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EXHIBIT 10.123
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FUNDING AGREEMENT
by and among
ONYX ACCEPTANCE RECEIVABLES CORPORATION
PARK AVENUE RECEIVABLES CORPORATION,
as a Lender
and
THE CHASE MANHATTAN BANK,
as Funding Agent and as a Lender
Dated as of August 9, 1999
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TABLE OF CONTENTS
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SECTION 1. DEFINITIONS...........................................................2
1.1. Defined Terms.......................................................2
SECTION 2. AMOUNT AND TERMS OF THE FACILITY......................................3
2.1. Loans by PARCO and the APA Banks....................................3
2.2. Loan Note...........................................................4
2.3. Availability of Borrowings..........................................4
2.4. Principal Payments; Optional Prepayments............................5
2.5. Interest............................................................6
2.6. Proceeds............................................................7
2.7. Collection Account..................................................7
2.8. Reduction of the Facility Limit and the Aggregate Commitment........7
2.9. Taxes...............................................................7
2.10. Illegality..........................................................8
2.11. Broken Funding......................................................9
2.12. Inability to Determine Eurodollar Rate.............................10
SECTION 3. REPRESENTATIONS AND WARRANTIES.......................................11
3.1. Representations and Warranties of Recco............................11
SECTION 4. CONDITIONS PRECEDENT.................................................15
4.1. Conditions to Effectiveness........................................15
4.2. Conditions to Each Loan............................................18
4.3. Conditions to Release of Proceeds of Loans from Disbursement
Sub-Account.......................................................19
SECTION 5. AFFIRMATIVE COVENANTS................................................22
5.1. Financial Statements...............................................22
5.2. Certificates; Other Information....................................22
5.3. Payment of Obligations.............................................23
5.4. Conduct of Business and Maintenance of Existence...................23
5.5. Maintenance of Property; Insurance.................................23
5.6. Inspection of Property; Files, Books and Records; Discussions......23
5.7. Notices............................................................24
5.8. Delivery of Other Reports..........................................24
5.9. Annual Certificate.................................................24
5.10. Further Assurances.................................................25
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5.11. Independent Director...............................................25
5.12. Instructions to Obligors...........................................25
5.13. Cooperation in Making Calculations.................................25
5.14. Interest Rate Hedge Mechanisms.....................................26
5.15. Contract Files.....................................................26
5.16. Permitted Investments..............................................26
5.17. Separate Existence.................................................26
SECTION 6. NEGATIVE COVENANTS...................................................28
6.1. Limitation on Debt.................................................28
6.2. Limitation on Liens................................................28
6.3. Limitation on Fundamental Changes..................................28
6.4. Limitation on Sale of Assets.......................................28
6.5. Purchased Contracts................................................28
6.6. Limitation on Dividends............................................29
6.7. Limitation on Capital Expenditures.................................29
6.8. Limitation on Investments, Loans and Advances......................29
6.9. Transactions with Affiliates.......................................29
6.10. Sale and Leaseback.................................................30
6.11. Corporate Documents................................................30
6.12. Capital Stock......................................................30
6.13. Fiscal Year........................................................30
6.14. Limitation on Negative Pledge Clauses..............................30
6.15. Activities of Recco................................................30
6.16. Agreements.........................................................30
6.17. Bank Accounts......................................................31
6.18. Successor Servicer.................................................31
6.19. Servicing of Contracts.............................................31
6.20. Prohibitions Regarding Subordinated Note...........................31
6.21. Lock-Box Banks.....................................................31
6.22. Contract Files.....................................................32
SECTION 7. EVENTS OF DEFAULT OR REPLACEMENT ....................................33
SECTION 8. THE FUNDING AGENT....................................................33
SECTION 9. MISCELLANEOUS........................................................34
9.1. Amendments and Waivers.............................................34
9.2. Notices............................................................35
9.3. No Waiver; Cumulative Remedies.....................................37
9.4. Survival of Representations and Warranties.........................37
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9.5. Payment of Expenses and Taxes......................................37
9.6. Successors and Assigns; Participations.............................38
9.7. Termination........................................................40
9.8. Counterparts.......................................................40
9.9. Severability.......................................................40
9.10. Integration........................................................40
9.11. Governing Law......................................................41
9.12. Submission to Jurisdiction; Waivers................................41
9.13. Acknowledgments....................................................41
9.14. Waiver of Jury Trial...............................................42
9.15. No Bankruptcy Petition.............................................42
9.16. Limited Recourse; Waiver of Setoff.................................42
9.17. Confidentiality....................................................43
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9.17. Confidentiality...................................................42
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EXHIBITS
EXHIBIT A Definitions List
EXHIBIT B Loan Note
EXHIBIT C Notice of Borrowing
EXHIBIT D Security Agreement
EXHIBIT E Form of Officer's Certificate of Recco
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FUNDING AGREEMENT
This FUNDING AGREEMENT, dated as of August 9, 1999 (as amended,
supplemented or otherwise modified and in effect, the "Funding Agreement"), is
by and among ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware corporation
(together with its successors and assigns, "Recco"), PARK AVENUE RECEIVABLES
CORPORATION, a Delaware corporation ("PARCO") and THE CHASE MANHATTAN BANK, a
New York banking corporation, as funding agent for the benefit of the Secured
Parties (together with its successors and assigns in such capacity, the "Funding
Agent") and individually as an APA Bank.
W I T N E S S E T H:
WHEREAS, pursuant to the Sale Agreement, Recco purchases certain
Contracts from time to time from Onyx Acceptance Corporation, a Delaware
corporation, as seller (together with its successors and assigns, the "Seller"),
and the Seller acts as Servicer of the Purchased Contracts;
WHEREAS, Recco from time to time requests that the Lenders make Loans to
Recco, the proceeds of which are used to purchase Contracts from the Seller in
accordance with the terms of the Sale Agreement;
WHEREAS, as collateral security for its obligations under this
Agreement, Recco has collaterally assigned the Purchased Contracts, its rights
under the Sale Agreement, all of its right, title, interest in and to the
Collection Account to the Funding Agent for the benefit of the Secured Parties
pursuant to the Security Agreement;
WHEREAS, MBIA Insurance Corporation (together with its successors and
assigns, the "Surety Provider"), Recco, the Seller and the Servicer have entered
into the Insurance Agreement pursuant to which, among other things, the Surety
Provider has issued a financial guaranty insurance policy to the Funding Agent
for the benefit of the Lenders to guarantee repayment of the Loans made by the
Lenders; and
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WHEREAS, subject to the terms and conditions set forth herein, the
Lenders are willing to make the Loans to Recco.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
SECTION 1. DEFINITIONS
0.1. Defined Terms. (A) As used in this Agreement, the Loan Note, the
Security Agreement or any certificate or other document made or delivered
pursuant hereto or thereto, the capitalized terms used herein and therein shall,
unless otherwise defined herein or therein, have the meanings assigned to them
in the Definitions List dated as of the date hereof that refers to this
Agreement, which is incorporated herein by reference and attached as Exhibit A
hereto (the "Definitions List").
(1) As used herein, in the Loan Note and in the Security Agreement,
or any certificate or other document made or delivered pursuant hereto and
thereto, 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.
(2) 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 Section,
subsection, Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(3) Capitalized terms used herein, in the Loan Note and in the
Security Agreement shall be equally applicable to both the singular and plural
forms of such terms.
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SECTION 2. AMOUNT AND TERMS OF THE FACILITY
0.1. Loans by PARCO and the APA Banks. (a) Prior to a PARCO Wind-Down
Event, on any Business Day, PARCO, on an offering basis only, agrees to make
Loans to Recco at the CP Rate, in each case for a funding period not exceeding
the lesser of 270 days and the number of days from and including such Business
Day to but excluding the fifth (5th) Business Day prior to Commitment Expiry
Date, commencing and ending on Business Days requested by Recco after
consultation with PARCO (but in the sole discretion of PARCO). Following a PARCO
Wind-Down Event but prior to the Termination Date or should PARCO otherwise fail
to make Loans, the APA Banks shall make Loans to Recco at either the Base Rate
or the Eurodollar Rate. Loans at the Eurodollar Rate shall be for a period of
one, two or three months requested by Recco and agreed to by the Funding Agent
commencing on a Business Day requested by Recco and agreed to by the Funding
Agent; provided, however, that if such funding period would expire on a day
which is not a Business Day, such funding period shall expire on the next
succeeding Business Day; provided, further, that if such funding period would
expire on (a) a day which is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such funding period shall
expire on the next preceding Business Day or (b) a Business Day for which there
is no numerically corresponding day in the applicable subsequent calendar month,
such funding period shall expire on the last Business Day of such month. Loans
made by the APA Banks at the Base Rate shall, prior to the occurrence of an
Event of Default or an Unmatured Event of Default, commence and end on Business
Days selected by Recco for terms not exceeding 1 day; following an Event of
Default or an Unmatured Event of Default, if no Replacement Event has occurred
and is continuing, Loans made by the APA Banks shall bear interest at the Base
Rate for a period not exceeding one Business Day in each instance; following an
Event of Default or an Unmatured Event of Default, if a Replacement Event has
occurred and is continuing, Loans made by the APA Banks shall bear interest at
the Base Rate plus 2% for a period not exceeding one Business Day in each
instance.
(b) Interest on each Loan at the CP Rate and the Eurodollar Rate shall
be computed on the basis of the actual number of days elapsed in a year
consisting of 360 days. Interest on each Loan at the Base Rate shall be computed
on the basis of the actual number of days elapsed in a year consisting of 365 or
366 days, as applicable.
(c) No Loan shall be made hereunder if, after giving effect to such
Loan, either (i) the Termination Date has occurred, (ii) the Outstanding
Principal
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Amount of all Loans made by the Lenders would exceed the Facility Limit, (iii)
with respect to each Lender, the Outstanding Principal Amount of all Loans made
by such Lender would exceed such Lender's ratable share of the Facility Limit or
its Commitment, (iv) a Borrowing Base Deficiency would exist or (v) a
Replacement Event has occurred and is continuing.
(d) The proceeds of all Loans shall be disbursed to the Disbursement
Sub-Account.
0.2. Loan Note. The Loans shall be evidenced by a promissory note of
Recco, substantially in the form of Exhibit B hereto (as amended, supplemented
or otherwise modified and in effect from time to time, the "Loan Note"), payable
to the order of the Funding Agent for the benefit of the Lenders. The Funding
Agent shall record the date and amount of each Loan made and the date and amount
of each payment of principal thereof, and any such recordation shall constitute
prima facie evidence of the accuracy of the information so recorded. The Loan
Note shall (a) be dated the date of issuance thereof, or, with respect to any
amendment thereof, the date of such amendment, (b) be stated to mature on the
Scheduled Maturity Date (unless otherwise extended with the consent of the
Lenders and the Surety Provider) and (c) provide for the payment of interest in
accordance with Section 2.5.
0.3. Availability of Borrowings. (a) Prior to a PARCO Wind-Down Event,
Recco may request Loans on any Business Day up to the Termination Date by giving
the Funding Agent prior irrevocable notice of each borrowing in the form of
Exhibit C hereto ("Notice of Borrowing") by 11:00 A.M. (New York time) one
Business Day prior to a Borrowing Date.
(b) Following a PARCO Wind-Down Event, but prior to the Termination
Date, if no Event of Default has occurred and is continuing, Recco may request
Loans on any Business Day by giving the Funding Agent a Notice of Borrowing (i)
in the case of Eurodollar Fundings, by 5:00 P.M. (New York time) no later than
three (3) Business Days prior to the Borrowing Date and (ii) in the case of BR
Fundings, by 10:00 A.M. (New York time) on the Borrowing Date.
(c) Following an Event of Default, the rate applicable to all
outstanding borrowings shall be the Base Rate in effect as of 10:00 A.M. (New
York time) on such Borrowing Date.
(d) The proceeds of such Loans will be made available to Recco by the
applicable Lenders by crediting a sub-account of the Collection Account (the
"Disbursement Sub-Account") with immediately available funds by 4:00 P.M. (New
York time) on the Borrowing Date; provided that any such release of funds to
Recco
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shall be subject to the conditions precedent set forth in Section 4.3; provided
further that amounts on deposit in the Disbursement Sub-Account shall not exceed
$1.8 million at any time.
0.4. Principal Payments; Optional Prepayments.
(1) All principal of Loans shall be payable by Recco in the
following manner: (i) in the case of any tranche of Commercial Paper, on the
maturity date thereof and (ii) in the case of any Eurodollar Funding or BR
Funding, on the last day of the related funding period (any such day, a "Payment
Date"). Recco shall make any such payment by no later than 1:00 P.M. (New York
time) on the applicable Payment Date by transferring such amount in immediately
available funds by wire transfer to an account specified by the Funding Agent.
The amount payable by Recco as determined by the Funding Agent shall be an
amount equal to the sum of (i) the Outstanding Principal Amount of Loans made
with the proceeds of Commercial Paper maturing on the applicable Payment Date
that will not be funded from the net proceeds of the sale of Commercial Paper on
such date, (ii) the outstanding principal amount of Loans made by the APA Banks
that are due and payable on such date and (iii) the amount necessary to cure any
Borrowing Base Deficiency existing on such date or that would exist at the close
of business on such date (after giving effect to the amount of any payment made
on such day in respect of subclauses (i) or (ii) of this Section 2.4(a)). On and
after the Termination Date, principal on the Loans shall be paid as provided in
the Security Agreement. Any amounts paid under the Note Policy with respect to
principal shall be applied by the Funding Agent to prepay the Loan Note.
(2) Recco may at any time and from time to time prepay the Loans, in
whole or in part, without premium or penalty, upon at least three Business Days'
irrevocable notice to the Funding Agent, specifying the date and amount of
prepayment; provided that, upon notice given by the Funding Agent, Recco shall
indemnify the Funding Agent and the Lenders and hold the Funding Agent and the
Lenders harmless from any funding loss (in an amount equal to the amount of
interest or discount the Lenders would have received but for such prepayment
less the interest earned on investing such funds) and expense which the Funding
Agent and the Lenders may sustain or incur as a consequence of such prepayment.
If any such notice is given, the amount specified in such notice shall be due
and payable on the date specified therein.
(3) On each Liquidation Day, Recco shall prepay all amounts
outstanding under the Loan Note and this Agreement to the extent of amounts on
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deposit in the Collection Account available on each such day and in the order
set forth in Section 5(b) of the Security Agreement.
0.5. Interest. (A) Recco shall pay to the Funding Agent for the benefit
of the Lenders, pursuant to the terms and conditions of the Security Agreement,
as interest on the Loans outstanding, the following amounts on the following
dates:
(1) in the case of Commercial Paper, on each Determination Date, an
amount equal to the discount or interest, as applicable, that
accrued on all Commercial Paper that was outstanding during the
preceding Determination Period;
(2) in the case of a Eurodollar Funding or a BR Funding, on each
Determination Date, in an amount equal to the interest that
accrued on all BR Fundings and Eurodollar Fundings outstanding
during the preceding Determination Period; and
(3) on each day that any interest is required to be paid in respect
of the prepayment of any Loan, an amount equal to such interest
through and including such day; provided that, in the case of a
Loan made with the proceeds of Commercial Paper, the aggregate
amount of interest payable in respect of such Loan shall include
all interest or discount in respect of such Commercial Paper
through and including the maturity date thereof; provided
further that, in the case of any such interest or discount in
respect of Commercial Paper paid pursuant to this clause
(a)(iii) by Recco, PARCO hereby agrees to remit to Recco, as
promptly as possible after receipt thereof, any investment
income earned by or on behalf of PARCO in respect of that
portion of interest or discount accruing from the date of
prepayment of the related Loan to and including the maturity
date of the related Commercial Paper.
(4) Recco agrees to pay the Servicing Fee to the Servicer on each
Business Day, as provided for in the Security Agreement.
0.6. Proceeds. The proceeds of the Loans shall be used by Recco solely
to purchase Contracts from the Seller pursuant to the Sale Agreement.
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0.7. Collection Account. Recco has established, on or prior to the date
hereof, a bank account (No. 4047105606) at ▇▇▇▇▇ Fargo Bank in the name of the
Funding Agent for the benefit of the Secured Parties (the "Collection Account").
Recco shall cause the Servicer to deposit all Collections to the Clearing
Account on the next Business Day after Collections are received in the
Lock-Boxes and on the next Business Day after Collections are received in any
other manner, and to transfer all Collections on deposit in the Clearing Account
to the Collection Account on the next Business Day after such Collections are
received by the Servicer in the Clearing Account. Recco shall make transfers and
withdrawals from the Collection Account solely as permitted by the terms and
conditions of the Security Agreement.
0.8. Reduction of the Facility Limit and the Aggregate Commitment. Recco
shall have the right from time to time, upon not less than five Business Days'
notice to the Funding Agent, the Surety Provider and the Lenders, to reduce the
Facility Limit and the Aggregate Commitment to an amount not less than the sum
of the Outstanding Principal Amount of the Loans and an amount equal to 102% of
the Facility Limit, respectively; provided, however, that in no event shall the
Facility Limit be reduced to less than $50,000,000. Each such reduction in the
Facility Limit shall be in an amount equal to $5,000,000 or any multiple thereof
and shall reduce permanently the Facility Limit (and the corresponding reduction
in the Aggregate Commitment) then in effect.
0.9. Taxes. All payments made by Recco under this Agreement and the Loan
Note shall be made free and clear of, and without deduction or withholding for
or on account of, any present or future income, stamp or other taxes, levies,
imposts, duties, charges, fees, deductions or withholdings, now or hereafter
imposed, levied, collected, withheld or assessed by any Governmental Authority
having taxing authority, excluding income taxes and franchise taxes (imposed in
lieu of income taxes) imposed on the Lenders, as a result of any present or
former connection between the jurisdiction of the government or taxing authority
imposing such tax or any political subdivision or taxing authority thereof or
therein and any such Lender (all such non-excluded taxes, levies, imposts,
duties, charges, fees, deductions and withholdings being hereinafter called
"Taxes"). If any Taxes are required to be withheld from any amounts payable to
or under the Loan Note, the amounts so payable to the applicable Lender shall be
increased to the extent necessary to yield to such Lender (after payment of all
Taxes) interest or any such other amounts payable hereunder at the rates or in
the amounts specified in this Agreement and the Loan Note. Whenever any Taxes
are payable by Recco, as promptly as possible thereafter Recco shall send to the
applicable Lender (with a copy to the Funding Agent and the Surety Provider) a
certified copy of an original official receipt received by Recco showing payment
thereof. If Recco fails to pay any Taxes when due to the appropri-
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ate taxing authority or fails to remit to a Lender the required receipts or
other required documentary evidence, Recco shall indemnify such Lender for any
incremental Taxes, interest or penalties that such Lender is legally required to
pay as a result of any such failure. The agreements in this Section 2.9 shall
survive the termination of this Agreement and the payment of the Loan Note.
0.10. Illegality. (A) Notwithstanding any other provision herein, if,
after the Closing Date, the adoption of any law or bank regulatory guideline or
any amendment or change in the interpretation of any existing or future law or
bank regulatory guideline by any Governmental Authority charged with the
administration, interpretation or application thereof, or the compliance with
any directive of any Governmental Authority (in the case of any bank regulatory
guideline, whether or not having the force of law), shall make it unlawful for
any APA Bank to acquire or maintain a Eurodollar Funding at the applicable
Eurodollar Rate as contemplated by this Agreement, (i) such APA Bank shall,
within forty-five (45) days after receiving actual knowledge thereof, deliver a
certificate to Recco (with a copy to the Funding Agent and the Surety Provider)
setting forth the basis for such illegality, which certificate shall be
conclusive absent manifest error, (ii) upon delivery of such certificate, the
commitment of such APA Bank hereunder to make a portion of a Eurodollar Funding,
continue any portion of a Eurodollar Funding as such and convert a BR Funding to
a Eurodollar Funding shall forthwith be cancelled, and such cancellation shall
remain in effect so long as the circumstance described above exists, and (iii)
such APA Bank's portion of any Eurodollar Funding then outstanding shall be
converted automatically to a BR Funding on the last day of the related funding,
or within such earlier period as required by law.
If any conversion of a portion of a Eurodollar Funding described in
Section 2.11 occurs on a day which is not the last day of the related funding,
Recco shall pay to such APA Bank such reasonable amounts, if any, as may be
required to compensate such APA Bank for the costs of such conversion. If
circumstances subsequently change so that it is no longer unlawful for an
affected APA Bank to acquire or to maintain a portion of a Eurodollar Funding as
contemplated hereunder, such APA Bank will, as soon as reasonably practicable
after such APA Bank knows of such change in circumstances, notify Recco, the
Surety Provider and the Funding Agent, and upon receipt of such notice, the
obligations of such APA Bank to acquire or maintain its acquisition of portions
of Eurodollar Fundings or to convert its portion of a BR Funding into portions
of Eurodollar Fundings shall be reinstated.
(b) By its execution of the Asset Purchase Agreement, each APA Bank
agrees that, upon the occurrence of any event giving rise to the operation of
Section 2.10(a) with respect to such APA Bank, it will, if requested by Recco or
the
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Surety Provider and to the extent permitted by law or by the relevant
Governmental Authority, endeavor in good faith to change the office at which it
books its portions of Eurodollar Fundings hereunder if such change would make it
lawful for such APA Bank to continue to acquire or to maintain its acquisition
of portions of Eurodollar Fundings hereunder; provided that such change may be
made in such manner that such APA Bank, in its sole determination, suffers no
unreimbursed cost or expense or any other material disadvantage whatsoever.
0.11. Broken Funding. In the event of (a) the payment of any principal
of any Eurodollar Funding other than on the last day of such funding (including
as a result of the occurrence of the Termination Date or an optional prepayment
of a Eurodollar Funding), (b) the conversion of any Eurodollar Funding other
than on the last day of such related funding, or (c) any failure to borrow,
convert, continue or prepay any Eurodollar Funding on the date specified in any
notice delivered pursuant hereto, then, in any such event, Recco shall
compensate the applicable APA Banks for the loss, cost and expense attributable
to such event. Such loss, cost or expense to any APA Banks may include an amount
determined by such APA Bank to be the excess, if any, of (i) the amount of
yield, as the case may be, which would have accrued on the principal amount of
such Eurodollar Funding had such event not occurred, at a Eurodollar Rate that
would have been applicable to such Eurodollar Funding, for the period from the
date of such event to the last day of such funding (or, in the case of a failure
to borrow, convert or continue, for the period that would have been the funding
period for such funding), over (ii) the amount of interest which would accrue on
such principal amount for such period at the interest rate which such APA Bank
would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the interbank
eurodollar market. Within forty-five (45) days after any APA Bank hereunder
receives actual knowledge of any of the events specified in this Section 2.11, a
certificate of such APA Bank setting forth in such reasonable detail as Recco
shall reasonably request a calculation of any amount or amounts that such APA
Bank is entitled to receive pursuant to this Section 2.11 and the reason(s)
therefor shall be delivered to Recco and the Surety Provider and shall be
conclusive absent manifest error. Recco shall pay each such APA Bank the amount
shown as due on any such certificate on the later of the tenth (10th) Business
Day or the next succeeding Determination Date after receipt thereof.
0.12. Inability to Determine Eurodollar Rate. If, prior to the first day
on which any Eurodollar Funding commences, the Funding Agent shall have
determined or shall have been notified (which determination or notification, in
the absence of manifest error, shall be conclusive and binding upon Recco) that,
by reason of circumstances affecting the relevant market, adequate and
reasonable
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means do not exist for ascertaining a Eurodollar Rate for such funding, then, in
such event, the Funding Agent shall give telecopy or telephonic notice thereof
(confirmed in writing) to Recco and the APA Banks as soon as practicable (but,
in any event, within forty-five (45) days after such determination or notice, as
applicable) thereafter. Until such notice has been withdrawn by the Funding
Agent, no further Eurodollar Fundings shall be made. The Funding Agent agrees to
withdraw any such notice as soon as reasonably practicable after the Funding
Agent is notified of a change in circumstances which makes such notice
inapplicable.
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SECTION 3. REPRESENTATIONS AND WARRANTIES
0.1. Representations and Warranties of Recco. To induce the Funding
Agent and the Secured Parties to enter into this Agreement and the Lenders to
make Loans hereunder, Recco hereby represents and warrants to the Funding Agent
and the Secured Parties that:
(1) Financial Condition. The balance sheet of Recco as at June 30,
1999 and the related statements of income and of cash flows for the six month
period then ended certified by a Responsible Officer, are complete and correct
and present fairly the financial condition of Recco as at such date, and the
results of its operations and its consolidated cash flows for the period then
ended. All such financial statements, including the related schedules and notes
thereto, have been prepared in accordance with GAAP applied consistently
throughout the period involved (except as approved by such Responsible Officer
and as disclosed therein). Recco does not have, and at the date of the balance
sheet referred to above, did not have any Debt, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any interest rate or foreign currency
swap or exchange transaction.
(2) Corporate Existence; Compliance with Law. Recco (i) is duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, (ii) has the corporate power and authority,
and the legal right, to own and operate its property, to lease the property it
operates as lessee and to conduct the business in which it is currently engaged,
(iii) is duly qualified as a foreign corporation and in good standing under the
laws of each jurisdiction where its ownership, lease or operation of property or
the conduct of its business requires such qualification and (iv) is in
compliance with all Requirements of Law.
(3) Corporate Power; Authorization; Enforceable Obligations. Recco
has the corporate power and authority, and the legal right, to make, deliver and
perform this Agreement and the other Operative Documents to which it is a party
and to borrow hereunder and has taken all necessary corporate action to
authorize the borrowings on the terms and conditions of this Agreement and the
other Operative Documents to which it is a party and to authorize the execution,
delivery and performance of this Agreement and the other Operative Documents to
which it is a party. All consents or authorization of, filing with or other act
by or in respect of, any Governmental Authority or any other Person required to
be obtained, made or given by it in connection with the borrowings hereunder or
with the execution, delivery, performance, validity or enforceability of this
Agreement or the other
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Operative Documents to which it is a party have been so obtained, made or
received. This Agreement and each other Operative Document to which it is a
party has been duly executed and delivered on behalf of Recco. This Agreement
and each other Operative Document to which it is a party constitutes a legal,
valid and binding obligation of Recco enforceable against Recco in accordance
with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforcement of creditors' rights generally and by general equitable principles
(whether enforcement is sought by proceedings in equity or at law).
(4) No Legal Bar. The execution, delivery and performance of this
Agreement and the other Operative Documents, the borrowings hereunder and the
use of the proceeds thereof will not violate any Requirement of Law or
Contractual Obligation of Recco and will not result in, or require, the creation
or imposition of any Lien on any of its properties or revenues pursuant to any
such Requirement of Law or Contractual Obligation.
(5) No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or
threatened by or against Recco or against any of its properties or revenues (i)
with respect to this Agreement or the other Operative Documents or any of the
transactions contemplated hereby or thereby, or (ii) which could have a material
adverse effect on the business, properties, assets, operations or condition,
financial or otherwise, of Recco, or the ability of Recco to perform its
obligations hereunder or under the other Operative Documents.
(6) No Default; No Event of Default. Recco is not in default under
or with respect to any of its Contractual Obligations in any respect which could
have a material adverse effect on the business, operations, properties, assets,
or condition, financial or otherwise, of Recco, or on the ability of Recco to
perform its obligations hereunder or under the other Operative Documents. No
Event of Default or Unmatured Event of Default has occurred and is continuing.
(7) No Burdensome Restrictions. Recco is not a party to or subject
to any Contractual Obligation (other than the Operative Documents) which could
have a material adverse effect on the business, properties, assets, operations
or condition, financial or otherwise, of Recco, or on the ability of Recco to
carry out its obligations hereunder or under the other Operative Documents.
(8) Taxes. Recco has filed or caused to be filed all Federal, state
and other tax returns which are required to be filed by it and has paid all
taxes shown
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to be due and payable on said returns or on any Federal, state and other tax
assessments made against it or any of its property and all other taxes, fees or
other charges imposed on it or any of its property by any Governmental Authority
having taxing power; no tax Lien has been filed against it (except for tax Liens
described in subsection 6.2(a) hereof), and no claim is being asserted by any
Governmental Authority, with respect to any such tax, fee or other charge.
(9) ERISA. Neither Recco nor any ERISA Affiliate of Recco has
participated in any Multiemployer Plan. Except for the Seller, neither Recco nor
any ERISA Affiliate of Recco has maintained any Single Employer Plan. No
Reportable Event has occurred during the five-year period prior to the date on
which this representation is made or deemed made with respect to any Plan of the
Seller, and each such Plan has complied with the applicable provisions of ERISA
and the Code. The present value of all accrued benefits under each such Plan
(based on those assumptions used to fund the Plans) did not, as of the last
annual valuation date prior to the date on which this representation is made or
deemed made, exceed the value of the assets of such Plan allocable to such
accrued benefits.
(10) Investment Company Act; Other Regulations. Recco is not an
"investment company", or a company "controlled" by an "investment company",
within the meaning of the Investment Company Act of 1940, as amended. Recco is
not subject to regulation under any Federal or state statute or regulation which
limits its ability to incur Debt.
(11) Subsidiaries. Recco has no Subsidiaries. Recco is a wholly owned
subsidiary of the Seller.
(12) Purpose of Loans. The proceeds of the Loans shall be used by
Recco solely to purchase Contracts from the Seller pursuant to the Sale
Agreement.
(13) No Deduction. Recco is not required to make any deduction or
withholding from payments to be made by it to the Funding Agent, the Surety
Provider and the Lenders under this Agreement or the other Operative Documents,
and the execution and performance of this Agreement and any of the other
Operative Documents does not make Recco liable for any registration tax, stamp
duty or similar tax or duty imposed by any authority of or within its
jurisdiction of incorporation, which tax or duty has not been, or will not be,
paid when due.
(14) No Priority Claims. Recco has no liability in respect of any
unsecured Debt, or in respect of any guarantee by Recco of the obligations of
another, under which the lender, creditor or lessor or the Person in whose favor
such
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guarantee is given has any right, by operation of law or otherwise, to have any
claim in respect of such obligation or guarantee first satisfied out of the
general assets of Recco in priority to the claims of its general creditors.
(15) Title; Liens. Except for the Lien granted to the Funding Agent
for the benefit of the Secured Parties pursuant to the Security Agreement and
the other Liens permitted pursuant to the Operative Documents and the Lien
granted to the Seller pursuant to the Subordinated Security Agreement, 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
for the benefit of the Secured Parties pursuant to the Security Agreement and in
favor of the Seller pursuant to the Subordinated Security Agreement and Liens
with respect to taxes described in Section 6.2(a) hereof.
(16) Ownership of Contracts. Each Purchase by Recco of Contracts
constitutes a valid sale of the Contracts to Recco and creates in favor of Recco
a perfected ownership interest in and valid, legal and equitable title to such
Contracts, which ownership interest is not subject to any Lien.
(17) No Petition. There is no intent to file a voluntary petition
under the federal bankruptcy laws with respect to Recco.
(18) Separate Corporate Existence. Recco is a special purpose
corporation whose primary activities are restricted in its certificate of
incorporation to purchasing Contracts from the Seller, entering into agreements
for the servicing thereof, borrowing funds secured thereby and conducting such
other activities as necessary or appropriate to carry out its primary
activities. Recco's certificate of incorporation provides for at least two
Independent Directors as set forth at Section 5.11 hereof, and requires, inter
alia, the unanimous vote of its Board of Directors to take corporate action to
institute, file or consent to insolvency or bankruptcy proceedings.
SECTION 4. CONDITIONS PRECEDENT
0.1. Conditions to Effectiveness. The effectiveness of this Agreement is
subject to the satisfaction, on or prior to the date hereof, of the following
conditions precedent:
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(1) Operative Documents. The Funding Agent, the Surety Provider and
each Lender shall have received (i) this Agreement executed and delivered by a
duly authorized officer of Recco, (ii) the Loan Note executed and delivered by a
duly authorized officer of Recco, (iii) the Security Agreement (substantially in
the form of Exhibit D hereto), executed and delivered by a duly authorized
officer of Recco, (iv) solely to the Surety Provider, a copy of the Credit and
Collection Policy, (v) copies of all the other Operative Documents, executed by
all parties thereto and in form and substance satisfactory to the Funding Agent,
the Surety Provider and the Lenders, and (vi) such other documents or
instruments as may be reasonably requested by the Funding Agent, the Surety
Provider or the Lenders.
(2) Corporate Proceedings. The Funding Agent, the Surety Provider
and the Lenders shall have received a copy of the resolutions, in form and
substance satisfactory to the Funding Agent, the Surety Provider and the
Lenders, of the Board of Directors of each of the Seller and Recco authorizing
the execution, delivery and performance of the Operative Documents to which it
is a party certified by the Secretary or an Assistant Secretary of each such
corporation, as of the date hereof, which certificate shall state that the
resolutions thereby certified have not been amended, modified, revoked or
rescinded and shall be in form and substance satisfactory to the Funding Agent,
the Surety Provider and the Lenders.
(3) Corporate Documents; Incumbency. (i) The Funding Agent, the
Surety Provider and the Lenders shall have received copies of the certificate of
incorporation and by-laws of each of the Seller and Recco certified as of the
date hereof as complete and correct copies thereof by its Secretary or Assistant
Secretary and (ii) a certificate of the Secretary or an Assistant Secretary of
each of the Seller and Recco, certifying the names and true signatures of the
officers of the Seller and Recco authorized to sign the Operative Documents to
which it is a party.
(4) No Violation. The consummation of the transactions contemplated
hereby and by the other Operative Documents shall not contravene, violate or
conflict with, nor involve the Seller or Recco in any violation of, any
Requirement of Law except to the extent that any such contravention, violation,
conflict or involvement would not adversely affect the transactions contemplated
hereby and by the other Operative Documents.
(5) Fees. The Surety Provider, the Funding Agent, Chase Securities,
Inc. and the Lenders shall have received in immediately available funds any fees
due and payable to any of them, all as set forth in the Fee Letter Agreement and
the Premium Side Letter Agreement.
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(6) Legal Opinions. The Funding Agent, the Surety Provider and the
Lenders shall have received (i) the executed legal opinion of counsel to the
Seller and Recco with respect to the enforceability of their obligations under
the Operative Documents and the Loan Note, (ii) the executed legal opinions of
counsel to the Seller and Recco to the effect that (A) the Seller and Recco
would not be substantively consolidated for purposes of the Bankruptcy Code and
(B) that each Purchase by Recco of Contracts constitutes a true sale of
Contracts, (iii) the executed legal opinion of counsel to Recco to the effect
that the security interest granted by Recco to the Funding Agent for the benefit
of the Secured Parties pursuant to the Security Agreement is a valid first
priority security interest and (iv) such other legal opinions as the Funding
Agent or the Surety Provider may reasonably require.
(7) UCC Searches. The Funding Agent, the Surety Provider and the
Lenders shall have received lien searches and other evidence as to the absence
of any Lien on or security interest in the Contracts in form and substance
satisfactory to the Funding Agent, the Surety Provider and the Lenders. Any
termination statements or releases requested by the Funding Agent, the Surety
Provider or the Lenders to be filed with respect to the Contracts shall have
been filed.
(8) Diligence. The operation of the Seller's billing, collection and
information systems with respect to the Contracts shall be satisfactory to the
Funding Agent, the Surety Provider and the Lenders.
(9) Recovery Procedure and Alternate Servicing Plan. The Funding
Agent, the Surety Provider and the Lenders shall be satisfied with the recovery
procedure and Alternate Servicing Plan implemented for the Seller's MIS system,
(the "Recovery Procedure"), a copy of each of which has been provided to the
Funding Agent and the Surety Provider.
(10) Internal Controls. The Funding Agent, the Surety Provider and
the Lenders shall be satisfied that the Seller has implemented all necessary
internal and other systems and procedures to monitor collections on account of
the Contracts, to gather all information and furnish all reports required under
the Operative Documents and to monitor compliance with the Operative Documents.
(11) Consents. The Funding Agent, the Surety Provider and the Lenders
shall have received copies of all consents, licenses and approvals, if any,
required in connection with the execution, delivery and performance by it and
the validity and enforceability against it of the Operative Documents to which
it is a party and such consents, licenses and approvals shall be in full force
and effect.
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(12) Surety Provider Credit Risk. S&P and ▇▇▇▇▇'▇ shall each have
informed the Surety Provider that the transactions contemplated by this
Agreement and the other Operative Documents (without regard to the Note Policy)
is an investment-grade risk.
(13) Commercial Paper Ratings. The Commercial Paper shall be rated
A-1 by S&P and P-1 by ▇▇▇▇▇'▇.
(14) Insurance. The Funding Agent and the Surety Provider shall have
received evidence that the Blanket Policy or other form of insurance acceptable
to the Funding Agent is in full force and effect.
(15) Note Policy. The Surety Provider shall have issued the Note
Policy to the Funding Agent for the benefit of the Lenders.
(16) Sub-Lease Agreement. The Funding Agent, the Surety Provider and
the Lenders shall have received a copy of the Sublease and Administrative
Services Agreement executed by Onyx and Recco providing for the lease of storage
space by Onyx to Recco for the location of the Files to be maintained by Recco
on behalf of the Secured Parties.
(17) Additional Documents. The Funding Agent, the Surety Provider and
the Lenders shall have received each additional document, instrument, legal
opinion or item of information reasonably requested by the Funding Agent, the
Surety Provider and the Lenders in respect of any aspect or consequence of the
transactions contemplated hereby or by any other Operative Document.
(18) Additional Matters. All corporate and other proceedings,
documents, instruments and legal matters specified in Section 4.1 hereof, or
required after the date hereof, shall be satisfactory in form and substance to
the Funding Agent, the Surety Provider and the Lenders.
(19) Collection Account and Collection Account Agreement. Recco shall
have established the Collection Account, and the financial institution at which
the Collection Account is established shall have executed and delivered the
Collection Account Agreement in form and substance acceptable to the Funding
Agent and the Surety Provider (as amended, supplemented or otherwise modified
and in effect from time to time, the "Collection Account Agreement").
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(20) Lien Certificate. The Funding Agent and the Surety Provider
shall have received a certificate of a Responsible Officer of each of the Seller
and Recco to the effect that the Purchased Contracts are not subject to any
Lien, except Liens created by the Operative Documents.
(21) Filings. The Funding Agent and the Surety Provider shall have
received acknowledgment copies of proper financing statements, duly filed under
the Uniform Commercial Code of all jurisdictions that the Funding Agent and the
Surety Provider may deem necessary or desirable in order to perfect the
ownership interest of Recco created by the Sale Agreement and the security
interests created by the Security Agreement and all other filings,
notifications, consents and recordings necessary to consummate the transactions
contemplated hereunder and under the Operative Documents shall be accomplished
and the Funding Agent and the Surety Provider shall have received evidence of
such filings, notifications, consents and recordings satisfactory in form and
substance to the Funding Agent and the Surety Provider.
0.2. Conditions to Each Loan. The agreement of any Lender to make any
Loan requested to be made by it on any date (including, without limitation, the
initial Loan) is subject to the satisfaction of the following conditions
precedent (it being understood and agreed that PARCO makes Loans on an offering
basis only and will make Loans only prior to a PARCO Wind-Down Event):
(22) Each of the representations and warranties made by Recco or the
Seller in or pursuant to any of the Operative Documents shall be true and
correct on and as of such date as if made on and as of such date.
(23) Recco shall have delivered a Notice of Borrowing to the Funding
Agent and the Surety Provider.
(24) After giving effect to the Loan to be made on such day, the
requirements of Section 2.1 shall not have been violated.
(25) The Funding Agent, the Surety Provider and the Lenders shall
have received an Officer's Certificate from Recco, dated the date the proceeds
of such Loan are requested to be disbursed, executed by the president, the chief
financial officer, the chief executive officer or any executive vice president,
in the form of Exhibit E hereto. Recco shall have received from the Seller an
Officer's Certificate, dated the date the proceeds of such Loan are requested to
be disbursed, in the form of Exhibit C to the Sale Agreement, and shall have
delivered such Certificate to the Funding Agent, the Surety Provider and the
Lenders.
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(26) No Borrowing Base Deficiency shall exist as reported on the
Daily Report.
(27) A File relating to each Contract to be purchased with the
proceeds of such Loan shall have been delivered by the Seller to Recco to be
held by Recco for the benefit of the Funding Agent on behalf of the Secured
Parties in segregated fireproof facilities; provided, however, that so long as
MBIA is the surety provider with respect to this Program and all other
financings entered into by Recco and Onyx Acceptance Financial Corporation, the
Files may be stored in the same facilities on an unsegregated basis with the
files of Onyx Acceptance Financial Corporation.
The proceeds of all Loans shall be deposited in the Disbursement
Sub-Account. Each borrowing by Recco hereunder shall constitute a representation
and warranty by Recco as of the date of such Loan that the conditions contained
in this subsection 4.2 have been satisfied.
0.3. Conditions to Release of Proceeds of Loans from Disbursement
Sub-Account. The agreement of Recco to release the proceeds of Loans from the
Disbursement Sub-Account is subject to the satisfaction of the following
conditions precedent:
(28) Representations and Warranties. Each of the representations and
warranties made by Recco or the Seller in or pursuant to any of the Operative
Documents shall be true and correct on and as of such date as if made on and as
of such date.
(29) Contract List. The Funding Agent and the Surety Provider shall
have received the Contract List relating to each Contract to be purchased with
the proceeds of such Loan.
(30) Officer's Certificates. The Funding Agent and the Surety
Provider shall have received an Officer's Certificate from Recco, dated the date
the proceeds of such Loan are requested to be disbursed from the Disbursement
Sub-Account, executed by the president, the chief financial officer, the chief
executive officer or any executive vice president, in the form of Exhibit E
hereto.
Recco shall have received from the Seller an Officer's Certificate,
dated the date the proceeds of such Loan are requested to be disbursed from the
Disbursement Sub-Account, in the form of Exhibit C to the Sale Agreement, and
shall have delivered such certificate to the Funding Agent and Surety Provider.
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(31) Additional Documents. The Funding Agent and the Surety Provider
shall have received each additional document, instrument, legal opinion or item
of information reasonably requested by the Funding Agent and the Surety Provider
in respect of any aspect or consequence of the transactions contemplated hereby
or by any other Operative Document.
(32) Additional Matters. All corporate and other proceedings,
documents, instruments and legal matters specified in Section 4.1 hereof, or
required after the date hereof, shall be satisfactory in form and substance to
the Funding Agent and the Surety Provider.
(33) Borrowing Base. No Borrowing Base Deficiency shall exist on the
day of the release of funds from the Disbursement Sub-Account as reported on the
Daily Report.
(34) Contract Files. A File relating to each Contract to be purchased
with the proceeds of such Loan shall have been delivered by the Seller to Recco
to be held by Recco for the benefit of the Funding Agent for the benefit of the
Secured Parties in segregated fireproof facilities; provided, however, that so
long as MBIA is the surety provider with respect to this Program and all other
financings entered into by Recco and Onyx Acceptance Financial Corporation, the
Files may be stored in the same facilities on an unsegregated basis with the
files of Onyx Acceptance Financial Corporation.
Each release of the proceeds of Loans to Recco hereunder shall
constitute a representation and warranty by Recco as of the date of such Loan
that the conditions contained in this Section 4.3 have been satisfied.
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SECTION 5. AFFIRMATIVE COVENANTS
Recco hereby agrees that, so long as this Agreement remains in effect,
Recco shall:
0.1. Financial Statements. Furnish to the Funding Agent, the Surety
Provider and the Lenders:
(1) as soon as available, but in any event within 90 days after the
end of each fiscal year of Recco, a copy of the balance sheet as at the end of
such year and the related statements of income and of cash flows for such year,
setting forth in each case in comparative form the figures for the previous year
(except for Recco's first fiscal year for which there are no comparative figures
for the previous fiscal year), audited by PricewaterhouseCoopers LLP or other
independent certified public accountants of nationally recognized standing; and
(2) as soon as available, but in any event not later than 45 days
after the end of each of the first eleven monthly periods of each fiscal year of
Recco, the unaudited balance sheet of Recco as at the end of such monthly period
and the related unaudited statements of income and of cash flows of Recco for
such period and the portion of the fiscal year through the end of such period,
setting forth in each case in comparative form the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all respects
(subject to normal year-end audit adjustments);
all such financial statements to be complete and correct in all respects and to
be prepared in detail and in accordance with GAAP applied consistently
throughout the periods reflected therein and with prior periods (except as
approved by such accountants or officer, as the case may be, and disclosed
therein).
0.2. Certificates; Other Information. Furnish to the Funding Agent, the
Surety Provider and the Lenders:
(3) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the independent certified public
accountants reporting on such financial statements stating that in making its
normal examination for purposes of its annual audit no knowledge was obtained of
any Event of Default or Unmatured Event of Default, except as specified in such
certificate;
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(4) concurrently with the delivery of the financial statements
referred to in Sections 5.1(a) and 5.1(b), a certificate of a Responsible
Officer stating that Recco during such period has observed or performed all of
its covenants and other agreements, and satisfied every condition, contained in
this Agreement and the other Operative Documents to be observed, performed or
satisfied by it, and that such Officer has obtained no knowledge of any
Unmatured Event of Default or Event of Default, except as specified in such
certificate;
(5) within five Business Days after the same are sent, copies of all
financial statements, reports and other communications that Recco may make to,
or file or have with, the SEC or any state securities commission; and
(6) promptly, such additional financial and other information as the
Funding Agent, the Surety Provider or the Lenders may from time to time request.
0.3. Payment of Obligations. Pay, discharge or otherwise satisfy at or
before maturity or before they become delinquent, as the case may be, all its
obligations of whatever nature.
0.4. Conduct of Business and Maintenance of Existence. Continue to
engage in business of the same type as now conducted by it and preserve, renew
and keep in full force and effect its corporate existence and take all action to
maintain all rights, privileges and franchises necessary or desirable in the
normal conduct of its business; and comply in all material respects with all
Contractual Obligations and Requirements of Law.
0.5. Maintenance of Property; Insurance. Keep all property useful and
necessary in its business in good working order and condition; maintain, or
cause to be maintained on its behalf, the Blanket Policy or other form of
insurance acceptable to the Funding Agent and the Surety Provider and, with
financially sound and reputable insurance companies, insurance on all its
property in at least such amounts and against at least such risks as are usually
insured against in the same general area by companies engaged in the same or a
similar business, and furnish to the Funding Agent, the Surety Provider and the
Lenders, at least annually, and otherwise upon written request, full information
as to the insurance carried.
0.6. Inspection of Property; Files, Books and Records; Discussions. Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities; and permit
representatives
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of the Funding Agent, the Surety Provider and the Lenders to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records and the Files at any time and as often as may be desired on prior notice
during normal business hours and to discuss the business, operations, properties
and financial and other condition of Recco with officers and employees of Recco
and with its independent certified public accountants.
0.7. Notices. Promptly give notice to the Funding Agent, the Surety
Provider and the Lenders of:
(7) the occurrence of any Event of Default or Unmatured Event of
Default (with notice to S&P and ▇▇▇▇▇'▇);
(8) any (i) default or event of default by Recco under any
Contractual Obligation of Recco or (ii) litigation, investigation or proceeding
which may exist at any time affecting Recco; and
(9) a material adverse change in the business, properties, assets,
operations or condition (financial or otherwise) of Recco.
Each notice pursuant to this Section 5.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action Recco proposes to take with respect
thereto.
0.8. Delivery of Other Reports. Furnish, or instruct the Servicer to
deliver any reports required to be delivered by Recco or the Servicer pursuant
to any Operative Document to which Recco or the Servicer is a party or which
Recco or the Servicer has signed.
0.9. Annual Certificate. Concurrently with the delivery, on account
of each fiscal year, of the financial statements of Recco required to be
delivered pursuant to Section 5.1(a) hereof, furnish to the Funding Agent, the
Surety Provider and the Lenders, a certificate of a Responsible Officer of Recco
to the effect that the facts upon which counsel to Recco relied in giving its
legal opinion that the Seller and Recco would not be substantively consolidated
for purposes of the United States Bankruptcy Code of 1978, as amended, have not
changed so as to render such opinion no longer valid.
0.10. Further Assurances. Do such further acts and things and execute
and deliver to the Funding Agent, the Surety Provider and the Lenders such
assignments, agreements, powers and instruments as are required by the Funding
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Agent, the Surety Provider or the Lenders to carry into effect the purposes of
this Agreement and the other Operative Documents or to better assure and confirm
unto the Funding Agent, the Surety Provider and the Lenders, their respective
rights, powers and remedies hereunder and under the other Operative Documents,
including, without limitation, to obtain such consents and give such notices,
and to file and record all such documents and instruments, and renew each such
consent, notice, filing and recordation, at such time or times, in such manner
and at such places, as may be necessary or desirable to preserve and protect the
position of the Funding Agent and the Secured Parties hereunder and under the
other Operative Documents. This covenant shall survive the termination of this
Agreement.
0.11. Independent Director. Maintain at all times at least two
Independent Directors. For purposes of this Section 5.11, "Independent Director"
shall have the meaning set forth in Recco's Certificate of Incorporation as in
effect on the date hereof.
0.12. Instructions to Obligors. Instruct all Obligors to cause all
Collections to be deposited directly into a Lock-Box.
0.13. Cooperation in Making Calculations. Cooperate with the Funding
Agent, the Surety Provider and the Lenders at all times in the calculation of
all formulas used in any Operative Document, including without limitation,
deliver in written or electronic form, any and all data and other information
necessary or required in the calculation of the Borrowing Base, Net Yield and
Recco Expenses and all calculations necessary or required to perform such
calculation. Recco hereby agrees to provide all such information on or before
each date, without prior request by the Funding Agent, the Surety Provider and
the Lenders, such information or data is required to make any such calculation
and to provide such information and data in such form as may be immediately used
by the Funding Agent, the Surety Provider and the Lenders without further
interpretation or purchase or license of any software. Recco does hereby further
agree that if it fails to provide any such information or data as required in
this Section 5.13, the Funding Agent, on behalf of the Secured Parties and the
Surety Provider, may use any estimate of any amount or calculation that it, in
its sole discretion, determines.
0.14. Interest Rate Hedge Mechanisms. Maintain or cause to be maintained
at all times Interest Rate Hedge Mechanisms to cover amounts outstanding under
the warehouse facility from time to time, satisfactory to ▇▇▇▇▇'▇, S&P, the
Funding Agent, the Surety Provider and the Lenders. Upon the execution of each
Interest Rate Hedge Mechanism, Recco shall deliver executed copies of such
Interest Rate Hedge Mechanism to the Funding Agent, the Surety Provider and the
Lenders.
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0.15. Contract Files. Maintain continuous custody of the Files (other
than those held by the Servicer, as agent for Recco pursuant to the Sale
Agreement) on behalf of the Funding Agent in secure and fireproof facilities in
accordance with the customary standards for such custody as certified to the
Funding Agent for the benefit of the Secured Parties; provided that such Files
shall be segregated from those of the Seller, and shall be readily identifiable
(by notation, segregation or otherwise) from files relating to Onyx Acceptance
Financial Corporation.
0.16. Permitted Investments. Notify the Funding Agent of the type and
maturity of Permitted Investments into which the funds in the Collection Account
shall be invested. Such notice shall be received by the Funding Agent no later
than 10:00 A.M. (New York City time) on each Business Day.
0.17. Separate Existence. At all times:
(10) maintain its own deposit account or accounts, separate from
those of any Affiliate, with commercial banking institutions and ensure that its
funds will not be diverted to any other Person or for other than its own
corporate uses, nor will such funds be commingled with the funds of any
Affiliate (other than funds deposited to the Clearing Account or the Lock-Box
Account, which funds may be commingled for a period not exceeding two (2)
Business Days);
(11) to the extent that it shares the same officers or other
employees as any of its Affiliates, the salaries of and the expenses related to
providing benefits to such officers and other employees shall be fairly
allocated among such entities, and each such entity shall bear its fair share of
the salary and benefit costs associated with all such common officers and
employees;
(12) to the extent that it jointly contracts with any of its
Affiliates to do business with vendors or service providers or to share overhead
expenses, the costs incurred in so doing shall be allocated fairly among such
entities, and each such entity shall bear its fair share of such costs. To the
extent that it contracts or does business with vendors or service providers
where the goods and services provided are partially for the benefit of any other
Person, the costs incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods or services are provided, and each
such entity shall bear its fair share of such costs;
(13) enter into all material transactions with its Affiliates,
whether currently existing or hereafter entered into, only on an arm's length
basis, it being
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understood and agreed that the transactions contemplated in the Operative
Documents meet the requirements of this paragraph (d);
(14) maintain office space that is physically segregated from the
office space of any of its Affiliates and, to the extent that it and any of its
Affiliates have offices in the same location, there shall be a fair and
appropriate allocation of overhead costs among them, and each such entity shall
bear its fair share of such expenses;
(15) conduct its affairs strictly in accordance with its certificate
of incorporation and observe all necessary, appropriate and customary corporate
formalities, including, but not limited to, separate stationery, holding all
regular and special stockholders' and directors' meetings appropriate to
authorize all corporate action, keeping separate and accurate minutes of its
meetings, passing all resolutions or consents necessary to authorize actions
taken or to be taken, and maintaining accurate and separate books, records,
financial records and accounts, including, but not limited to, payroll and
intercompany transaction accounts;
(16) hold itself out as a separate entity, pay its own liabilities
out of its own funds, and not assume or guarantee any of the liabilities of any
of its Affiliates; and
(17) take, or refrain from taking, as the case may be, all other
actions that are necessary to be taken or not to be taken in order to comply
with this Section 5.17.
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SECTION 6. NEGATIVE COVENANTS
Recco hereby agrees that, so long as this Agreement remains in effect,
Recco shall not directly or indirectly (without the prior written consent of the
Funding Agent and the Surety Provider):
0.1. Limitation on Debt. Create, incur, assume or suffer to exist any
Debt, except indebtedness in respect of the Loans, the Loan Note, other
obligations of Recco under the Operative Documents, including, without
limitation, the Subordinated Note.
0.2. Limitation on Liens. Create, incur, assume or suffer to exist any
Lien upon any of its property, assets or revenues, whether now owned or
hereafter acquired, except:
(1) Liens for taxes not yet due;
(2) Liens in favor of the Funding Agent as provided in the Operative
Documents; and
(3) Liens in favor of the Seller securing the Subordinated Note.
0.3. Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, or make any material change in its present method of conducting
business.
0.4. Limitation on Sale of Assets. Convey, sell, lease, assign, transfer
or otherwise dispose of any of its property, business or assets (including,
without limitation, Contracts and leasehold interests), whether now owned or
hereafter acquired, except as provided in the Operative Documents.
0.5. Purchased Contracts.
(4) Sell, assign or otherwise encumber any Purchased Contract,
except as provided in the Operative Documents; or
(5) Cancel, terminate, amend, modify or waive any term or condition
of any Purchased Contract (including the granting of rebates or
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adjustments with respect thereto), except in accordance with the Credit and
Collection Policy.
0.6. Limitation on Dividends. Declare or pay any dividend on, or make
any payment on account of, or set apart assets for a sinking or other analogous
fund for, the purchase, redemption, defeasance, retirement or other acquisition
of, any shares of any class of Capital Stock of Recco or any warrants or options
to purchase any such Stock, whether now or hereafter outstanding, or make any
other distribution in respect thereof, either directly or indirectly, whether in
cash or property or in obligations of Recco except (i) dividends payable solely
in common stock of Recco, and (ii) payments pursuant to any agreement or other
arrangement approved in writing by the Funding Agent and the Surety Provider to
share taxes of any affiliated, consolidated, unitary, combined or similar group
including the Seller and Recco and (iii) cash dividends to the extent permitted
by the Security Agreement, provided that after giving effect thereto no Event of
Default or Unmatured Event of Default shall have occurred and be continuing.
0.7. Limitation on Capital Expenditures. Make or commit to make (by way
of the acquisition of securities of a Person or otherwise) any expenditure in
respect of the purchase or other acquisition of fixed or capital assets.
0.8. Limitation on Investments, Loans and Advances. Make any advance,
loan, extension of credit or capital contribution to, or purchase any stock,
bonds, notes, debentures or other securities of or any assets constituting a
business unit of, or make any other investment in, any Person, except:
(6) purchases of Contracts pursuant to the Sale Agreement; and
(7) investments in Permitted Investments of funds, if any, on
deposit in the Collection Account.
0.9. Transactions with Affiliates. Enter into any transaction,
including, without limitation, any purchase, sale, lease or exchange of property
or the rendering of any service, with any Affiliate, except for (i) Purchases,
(ii) transactions expressly permitted by the Operative Documents and (iii) any
agreement or other arrangement satisfactory to the Funding Agent, the Surety
Provider and the Lenders to share taxes of any affiliated, consolidated,
unitary, combined or similar group including the Seller and Recco.
0.10. Sale and Leaseback. Enter into any arrangement with any Person
providing for the leasing by Recco of real or personal property which has been
or is to be sold or transferred by Recco to such Person or to any other Person
to
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whom funds have been or are to be advanced by such Person on the security of
such property or rental obligations of Recco.
0.11. Corporate Documents. Amend its Certificate of Incorporation or
By-Laws.
0.12. Capital Stock. Issue any shares of capital stock in addition to
the shares issued and paid for as of the Closing Date or permit during the term
of this Agreement any transfers of any shares of its capital stock; provided,
however, that its parent company may pledge the stock of Recco.
0.13. Fiscal Year. Permit the fiscal year of Recco to end on a day other
than December 31st.
0.14. Limitation on Negative Pledge Clauses. Enter into any agreement
with any Person other than the Funding Agent, the Surety Provider and the
Lenders pursuant to the Operative Documents which prohibits or limits the
ability of Recco to create, incur, assume or suffer to exist any Lien upon any
of its property, assets or revenues, whether now owned or hereafter acquired
except with the prior written consent of the Funding Agent, the Surety Provider
and the Lenders.
0.15. Activities of Recco. Engage in any business or activity of any
kind or enter into any transaction or indenture, mortgage, instrument,
agreement, contract, lease or other undertaking which is not directly related to
the transactions contemplated and authorized hereby or by the other Operative
Documents other than an agreement or other arrangement approved in writing by
the Funding Agent and the Surety Provider to share taxes of any affiliated,
consolidated, unitary, combined or similar group including the Seller and Recco.
0.16. Agreements.
(8) Except for the Operative Documents and as expressly permitted by
the Operative Documents, become a party to, or permit any of its properties to
be bound by, any indenture, mortgage, instrument, contract, agreement, lease or
other undertaking, or issue any power of attorney except to the Funding Agent
or, pursuant to the Sale Agreement, to the Servicer, or cancel, terminate,
amend, supplement, modify or waive any of the provisions of the Sale Agreement
or request, consent or agree to or suffer to exist or permit any such
cancellation, termination, amendment, supplement, modification or waiver.
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(9) Permit the Seller or the Servicer to assign any of their
respective rights or obligations under the Sale Agreement, except as expressly
permitted by the Sale Agreement.
(10) Permit the Servicer to change the forms of the Monthly Report,
the Daily Report, the Annual Report or any other document required to be
delivered by it pursuant to the Sale Agreement.
(11) On any day, permit a Borrowing Base Deficiency to exist.
0.17. Bank Accounts. Move the Bank Accounts from the institution at
which they are maintained on the Closing Date.
0.18. Successor Servicer. Permit any change of Servicer, except in
accordance with the Sale Agreement.
0.19. Servicing of Contracts.
(12) Permit any change in the method by which Collections are made,
unless instructed to in writing by the Funding Agent and the Surety Provider, in
which case Recco does hereby agree to implement any and all such changes as soon
as practicable.
(13) Amend, modify or otherwise change or agree to any amendment,
modification or other change in the Credit and Collection Policy without the
prior written consent of the Funding Agent and the Surety Provider to each such
proposed amendment, modification or change (with notice to S&P and ▇▇▇▇▇'▇).
0.20. Prohibitions Regarding Subordinated Note. Make any payment or
prepayment of, or purchase, redeem or otherwise acquire, or amend any provisions
pertaining to the subordination or the terms of payment of, the Subordinated
Note except as permitted by the terms of the Operative Documents.
0.21. Lock-Box Banks. Add or terminate any bank as a Lock-Box Bank or
make any change in its instructions to Obligors regarding payments to be made to
any Lock-Box Bank, unless the Funding Agent and the Surety Provider shall have
received notice of such addition of any Lock-Box Bank; or deposit or otherwise
credit, or cause or permit to be so deposited or credited, Collections to any
lock-box account except the Lock-Boxes, the Clearing Account and the Collection
Account.
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0.22. Contract Files. Transfer the Files to any Person or permit the
Files to be maintained at any location other than as set forth in the Sale
Agreement, in fireproof facilities owned, leased or utilized by Recco as
certified to the Funding Agent and the Surety Provider.
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SECTION 7. EVENTS OF DEFAULT OR REPLACEMENT
EVENT; REMEDIES
7.1. Events of Default or Replacement Event; Remedies. If an Event of
Default or a Replacement Event shall have occurred, the Aggregate Commitment of
the APA Banks to make Loans to Recco up to the Facility Limit shall terminate as
of the Termination Date. Upon the occurrence of an Event of Default, and upon
the written instructions of the Controlling Party, Recco shall take such action
or shall cause such action to be taken pursuant to any and all Interest Rate
Hedge Mechanisms and/or enter into any Hedge Agreement at the sole expense of
Recco promptly upon the request of the Controlling Party. In addition, the
Controlling Party shall be entitled to exercise any additional rights it may
have pursuant to the Operative Documents, including, without limitation, the
right to implement a Complete Servicing Transfer under the Sale Agreement and
the right to intercept the payments of Obligors directly to the Funding Agent.
SECTION 8. THE FUNDING AGENT
8.1. Funding Agent. (a) Notwithstanding any provision of this Agreement
and the other Operative Documents: (i) the Funding Agent shall not have any
obligations other than those specifically set forth herein, and no implied
obligations of the Funding Agent shall be read into this Agreement; and (ii) in
no event shall the Funding Agent be liable under or in connection with this
Agreement for indirect, special, or consequential losses or damages of any kind,
including lost profits, even if advised of the possibility thereof and
regardless of the form of action by which such losses or damages may be claimed.
Neither the Funding Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken in good
faith by it or them under or in connection with this Agreement, except for its
or their own gross negligence or willful misconduct. Without limiting the
foregoing, the Funding Agent (1) may consult with legal counsel (including
counsel for the Secured Parties), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, (2) shall not be responsible to the Secured Parties,
Recco, the Seller or the Servicer for any statements, warranties or
representations made in or in connection with this Agreement or the other
Operative Documents, (3) shall not be responsible to the Secured Parties, Recco,
the Seller or the Servicer for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of this Agreement or the other
Operative Documents, (4) shall incur no liability under or in
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respect of any of PARCO's commercial paper or other obligations of PARCO under
this Agreement or the other Operative Documents and (5) shall incur no liability
under or in respect of this Agreement or the other Operative Documents by acting
upon any notice (including notice by telephone), consent, certificate or other
instrument or writing (which may be by facsimile) reasonably believed by it to
be genuine and signed or sent by the proper party or parties. Notwithstanding
anything else herein or in the other Operative Documents, it is agreed that
where the Funding Agent may be required under this Agreement or the other
Operative Documents to give notice of any event or condition or to take any
action as a result of the occurrence of any event or the existence of any
condition, the Funding Agent agrees to give such notice or take such action only
to the extent that it has actual knowledge of the occurrence of such event or
the existence of such condition, and shall incur no liability for any failure to
give such notice or take such action in the absence of such knowledge.
(b) The Chase Manhattan Bank acts as Funding Agent and as administrative
agent for PARCO, as issuing and paying agent for PARCO's commercial paper, as
provider of other backup facilities for PARCO, and may provide other services or
facilities from time to time (collectively, the "Chase Roles"). Each of the
parties hereto hereby acknowledges and consents to any and all Chase Roles,
waives any objections it may have to any actual or potential conflict of
interest caused by Chase's acting as the Funding Agent or as an APA Bank under
this Agreement and acting as or maintaining any of the Chase Roles, and agrees
that in connection with any Chase Role, The Chase Manhattan Bank may take, or
refrain from taking, any action which it in its discretion deems appropriate.
SECTION 9. MISCELLANEOUS
0.1. Amendments and Waivers. None of this Agreement, the Loan Note, any
other Operative Document to which the Funding Agent, the Lenders or Recco is a
party, nor any terms hereof or thereof may be amended, supplemented or modified
except in accordance with the provisions of this subsection. The Funding Agent,
the Lenders, the Surety Provider and Recco may, from time to time, enter into
written amendments, supplements or modifications hereto and to the Loan Note and
the other Operative Documents for the purpose of adding any provisions to this
Agreement or the Loan Note or such other Operative Documents or changing in any
manner the rights of the Funding Agent, the Lenders or Recco hereunder or
thereunder and, in addition, waiving, on such terms and conditions as the
Funding Agent, the Surety Provider and the Lenders may specify in such
instrument, any of the requirements of this Agreement or the Loan Note or such
other Operative Documents or any Unmatured Event of Default or Event of Default
and its consequences. The forego-
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ing notwithstanding, no waiver of paragraph (o) of the definition of Event of
Default shall in any case be effective for more than 15 days. Any such waiver
and any such amendment, supplement or modification shall be binding upon the
Funding Agent, the Surety Provider and the Lenders and all future holders of the
Loan Note and each of S&P and ▇▇▇▇▇'▇ shall receive notice thereof. In the case
of any waiver, the Funding Agent, the Surety Provider, the Lenders and Recco
shall be restored to their former position and rights hereunder and under the
Loan Note and any other Operative Documents, and any Unmatured Event of Default
or Event of Default waived shall be deemed to be cured and not continuing; but
no such waiver shall extend to any subsequent or other Unmatured Event of
Default or Event of Default, or impair any right consequent thereon.
0.2. Notices. Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
overnight courier service, or by registered, certified or express mail, postage
prepaid, return receipt requested, or by facsimile copy, or telegram (with
messenger delivery specified in the case of a telegram) and shall be deemed to
be delivered for purposes of this Agreement on: (a) the second Business Day
following the day on which such notice was placed in the custody of the U.S.
Postal Service, (b) the next Business Day following the day on which such notice
was placed in the custody of any overnight courier service, including express
mail service or (c) the same Business Day on which such notice is sent by
telegram, messenger or facsimile. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this Section, notices,
demands, instructions and other communications in writing shall be given to or
made upon the respective parties hereto at their respective addresses (or to
their respective facsimile numbers) indicated below, and, in the case of
telephonic instructions or notices, by calling the telephone number or numbers
indicated for such party below:
If to Recco:
ONYX ACCEPTANCE RECEIVABLES CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Seller:
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ONYX ACCEPTANCE CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President
and Chief Financial Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to PARCO:
PARK AVENUE RECEIVABLES CORPORATION
c/o Global Securitization Services, LLC
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
(with a copy to the Funding Agent)
If to the Funding Agent or the APA Banks:
THE CHASE MANHATTAN BANK
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Structured Finance Services, PARCO Manager
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
CHASE SECURITIES INC.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Surety Provider:
MBIA Insurance Corporation
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇
▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Insured Portfolio Management, Structured Finance
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notice delivered to or required to be sent by Recco
hereunder shall be sent by Recco to the holder of the Subordinated Note.
0.3. No Waiver; Cumulative Remedies. No failure to exercise and no delay
in exercising, on the part of the Funding Agent, the Surety Provider or the
Lenders any right, remedy, power or privilege hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right, remedy,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, remedy, power or privilege. The rights,
remedies, powers and privileges herein provided are cumulative and not exclusive
of any rights, remedies, powers and privileges provided by law.
0.4. Survival of Representations and Warranties. All representations and
warranties made hereunder and in any document, certificate or statement
delivered pursuant hereto or in connection herewith shall survive the execution
and delivery of this Agreement and the Loan Note.
0.5. Payment of Expenses and Taxes. Recco agrees, on demand, to (a) pay
or reimburse the Funding Agent, the Surety Provider and the Lenders for all its
out-of-pocket costs and expenses incurred in connection with the preparation and
execution of, and any amendment, supplement or modification to, this Agreement,
the Loan Note and the other Operative Documents and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, any and all
collateral audit fees, the reasonable fees and disbursements of counsel to the
Funding Agent, the Surety Provider and the Lenders, (b) pay or reimburse the
Funding Agent, the Surety Provider and the Lenders for all of their costs and
expenses incurred in connection with the enforcement or preservation of any
rights under this Agreement, the Loan Note, the other Operative Documents and
any such other documents, including, without limitation, reasonable fees and
disbursements of counsel to the Funding Agent, the Controlling Party, the Surety
Provider and the Lenders and (c) pay, indemnify, and hold the Funding Agent, the
Surety Provider and the Lenders harmless from, any and all recording and filing
fees and any and all liabilities with respect to, or resulting from any delay in
paying, any registration tax, stamp, duty and other similar taxes or duties, if
any, which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation of any of
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the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement, the Loan
Note, the other Operative Documents and any such other documents, and (d) pay,
indemnify, and hold the Funding Agent, the Surety Provider and the Lenders
harmless from and against any and all other liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever with respect to the execution, delivery,
enforcement, performance and administration of this Agreement, the Loan Note and
the other Operative Documents, (all the foregoing, collectively, the
"indemnified liabilities"), provided that Recco has no obligation hereunder to
the Funding Agent, the Surety Provider and the Lenders with respect to
indemnified liabilities arising from the gross negligence or willful misconduct
of the Funding Agent, the Surety Provider or the Lenders. The agreements in this
Section 9.5 shall survive repayment of the Loan Note and all other amounts
payable hereunder.
0.6. Successors and Assigns; Participations.
(1) This Agreement shall be binding upon and inure to the benefit of
the Funding Agent, the Surety Provider and the Lenders and all future holders of
the Loan Note and their respective successors and assigns, except that Recco may
not assign or transfer any of its rights or obligations under this Agreement.
PARCO may not assign its rights hereunder without prior notice to the Surety
Provider and without the consent of Recco and the Surety Provider (which consent
shall not be unreasonably withheld); provided that no such consent shall be
required in the event of any assignment by PARCO to (i) an APA Bank pursuant to
the Asset Purchase Agreement or (ii) a commercial paper vehicle administered by
Chase. On and after the date hereof, the Funding Agent shall notify Recco and
the Surety Provider of any new or exiting APA Banks.
(2) Any APA Bank may, in accordance with applicable law, at any time
sell to one or more banks or other entities ("Participants") participating
interests in any Loan owing to it, the Loan Note, its Commitment or any other
interest of such APA Bank hereunder and under the other Operative Documents. In
the event of any such sale by an APA Bank of participating interests to a
Participant, such APA Bank's obligations under this Agreement to the other
parties hereto shall remain unchanged, such APA Bank shall remain solely
responsible for the performance thereof, such APA Bank shall remain the holder
of the Loan Note for all purposes under this Agreement and the other Operative
Documents, and Recco shall continue to deal solely and directly with such APA
Bank in connection with such APA Bank's rights and obligations under this
Agreement and the other Operative Documents. Recco agrees that if amounts
outstanding under this Agreement and the
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Loan Note are due and unpaid, or shall have been declared or shall have become
due and payable upon the occurrence of the Termination Date, each Participant
shall be deemed to have the right of setoff in respect of its participating
interest in amounts owing under this Agreement and the Loan Note to the same
extent as if the amount of its participating interest were owing directly to it
under this Agreement or the Loan Note. Recco also agrees that each Participant
shall be entitled to the benefits of Sections 2.9 and 9.5 with respect to its
participation in such APA Bank's Commitment and the Loans outstanding from time
to time; provided that no Participant shall be entitled to receive any greater
amount pursuant to such Sections than such APA Bank would have been entitled to
receive in respect of the amount of the participation transferred by such APA
Bank to such Participant had no such transfer occurred.
(3) If, pursuant to this Section 9.6, any interest in this Agreement
or the Loan Note is transferred or assigned to any Participant or assignee which
is organized under the laws of any jurisdiction other than the United States or
any state thereof, the applicable APA Bank shall cause such Participant or
assignee, as a condition to the effectiveness of such transfer, (i) to represent
to the Funding Agent, such APA Bank and Recco that under applicable law and
treaties then in effect no taxes will be required to be withheld by Recco, the
Funding Agent or such Participant or assignee with respect to any payments to be
made to such Participant or assignee in respect of the Loans, (ii) to furnish to
the Funding Agent, such APA Bank and Recco either U.S. Internal Revenue Service
Form 4224 (or any successor form) or U.S. Internal Revenue Service Form 1001 (or
any successor form) (wherein such Participant or assignee claims entitlement to
complete exemption from U.S. federal withholding tax on all interest payments
hereunder) and (iii) to agree (for the benefit of the Funding Agent, such APA
Bank and Recco) timely to provide the Funding Agent, such APA Bank and Recco a
new Form 4224 (or any successor form) or Form 1001 (or any successor form) upon
the expiration or obsolescence of any previously delivered form and comparable
statements in accordance with and if permitted under applicable U.S. laws and
regulations and amendments then in effect duly executed and completed by such
Participant or assignee, and to comply from time to time with all applicable
U.S. laws and regulations with regard to such withholding tax exemption.
(4) No APA Bank shall grant to any Participant the right to consent
to any amendment or waiver entered into in accordance with Section 9.1, except
for any such amendment or waiver which would increase such APA Bank's
Commitment, or reduce the amount or extend the due date of any principal of or
interest on the Loan Note.
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0.7. Termination. This Agreement shall terminate following the
Termination Date upon payment in full of all outstanding principal, interest and
other amounts due hereunder and under the Operative Documents which are payable
to the Funding Agent, the Surety Provider and the Lenders on such date.
0.8. 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.
0.9. 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.
0.10. Integration. This Agreement represents the agreement of Recco, the
Funding Agent and the Secured Parties with respect to the subject matter hereof,
and there are no promises, undertakings, representations or warranties by the
Funding Agent or the Secured Parties relative to the subject matter hereof not
expressly set forth or referred to herein or in the other Operative Documents.
0.11. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York.
0.12. Submission to Jurisdiction; Waivers. Recco hereby irrevocably and
unconditionally:
(5) submits for itself and its property in any legal action or
proceeding relating to this agreement and the other operative documents to which
it is a party, or for recognition and enforcement of any judgment in respect
thereof, to the non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the Southern District
of New York, and appellate courts from any thereof;
(6) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to the
venue of any such action or proceeding in any such court or that such action or
proceeding was brought in an inconvenient court and agrees not to plead or claim
the same;
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(7) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail (or
any substantially similar form of mail), postage prepaid, to its address set
forth in Section 9.2 or at such other address of which all of the other parties
hereto shall have been notified pursuant thereto; and
(8) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred to in
this subsection any special, exemplary, punitive or consequential damages.
0.13. Acknowledgments. Recco hereby acknowledges that:
(9) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement, the Loan Note and the other Operative Documents;
(10) neither the Funding Agent, the Lenders nor the Surety Provider
has any fiduciary relationship to Recco, and the relationship between each
Lender, on the one hand, and Recco, on the other hand, is solely that of debtor
and creditor; and
(11) no joint venture exists between Recco and any Lender.
0.14. Waiver of Jury Trial. Recco hereby irrevocably and unconditionally
waives trial by jury in any legal action or proceeding relating to this
Agreement or the Loan Note or any other Operative Document and for any
counterclaim therein.
0.15. No Bankruptcy Petition. Each of Recco, the Funding Agent, the APA
Banks and the Surety Provider covenants and agrees that it will not institute
against, or join with or knowingly cooperate or encourage any other Person in
instituting against, PARCO any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law. Each of the Seller, the Lenders, the Funding
Agent and the Surety Provider covenants and agrees that it will not institute
against, or join with or knowingly cooperate or encourage any other Person in
instituting against, Recco any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings, or other proceedings under any federal or
state bankruptcy or similar law.
0.16. Limited Recourse; Waiver of Setoff. (a) Notwithstanding anything
to the contrary contained herein, the obligations of PARCO under this Agreement
are solely the corporate obligations of PARCO and, in the case of
40
47
obligations of PARCO other than PARCO's commercial paper, shall be payable at
such time as funds are actually received by, or are available to, PARCO in
excess of funds necessary to pay in full all of PARCO's outstanding commercial
paper and, to the extent funds are not available to pay such obligations, the
claims relating thereto shall not constitute a claim against PARCO but shall
continue to accrue. Each party hereto agrees that the payment of any claim (as
defined in Section 101 of Title 11 of the Bankruptcy Code) of any such party
shall be subordinated to the payment in full of all of PARCO's outstanding
commercial paper.
No recourse under any obligation, covenant or agreement of PARCO
contained in this Agreement shall be had against any incorporator, stockholder,
officer, director, member, manager, employee or agent of PARCO or any of their
Affiliates (solely by virtue of such capacity) by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise; it being expressly agreed and understood that no personal liability
whatever shall attach to or be incurred by any incorporator, stockholder,
officer, director, member, manager, employee or agent of PARCO or any of their
Affiliates (solely by virtue of such capacity) or any of them under or by reason
of any of the obligations, covenants or agreements of PARCO contained in this
Agreement, or implied therefrom, and that any and all personal liability for
breaches by PARCO of any of such obligations, covenants or agreements, either at
common law or at equity, or by statute, rule or regulation, of every such
incorporator, stockholder, officer, director, member, manager, employee or agent
is hereby expressly waived as a condition of and in consideration for the
execution of this Agreement; provided that the foregoing shall not relieve any
such Person from any liability it might otherwise have as a result of fraudulent
actions taken or fraudulent omissions made by them or in any case of the gross
negligence, bad faith or willful misconduct of any such Person.
(b) Each of the Funding Agent, Recco, the APA Banks and the Seller
hereby waives any right of setoff it may have or to which it may be entitled
under this Agreement and the Operative Documents from time to time against PARCO
or its assets.
0.17. Confidentiality. (a) Recco shall maintain, and shall cause each
officer, employee and agent of itself and its Affiliates to maintain, the
confidentiality of the Operative Documents and all other confidential
proprietary information with respect to PARCO, the Funding Agent and the APA
Banks and each of their respective businesses obtained by them in connection
with the structuring, negotiation and execution of the transactions contemplated
herein and in the other Operative Documents, except for information that has
become publicly available or information disclosed (i) to legal counsel,
accountants and other professional advisors to Recco
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and its Affiliates, (ii) as required by law, regulation or legal process or
(iii) in connection with any legal or regulatory proceeding to which Recco or
any of its Affiliates is subject. Recco hereby consents to the disclosure of any
non-public information with respect to it received by PARCO, the Funding Agent
or any APA Bank to (i) any of PARCO, the Funding Agent or any APA Bank, (ii) any
nationally recognized rating agency providing a rating or proposing to provide a
rating to PARCO's Commercial Paper, (iii) any placement agent which proposes to
offer and sell PARCO's Commercial Paper, (iv) any provider of PARCO's
program-wide liquidity or credit support facilities, (v) any potential APA Bank
to which Recco has consented (which consent shall not be unreasonably withheld)
or (vi) any participant or potential participant to which Recco has consented
(which consent shall not be unreasonably withheld) (which Person, in the case of
clauses (iii) - (vi), agrees in writing to be bound by the confidentiality
provisions of this Section.
(b) Notwithstanding the foregoing, each of the Surety Provider, PARCO,
the Funding Agent and the APA Banks shall maintain, and shall cause each
officer, employee and agent of itself and its Affiliates to maintain, the
confidentiality of the Operative Documents and all other confidential
proprietary information with respect to Recco and its Affiliates and each of
their respective businesses obtained by them in connection with the structuring,
negotiation and execution of the transactions contemplated herein and in the
other Operative Documents, except for information that has become publicly
available or information disclosed (i) to legal counsel, accountants, reinsurers
and other professional advisors to the Surety Provider, PARCO, the Funding
Agent, the APA Banks and their Affiliates, (ii) as required by law, regulation
or legal process or (iii) in connection with any legal or regulatory proceeding
to which the Funding Agent, the Surety Provider, PARCO, the APA Banks or any of
their Affiliates is subject.
(c) The foregoing confidentiality provisions shall survive the
termination of this Agreement and the Program.
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IN WITNESS WHEREOF, the parties hereto have caused this Funding
Agreement to be duly executed and delivered in New York, New York by their
proper and duly authorized officers as of the day and year first above written.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
PARK AVENUE RECEIVABLES
CORPORATION, as a Lender
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
Funding Agent
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as
an APA Bank
By:
-------------------------------------
Name:
Title:
43
50
Accepted and agreed as of
the date first above written:
MBIA INSURANCE CORPORATION,
as Surety Provider
By:
----------------------------------
Name:
Title:
44
51
EXHIBIT A
[DEFINITIONS LIST]
A-1
52
EXHIBIT B
[FORM OF LOAN NOTE]
$150,000,000
New York, New York Date: August 9, 1999
FOR VALUE RECEIVED, the undersigned, Onyx Acceptance Receivables
Corporation, a Delaware corporation ("Recco"), promises to pay to the order of
The Chase Manhattan Bank, as Funding Agent for the benefit of the Lenders
(together with its successors and assigns in such capacity, the "Funding
Agent"), on the date specified in Section 2.2 of the Funding Agreement
hereinafter referred to, at the office of the Funding Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, in lawful money of the United States of America and in
immediately available funds, the principal amount of ONE HUNDRED FIFTY MILLION
DOLLARS ($150,000,000) or, if less, the aggregate unpaid principal amount of
all Loans made by the Lenders to Recco pursuant to the Funding Agreement, and to
pay interest at such office, in like money, from the date hereof on the unpaid
principal amount of such Loans from time to time outstanding at the rates and on
the dates specified in Section 2.5 of the Funding Agreement.
The Funding Agent is authorized to record, on the schedule
annexed hereto and made a part hereof or on other appropriate records of the
Funding Agent, the date and amount of each Loan made by the Lenders, each
continuation thereof, the interest rate from time to time on each Loan and the
date and amount of each payment or prepayment of principal thereof. Any such
recordation shall constitute prima facie evidence of the accuracy of the
information so recorded, provided that the failure of the Funding Agent to make
any such recordation (or any error in such recordation) shall not affect the
obligations of Recco hereunder or under the Funding Agreement in respect of the
Loans.
This Loan Note is the Loan Note referred to in that certain
Funding Agreement, dated as of August 9, 1999 (as amended, supplemented or
otherwise modified and in effect from time to time, the "Funding Agreement"), by
and among Recco, Park Avenue Receivables Corporation, the Funding Agent and The
Chase Manhattan Bank, as an APA Bank, and is entitled to the benefits thereof.
Capitalized terms used herein without definition have the meanings assigned to
them in, or incorporated by reference into, the Funding Agreement.
B-1
53
This Loan Note is subject to optional and mandatory prepayment
as provided in the Funding Agreement.
Upon the occurrence of an Event of Default, the Controlling
Party and the Funding Agent shall have all of the remedies specified in the
Funding Agreement, the Security Agreement and the other Operative Documents.
Recco hereby waives presentment, demand, protest and all notices of any kind.
This Loan Note shall be governed by, and construed in accordance
with, the laws of the State of New York.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
B-2
54
Schedule 1 to
Loan Note
Principal Interest on Prepayment
Date of Loans Loans of Loans Notation By
---- -------- ----------- ---------- -----------
------------ ------------ ------------ ------------ ------------
------------ ------------ ------------ ------------ ------------
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------------ ------------ ------------ ------------ ------------
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DATED:
B-1
55
EXHIBIT C
NOTICE OF BORROWING
Onyx Acceptance Receivables Corporation hereby requests that the
Lenders make a Loan to it on [insert Borrowing Date] (the "Borrowing Date") in
the amount of [amount of Loan requested] by wire transfer in immediately
available funds to the Disbursement Sub-Account by 4:00 P.M. (New York City
time) on the Borrowing Date (capitalized terms used herein have the meanings
assigned to them in, or incorporated by reference into, the Funding Agreement,
dated as of August 9, 1999 (as amended, the "Funding Agreement"), by and among
Onyx Acceptance Receivables Corporation, The Chase Manhattan Bank and Park
Avenue Receivables Corporation). Onyx Acceptance Receivables Corporation hereby
certifies as of the date hereof that the representations and warranties made in
Section 3 of the Funding Agreement are true and correct on and as of the
Borrowing Date for such Loan, both before and after giving effect to such Loan.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
Date:____________, ________
C-1
56
EXHIBIT D
[SECURITY AGREEMENT]
See Tab 4
D-1
57
EXHIBIT E
[FORM OF RECCO OFFICER'S CERTIFICATE]
The undersigned [President] [Chief Financial Officer] [Chief
Executive Officer] [Executive Vice President] of Onyx Acceptance Receivables
Corporation ("Recco") hereby certifies that as such he is authorized to execute
and deliver this certificate on behalf of Recco in connection with the Funding
Agreement, dated as of August 9, 1999 (as amended, supplemented or otherwise
modified, the "Funding Agreement"), by and among Recco, Park Avenue Receivables
Corporation and The Chase Manhattan Bank (all capitalized terms used herein
without definition having the respective meanings specified in, or incorporated
by reference into, the Funding Agreement), and further certify as follows:
Recco shall apply the proceeds of the Loan which are being
disbursed to Recco on the date hereof (the "Loan Proceeds") solely for the
purpose of purchasing from the Seller, pursuant to the Sale Agreement, those
Contracts set forth on the Contracts List delivered to the Funding Agent and the
Surety Provider on the date hereof and such Loan Proceeds shall be applied on
________, _____.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ____ day
of __________ _____.
By:
-------------------------------------
Name:
Title:
E-1