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EXHIBIT 10.121
SUBORDINATED SECURITY AGREEMENT
SUBORDINATED SECURITY AGREEMENT, dated as of August 9, 1999 (as amended,
supplemented or otherwise modified and in effect, this "Agreement"), between
ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware corporation (together with
its successors and assigns, "Recco") and ONYX ACCEPTANCE CORPORATION, a Delaware
corporation (together with its successors and assigns, the "Seller").
W I T N E S S E T H :
WHEREAS, pursuant to the Sale and Servicing Agreement (as amended, the
"Sale Agreement") dated as of the date hereof between the Seller and Recco, the
Seller from time to time sells to Recco and Recco from time to time purchases
from the Seller certain loans secured by automobiles, vans and light trucks (the
"Contracts");
WHEREAS, a portion of the purchase price for the Contracts is
represented by a subordinated note issued by Recco to the Seller (the
"Subordinated Note");
WHEREAS, Recco has entered into the Security Agreement, dated as of the
date hereof (as amended, the "Security Agreement") with The Chase Manhattan
Bank, as Funding Agent for the benefit of the Secured Parties, pursuant to which
Recco has granted to the Funding Agent a first priority security interest in the
Purchased Contracts and certain other collateral;
WHEREAS, in order to secure the Subordinated Note, Recco has granted to
the Seller a subordinated security interest in the Purchased Contracts and
certain other collateral, subject to the prior rights of the Funding Agent for
the benefit of the Secured Parties; and
WHEREAS, the Seller's security interests in the Purchased Contracts and
certain other collateral granted pursuant to this Agreement is subordinated to
the rights of the Funding Agent for the benefit of the Secured Parties and its
rights to exercise any remedies under this Agreement are limited for so long as
any amounts secured under the Security Agreement are outstanding.
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NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. Defined Terms.
(1) As used in this Agreement or any certificate or other document
made or delivered pursuant hereto, the capitalized terms used
herein and therein shall, unless otherwise defined herein, have
the meanings assigned to them in the Definitions List dated as
of the date hereof that is attached to the Sale Agreement, which
is incorporated herein by reference (the "Definitions List").
(2) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined in the
Definitions List and accounting terms partly defined in the
Definitions List to the extent not defined, shall have the
respective meanings given to them under GAAP.
(3) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and paragraph references are to this Agreement unless
otherwise specified.
(4) Capitalized terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
(5) The following terms that are defined in the UCC are used herein
as so defined: Chattel Paper, Equipment, General Intangibles,
Instruments and Proceeds.
SECTION 2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity or otherwise) of the Subordinated Note and all other obligations of
Recco to the Seller hereunder (collectively, the "Obligations") and subject to
the prior rights of the Funding Agent under the Security Agreement, Recco hereby
assigns, pledges, grants, conveys, transfers, delivers and sets over to the
Seller a security interest in all Recco's right, title and interest in, to and
under the following, whether now owned or
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hereafter acquired, in each case only as related to the Purchased Contracts
(collectively, the "Collateral"). For further clarification, all Collateral as
heretofore described in this Section 2 shall relate to and be in respect of
Purchased Contracts, subject to any and all provisos, as applicable, expressly
included in the definition thereof.
(1) all chattel paper, including, without limitation, the Purchased
Contracts and other contracts related to the Purchased Contracts
(as the same may be amended, modified, supplemented, restated or
replaced from time to time) and amounts paid or payable with
respect thereto;
(2) all Files (including all Dealer Assignments) and Contract Lists,
and all right, title and interest of Recco in and to the
documents, agreements and instruments included in the Files,
including, without limitation, rights of recourse of Recco
against Vehicle Dealers;
(3) all Insurance Policies and all rights of Recco in all Insurance
Policies;
(4) all security interests, Liens, guaranties, mortgages and other
encumbrances in favor of or assigned or transferred to Recco in
and to Purchased Contracts and Vehicles, and all accessions
thereto and replacements thereof, and in any other property in
which a security interest is assigned or transferred to Recco;
(5) all of Recco's Equipment, general ledger sheets, files, records,
books of account, invoices, bills, certificates or documents of
ownership, bills of sale, business papers, correspondence,
tapes, cards, computer tapes and all other data and data storage
systems (whether in the possession of Recco or any other Person)
relating to any of the foregoing;
(6) all deposit accounts, moneys, deposits, funds, accounts and
instruments relating to the foregoing;
(7) the Collection Account (including, without limitation, all funds
at any time on deposit therein and all Permitted Investments in
which such funds may at any time be invested);
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(8) all Operative Documents to which Recco is a party, including,
without limitation, all rights of Recco to amounts due or to
become due under or in connection with such agreements;
(9) any Hedge Agreement; and
(10) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
SECTION 3. Notice to Obligors. Subject to the terms of Section 21 hereof
and the provisions of the other Operative Documents, at any time upon the
request of the Seller, Recco shall notify the Obligors that the Purchased
Contracts have been reassigned to the Seller and that payments in respect
thereof shall be made directly to the Seller. Subject to the terms of Section 21
hereof and the provisions of the other Operative Documents, the Seller may in
its own name or in the name of others communicate with the Obligors to verify
with them to its satisfaction the existence, amount and terms of any Purchased
Contracts.
(1) Analysis of Contracts. Subject to the terms of Section 21 hereof
and the provisions of the other Operative Documents, the Seller
shall have the right to make test verifications of the Purchased
Contracts in any manner and through any medium that it considers
advisable, and Recco shall furnish or cause to be furnished by
the Servicer all such assistance and information as the Seller
may require in connection therewith. In addition, at any time
and from time to time, upon the Seller's request, Recco shall
cause independent public accountants or others satisfactory to
the Seller to furnish to the Seller reports showing
reconciliations, aging and test verifications of, and trial
balances for, the Purchased Contracts.
(2) Proceeds. Subject to the terms of Section 21 hereof and the
provisions of the other Operative Documents, any Proceeds, when
collected by Recco, shall be forthwith turned over to the Seller
by Recco in the exact form received, duly endorsed by Recco to
the Seller, and until so turned over, shall be held by Recco in
trust for the Seller. Such Proceeds shall continue to be
collateral security for all of the Obligations and shall not
constitute payment thereof until applied as set forth in the
Security Agreement. Subject to the terms of Section 21 hereof
and the provisions of the other Operative Documents, upon the
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request of the Seller, Recco shall deliver or cause to be
delivered to the Seller all Files relating to the Purchased
Contracts, including original and other documents evidencing,
and relating to, the transactions which created the Purchased
Contracts, including, without limitation, all original orders,
invoices, receipts and similar documents.
(3) Document Delivery. Subject to the terms of Section 21 hereof (it
being understood that for so long as the Security Agreement is
in effect the provisions of that Agreement shall control), upon
the request of the Seller, Recco shall deliver to the Seller the
original Contract and complete Files relating to each Purchased
Contract. In addition, Recco shall ▇▇▇▇ the following notation
on the computer tape for such Contract and File: "The Contracts
herein have been pledged to secure the debt of Recco to Onyx
Acceptance Corporation, and its successors and assigns pursuant
to that certain Subordinated Security Agreement dated as of
August 9, 1999 between Onyx Acceptance Corporation and Recco".
SECTION 4. Representations and Warranties. Recco hereby represents and
warrants that:
(1) Title; No Other Liens. Except for the Lien granted to the
Funding Agent pursuant to the Security Agreement and the Lien
granted to the Seller pursuant to this Agreement and the other
Liens permitted pursuant to any of the other Operative
Documents, Recco owns each item of the Collateral free and clear
of any and all Liens or claims of others. No security agreement,
financing statement or other public notice with respect to all
or any part of the Collateral is on file or of record in any
public office, except such as may have been filed in favor of
the Funding Agent pursuant to the Security Agreement and in
favor of the Seller pursuant to this Agreement or as may be
permitted pursuant to any Operative Document.
(2) Perfected Liens. The Liens granted pursuant to this Subordinated
Security Agreement constitute perfected Liens on the Collateral
in favor of the Seller, subject only to the prior Lien of the
Funding Agent, and are enforceable as such against all creditors
of and purchasers from Recco and, in the case of any
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Collateral constituting fixtures, against any owner or purchaser
of the real property where any of the Equipment is located and
any present or future creditor obtaining a Lien on such real
property.
(3) Chief Executive Office. Recco's chief executive office and chief
place of business is located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
(4) Locations. All Collateral is located at the addresses listed on
Schedule 4(d) hereto.
SECTION 5. Covenants. Subject to the terms of Section 21 hereof, Recco
covenants and agrees with the Seller that until the Obligations are paid in full
and the Sale Agreement is terminated:
(1) Further Documentation. At any time and from time to time, upon
the written request of the Seller, and at the sole expense of
Recco, Recco will promptly and duly execute and deliver such
further instruments and documents and take such further action
as the Seller may request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC
with respect to the Liens created hereby, including all steps
necessary to maintain perfection of the security interest of
Recco in each Vehicle; provided, however, that Recco shall not
be obligated to take any action which, in the reasonable
judgment of the Funding Agent (acting at the direction of the
Controlling Party), would violate or conflict with the terms of
the Security Agreement or any other Operative Document. Subject
to the terms of Section 21 hereof and the provisions of the
other Operative Documents, Recco also hereby authorizes the
Seller to file any such financing or continuation statement
without the signature of Recco to the extent permitted by
applicable law.
(2) Maintenance of Records. Recco will keep and maintain, or cause
to be maintained by the Servicer, at its cost and expense
satisfactory and complete records of the Collateral, including,
without limitation, a record of all payments received and all
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credits granted with respect to the Purchased Contracts. Recco
will ▇▇▇▇ or cause the Servicer to ▇▇▇▇ its books and records
pertaining to the Collateral to evidence this Agreement and the
subordinated security interest granted hereby. With the prior
written consent of the Funding Agent and the Surety Provider, at
any time upon the request of the Seller, Recco shall, during
normal business hours, turn over or cause the Servicer to turn
over any books and records to the Seller or to its designated
representatives.
(3) Compliance with Laws, etc. Recco will comply with all
Requirements of Law applicable to the Collateral or any part
thereof or to the operation of Recco's business; provided,
however, that Recco may contest any Requirement of Law in any
reasonable manner which shall not, in the reasonable opinion of
the Seller, adversely affect the Seller's rights or the priority
of its Liens on the Collateral.
(4) Compliance with Terms etc. Recco will perform and comply with
all its Contractual Obligations relating to the Subordinated
Note.
(5) Limitation on Liens on Collateral. Recco will not create, incur
or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any Lien or
claim on or to the Collateral, other than the Liens created by
the Security Agreement, the Liens created hereby and other than
as permitted pursuant to the Operative Documents, and will
defend the right, title and interest of the Seller in and to any
of the Collateral against the claims and demands of all Persons
whomsoever.
(6) Limitations on Dispositions of Collateral. Recco will not sell,
transfer, lease or otherwise dispose of any of the Collateral,
or attempt, offer or contract to do so, except as provided for
in this Agreement.
(7) Limitations on Modifications, Waivers, Extensions of Contracts.
Recco will not, and will not permit the Servicer to, (i) amend,
modify, terminate or waive any provision of any Purchased
Contract in any manner which could have an ad-
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verse effect on the value of such Purchased Contract as
Collateral, (ii) fail to exercise promptly and diligently each
and every right which Recco may have under each Purchased
Contract and (iii) act otherwise than in accordance with the
Credit and Collection Policy.
(8) Limitations on Discounts, Compromises, Extensions of Contracts.
Other than pursuant to the Credit and Collection Policy, Recco
will not, and will not permit the Servicer to, grant any
extension of the time of payment of any of the Purchased
Contracts, compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partially, any
Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(9) Maintenance of Equipment. Recco will maintain each item of
Equipment in good operating condition, ordinary wear and tear
and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
(10) Changes in Locations, Name, etc. Recco will not, without
providing 30 days prior written notice to the Seller, and
without filing any UCC financing statements necessary or
desirable (in the opinion of the Seller) to maintain the
perfection and priority of the Seller's security interest in the
Collateral, as provided for herein (i) change the location of
its chief executive office/chief place of business from that
specified in Section 4(c) or remove its books and records from
such location, (ii) permit any Equipment that it may acquire to
be kept at a location other than that specified in Section 4(d),
or (iii) change its name, identity or corporate structure to
such an extent that any financing statement filed by the Seller
in connection with this Agreement would become misleading.
SECTION 6. Seller's Appointment as Attorney-in-Fact.
(1) Powers. Subject to the terms of Section 21 hereof and the
provisions of the other Operative Documents, Recco hereby
irrevocably constitutes and appoints the Seller and any officer
or agent thereof, with full power of substitution, as its true
and
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lawful attorney-in-fact with full irrevocable power and
authority in the place and stead of Recco and in the name of
Recco or in its own name, from time to time in the Seller's
discretion, for the purpose of carrying out the terms of this
Agreement, to take any and all lawful and appropriate action and
to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this
Agreement, and, without limiting the generality of the
foregoing, Recco hereby gives the Seller the power and right, on
behalf of Recco, without notice to or assent by Recco, to do the
following:
(1) upon the occurrence and during the continuance
of any Unmatured Event of Default or Event of Default, in the
name of Recco or its own name, or otherwise, to take possession
of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due
under any Instrument, General Intangible or Purchased Contract
and to file any claim or to take any other action or proceeding
in any court of law or equity or otherwise deemed appropriate by
the Seller for the purpose of collecting any and all such moneys
due under any Instrument, General Intangible or Purchased
Contract whenever payable;
(2) to pay or discharge taxes and Liens levied or
placed on or threatened against the Collateral; and
(3) upon the occurrence and during the continuance
of any Unmatured Event of Default or Event of Default, (A) to
direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to
become due thereunder directly to the Seller or as the Seller
shall direct; (B) to ask or demand for, collect, receive payment
of and receipt for, any and all moneys, claims and other amounts
due or to become due at any time in respect of or arising out of
any Collateral; (C) to sign and endorse any invoices, freight or
express bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications, notices and
other documents in connection with any of the Collateral; (D) to
commence and prosecute any suits, actions or proceedings at law
or in equity in any court of
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competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral; (E)
to defend any suit, action or proceeding brought against Recco
with respect to any Collateral; (F) to settle, compromise or
adjust any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such discharges or
releases as the Seller may deem appropriate; and (G) generally,
to sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral pursuant to Section
8 hereof as fully and completely as though the Seller were the
absolute owner thereof for all purposes, and to do, at the
Seller's option and Recco's expense, at any time, or from time
to time, all lawful acts and things which the Seller deems
necessary to protect, preserve or realize upon the Collateral
and the Seller's Liens thereon and to effect the intent of this
Agreement, all as fully and effectively as Recco might do.
Recco hereby ratifies all that said attorneys shall lawfully do or cause
to be done by virtue hereof.
(2) Other Powers. Subject to the terms of Section 21 hereof and the
provisions of the other Operative Documents, Recco also
authorizes the Seller, at any time and from time to time, to
execute, in connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral.
(3) No Duty on Seller's Part. The powers conferred on the Seller
hereunder are solely to protect the Seller's interests in the
Collateral and shall not impose any duty upon it to exercise any
such powers. The Seller shall be accountable only for amounts
that it actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to Recco for any act or
failure to act hereunder, except for its own gross negligence or
willful misconduct.
SECTION 7. Performance by Seller of Recco's Obligations. Subject to the
terms of Section 19 hereof and the provisions of the other Operative Documents,
if Recco fails to perform or comply with any of its agreements contained herein,
the Seller, as provided for by the terms of this Agreement, shall itself perform
or comply, or otherwise cause performance or compliance, with such agreement.
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SECTION 8. Remedies. Subject to the terms of Section 21 hereof and the
provisions of the other Operative Documents, if an Event of Default shall occur
and be continuing, the Seller may exercise in addition to all other rights and
remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, the Seller, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or upon Recco or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to purchase,
or otherwise dispose of and deliver said Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the Seller
or elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Seller shall have the right upon any such
public sale or sales, and, to the extent permitted by law, upon any such private
sale or sales, to purchase the whole or any part of said Collateral so sold,
free of any right or equity of redemption in Recco, which right or equity is
hereby waived or released. Recco further agrees, at the Seller's request, to
assemble the Collateral and the Files and make them available to the Seller at
places which the Seller shall select, whether at Recco's premises or elsewhere.
The Seller shall apply the net proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Seller hereunder, including, without limitation, attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Seller may elect, and only after such application and after the
payment by the Seller of any other amount required by any provision of law,
including, without limitation, Section 9-504(1)(c) of the UCC, need the Seller
account for the surplus, if any, to Recco. To the extent permitted by applicable
law, Recco waives all claims, damages, and demands against the Seller arising
out of the repossession, retention or sale of the Collateral. If any notice of a
proposed sale or disposition of Collateral shall be required by law, such notice
shall be deemed reasonably and properly given if given (effective upon dispatch)
in any manner provided in the Sale Agreement at least 10 days before such sale
or disposition. Recco shall remain liable for any deficiency if the proceeds of
any sale or other disposition of the Collateral are
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insufficient to pay the Obligations and the expenses, including the fees and
disbursements of any attorneys employed by the Seller, to collect such
deficiency.
SECTION 9. Limitation on Seller's Duties in Respect of Collateral. The
Seller's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
UCC, shall be to deal with it in the same manner as the Seller deals with
similar property for its own account. Neither the Seller nor any of its
directors, officers, employees or agents shall be liable for failure to demand,
collect or realize upon all or any part of the Collateral or for any delay in
doing so or shall be under any obligation to sell or otherwise dispose of any
Collateral upon the request of Recco or otherwise.
SECTION 10. Powers Coupled with an Interest. All powers of attorney,
authorizations and agencies herein contained with respect to the Collateral are
irrevocable and are powers coupled with an interest.
SECTION 11. Severability. Any provision of this Agreement which is
prohibited 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, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 12. Assignment. Recco does hereby acknowledge that the Seller
may pledge or otherwise transfer the Subordinated Note and all security
therefore granted hereunder with the prior written consent of the Funding Agent
(acting at the direction of the Controlling Party). Recco hereby waives its
rights under Section 9-112 of the UCC, including without limitation all rights
under Sections 9-502(2), 9-504(1), 9-208, 9-505, 9-506, 9-507(1) and 9-208(2) of
the UCC otherwise granted to it pursuant to Section 9-112 of the UCC.
SECTION 13. Section and Paragraph Headings. The section and paragraph
headings used in this Agreement are for convenience of reference only and are
not to affect the construction hereof or be taken into consideration in the
interpretation hereof.
SECTION 14. No Waiver; Cumulative Remedies. The Seller shall not by any
act (except pursuant to the execution of a written instrument pursuant to
Section 15 hereof), delay, indulge, omit or otherwise be deemed to have waived
any right or remedy hereunder or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of
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the Seller, any right, power or privilege hereunder shall operate as a waiver
thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
or any other right, power or privilege. A waiver by the Seller of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Seller would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.
SECTION 15. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by Recco and the
Seller with the prior written consent of the Funding Agent and the Controlling
Party; provided, however, that for so long as the Security Agreement shall be in
effect, if the Funding Agent shall have consented to a waiver, amendment,
supplement or modification under the Security Agreement, the consent of the
Seller shall be deemed automatically given under the comparable provision of
this Agreement. No amendment shall be effective without prior written notice
thereof to S&P and ▇▇▇▇▇'▇. This Agreement shall be binding upon the successors
and assigns of Recco and shall inure to the benefit of the Seller and its
successors and assigns.
SECTION 16. Integration. This Agreement represents the agreement of
Recco with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Seller relative to subject
matter hereof not expressly set forth or referred to herein or in the other
Operative Documents.
SECTION 17. Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
SECTION 18. Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of New York.
SECTION 19. Termination and Release.
(1) This Agreement and the security interests created or granted
hereby shall remain in full force and effect until the
indefeasible payment in full in cash of the Obligations and the
Subordi-
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nated Note, at which time, following the receipt by the Seller
of (i) written notice from the Funding Agent and the Surety
Provider that the Obligations have been so paid, and (ii)
payment in full of the Subordinated Note, the security interest
created or granted hereby shall terminate and the Seller shall,
execute and deliver such documents and instruments (including
without limitation UCC termination statements) necessary to
evidence the termination of such security interest, as Recco may
reasonably request.
(2) (i) Recco Request for Release. Recco intends from time to time
to sell Purchased Contracts and other related Collateral to (x)
entities which will then privately or publicly sell securities
backed by such Purchased Contracts and Collateral, (y) in whole
loan bulk sales to unaffiliated third parties or (z) in whole
loan bulk sales to Onyx Acceptance Corporation, in each case,
for a cash purchase price of not less than the aggregate
Outstanding Balance of such Purchased Contracts plus accrued and
unpaid interest thereon. The proceeds of all sales by Recco
pursuant to clauses (x), (y) and (z) above shall be applied to
prepay the Loan Note and the Subordinated Note. Upon not less
than 5 Business Days' prior written notice to the Seller, Recco
may request that specified Purchased Contracts and other related
Collateral be released in connection with such sales and the
prepayment. In connection with such request, Recco shall execute
and deliver to the Seller a Lien Release Request Certificate in
the form attached hereto as Exhibit A. In selecting the
Purchased Contracts enumerated in its Lien Release Request
Certificate delivered to the Seller pursuant hereto, Recco shall
employ selection procedures which are not adverse to the
interests of the Seller.
(1) Seller Release. Upon the release by the Funding
Agent of its interest in whole or in part in the Purchased
Contracts pursuant to Section 21(b) of the Security Agreement,
the Seller shall, at the sole expense of Recco, execute and
deliver a Seller Lien Release Certificate in the form attached
hereto as Exhibit B which shall evidence the release of its
security interest in the Purchased Contracts released by the
Funding Agent under the Security Agreement.
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(2) Documents and Filings. In connection with any
such release pursuant to this Section 19, Recco and the Seller,
shall at the sole expense of Recco, execute and deliver any
documents and instruments necessary to evidence the release of
the Seller's security interest in such Purchased Contracts and
other Collateral, including without limitation, forms UCC-2
prepared for filing in all appropriate jurisdictions.
SECTION 20. Conflict. In the event of any conflict between the terms of
this Agreement, on the one hand, and the terms of the Subordinated Note, or any
other Operative Document, on the other hand, the terms of the Subordinated Note
or such other Operative Document, as the case may be, shall prevail.
SECTION 21. Standstill on Exercise of Rights. The Seller and Recco agree
that neither the Seller nor any permitted assignee of the Seller may exercise or
take any action to enforce any of the rights granted by Recco to the Seller in
this Agreement until such time as all of the Obligations (as defined in the
Definitions List) of Recco to the Lenders, the Funding Agent and the Surety
Provider under the Operative Documents have been indefeasibly paid in full in
cash.
15
16
IN WITNESS WHEREOF, the parties hereto have caused this Subordinated
Security Agreement to be duly executed and delivered as of the date first above
written.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
ONYX ACCEPTANCE CORPORATION
By:
-------------------------------------
Name:
Title:
Acknowledged and agreed as
of the date first above written:
THE CHASE MANHATTAN BANK,
as Funding Agent
By:
----------------------------------
Name:
Title:
17
SCHEDULE 4(d)
Locations of Collateral
The Collateral is located at:
Onyx Acceptance Receivables Corporation
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ Data Bank
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18
EXHIBIT A
LIEN RELEASE REQUEST CERTIFICATE
from Recco to the Funding Agent and Seller
pursuant to Section 21 of the Security Agreement
and Section 19 of Subordinated Security Agreement
[ date ]
The Chase Manhattan Bank,
as Funding Agent
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Services, PARCO Manager
Onyx Acceptance Corporation
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Attention: ▇▇▇ ▇. ▇▇▇▇▇
MBIA Insurance Corporation
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Attention: Insured Portfolio Management
Structured Finance
Re: Onyx Acceptance Receivables Corporation/Commercial Paper Program--
Request for Release of Lien
Ladies and Gentlemen:
Onyx Acceptance Receivables Corporation ("Recco") refers to (i) the
Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Security Agreement"), and (ii) the Subordinated
Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Subordinated Security Agreement"). Terms not otherwise
defined herein are used herein as defined in the Definitions List dated August
9, 1999, which is incorporated herein by reference.
19
Recco submits this Lien Release Request Certificate pursuant to Section
21 of the Security Agreement and Section 19 of the Subordinated Security
Agreement and requests that The Chase Manhattan Bank, in its capacity as Funding
Agent for the benefit of the Secured Parties under the Security Agreement, and
Onyx Acceptance Corporation, in its capacity as Seller under the Subordinated
Security Agreement ("Onyx"), each release (and Onyx cause its assignee to
release) all of their liens on and security interests in the assets described on
Schedule 1 attached hereto (and all proceeds thereof, all books, records and
computer records pertaining thereto and all other assets that constitute
Collateral which are specifically related to the assets described in Schedule
1).
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
20
EXHIBIT B
SELLER LIEN RELEASE CERTIFICATE
pursuant to Section 19 of Subordinated Security Agreement
[Date]
Onyx Acceptance Receivables Corporation
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Re: Partial Collateral Release
Ladies and Gentlemen:
We hereby refer to the Lien Release Request Certificate
submitted by Onyx Acceptance Receivables Corporation ("Recco") dated ________, a
copy of which is attached hereto (the "Request Certificate"). Pursuant to the
Request Certificate, Onyx Acceptance Corporation, acting in its capacity as
Seller under the Subordinated Security Agreement, hereby releases (and
represents and warrants that it has caused its assignee to so release) its liens
on and security interests in the assets identified in Schedule 1 attached to the
Request Certificate (and all proceeds thereof, all books, records and computer
records pertaining thereto and all other assets that constitute Collateral which
are specifically related to the assets described in that Schedule 1).
This Lien Release Certificate may be executed in any number of
counterparts.
ONYX ACCEPTANCE CORPORATION,
as Seller
By:
-------------------------------------
Name:
Title:
