opinions
of Counsel in which such details are given, or (B)
stating that, in the opinion of such counsel, no such
action shall be necessary to preserve and protect such
interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more
than three months after the Closing Date an Opinion of
Counsel, dated as of a date during such 90-day period,
either (A) stating that, in the opinion of such
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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 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 TRUST AGENT AND THE INDENTURE TRUSTEE SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.04. NOTICES.
All demands, notices and communications under this Agreement shall be in
writing, personally delivered or mailed by certified mail, return receipt
requested, and shall be deemed to have been duly given upon receipt in the case
of
(i) the Seller, at 27051 Towne Centre Drive, Suite 200,
Foothill Ranch, CA 92610, Attention: John W. Hall,
President, facsimile (949) 465- 3530;
(ii) the Servicer, at 27051 Towne Centre Drive, Suite 100,
Foothill Ranch, CA 92610, Attention: Don P. Duffy,
Executive Vice President, facsimile (949) 465-3992;
(iii) the Insurer, at 113 King Street, Armonk, New York 10504,
Attention: Insured Portfolio Management, Structured
Finance, facsimile (914) 765-3163;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee
Corporate Trust Office (with, in the case of the Issuer,
a copy to the Seller);
(v) the Trust Agent, at the Trust Agent Office;
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<PAGE> 80
(vi) the Indenture Trustee, at the Corporate Trust Office;
(vii) Moody's, to Moody's Investors Service, Inc., ABS
Monitoring Department, 99 Church Street, New York, New
York 10007;
(viii) Standard & Poor's, to Standard & Poor's Ratings
Services, 55 Water Street, New York, New York 10041,
Attention: Asset Backed Surveillance Department; and
(ix) the Custodian, to Onyx Acceptance Corporation, 27051
Towne Centre Drive, Suite 100, Foothill Ranch, CA 92610,
Attention: Don P. Duffy, Executive Vice President,
facsimile (949) 465-3992.
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 Noteholder shall be given by first class mail, postage prepaid,
at the address of such Holder as shown in the Note Register. Any notice so
mailed within the time prescribed herein shall be conclusively presumed to have
been duly given, whether or not such Noteholder shall receive such notice.
SECTION 9.05. SEVERABILITY OF PROVISIONS.
If the covenants, agreements, provisions or terms of this Agreement
shall be for any reason whatsoever held invalid, then such covenants,
agreements, provisions or terms shall be deemed severable from the remaining
covenants, agreements, provisions or terms of this Agreement and shall in no way
affect the validity or enforceability of the other provisions of this Agreement
or of the Notes or 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 Notes and (B) the Issuer, the Indenture Trustee and the Insurer have
consented to such transfer or assignment, or (ii) the Insurer, the Issuer, the
Indenture Trustee and Holders of Notes of each Class evidencing not less than
51% of the outstanding amount of Notes of such Class 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 parties other than the
Insurer and, solely for the purposes of Section 6.01, the Owner Trustee and the
Trust Agent, shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement.
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<PAGE> 81
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 are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders; provided, however, that
without the consent of each Noteholder 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 or Residual Interest Instrument, (ii) adversely affect in
any material respect the interests of the Holders of any Notes or Residual
Interest Instruments or (iii) alter the rights of any such Holder to consent to
such amendment.
Notwithstanding any provision in this Agreement to the contrary, for so
long as an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Seller, the Indenture Trustee, the
Servicer or the Trust Agent pursuant to the terms of this Agreement, nor shall
the consent of the Insurer be required with respect to any action (or waiver of
a right to take action) to be taken by the Trust, the Seller, the Indenture
Trustee, the Servicer, the Trust Agent or the Holders of the Notes; provided,
that the consent of the Insurer shall be required at all times with respect to
any amendment of this Agreement.
SECTION 9.09. HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
SECTION 9.10. ASSIGNMENT BY ISSUER.
The Seller hereby acknowledges and consents to any mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Noteholders and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 9.11. LIMITATION OF LIABILITY OF CERTAIN PARTIES.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by Bankers Trust (Delaware) not in its individual
capacity but in its capacity as Owner Trustee of the Issuer and by The Chase
Manhattan Bank not in its individual capacity but in its capacity as Indenture
Trustee and Trust Agent, and in no event shall Bankers Trust (Delaware) in its
individual capacity, The Chase Manhattan Bank in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer.
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<PAGE> 82
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 2000-B
as Issuer
By: Bankers Trust (Delaware), not in its
individual capacity but solely as
Owner Trustee
By: /s/ PETER BECKER
--------------------------------------
Name: Peter Becker
Title: Attorney-in-Fact
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Seller
By: /s/ MICHAEL A. KRAHELSKI
-----------------------------------------
Michael A. Krahelski
Senior Vice President
ONYX ACCEPTANCE CORPORATION, as Servicer
and Custodian
By: /s/ DON P. DUFFY
-------------------------------------
Don P. Duffy
Executive Vice President and
Chief Financial Officer
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as Indenture
Trustee and as Trust Agent
By: /s/ KRISTEN DRISCOLL
--------------------------------------
Name: Kristen Driscoll
Title: Trust Officer
<PAGE> 83
SCHEDULE I-A
SCHEDULE OF INITIAL CONTRACTS
[On file with the Servicer]
<PAGE> 84
SCHEDULE I-B
SCHEDULE OF SUBSEQUENT CONTRACTS
[On file with the Servicer]
<PAGE> 85
SCHEDULE II
LOCATION AND ACCOUNT NUMBERS OF TRUST ACCOUNTS
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<PAGE> 86
EXHIBIT A
FORM OF APPOINTMENT OF CUSTODIAN
[Name and address of Custodian]
Re: Onyx Acceptance Owner Trust 2000-B
Auto Loan Backed Notes, Series 2000-B
Dear Sirs:
Reference is hereby made to the Sale and Servicing Agreement (the "Sale
and Servicing Agreement") dated as of April 1, 2000 by and among Onyx Acceptance
Owner Trust 2000-B, as Issuer (the "Issuer"), Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation and The Chase Manhattan Bank, as Indenture
Trustee (the "Indenture Trustee") and Trust Agent ("Trust Agent"). Terms used
herein which are defined in the Sale and Servicing Agreement have the respective
meanings set forth in the Sale and Servicing Agreement.
You are revocably appointed as the agent of and bailee for the Indenture
Trustee to act as custodian, in accordance with the terms and provisions of the
Sale and Servicing Agreement, of the Contract Documents relating to each
Contract and the related Obligor and Financed Vehicle. Please acknowledge your
acceptance of such appointment and your agreement to act as custodian in
accordance with the terms and provisions of the Sale and Servicing Agreement by
signing below in the space indicated therefor.
By accepting such appointment you acknowledge that (i) the Indenture
Trustee (if the Notes have not been paid in full and the Indenture has not been
satisfied and discharged) and the Issuer or (ii) the Insurer, may terminate such
appointment at any time, with or without cause, by written notice to you.
Very truly yours,
THE CHASE MANHATTAN BANK,
not in its individual capacity,
but solely as Indenture Trustee
By:
--------------------------------------
Name:
Title:
<PAGE> 87
ONYX ACCEPTANCE OWNER TRUST 2000-B
By: Bankers Trust (Delaware),
not in its individual capacity, but
solely as Owner Trustee
By:
Name:
Title:
ACCEPTED AND AGREED:
[Name of Custodian]
By:
------------------------------------
Name:
Title:
MBIA Insurance Corporation
By:
------------------------------------
Name:
Title:
<PAGE> 88
EXHIBIT B
FORM OF POLICY
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<PAGE> 89
EXHIBIT C-1
FORM OF TRANSFER CERTIFICATE
The Transfer Certificate, dated as of _________, 2000, is delivered
pursuant to Section 2.01(c) of the Sale and Servicing Agreement dated as of
April 1, 2000 (the "AGREEMENT") between Onyx Acceptance Owner Trust 2000-B, as
Issuer (the "ISSUER"), Onyx Acceptance Financial Corporation, as Seller (the
"SELLER"), Onyx Acceptance Corporation, as Servicer and Custodian, and The Chase
Manhattan Bank, as Indenture Trustee and as Trust Agent (the "INDENTURE
TRUSTEE"). Terms used in this Transfer Certificate which are not defined herein
have meanings assigned to such terms in the Agreement.
I, __________________, the ____________ of the Seller, do hereby
certify:
1. Attached hereto as Schedule I is a list of Prefunded Contracts
setting forth the Contract Number, Date of Origination, Maturity Date, Monthly
P&I, Original Principal Balance, Outstanding Principal Balance and APR for each
such Prefunded Contract. Such Schedule I is a list of Prefunded Contracts
referred to in the definition of "Schedule of Contracts" in the Agreement, and
is deemed incorporated into and made a part thereof. Such Prefunded Contracts
have an aggregate Outstanding Principal Balance of $________________, and all
Contract Documents relating thereto have been delivered to the Custodian as of
the date hereof. The Prefunding Cut-Off Date with respect to the Prefunded
Contracts transferred on the date hereof is _____________, 2000.
2. The aggregate Outstanding Principal Balance of all Prefunded
Contracts as of their respective Prefunding Cut-Off Dates delivered to the
Custodian, on behalf of the Indenture Trustee, pursuant to this Transfer
Certificate and each Transfer Certificate delivered up to the date hereof and
after the Closing Date is $_________, which amount is less than or equal to the
Prefunded Amount.
3. Each of the conditions set forth in Sections 2.01(c) and 4.08 of the
Agreement has been met as of this Prefunding Transfer Date.
4. The representations and warranties as set forth in Section 2.02(a)
and (d) of the Agreement with respect to the Seller and the Prefunded Contracts
delivered hereunder are true and correct as of this Prefunding Transfer Date.
Please transfer immediately available funds by 4:00 New York time today
in the amount of $___________________ to Seller in accordance with the wire
instructions below.
<PAGE> 90
IN WITNESS WHEREOF, the undersigned has caused this Transfer Certificate
to be delivered to the Issuer, the Indenture Trustee and the Insurer as of the
date first above written.
ONYX ACCEPTANCE FINANCIAL CORPORATION
By:
Name:
Office:
Wiring Instructions:
Beneficiary:
____________: __________________________
__________________________
__________________________
__________________________
ABA: __________________________
__________________________
Bank Acct. # __________________________
$ Amount: __________________________
Notation: Proceeds from 2000-B Owner Trust Prefunding Account
Consented to and agreed to (if the balance in the Prefunding Account prior to
the Prefunding Transfer Date to which this certificate relates exceeds
$___________).
MBIA Insurance Corporation
<PAGE> 91
EXHIBIT C-2
FORM OF PREFUNDING CLOSING DATE CERTIFICATE
This Prefunding Closing Date Certificate, dated as of _________, 2000,
is delivered pursuant to Section 2.01(j) of the Sale and Servicing Agreement
dated as of April 1, 2000 (the "AGREEMENT") between Onyx Acceptance Owner Trust
2000-B, as Issuer, Onyx Acceptance Financial Corporation, as Seller (the
"SELLER"), Onyx Acceptance Corporation, as Servicer and Custodian, and The Chase
Manhattan Bank, as Indenture Trustee and as Trust Agent (the "INDENTURE
TRUSTEE"). Terms used in this Prefunding Closing Date Certificate which are not
defined herein have meanings assigned to such terms in the Agreement.
I, __________________, the ____________ of the Seller, do hereby
certify:
1. All Contract Documents relating to the Prefunded Contracts have been
delivered to the Custodian, on behalf of the Indenture Trustee, on or before the
date hereof.
2. The aggregate Outstanding Principal Balance of all Prefunded
Contracts as of their respective Prefunding Transfer Dates conveyed to the
Issuer and pledged to the Indenture Trustee, as described in the Prefunding
Transfer Certificates delivered on and after the Closing Date up to the date
hereof, is $_________, which amount is less than or equal to the original
Prefunded Amount.
3. Each of the conditions set forth in Section 2.01(j) of the Agreement
has been met as of the Prefunding Closing Date and each of the conditions set
forth in Sections 2.01(c) and 4.08 of the Agreement was met as of each
Prefunding Transfer Date.
IN WITNESS WHEREOF, the undersigned has caused this Prefunding Closing
Date Certificate to be delivered to each Rating Agency, the Insurer and the
Indenture Trustee as of the date first above written.
ONYX ACCEPTANCE FINANCIAL CORPORATION
By:
----------------------------------------
Name:
Office:
