EXHIBIT 10.149
EXECUTION
ONYX ACCEPTANCE RECEIVABLES CORPORATION
AMENDED AND RESTATED
SALE AND SERVICING AGREEMENT
dated as of January 29, 2004
ONYX ACCEPTANCE CORPORATION
ONYX ACCEPTANCE RECEIVABLES CORPORATION
TABLE OF CONTENTS
Page No.
ARTICLE I DEFINITIONS............................................................................. 1
Section 1.1 Definitions.................................................................. 1
ARTICLE II PURCHASES AND SALES.................................................................... 2
Section 2.1 Agreements to Purchase and to Sell........................................... 2
Section 2.2 Purchase Price............................................................... 2
Section 2.3 Payment of Purchase Price.................................................... 3
Section 2.4 Delivery..................................................................... 3
ARTICLE III CONDITIONS TO PURCHASE................................................................ 3
Section 3.1 Conditions to Effectiveness.................................................. 3
Section 3.2 Conditions Precedent to Payment of Purchase.................................. 4
ARTICLE IV REPRESENTATIONS, WARRANTIES AND COVENANTS.............................................. 4
Section 4.1 Representations and Warranties of the Seller and the Servicer................ 4
Section 4.2 Representations and Warranties of the Seller Concerning Contracts............ 8
Section 4.3 Covenants of Seller.......................................................... 12
Section 4.4. Covenants of Servicer....................................................... 18
Section 4.5 Repurchase of Ineligible Contracts........................................... 20
Section 4.6 Financial Covenants of Seller................................................ 21
Section 4.7 Representations and Warranties of Recco...................................... 22
Section 4.8 Collecting Title Documents Not Delivered on the Purchase Date................ 22
ARTICLE V SELLER NOTE AND SUBORDINATED NOTE....................................................... 23
Section 5.1 Seller Note.................................................................. 23
Section 5.2 Restrictions on Transfer of Seller Note...................................... 23
Section 5.3 Subordinated Note............................................................ 23
Section 5.4 Restrictions on Transfer of Subordinated Note................................ 26
ARTICLE VI TERMINATION OF COMMITMENT.............................................................. 26
Section 6.1 Termination.................................................................. 26
Section 6.2 Remedies..................................................................... 26
ARTICLE VII INDEMNIFICATION, ADDITIONAL COSTS, INSPECTION AND CERTAIN LITIGATION MATTERS.......... 27
Section 7.1 Indemnities.................................................................. 27
Section 7.2 Rights of Inspection......................................................... 28
Section 7.3 Certain Litigation Matters................................................... 29
ARTICLE VIII THE SERVICER......................................................................... 30
Section 8.1 Appointment of Servicer...................................................... 30
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Section 8.2 Collections.................................................................. 31
Section 8.3 Maintenance of Records; Quarterly and Annual Reports......................... 31
Section 8.4 Servicing Fee................................................................ 33
Section 8.5 Resignation; Sub-Contracting................................................. 33
Section 8.6 Termination.................................................................. 33
Section 8.7 Daily Report................................................................. 34
Section 8.8 Monthly Report............................................................... 34
Section 8.9 Servicer Termination Events.................................................. 34
Section 8.10 Servicer Termination........................................................ 35
Section 8.11 Appointment of Successor Servicer........................................... 36
ARTICLE IX MISCELLANEOUS.......................................................................... 37
Section 9.1 Notices, Etc................................................................. 37
Section 9.2 Successors and Assigns....................................................... 38
Section 9.3 Confirmation of Intent; Security Interest.................................... 38
Section 9.4 Payments..................................................................... 39
Section 9.5 Rights to Enable Successor Servicing......................................... 39
Section 9.6 Costs; Expenses and Taxes.................................................... 39
Section 9.7 Severability Clause.......................................................... 39
Section 9.8 Amendments; Governing Law; Jury Trial Waiver................................. 39
Section 9.9 No Recourse.................................................................. 40
Section 9.10 Further Assurances.......................................................... 40
Section 9.11 Termination................................................................. 40
Section 9.12 Assignment to Collateral Agent.............................................. 40
Section 9.13 Counterparts................................................................ 41
Section 9.14 Headings.................................................................... 41
Section 9.15 No Bankruptcy Petition Against ▇▇▇▇▇........................................ 41
EXHIBIT A Seller Note
EXHIBIT B Subordinated Note
EXHIBIT C Officer's Certificate
EXHIBIT D List of Lock-Box Banks and Numbers of Lock-Boxes
EXHIBIT E Clearing Account Bank and Account Number
EXHIBIT F Form of Servicer's Certificate
EXHIBIT G Form of Daily Report
EXHIBIT H Form of Monthly Report
EXHIBIT I Credit and Collection Policy
SCHEDULE 4.1(h)-1 Principal Place of Business, Etc. of Seller
SCHEDULE 4.1(h)-2 Principal Place of Business, Etc. of Servicer
SCHEDULE 4.1(k)-1 Trade Names of Seller
SCHEDULE 4.1(k)-2 Trade Names of Servicer
SCHEDULE 4.1(r)-1 Subsidiaries of Seller
SCHEDULE 4.1(r)-2 Subsidiaries of Servicer
SCHEDULE 9.5 Licenses, Patents, Computer Hardware and Software, Etc.
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SALE AND SERVICING AGREEMENT
SALE AND SERVICING AGREEMENT (the "Sale Agreement" or this "Agreement"),
dated as of January 29, 2004, between ONYX ACCEPTANCE CORPORATION, a Delaware
corporation, as seller (in such capacity, the "Seller") and as servicer (in such
capacity, the "Servicer"), and ONYX ACCEPTANCE RECEIVABLES CORPORATION, a
Delaware corporation (together with its successors and assigns, "Recco"), as the
purchaser.
W I T N E S S E T H:
WHEREAS, the Seller in the ordinary course of its business originates and
purchases contracts secured by automobiles, vans and light trucks;
WHEREAS, the Seller wishes to sell certain of such contracts from time to
time to Recco and Recco desires to purchase such contracts;
WHEREAS, from time to time in accordance with the consummation of the
transactions contemplated herein, Recco financed the purchases of such contracts
by advances made by the Lenders under the Credit Agreement, which advances will
be secured by the contracts purchased by Recco;
WHEREAS, the parties hereto entered into the Sale and Servicing Agreement,
dated as of January 9, 2003 (the "Original Sale Agreement"); and
WHEREAS, the parties wish to amend and restate the Original Sale Agreement
as hereinafter provided.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINITIONS
Section 1.1 Definitions.
(a) As used in this Agreement, capitalized terms used herein shall,
unless otherwise defined herein, have the meanings assigned to them in Exhibit A
to the Amended and Restated Credit Agreement, dated as of the date hereof, among
Recco, CDC Financial Products, Inc., as Administrative Agent, the Conduit
Lenders party thereto, the Committed Lenders party thereto and the respective
Group Agents (the "Credit Agreement"), which is incorporated herein by reference
(the "Definitions List").
(b) 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.
(c) Capitalized terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
ARTICLE II
PURCHASES AND SALES
Section 2.1 Agreements to Purchase and to Sell.
(a) On each Purchase Date occurring prior to the Commitment
Termination Date, the Seller does hereby agree to sell, transfer, assign, set
over and otherwise convey, without recourse (except as expressly provided
herein), to Recco and Recco does hereby agree to purchase, without recourse
(except as expressly provided herein) all right, title and interest of the
Seller in and to (i) all Contracts originated, purchased or owned by the Seller
that have Outstanding Balances as of the close of business on the Business Day
immediately preceding such Purchase Date and all payment and enforcement rights
(but not any obligations) to, in and under such Contracts, (ii) all rights in
and to any Insurance Policies with respect to such Contracts, (iii) any and all
security interests in the Vehicles, (iv) all monies due and to become due, and
all amounts received, with respect to the foregoing, (v) any and all Files
related to such Contracts, including the Dealer Assignment related to each
Contract (vi) all Recoveries related to such Contracts and (vii) all proceeds of
the foregoing (including, without limitation, "proceeds" as defined in Section
9-102 of the UCC as in effect in the State of New York); provided that the
Seller shall not be obligated to sell any Contract to Recco which (i) the Seller
sells to a Subsidiary of the Seller pursuant (a) the Triple-A One Funding
Corporation warehouse facility, dated November 30, 2001 or (b) any other
warehouse or similar facility entered into with the prior written consent of the
Administrative Agent, each Group Agent and the Surety Provider or (ii) is
purchased or originated by the Seller for the sole purpose of selling such
Contract to an affiliated or unaffiliated third party. Recco shall not be
obligated to make any purchase hereunder on or after the Commitment Termination
Date.
(b) It is the express and specific intent of the parties that the
transfer of the Purchased Contracts from the Seller to Recco, as provided in
this Agreement, is and shall be construed for all purposes as a true, complete
and absolute sale of the Purchased Contracts.
(c) The Seller acknowledges that, upon transfer to Recco, the
Purchased Contracts are subject to the security interest of the Collateral Agent
for the benefit of the holders of the Obligations pursuant to the Security
Agreement.
(d) In connection with the Seller's sale of Contracts set forth
herein the Seller hereby transfers to Recco all its right, title and interest in
and to each Lock-Box.
(e) In selecting the Contracts to be sold pursuant to clause (a) the
Seller shall employ selection procedures which are not adverse to the interests
of Recco, the Lenders, the Surety Provider or the Collateral Agent.
Section 2.2 Purchase Price.
(a) The amount payable to the Seller by Recco on each Purchase Date
occurring prior to the Commitment Termination Date in connection with any sale
hereunder shall be equal to the aggregate Outstanding Balances of the Contracts
set forth on the Contract List for such Purchase Date (the "Purchase Price"), as
set forth in the Daily Report dated such Purchase Date.
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(b) The outstanding balance of Finance Charges shall not be included
in the calculation of the Purchase Price of any Contracts purchased on any
Purchase Date.
Section 2.3 Payment of Purchase Price.
(a) Prior to 9 A.M. (New York City time) on each Purchase Date,
including the Closing Date, the Servicer will determine the Purchase Price to be
paid on such Purchase Date. The Purchase Price shall be paid on the related
Purchase Date in the manner provided below:
(i) in cash, in an amount equal to the lesser of (A)
Available Funds on such Purchase Date and (B) the Purchase Price;
(ii) to the extent that the Purchase Price exceeds the amount
of the cash payment in (i) above, such excess shall be paid, on each Purchase
Date, by adjusting the principal amount of the Subordinated Note to equal the
Subordinated Interest on such Purchase Date up to the Maximum Subordinated
Interest; and
(iii) to the extent that the Purchase Price exceeds the sum of
(a) the amount of the cash payment in (i) above and (b) the adjustment to the
principal amount of the Subordinated Note in accordance with (ii) above, such
excess shall be paid, on each Purchase Date, by adjusting the principal amount
of the Seller Note to equal the Seller Interest on such Purchase Date up to the
Maximum Seller Interest; and.
(iv) to the extent the Purchase Price exceeds the sum of (a)
the amount of the cash payment in (i) above, (b) the adjustment to the principal
amount of the Subordinated Note in accordance with (ii) above and (c) the
adjustment of the principal amount of the Seller Note in accordance with (iii)
above, the Seller shall and does hereby contribute such excess to the capital of
Recco on such Purchase Date.
(b) Unless otherwise specified herein, all payments of the cash
component of the Purchase Price shall be made not later than 4:00 P.M. (New York
City time) on the applicable Purchase Date in lawful money of the United States
of America in same day funds by depositing such amounts in the bank account
designated in writing by the Seller to Recco, with a copy to the Administrative
Agent and each Group Agent.
Section 2.4 Delivery. The Seller hereby agrees that all chattel paper and
instruments (as each such term is defined in the UCC), if any, representing or
evidencing any of the Purchased Contracts shall be promptly transferred to Recco
pursuant to duly executed transfer instruments in form and substance
satisfactory to Recco, the Surety Provider, the Administrative Agent and each
Group Agent. All such chattel paper and instruments shall be delivered into the
possession of the Servicer (acting in its capacity as custodian as described in
Section 8.3(a) hereof) or its agent or to such Person as the Controlling Party
may approve, on or prior to the Purchase Date.
ARTICLE III
CONDITIONS TO PURCHASE
Section 3.1 Conditions to Effectiveness. On or prior to the date hereof,
the following conditions shall have been satisfied:
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(a) the conditions set forth in subsection 4.1 of the Credit
Agreement shall have been satisfied; and
(b) a Responsible Officer of the Servicer shall have executed and
delivered an officer's certificate to Recco, with copies to the Collateral
Agent, the Surety Provider, the Administrative Agent and each Group Agent,
listing the servicing officers of the Servicer.
Section 3.2 Conditions Precedent to Payment of Purchase Price. As a
condition precedent to the obligation of Recco to make payment of the Purchase
Price on any Payment Date, the following conditions shall have been satisfied on
or prior to such Payment Date:
(a) no Unmatured Wind-Down Event or Wind-Down Event shall have
occurred and be continuing on such Payment Date or would result from such
payment or from the application of the proceeds therefrom. By accepting payment
for the Purchased Contracts the Seller shall be deemed to certify that this
condition has been satisfied;
(b) Recco shall have received all other approvals, legal opinions,
documents, instruments or items of information as it may reasonably request and
all of the foregoing shall be satisfactory in form and substance to Recco, and
all corporate and other proceedings (if any) required to be taken shall be
satisfactory in form and substance to Recco;
(c) an authorized officer of the Seller shall have executed and
delivered an officer's certificate to Recco, with copies to the Collateral
Agent, the Surety Provider, the Administrative Agent and each Group Agent,
substantially in the form of Exhibit C; and
(d) the conditions set forth in subsections 4.1, 4.2 and 4.3 of the
Credit Agreement shall have been satisfied.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 4.1 Representations and Warranties of the Seller and the Servicer.
The Seller represents and warrants to Recco, the Administrative Agent and the
Group Agents, as to itself, as of the date of this Agreement and as of any
future Purchase Date, and the Servicer represents and warrants as to itself
(except as to clauses (m), (o), (q), (s), (u) and (v) and, to the extent
relating to the Seller, clauses (g), (h), (k) and (r) of this Section 4.1, as to
which the Servicer makes no representation or warranty) to Recco, the
Administrative Agent and the Group Agents, as of the date of this Agreement and
as of each Payment Date, as follows:
(a) Corporate Existence. It is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of Delaware,
with full corporate power and authority to conduct its business and to own its
properties and other assets and is duly qualified to do business and is in good
standing in every jurisdiction in which the nature of its business requires it
to be so qualified.
(b) Corporate Power; Authorization; Non-Contravention. The
execution, delivery and performance by it of this Agreement, the other Operative
Documents to which it is a party and all other agreements, instruments and
documents to be delivered by it hereunder and thereunder, and the transactions
contemplated hereby and thereby, are within its corporate
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powers, have been duly authorized by all necessary corporate action, do not
contravene (i) any Requirement of Law applicable to it or (ii) any Contractual
Obligation of it, and do not result in or require the creation of any Lien or
any other claim upon or with respect to any of its properties (other than those
contemplated hereunder); and no transaction contemplated hereby requires
compliance with any bulk sales act or similar law. This Agreement and all the
other Operative Documents to which it is a party have been duly executed and
delivered on its behalf.
(c) No Consents. No authorization or approval or other action by,
and no notice to or filing with, any Governmental Authority or regulatory body
is required for the due execution, delivery and performance by it of this
Agreement, the other Operative Documents to which it is a party or any other
agreement, document or instrument to be delivered by it hereunder and
thereunder, or for the perfection of, or the exercise by, Recco or any other
beneficiary or assignee hereof or thereof of its rights or remedies under this
Agreement or any such Operative Document or other agreement, document or
instrument, except for the filing of the UCC financing statements referred to in
clause (o) of this Section 4.1, all of which, on or prior to the date hereof,
shall have been duly made and shall be in full force and effect.
(d) Enforceable Obligation. Each of this Agreement and the other
Operative Documents to which it is a party is and will be its legal, valid and
binding obligation, enforceable against it in accordance with its terms except
as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforceability of
creditors' rights generally and by general equitable principles (whether
considered in proceedings in equity or at law).
(e) Financial Condition. Its audited consolidated balance sheet as
at December 31, 2002 and the related statements of income and retained earnings
and of cash flows for the fiscal year then ended, certified by
PricewaterhouseCoopers LLP, and its unaudited consolidated and consolidating
balance sheets as at September 30, 2003 and the related statements of income and
retained earnings and of cash flows for the nine-month period then ended, copies
of all of which have been furnished to Recco, the Collateral Agent, the Surety
Provider, the Administrative Agent, and each Group Agent, fairly present the
financial condition of it and its consolidated Subsidiaries as at such date and
the results of the operations of it and its consolidated Subsidiaries for the
period ending on such date, all in accordance with GAAP, and since September 30,
2003 there has been no Material Adverse Effect.
(f) Material Litigation. Except as otherwise disclosed in writing to
Recco, the Collateral Agent, the Surety Provider, the Administrative Agent and
each Group Agent prior to the date hereof, there is no pending or threatened
action, suit or proceeding against or affecting it or any of its Subsidiaries or
Affiliates or any of their respective officers or directors, in such capacity,
or the property of it or of any of its Subsidiaries or Affiliates, in any court,
or before any arbitrator of any kind, or before or by any governmental body (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.
(g) Accuracy of Information. (i) Each exhibit, financial statement,
document, book, record, report and other item of written information furnished
by it to the Collateral Agent, the Surety Provider, Recco, the Administrative
Agent or any Group Agent in connection with the
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Operative Documents is accurate as of its date and as of the date so furnished
and (ii) all financial projections contained therein are based on reasonable and
stated assumptions, and no such item referred to in (i) or (ii) above contains
any material misstatement of fact or omits to state a material fact.
(h) Principal Place of Business. Its principal place of business and
chief executive office is located at the address referred to in Section 9.1 and
the locations of the offices where it keeps all the records relating to the
Contracts, including without limitation, the Files are listed on Schedule
4.1(h)-1 (as to the Seller) and on Schedule 4.1(h)-2 (as to the Servicer)
hereto.
(i) Lock-Box. The names and addresses of all the Lock-Box Banks,
together with the account numbers of each Lock-Box, are specified in Exhibit D
hereto. Each Obligor has been directed to remit all funds in respect of the
Purchased Contracts only into the Lock-Boxes.
(j) Clearing Account. The name and address of the Clearing Account
Bank, together with the account number thereof, are specified in Exhibit E. All
funds in respect of the Purchased Contracts at any time on deposit in the
Clearing Account are held by the Clearing Account Bank subject to the security
interest of the Collateral Agent, for the benefit of the holders of the
Obligations.
(k) Names. Except as set forth on Schedule 4.1(k)-1 (as to the
Seller) and Schedule 4.1(k)-2 (as to the Servicer), it has no tradenames,
fictitious names, assumed names or "doing business as" names.
(l) ERISA.
(i) No Plan is or has been a Multiemployer Plan. Except for
the Seller, neither Recco nor any ERISA Affiliate of Recco has maintained any
Plan which is subject to Title IV of ERISA. 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 in all material respects with the applicable provisions of ERISA
and the Code; provided, that any non-compliance by the Plan with the applicable
provisions of ERISA or the Code that is reasonably likely to, in the Controlling
Party's sole discretion, subject Recco to any tax, penalty or other liability,
shall be deemed material non-compliance. 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.
(ii) If required to be filed, Schedule B (Actuarial
Information) to each most recent annual report (Form 5500 Series) has been filed
for each applicable Plan with the IRS and copies of such Schedule have been
furnished to the Administrative Agent, each Group Agent and Recco. Each such
Schedule is complete and accurate in all material respects and fairly presents
the funding status of such applicable Plan.
(iii) Each Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified, and each trust related to any such
Plan has been determined to be exempt from federal income tax under Section
501(a) of the Code, and neither Recco nor any ERISA Affiliate has materially
breached any of the responsibilities, obligations or duties
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imposed on it by ERISA, the Code or regulations promulgated thereunder with
respect to any Plan; provided, that any breach of any of the responsibilities,
obligations or duties imposed on Recco or an ERISA Affiliate by ERISA, the Code
or regulations promulgated thereunder with respect to any Plan, which breach is
reasonably likely to, in the Controlling Party's sole discretion, subject Recco
to any tax, penalty or other liability, shall be deemed a material breach.
(iv) Neither Recco nor any ERISA Affiliate maintains or
contributes to any "employee welfare benefit plan" within the meaning of Section
3(1) of ERISA which provides benefits to employees after termination of
employment other than as required by Section 601 of ERISA, Section 4980B of the
Code, or any substantially similar state or local law.
(v) No Plan has incurred any accumulated funding deficiency
(as defined in Section 302 of ERISA and 412(a) of the Code), whether or not
waived.
(vi) Neither Recco nor any ERISA Affiliate nor any fiduciary
of any Plan (i) has engaged in a nonexempt prohibited transaction described in
Sections 406 of ERISA or 4975 of the Code or (ii) has taken or failed to take
any action which would constitute or result in an ERISA Termination Event.
(vii) Neither Recco nor any ERISA Affiliate has incurred, and
no condition exists or event or transaction has occurred with respect to any
Plan that could result in, any withdrawal liability under Section 4201 of ERISA
that remains unpaid or liability to the PBGC which remains outstanding other
than the payment of premiums, and there are no such premium payments which have
become due which are unpaid.
(viii) Neither Recco nor any ERISA Affiliate has (i) failed to
make a required contribution or payment to a Plan, (ii) made a complete or
partial withdrawal from a Multiple Employer Plan or a Multiemployer Plan or
(iii) failed to make a required installment or any other required payment under
Section 412 of the Code on or before the due date for such installment or other
payment.
(ix) Neither Recco nor any ERISA Affiliate is required to
provide security to a Plan under Section 401(a)(29) of the Code due to a Plan
amendment that results in an increase in current liabilities for the plan year.
(m) Treatment of Transaction. It has accounted for and prepared
financial statement which account for the transactions contemplated hereby as a
financing secured by the Purchased Contracts, but it has not in any other
respect treated the transactions in the Purchased Contracts by it contemplated
hereby in any manner other than as a sale of, or absolute assignment of, its
full right, title and ownership interest in, the Purchased Contracts, to Recco.
(n) Requirements of Law. Neither it nor any Subsidiary is in
violation of any Requirement of Law that could materially adversely affect its
operations or the conduct of its businesses or which is inconsistent with the
transactions contemplated by this Agreement.
(o) UCC Filings to Evidence Sale and Ownership Transfer. All filings
and recordings (including pursuant to the UCC in effect in the state in which
Onyx is incorporated) required to perfect a first priority ownership interest in
the Purchased Contracts in favor of Recco, have been accomplished and are in
full force and effect.
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(p) Taxes. It has filed or caused to be filed all Federal, state and
other tax returns which are required to be filed and has paid all taxes shown 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 (other than any amount the validity of which is currently
being contested in good faith by appropriate proceedings and with respect to
which reserves in conformity with GAAP have been provided on its books); no tax
Lien has been filed, and no claim is being asserted, with respect to any such
tax, fee or other charge.
(q) Investment Company Act; Other Regulations. It 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. It is not
subject to regulation under any Federal or state statute or regulation which
limits its ability to incur Debt.
(r) Subsidiaries. Schedule 4.1(r)-1 (as to the Seller) and Schedule
4.1(r)-2 (as to the Servicer) lists all of its Subsidiaries.
(s) Use of Proceeds. No proceeds of any purchase will be used by the
Seller in violation of Regulation T, U, or X of the Board of Governors of the
Federal Reserve System or to acquire any security in a transaction subject to
Section 13 or 14 of the Securities Exchange Act of 1934, as amended.
(t) No Material Adverse Change. Since the date hereof, there has
been no material adverse change in the collectibility of the aggregate Contracts
outstanding.
(u) Nature of Transfers. The transfers of Contracts by the Seller to
Recco pursuant to this Agreement, and all other transactions between the Seller
and Recco, have been and will be made in good faith and without intent to
hinder, delay or defraud creditors of the Seller.
(v) Solvency. On each Purchase Date, the Seller is Solvent and no
sale of Contracts hereunder shall cause the Seller to become not Solvent.
(w) No Change in Business. No change has been made in the character
of its business (except to the extent required by law, of which change the
Surety Provider, the Collateral Agent, the Administrative Agent and each Group
Agent have received written notice), if such change is reasonably likely to
impair the collectibility of the Purchased Contracts as a whole.
(x) No Change in Credit and Collection Policy. No change has been
made in the Credit and Collection Policy without the consent of the Controlling
Party, including without limitation, the amount and timing of finance charges,
fees and write-offs (except to the extent required by law, of which change the
Surety Provider, the Collateral Agent, the Administrative Agent and each Group
Agent shall have received written notice).
Section 4.2 Representations and Warranties of the Seller Concerning
Contracts. On each Purchase Date the Seller represents and warrants to Recco,
the Administrative Agent and each Group Agent as follows:
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(a) Eligible Contract. Each Contract to be sold by it on such day is
an Eligible Contract.
(b) Liens. Each Contract to be sold by it on such day is owned by it
free and clear of any Lien or claim of any kind or any offset and, upon transfer
to Recco pursuant to this Agreement, Recco will acquire a valid ownership
interest in each Purchased Contract free and clear of any Lien or claim of any
kind or any offset and no effective financing statement or other instrument
similar in effect covering any such Purchased Contract shall at any time be on
file in any recording office except those relating to this Agreement and the
transactions contemplated hereby.
(c) Compliance with Laws. Each Contract to be sold by it on such day
and the sale and financing of the related Vehicle complied at the time it was
originated or made and each Contract to be sold by it on such day complies with
all Federal, state and local laws and regulations applicable thereto, including,
without limitation, all usury and consumer credit laws.
(d) Enforceable Obligations; Nature of Contracts. Each Contract to
be sold by it on such day is in full force and effect and represents a legal,
valid and binding obligation of the Obligor enforceable against the Obligor in
accordance with its terms (except as enforceability may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or similar laws affecting the
enforceability of creditors' rights generally and by general equitable
principles whether considered in proceedings in equity or at law) and
constitutes "chattel paper" under the UCC in effect in all applicable
jurisdictions including the state in which the Seller is incorporated.
(e) Valid Sale. The sale pursuant to this Agreement by the Seller
and the purchase by Recco of the Purchased Contracts on such Purchase Date
constitutes and will constitute a valid sale and contribution of such Purchased
Contracts and the other Collateral and the proceeds thereof, which sale and
contribution is and will be enforceable against the Seller and all existing and
future creditors of the Seller and all subsequent purchasers from the Seller or
Recco of any of the Purchased Contracts. Upon the filing of the financing
statements described in Section 4.1(o) with the Secretary of State of the State
of Delaware evidencing the sale of the Purchased Contracts to Recco and, in the
case of Purchased Contracts hereafter created and the proceeds thereof, upon the
sale, transfer and assignment thereof to Recco, Recco shall have a first
priority perfected ownership interest in the Purchased Contracts and the other
Collateral free and clear of any Lien.
(f) Contract Information. The Contract Information delivered by the
Seller to Recco (if the Seller is the Servicer) or by the Seller to the Servicer
(if the Seller is not the Servicer) with respect to each Purchased Contract to
be sold by it on such Purchase Date is true and correct.
(g) Inspections. Each Vehicle subject to a Contract to be sold by it
on such Purchase Date that is not originated by a Vehicle Dealer has been
inspected by CSI Escrow Document Services, Inc., the Servicer or any other
inspection company reasonably acceptable to the Administrative Agent and the
Group Agents ("Inspector"), and the Inspector has issued a written inspection
report (the "Vehicle Condition Report") describing the Vehicle and the
9
equipment in the Vehicle, confirming the vehicle identification number and
certifying that the Vehicle is in good repair.
(h) Repossessed Vehicles. The Contracts to be sold by it on such
Purchase Date will not result in the Outstanding Balance of Purchased Contracts
secured by Vehicles previously repossessed by or on behalf of the Seller (each,
a "Repossessed Vehicle") exceeding 1% of the aggregate Outstanding Balance of
all Purchased Contracts.
(i) Documentation. All documents used by the Seller in connection
with the purchase or origination of Contracts (including, without limitation,
any security agreement, loan contract or promissory note), and all certificates
of title and entries in the Paperless Title System for Vehicles securing
Contracts use the following words to identify the lender, secured party or
obligee: (i) "Onyx Acceptance Corporation" or some abbreviation thereof which
unmistakably identifies the Seller as secured party or (ii) "ABNI, Inc."
(j) Nature of Receivable. Each Contract to be sold by it on such day
is an obligation representing all or part of the sales price of merchandise,
insurance or services.
(k) Contract Files. It has delivered to the Servicer (as custodian
for the Collateral Agent (on behalf of the holders of the Obligations)) or its
agent the Files relating to each Contract to be sold to Recco on such Purchase
Date, and such Files are complete in all material respects; provided, however,
that as to any Purchased Contract, if (a) as evidenced by an opinion of counsel
delivered to and in form and substance satisfactory to the Controlling Party,
(x) an optical image or other representation of the Files are enforceable in the
relevant jurisdictions to the same extent as the original of such document and
(y) such optical image or other representation does not impair the ability of an
owner or pledgee of such Contract to transfer its interest in such Contract, and
(b) the retention of such documents in such format will not result in a
reduction of the then current rating of the transaction and the Lenders, without
regard to the Surety Bonds, such optical image or other representation may be
held by the Servicer (as custodian for the Collateral Agent on behalf of the
holders of the Obligations) or its agent in lieu of the Files.
(l) Software. Each of Recco (and its successors and assigns) and the
Servicer has valid and enforceable rights to access and use any software and
computer programs necessary for the servicing and administration of the
Purchased Contracts.
(m) Selection. The Purchased Contracts were selected at random from
the Seller's Contracts, not in a manner adverse to the interest of Recco or the
Collateral Agent and are representative of the types of Contracts held by the
Seller with respect to the creditworthiness of Obligors and collection
experience.
(n) Transfer. Each Purchased Contract prohibits sale or transfer of
the Vehicle without the consent of the Seller.
(o) Lawful Assignment. No Purchased Contract was originated in, or
shall be subject to the laws of any jurisdiction under which the sale, transfer
and assignment of such Purchased Contract hereunder or under the Operative
Documents or the pledge thereof under the Security Agreement is unlawful, void
or voidable.
10
(p) One Original. There is only one original executed copy of each
Purchased Contract.
(q) Weighted Average Remaining Term. The Contracts to be sold by it
on such day will not result in the Purchased Contracts owned by Recco (after
giving effect to such Purchase) having a weighted average remaining term
exceeding 67 months.
(r) Title Documents. (A) If the related Purchased Contract was
originated in a state in which notation of a security interest on the Title
Document (or in the electronic title records) is required or permitted to
perfect the security interest in the related Vehicle, the Title Document or the
electronic title records for such Vehicle shows, or, if a new or replacement
Title Document is being applied for with respect to such Vehicle, the Title
Document (or electronic title record) will be received within 180 days of the
related Purchase Date and will show, Onyx named as the original secured party
under the related Purchased Contract as the holder of a first priority security
interest in such Vehicle, and (B) if the related Purchased Contract was
originated in a state in which the filing of a financing statement under the UCC
is required to perfect a security interest in motor vehicles, such filings or
recordings have been duly made and show Onyx named as the original secured party
under the related Purchased Contract, and in either case, upon the filing of UCC
financing statements as required by the Operative Documents, the Collateral
Agent on behalf of the holders of the Obligations will have the same rights as
such secured party has or would have (if such secured party were still the owner
of such Purchased Contract) against all parties claiming an interest in such
Vehicle. With respect to each Purchased Contract for which the Title Document
has not yet been returned from the Registrar of Titles (or is not yet evidenced
in the electronic title records), Onyx has written evidence that such Title
Documents showing Onyx as first lienholder have been applied for.
(s) Delinquent Taxes. Regarding each Contract to be sold by it on
such day, there is no lien against the related Vehicle for delinquent taxes.
(t) Default, Breach, Violation or Event Permitting Acceleration.
Regarding each Contract to be sold by it on such day, (i) there is no default,
breach, violation or event permitting acceleration existing under such Contract
(except payment delinquencies on a Contract that is not a Delinquent Contact),
(ii) there does not exist any continuing condition that with notice or lapse of
time would constitute a default, breach, violation or event permitting
acceleration existing under such Contract, and (iii) the Seller has not waived
any such default, breach, violation or event permitting acceleration (except as
required by law and except for payment delinquencies on a Contract that is not a
Delinquent Contract).
(u) Blanket Policy. Regarding each Contract to be sold by it on such
day, each related Vehicle will be covered by the Blanket Policy.
(v) Comprehensive and Collision Insurance Policy and Other Insurance
Policies. (A) Each Contract to be sold by it on such day will require that the
related Obligor obtain and maintain in effect for the related Vehicle a
comprehensive and collision insurance policy (with standard deductibles) (i) in
an amount at least equal to the lesser of (x) its maximum insurable value or (y)
the principal amount due from the related Obligor under such Contract, (ii)
naming the Seller as a loss payee and (iii) insuring against loss and damage due
to fire, theft,
11
transportation, collision and other risks generally covered by comprehensive and
collision coverage and (B) the Servicer or its agent shall have insurance
policies providing coverage upon repossession of the related Vehicle in an
amount equal to the lesser of the actual cash value of such Vehicle, the cost of
repair or replacement for such Vehicle and the unpaid balance of the related
Contract.
(w) Original Principal Balance. At the date of origination of the
Purchased Contract, the original principal balance of such Purchased Contract
was not greater than the purchase price to the related Obligor (including taxes,
warranties, licenses and related charges) of the related Vehicle.
Section 4.3 Covenants of Seller. The Seller covenants and agrees with
Recco that so long as this Agreement shall remain in effect:
(a) Corporate Existence.
(i) It will preserve and maintain its corporate existence,
rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified and in good standing as a
foreign corporation in each jurisdiction where the failure to maintain
such existence, rights, franchises, privileges and qualifications could
affect (x) the rights or interests of Recco or the holders of the
Obligations hereunder, (y) the collectibility of any Contract or (z) its
ability to perform its obligations hereunder.
(ii) It shall at all times remain in good standing in all
respects in all jurisdictions in which it currently does business. In the
event that the Seller fails to remain in good standing in any such
jurisdiction, it shall promptly furnish to the Surety Provider, the
Administrative Agent and each Group Agent (x) a certificate of an
appropriate officer of the Seller setting forth the circumstances
surrounding such failure to remain in good standing and any action taken
or proposed to be taken by the Seller with respect thereto, (y) such other
information with respect to such failure to remain in good standing as the
Surety Provider, the Administrative Agent or any Group Agent may
reasonably request, and (z) an opinion of counsel in form and substance
satisfactory to the Surety Provider, the Administrative Agent and each
Group Agent to the effect that it is in good standing in such jurisdiction
promptly following the cure of such failure to remain in good standing.
(b) Master Record of the Contracts. It will, at its own cost and
expense, retain a master record of the Contracts sold by it and copies of all
documents and records relating to each such Purchased Contract and, at its own
cost and expense, ▇▇▇▇ such master record to the effect that the Purchased
Contracts listed thereon have been sold to Recco.
(c) Recovery Procedure. It will maintain its Recovery Procedure in
good operational order and permit representatives of Recco, the Servicer, the
Surety Provider, the Administrative Agent and each Group Agent access to its
management employees, upon reasonable prior notice and during normal business
hours, to fully discuss such Recovery Procedure. If it obtains a third party to
maintain such Recovery Procedure, then it shall arrange to permit
representatives of Recco, the Servicer, the Surety Provider, the Administrative
Agent
12
and each Group Agent, upon reasonable prior notice and during normal business
hours, access to such system to make such inspections and examinations as it
deems necessary.
(d) Conduct of Business. It will comply with all applicable laws,
rules, regulations, and orders with respect to it, its business and properties
and all Contracts it originates or purchases, the failure to comply with which
could have a Material Adverse Effect.
(e) Defense of the Purchased Contracts. It will not create, permit
or suffer to exist, and will take such other actions as are necessary to remove,
any Lien, claim or right in, to or on any Purchased Contract, and will defend
the right, title and interest of Recco in and to the Purchased Contracts against
the claims and demands of all Persons whomsoever, other than (i) the Liens
created hereby and by the transactions contemplated hereby or (ii) Liens for
taxes which are being contested in good faith by appropriate proceedings,
provided that adequate reserves with respect thereto are maintained on the books
of Recco in conformity with GAAP.
(f) Notice. It will advise Recco (with a copy to the Surety Provider
the Administrative Agent and each Group Agent) in detail, of (i) any Lien
asserted or claim made against any Purchased Contract, (ii) the occurrence of
any breach by it of any of its representations, warranties and covenants
contained herein, (iii) the occurrence of any Wind-Down Event or Unmatured
Wind-Down Event, (iv) any litigation, investigation or proceeding which may
exist at any time between it and any Governmental Authority or other Person or
default or event of default under any of its Contractual Obligations, which in
either case could have a material adverse effect on the value of the Purchased
Contracts or its ability to satisfy its obligations hereunder and (v) any
Material Adverse Effect, in each case, immediately upon ascertaining or
obtaining knowledge of any of the foregoing. Each notice pursuant to this
subsection shall be accompanied by a statement of a Responsible Officer setting
forth details of the occurrence referred to therein and stating what action it
proposes to take with respect thereto.
(g) Maintain Interest.
(i) It shall, with respect to any and all Purchased
Contracts and security interests in Vehicles sold hereunder, at its expense,
perform all acts and execute all documents requested by Recco, the Servicer, the
Collateral Agent, the Surety Provider, the Administrative Agent or any Group
Agent as the case may be, at any time to evidence, perfect, maintain and enforce
the ownership interest and security interest, respectively, of Recco and the
Collateral Agent therein and the first priority of such ownership interest and
security interest, respectively. It will, at the request of a duly authorized
officer of Recco, the Servicer, the Collateral Agent, the Surety Provider, any
Group Agent, or the Administrative Agent, prepare and deliver financing
statements evidencing the ownership interest of Recco in all of the foregoing,
which financing statements must be satisfactory in form and substance to the
Administrative Agent, each Group Agent and the Surety Provider, and the Seller
authorizes Recco to file one or more financing statements. It also hereby
irrevocably appoints Recco its attorney-in-fact to file one or more financing
statements on behalf of the Seller.
(ii) It will not, without providing 30 days' notice to Recco,
the Collateral Agent, the Surety Provider, the Administrative Agent, each Group
Agent, and without filing such new financing statements or such amendments to
any previously filed financing
13
statements as Recco, the Servicer, the Collateral Agent, the Surety Provider,
the Administrative Agent or any each Group Agent may require, (A) change,
without limiting the provisions of Section 4.3(q), its state of incorporation or
(B) change its name, identity or corporate structure in any manner which might
make any financing statement or continuation statement filed by it pursuant to
the transactions contemplated hereby seriously misleading within the meaning of
9-506 (or any successor provision) of any applicable enactment of the UCC.
(iii) It will not change its principal place of business or
its chief executive office or the location of the office where the Files
relating to the Contracts are kept to a location outside the United States.
(h) Annual Certificate. It will deliver to Recco, the Collateral
Agent, the Surety Provider, the Administrative Agent and each Group Agent
concurrently with the delivery of its annual financial statements delivered
pursuant to subsection (l) of this Section 4.3, a certificate of a Responsible
Officer dated as of a date during the 90-day period following the end of the
immediately preceding fiscal year, either (i) stating that such action has been
taken with respect to the recording, registering, filing, re-recording,
re-registering and re-filing of financing statements, continuation statements or
other instructions or documents as is necessary to preserve and protect the
interests of Recco and the Collateral Agent in and to the Purchased Contracts
and related Vehicles and reciting the details of such action or referring to
opinions of counsel in which such details are given and stating what action is
required to be taken in the subsequent 13-month period to preserve and protect
such interest or (ii) stating that no such action is necessary to preserve and
protect such interest.
(i) Character of Business; Normal Policies and Procedures; Credit
and Collection Policy. It will (i) at all times comply with its Credit and
Collection Policy, including, but not limited to, its customary practices with
respect to granting rebates and discounts, (ii) not change the character of its
business (except to the extent required by law, of which change the Surety
Provider, the Collateral Agent, the Administrative Agent and each Group Agent
shall receive written notice), if such change is reasonably likely to impair the
collectibility of the Purchased Contracts as a whole, (iii) not materially
change its normal policies and procedures with respect to the servicing of the
Purchased Contracts (including, without limitation, the amount and timing of
finance charges, fees and write-offs) and (iv) not change its Credit and
Collection Policy (including, without limitation, the amount and timing of
finance charges, fees and write-offs), except (with respect to this clause (iv))
with the prior written consent of the Controlling Party or as required by any
Requirement of Law (in which case it shall give the Collateral Agent, the Surety
Provider, the Administrative Agent and each Group Agent immediate written notice
of such Requirement of Law).
(j) Collections. If it receives Collections, it agrees to hold such
Collections in trust for the benefit of Recco and the Collateral Agent and any
such Collections received in the Lock-Boxes shall be transferred to the Clearing
Account on the next Business Day and any Collections received in any other
manner shall be transferred to the Clearing Account on the next Business Day
after receipt. Collections shall be transferred from the Clearing Account to the
Collection Account on the next Business Day after deposit into the Clearing
Account.
14
(k) Obligations Under the Contracts and Dealer Assignments. It will
duly fulfill all obligations on its part to be fulfilled under or in connection
with each Contract and related Dealer Assignment (if any) and will do nothing to
impair the rights of Recco and the holders of the Obligations in the Purchased
Contracts. It agrees that, for the benefit of Recco and the Collateral Agent, it
will continue to make and pursue claims on the Contracts sold by it hereunder to
the extent that any law, regulation or contractual provision requires that it
directly make and pursue such claims, for the benefit of Recco and the
Collateral Agent; provided that the Seller agrees that it is making and pursuing
such claims for the benefit of Recco and the Collateral Agent, and that any
funds received by the Seller based on such claims will be transferred to the
Clearing Account within one Business Day of being received and will thereafter
be transferred to the Collection Account on the next Business Day after deposit
into the Clearing Account.
(l) Financial Statements. It will furnish to Recco (with a copy to
the Administrative Agent, each Group Agent and the Surety Provider):
(i) as soon as available, but in any event within 90 days
after the end of each fiscal year, a copy of its consolidated balance sheets as
at the end of such year and the related statements of income and retained
earnings and of cash flows for such year, setting forth in each case in
comparative form the figures for the previous year, audited by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP or other Independent certified public accountants of nationally recognized
standing;
(ii) as soon as available, but in any event not later than 90
days after the end of each fiscal year, a copy of its unaudited consolidating
balance sheets as at the end of such year and the related consolidating
statements of income and retained earnings and of cash flows for such year,
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;
(iii) as soon as available, but in any event not later than 45
days (or 90 days with respect to the fourth quarter) after the end of each
quarterly period of each of its fiscal years, a copy of its unaudited
consolidated and consolidating balance sheets, as at the end of such quarter and
the related unaudited statements of income and retained earnings and of
consolidated cash flows 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 projected budget amounts for such period and the figures for the previous
year, certified by a Responsible Officer as being fairly stated in all respects
when considered in relation to its financial statements (subject to normal
year-end audit adjustments); and
(iv) as soon as available, but in any event not later than 30
days after the end of each month (except at the end of those months in which
quarterly reports are due pursuant to paragraph (iii) of this Section 4.3(l)) of
each of its fiscal years, a copy of its unaudited consolidated balance sheets,
as at the end of such period and the related unaudited statements of income and
retained earnings and of cash flows 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 projected budget amounts for such period and the figures
for the previous year, certified by a Responsible Officer as being fairly stated
in all respects when considered in relation to its financial statements (subject
to normal year-end audit adjustments).
15
All such financial statements shall 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;
provided, however, that the unaudited financial statements referred to in clause
(iii) and (iv) above need not contain footnotes required under GAAP.
(m) Certificates; Other Information. It will furnish to Recco, with
a copy to the Administrative Agent, each Group Agent and the Surety Provider:
(i) concurrently with the delivery of the financial
statements referred to in clause (i) of paragraph (l) a certificate of its
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 Wind-Down Event or Unmatured Wind-Down Event,
except as specified in such certificate;
(ii) concurrently with the delivery of the financial
statements referred to in clauses (i) and (ii) of paragraph (l) a certificate of
a Responsible Officer stating that during such period it 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 Wind-Down Event or Wind-Down Event except as
specified in such certificate; such certificate shall set forth the details of
each Unmatured Wind-Down Event and Wind-Down Event and the action which it has
taken and proposes to take with respect thereto;
(iii) no later than December 15th of each year, projections by
it of its operating budget and cash flow budget on a monthly basis for the next
fiscal year, certified by a Responsible Officer as being prepared in good faith
on the basis of the assumptions stated therein, which assumptions were
reasonable in light of conditions existing at the time of delivery thereof and
represented, at the time of delivery, as its best estimate of its future
financial performance;
(iv) within five Business Days after the same are sent, made
or filed, copies of all financial statements and reports which it may send to,
make to, or file with, the Securities and Exchange Commission or any state
securities commission and any financial statements and reports which it may send
to, make to, or file with, any other Governmental Authority; provided that if
such financial statements or reports are filed electronically with the SEC, then
such financial statements or reports shall be deemed furnished to Recco, the
Administrative Agent, each Group Agent and the Surety Provider upon receipt of
notice of such filing by Recco, the Administrative Agent and each Group Agent or
the Surety Provider (as applicable).
(v) promptly, notification of each Purchased Contract which
becomes an Ineligible Contract; and
(vi) promptly, such additional financial and other
information as Recco, the Administrative Agent, any Group Agent, the Surety
Provider or the Collateral Agent may from time to time reasonably request.
16
(n) Delivery of Other Reports. It will furnish, or instruct the
Servicer to furnish any other reports required to be delivered pursuant to this
Agreement and the other Operative Documents.
(o) Annual Certificate. Concurrently with the delivery of its
financial statements with respect to each fiscal year required to be delivered
pursuant to clauses (i) and (ii) of paragraph (l), it will furnish to Recco, the
Administrative Agent, each Group Agent and the Surety Provider, a certificate of
a Responsible Officer to the effect that the facts upon which counsel to the
Seller relied in giving its legal opinion on the Effective Date, to the effect
that the Seller and Recco would not be substantively consolidated for purposes
of the Bankruptcy Code, have not changed.
(p) Insurance.
(i) It will maintain, or cause to be maintained on its
behalf, 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 Recco (with a copy to the
Administrative Agent, each Group Agent and the Surety Provider), at least
annually, and otherwise upon written request, full information as to the
insurance carried. All such insurance policies relating to any Collateral shall
name Recco and the Collateral Agent as additional insureds and loss payees, as
applicable, and shall provide that Recco and the Collateral Agent receive at
least 30 days' prior written notice of the cancellation thereof.
(ii) It will require each Obligor to obtain physical damage
insurance covering the Vehicle as of the execution of the related Purchased
Contract. It will maintain in full force and effect the Blanket Policy, and
shall at all times comply with all of the provisions of such insurance policy
applicable to it so long as such insurance policy is in effect. It shall at all
times comply with all of the provisions applicable to the Seller of the
insurance policies referenced in Section 4.2(w) hereof. It will immediately
deposit to the Collection Account all amounts received by it in respect of or as
proceeds of any Insurance Policy to the extent relating to Purchased Contracts
or related Vehicles.
(q) Merger or Consolidation. It shall not be a party to any merger,
consolidation, or other corporate transaction pursuant to which the surviving
entity or corporate successor is (i) not Onyx or (ii) not consented to in
writing by the Administrative Agent, each Group Agent and the Surety Provider.
(r) Local Counsel Opinions. In the event that, at any time, the
Outstanding Balance of all Purchased Contracts originated in a single state
(other than the State of California) equals or exceeds 10% of the aggregate
Outstanding Balance of all Purchased Contracts, then the Seller shall, within 30
days following the occurrence of such event, deliver to the Administrative
Agent, each Group Agent, the Surety Provider, S&P and ▇▇▇▇▇'▇ an opinion of
counsel with respect to the requirements under the applicable laws of such state
for the assignment of a security interest in a Vehicle to the Collateral Agent
for the benefit of the holders of the Obligations. Such opinion of counsel shall
be rendered by a firm the attorneys of which are
17
admitted to the practice of law in such state, and such opinion shall be in form
and substance acceptable to the Administrative Agent, each Group Agent and the
Surety Provider.
(s) Contracts Not to be Evidenced by Instruments. The Seller will
take no action to cause any Purchased Contract to be evidenced by an instrument
except in connection with the enforcement or collection of such Purchased
Contract.
Section 4.4 Covenants of Servicer. The Servicer covenants and agrees with
Recco, the Administrative Agent, each Group Agent and the Surety Provider that
so long as this Agreement shall remain in effect:
(a) Corporate Existence. It will preserve and maintain its existence
as a corporation in good standing under the laws of the state of Delaware and in
every jurisdiction where the failure to maintain such existence or good standing
could adversely affect the rights and interests of Recco, the Collateral Agent
or the holders of the Obligations hereunder, or its ability to perform its
obligations hereunder.
(b) Preservation of Electronic Ledger. It will, at its own cost and
expense, (i) retain the electronic ledger used by it as a master record of the
Purchased Contracts and copies of all documents relating to each Purchased
Contract as custodian for Recco, the Collateral Agent, the holders of the
Obligations, and to the extent permitted by the Operative Documents, other
Persons with interests in the Purchased Contracts, (ii) ▇▇▇▇ such electronic
ledger to the effect that the Purchased Contracts have been transferred and
assigned to Recco and are subject to a security interest in favor of the
Collateral Agent for the benefit of the holders of the Obligations, (iii)
arrange for and maintain for the term of this Agreement an appropriate off-site
location for the storage of duplicate or back-up tapes containing the master
record of the Purchased Contracts and deliver or cause to be delivered on at
least a weekly basis to such site, such duplicate or back-up tapes, (iv) provide
or arrange for irrevocable access by the Collateral Agent, the Surety Provider,
the Administrative Agent, any Group Agent and Recco (upon reasonable notice) to
the off-site storage facility maintained by the Servicer pursuant to subsection
4.4(b)(iii) hereof and (v) deliver duplicate or back-up tapes containing the
master record of the Purchased Contracts to the Administrative Agent and each
Group Agent upon request by the Administrative Agent or any Group Agent.
(c) Notices, etc. It will advise Recco, the Administrative Agent,
each Group Agent and the Surety Provider promptly, in reasonable detail, of (i)
any Lien asserted or claim made against any of the Purchased Contracts of which
it obtains knowledge, (ii) the occurrence of any breach by it of any of its
representations, warranties and covenants contained herein, (iii) the occurrence
of any Servicer Termination Event, Wind-Down Event or Unmatured Wind-Down Event,
(iv) any litigation, investigation or proceeding which may exist at any time
between it and any Governmental Authority or other Person or default or event of
default under any of its Contractual Obligations, which in any case could have a
material adverse effect on the value of the Purchased Contracts or its ability
to satisfy its obligations hereunder and (v) the occurrence of any other event,
which could have a Material Adverse Effect, in each case immediately upon
ascertaining or obtaining knowledge of any of the foregoing. Each notice
pursuant to this subsection shall be accompanied by a statement of a Responsible
Officer setting
18
forth details of the occurrence referred to therein and stating what action it
proposes to take with respect thereto.
(d) Right of Inspection. It will permit each of Recco, the
Collateral Agent, the Surety Provider, the Administrative Agent and each Group
Agent, and their representatives, at all times to have full and free access,
upon reasonable prior notice and during normal business hours, to all of its
books, correspondence and records insofar as they relate to the Contracts, the
related Vehicles or the related Files, and Recco, the Collateral Agent, the
Surety Provider, the Administrative Agent and each Group Agent, and their
representatives may examine the same, take extracts therefrom and make
photocopies thereof, and it agrees to render to Recco, the Collateral Agent, the
Surety Provider, the Administrative Agent and each Group Agent, or their
representatives, at its sole cost and expense such clerical and other assistance
as may be reasonably requested with regard thereto.
(e) Delivery of Notices, Etc. It will deliver or cause to be
delivered to Recco, the Lenders, the Administrative Agent, the Group Agents, the
Surety Provider or the Collateral Agent, as the case may be, such notices,
documents, reports, certificates and other documents (i) required to be
delivered by it pursuant to the Operative Documents and (ii) as may be
reasonably requested by the Administrative Agent, any Group Agent or the Surety
Provider from time to time.
(f) Merger or Consolidation. It shall not be a party to any merger,
consolidation, or other corporate transaction pursuant to which the surviving
entity or corporate successor is (i) not Onyx, or (ii) not consented to in
writing by the Surety Provider, the Administrative Agent and each Group Agent.
(g) Extension or Amendment of Contracts. It shall not amend, modify
or waive any term or condition of any Purchased Contract if such extension,
modification or waiver shall adversely affect the cash flow of such Purchased
Contract, unless (i) the Controlling Party shall have previously approved such
extension, modification or waiver or (ii) such extension, modification or waiver
shall be in compliance with the Credit and Collection Policy; provided that it
shall not amend, modify or waive the Annual Percentage Rate or the principal
balance of any Purchased Contract such that the Annual Percentage Rate or the
principal balance of any Purchased Contract shall be effectively reduced, unless
the Controlling Party shall have previously approved such extension,
modification or waiver.
(h) Recovery Procedure. It will maintain its Recovery Procedure in
good operational order and permit representatives of Recco, the Surety Provider,
the Administrative Agent and each Group Agent access, upon reasonable prior
notice and during normal business hours, to its management employees to fully
discuss such Recovery Procedure. If it obtains a third party to maintain such
Recovery Procedure, then it shall arrange to permit representatives of Recco,
the Surety Provider, the Administrative Agent and each Group Agent access, upon
reasonable prior notice and during normal business hours, to such system to make
such inspections and examinations as it deems necessary.
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(i) Conduct of Business. It will comply with all applicable laws,
rules, regulations, and orders with respect to it, its business and properties
and all Contracts it services, the failure to comply with which could have a
Material Adverse Effect.
(j) Defense of the Purchased Contracts. It will not create, permit
or suffer to exist, and will take such other actions as are necessary to remove,
any Lien, claim or right in, to or on any Purchased Contract, and will defend
the right, title and interest of Recco and the Collateral Agent in and to the
Purchased Contracts against the claims and demands of all Persons whomsoever,
other than Liens permitted by Section 4.3(e).
(k) Insurance. It will use reasonable efforts to insure that each
Obligor under a Purchased Contract maintains physical damage insurance covering
the related Vehicle. It will immediately deposit to the Collection Account all
amounts received by it in respect of or as proceeds of any Insurance Policy to
the extent relating to the Purchased Contracts or related Vehicles.
(l) Normal Policies and Procedures; Credit and Collection Policy. It
will (i) at all times comply with its Credit and Collection Policy, including,
but not limited to, its customary practices with respect to granting rebates and
discounts and (ii) not materially change its normal policies and procedures with
respect to the servicing thereof or change its Credit and Collection Policy
(including, without limitation, the amount and timing of finance charges, fees
and write-offs), except with the prior written consent of the Controlling Party
or as required by any Requirement of Law (in which case it shall give the Surety
Provider, the Administrative Agent and each Group Agent immediate written notice
of such Requirement of Law).
(m) Collections. If it receives Collections, it agrees to hold such
Collections in trust for the benefit of Recco and the Collateral Agent and any
such Collections received in the Lock-Boxes shall be transferred to the Clearing
Account on the next Business Day and any Collections received in any other
manner shall be transferred to the Clearing Account on the next Business Day
after receipt. Collections shall be transferred from the Clearing Account to the
Collection Account on the next Business Day after deposit into the Clearing
Account.
(n) Obligations Under the Contracts and Dealer Assignments. It will
duly fulfill all obligations on its part to be fulfilled under or in connection
with each Purchased Contract and related Dealer Assignment (if any) and will do
nothing to impair the rights of Recco or the Collateral Agent in the Purchased
Contracts.
(o) Contracts Not to be Evidenced by Instruments. The Servicer will
take no action to cause any Purchased Contract to be evidenced by an instrument
except in connection with the enforcement or collection of such Purchased
Contract.
(p) Delivery of Servicer's Extension Report. It will, on each
Determination Date, furnish to the Controlling Party a report (the "Servicer's
Extension Report") setting forth (i) the number of extensions granted by the
Servicer during the prior calendar month, and (ii) the Outstanding Balance of
all Purchased Contracts on which an extension has been granted by the Servicer
during the prior calendar month pursuant to Section 4.4(h) of this Agreement.
Section 4.5 Repurchase of Ineligible Contracts. On each Business Day, the
Seller and the Servicer will notify Recco of the aggregate Outstanding Balances
of Purchased Contracts, if
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any, that are determined to be Ineligible Contracts as of the preceding Business
Day which notice shall specify such Purchased Contracts. The Surety Provider,
the Administrative Agent or any Group Agent may also notify the Seller and the
Servicer on any Business Day of Purchased Contracts which the Surety Provider,
the Administrative Agent or any Group Agent shall have determined to be
Ineligible Contracts. The Seller shall repurchase such Ineligible Contracts on
the next Determination Date, or if a Borrowing Base Deficiency shall have
occurred as a result of a Purchase Contract being an Ineligible Contract, on the
next Business Day to occur following the notification of ineligibility given or
received by it with respect thereto (such next Determination Date or Business
Day, a "Repurchase Date") by depositing in the Collection Account the Purchase
Price originally paid by Recco with respect to such Ineligible Contract, plus an
amount equal to the amount of Finance Charges that accrued on such Ineligible
Contract from and including the Purchase Date related to such Ineligible
Contract to, but excluding, the Repurchase Date, less an amount equal to the
amount of Collections representing principal received by Recco and deposited to
the Collection Account with respect to such Ineligible Contract to, but
excluding the Repurchase Date. On such Repurchase Date upon the payment in full
in cash of the Repurchase Price by the Seller, Recco shall automatically and
without further action (other than the authorization and filing of applicable
UCC financing statements in connection with the reconveyance of such Ineligible
Contract) be deemed to transfer, assign, set-over and otherwise convey to the
Seller, without recourse, representation or warranty, all the right, title and
interest of Recco in and to such Ineligible Contracts, all monies due or to
become due with respect thereto, and all proceeds thereof.
Section 4.6 Financial Covenants of Seller. The Seller covenants and agrees
with Recco that so long as this Agreement shall remain in effect:
(a) Adjusted Tangible Net Worth to Total Assets. The percentage
equivalent of the ratio of Adjusted Tangible Net Worth to Total Assets shall be
at least 15% as of the end of each fiscal quarter.
(b) Adjusted EBITDA Coverage Ratio. The Adjusted EBITDA Coverage
Ratio shall be greater than 1.5:1 as of the end of each fiscal quarter.
(c) Ratio of Securitization Assets to Adjusted Tangible Net Worth.
The ratio of Securitization Assets to Adjusted Tangible Net Worth shall not be
greater than 3:1 as of the end of each fiscal quarter.
As used in this Section 4.6, the following terms shall have the following
meanings:
"Adjusted EBITDA Coverage": The sum of: (1) pre-tax income,
(2) interest expense, (3) amortization of excess servicing asset and (4) other
amortization and depreciation, less any gain on sale recognized according to
FASB 140 (or any successor FASB ruling), divided by interest expense, each of
the above listed items as they appear in the consolidated financial statements
of Onyx prepared in accordance with GAAP.
"Adjusted Tangible Net Worth": The sum of (i) Net Worth and
(ii) Eligible Subordinated Debt; provided, however, that for purposes of this
calculation, Eligible Subordinated Debt shall not exceed 20% of Adjusted
Tangible Net Worth.
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"Eligible Subordinated Debt": The total subordinated debt and
non-common equity (i.e. preferred stock) of Onyx and its Subsidiaries on a
consolidated basis having original maturities of 3 years or more.
"Net Worth": The amount equal to Total Assets minus Total
Liabilities of Onyx and its Subsidiaries on a consolidated basis calculated in
accordance with GAAP minus any intangible assets including inter alia, good
will, franchises and intellectual property.
"Securitization Assets": The sum of: (1) trust receivables and
(2) excess servicing (retained interest in securitized assets net of
amortization), each of the above listed items as they appear in the consolidated
financial statements of Onyx and its Subsidiaries prepared in accordance with
GAAP.
"Total Assets": All assets which in accordance with GAAP would
be included in determining total assets as shown on the assets side of the
consolidated balance sheet of Onyx and its Subsidiaries.
"Total Liabilities": All liabilities which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of the consolidated balance sheet of Onyx and its Subsidiaries.
Section 4.7 Representations and Warranties of Recco. Recco represents and
warrants to the Seller, the Administrative Agent and each Group Agent that, as
of the date hereof and as of each Purchase Date:
(a) Corporate Existence. Recco is a corporation duly incorporated,
validly existing and in good standing under the laws of the state of Delaware,
with full corporate power and authority to conduct its business and to own its
properties and other assets, and is duly qualified to do business, and is in
good standing in every jurisdiction in which the nature of its business requires
it to be so qualified.
(b) Corporate Power; Authorization; Non-Contravention. The
execution, delivery and performance by Recco of this Agreement and all other
agreements, instruments and documents to be delivered by it hereunder, and the
transactions contemplated hereby and thereby, are within Recco's corporate
powers, have been duly authorized by all necessary corporate action, do not
contravene (i) Recco's charter or by-laws, (ii) any Requirement of Law
applicable to Recco or (iii) any Contractual Obligation, and do not result in or
require the creation of any Lien upon or with respect to any of its properties
(other than as contemplated hereunder and under the terms and conditions of the
Operative Documents). This Agreement has been duly executed and delivered on
behalf of Recco.
(c) Enforceable Obligation. This Agreement is the 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
enforceability of creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law).
Section 4.8 Collecting Title Documents Not Delivered on the Purchase Date.
In the case of any Purchased Contract in respect of which, in place of a Title
Document (or a notation
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in the electronic title records), the Servicer received on the related Purchase
Date written evidence from the Vehicle Dealer selling the related Vehicle that,
or otherwise in respect of which, the Title Document or a notation in the
electronic title records for such Vehicle showing Onyx as first lienholder has
been applied for from the Registrar of Titles, the Servicer shall use its best
efforts to collect (or to obtain evidence in the electronic title records of)
such Title Document from the Registrar of Titles as promptly as possible. If
such Title Document (or a notation in the electronic title records) showing Onyx
as first lienholder is not received by the Servicer (or verified by the Servicer
in the electronic title records) within 180 days after the related Purchase Date
with respect to each Purchased Contract, then the representation and warranty in
Section 4.2(s) as to any such Purchased Contracts shall be deemed to have been
incorrect in a manner that materially and adversely affects the Collateral
Agent, and the Seller shall be obligated to repurchase such Purchased Contract
in accordance with Section 4.5.
ARTICLE V
SELLER NOTE AND SUBORDINATED NOTE
Section 5.1 Seller Note.
(a) On the Closing Date, Recco issued to the Seller the seller note
substantially in the form of Exhibit A (the "Seller Note"). The principal amount
of the Seller Note shall be calculated pursuant to the Daily Report and, on any
day, shall be equal to the Seller Interest on such day. The Seller Note shall
(x) be dated the Closing Date, and (y) be stated to mature on the Scheduled
Maturity Date. Interest on the principal amount of the Seller Note shall accrue
and be payable on each Determination Date, as provided in the Security
Agreement, at a rate per annum equal to the Seller Note Interest Rate. Accrued
but unpaid interest on Seller Note shall not be capitalized. The principal
amount of the Seller Note shall not be increased after the Commitment
Termination Date.
(b) Seller agrees and confirms that the Seller Note represents
solely an obligation of Recco to make certain payments from funds available
under the Security Agreement and only to the extent, in the manner and at the
times set forth in the Security Agreement, and that the Seller Note does not
represent an interest in, and is not secured by, the Purchased Contracts, the
proceeds thereof or any other Collateral.
(c) Recco may at any time and from time to time prepay the Seller
Note, in whole or in part, without premium or penalty, provided that a Wind-Down
Event would not occur as a result of such prepayment.
Section 5.2 Restrictions on Transfer of Seller Note. Neither the Seller
Note nor any right of the Seller to receive any payment thereunder, shall be
assigned, transferred, exchanged, pledged, hypothecated, participated or
otherwise conveyed except with the prior written consent of the Controlling
Party, which consent shall not be unreasonably withheld or delayed.
Section 5.3 Subordinated Note.
(a) On the Closing Date, Recco issued to the Seller the subordinated
note substantially in the form of Exhibit B (the "Subordinated Note"). The
principal amount of the Subordinated Note shall be calculated pursuant to the
Daily Report and, on any day, shall be
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equal to the Subordinated Interest on such day; provided, however, that the
principal amount of the Subordinated Note shall be fixed on and not be
recalculated after the Commitment Termination Date.
(b) Interest on the principal amount of the Subordinated Note shall
accrue at a rate set forth in the Subordinated Note. Principal and interest
payments on the Subordinated Note may be made only to the extent permitted by
the Security Agreement. Principal amounts outstanding on the Subordinated Note
shall increase concurrently with the payment of the Purchase Price pursuant to
the terms of Section 2.3(a)(ii) hereof. Principal payments on the Subordinated
Note shall become payable only upon the release of Collateral by the Collateral
Agent pursuant to, and in accordance with, Section 23(b) of the Security
Agreement. Except to the extent permitted by the Security Agreement, the Seller
agrees not to ask, demand, ▇▇▇ for or take or receive from Recco in cash or
other property, by set-off or in any other manner, (including, without
limitation, from or by way of the Collateral), payment of all or any part of the
Subordinated Note.
(c) The Seller agrees upon any distribution of all or any of the
assets of Recco to creditors of Recco upon the dissolution, winding up, total or
partial liquidation, arrangement, reorganization, adjustment, protection,
relief, or composition of Recco or its debts, any payment or distribution of any
kind (including, without limitation, cash, property, securities and any payment
or distribution which may be payable or deliverable by reason of the payment of
any other Debt of Recco being subordinated to the payment of the Subordinated
Note) in respect of the Subordinated Note that otherwise would be payable or
deliverable upon or with respect to the Subordinated Note, directly or
indirectly, by set-off or in any other manner, including, without limitation,
from or by way of the Collateral, shall be paid or delivered directly to the
Collateral Agent for application (in the case of cash) to or as Collateral (in
the case of non-cash property or securities) for the payment or prepayment in
full of, the Obligations until the Obligations shall have been indefeasibly paid
in full in cash. The Collateral Agent is irrevocably authorized and empowered
(in its own name or in the name of the Seller or otherwise), but shall have no
obligation, to demand, ▇▇▇ for, collect and receive every payment or
distribution referred to in the preceding sentence and give acquittance therefor
and to file claims and proofs of claim and take such other action (including,
without limitation, voting the Subordinated Note and enforcing any security
interest or other lien securing payment of the Subordinated Note) as the
Collateral Agent may deem necessary or advisable for the exercise or enforcement
of any of the rights or interest of the holders of the Obligations. The Seller
shall duly and promptly take such action as the Collateral Agent may request to
(i) collect the Subordinated Note for the account of the holders of the
Obligations and to file appropriate claims or proofs of claim in respect of the
Subordinated Note, (ii) execute and deliver to the Collateral Agent such powers
of attorney, assignments or other instruments as the Collateral Agent may
request in order to enable the Collateral Agent to enforce any and all claims
with respect to, and any security interests and other liens securing payment of,
the Subordinated Note, and (iii) collect and receive any and all payments or
distributions which may be payable or deliverable upon or with respect to the
Subordinated Note.
(d) All payments or distributions upon or with respect to the
Subordinated Note that are received by the Seller contrary to the provisions of
the Operative Documents shall be
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received in trust for the benefit of the holders of the Obligations, shall be
segregated from other funds and property held by the Seller and shall be
forthwith paid over to the Collateral Agent in the same form as so received
(with any necessary endorsement) to be applied (in the case of cash) to, or held
as Collateral (in the case of non-cash property or securities) for the payment
or prepayment in full of, the Obligations until such Obligations shall have been
indefeasibly paid in full in cash. The Seller agrees that no payment or
distribution to the holders of the Obligations pursuant to the provisions of the
Subordinated Note shall entitle the Seller to exercise any rights of subrogation
in respect thereof against Recco until the Obligations and all principal and
interest under the Seller Note shall have been indefeasibly paid in full in
cash. The Seller and Recco hereby waive promptness, diligence, notice of
acceptance and any other notice with respect to any of the Obligations and any
requirement that the Collateral Agent protect, secure, perfect or insure any
security interest or lien on any property subject thereto or exhaust any right
or take any action against Recco or any other Person or any Collateral.
(e) The Subordinated Note is secured by the Collateral pursuant to
the Subordinated Security Agreement, subject to the prior lien of the Collateral
Agent under the Security Agreement. No payments may be received, directly or
indirectly, by the Seller (and if received, the Seller agrees to return such
payments to Recco) on the Subordinated Note unless Recco has paid all amounts
required pursuant to the Security Agreement to be paid prior to any payments in
respect of the Subordinated Note.
(f) The Seller agrees and confirms that the Collateral Agent shall
not have any duty whatsoever to the Seller, in the Seller's capacity as holder
of the Subordinated Note, and that the Collateral Agent shall not be liable to
the Seller for any action taken or omitted to be taken with respect to the
Subordinated Note or the Collateral under the Security Agreement.
(g) Prior to the indefeasible payment in full in cash of the other
Obligations, the Seller will not seek to collect any amounts owing under the
Subordinated Note or exercise or enforce any of its rights under the
Subordinated Security Agreement.
(h) The Seller and Recco further agree that at no time hereafter
will any part of the indebtedness represented by the Subordinated Note be
represented by any negotiable instruments or other writings except the
Subordinated Note.
(i) The Seller and Recco waive notice of and consent to the creation
of the Loans and any of the other Obligations, any extensions granted or other
action taken by the Lenders, the Surety Provider, the Administrative Agent, any
Group Agent or the Collateral Agent with respect thereto, the taking or
releasing of Collateral or any obligors or guarantors for the payment thereof,
and the releasing of the Seller or any other subordinated creditors. No failure
or delay by the Lenders, the Surety Provider, the Administrative Agent, any
Group Agent or the Collateral Agent to exercise any right granted herein, or in
any other agreement or by law shall constitute a waiver of such right or of any
other right.
(j) The terms of the Subordinated Note and the subordination
effected hereby, and the rights of the Lenders, the Surety Provider, the
Administrative Agent, each Group Agent and the Collateral Agent and the
obligations of the Seller and Recco arising hereunder, shall not be affected,
modified or impaired in any manner or to any extent by (a) any amendment or
25
modification of or supplement to any provision of the Operative Documents or any
instrument or document executed or delivered pursuant thereto or in connection
with the transactions contemplated thereby; (b) the validity or enforceability
of any of such documents; (c) any exercise or non-exercise of any right, power
or remedy under or in respect of the other Obligations or any instruments or
documents related thereto or arising at law; or (d) any waiver, consent,
release, indulgence, extension, renewal, modification, delay or other action,
inaction or omission in respect of the other Obligations or any of the
instruments or documents related thereto.
Section 5.4 Restrictions on Transfer of Subordinated Note. Neither the
Subordinated Note nor any right of the Seller to receive any payment thereunder,
shall be assigned, transferred, exchanged, pledged, hypothecated, participated
or otherwise conveyed; provided, however, that the Seller may pledge or
otherwise transfer the Subordinated Note with the prior written consent of the
Controlling Party; provided, further, that any such transferee or pledgee of the
Subordinated Note shall (i) be bound by all of the terms applicable to the
Subordinated Note set forth in the Operative Documents and (ii) execute an
agreement containing a provision substantially in the form of Section 9.15
hereof.
ARTICLE VI
TERMINATION OF COMMITMENT
Section 6.1 Termination.
(a) Subject to the payment of any and all fees required to be paid
pursuant to the Fee Letters and the Insurance Agreement, the Seller may
terminate the commitment of the Lenders to make loans at any time by giving ten
(10) Business Days prior written notice to Recco, the Administrative Agent and
each Group Agent.
(b) The commitment of the Lenders to make loans shall terminate on
the Commitment Termination Date.
Section 6.2 Remedies.
(a) On the Commitment Termination Date, all purchases by, and sales
to, Recco of Contracts hereunder shall immediately cease.
(b) On and after the Commitment Termination Date, Recco shall have,
in addition to all other rights under this Agreement, all rights and remedies
provided under any applicable law.
(c) On and after the Commitment Termination Date, Recco shall
continue to maintain its interest in all Purchased Contracts created prior to
such date and all amounts received as payments on or with respect to the
Purchased Contracts will continue to be paid to Recco as provided herein.
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ARTICLE VII
INDEMNIFICATION, ADDITIONAL COSTS, INSPECTION AND CERTAIN LITIGATION MATTERS
Section 7.1 Indemnities.
(a) Without limiting any other rights that Recco may have hereunder
or under applicable law, the Seller hereby agrees to indemnify Recco, its
directors, employees, officers, successors and assigns (collectively, the
"Indemnified Parties") from and against any and all damages, losses, claims,
liabilities and related costs and expenses, including all attorneys' fees and
disbursements (all of the foregoing being collectively referred to as the
"Indemnified Amounts"), awarded against or incurred by any of them arising out
of or as a result of this Agreement, the Operative Documents or Recco's
ownership of any Purchased Contracts, excluding, however, recourse (except as
otherwise specifically provided in this Agreement) for uncollectible Purchased
Contracts. Without limiting the generality of the foregoing, the Seller shall
indemnify the Indemnified Parties for all Indemnified Amounts relating to or
resulting from:
(i) the transfer of an interest in any Contract other than
an Eligible Contract;
(ii) reliance on any representation or warranty made by the
Seller (or any of its Responsible Officers) or the Servicer (or any of its
Responsible Officers), if the Seller or any Affiliate of the Seller is acting as
the Servicer, under or in connection with the Operative Documents, and any
information or report delivered by the Seller or the Servicer pursuant hereto,
which shall have been false or incorrect in any material respect when made or
deemed made;
(iii) the failure by the Seller or the Servicer (if the
Servicer is the Seller or any Affiliate of the Seller) to comply with any
applicable law, rule or regulation with respect to any Purchased Contract or the
nonconformity of any Purchased Contract with any such applicable law, rule or
regulation;
(iv) the failure to vest and maintain vested in Recco or to
transfer to Recco, legal and equitable title to and ownership of, the Contracts
that are, or are intended to be, Purchased Contracts, together with all proceeds
thereof, including, without limitation, all Collections and other items that
constitute proceeds, free and clear of any Lien whether existing at the time of
the Purchase of such Contract or at any time thereafter, or the failure to
perfect, or to maintain the Lien on any Vehicle subject to a Purchased Contract;
(v) the failure to file, in a timely manner, financing
statements or other similar instruments or documents required under the UCC in
effect in the state in which the Seller is organized or the Seller's principal
place of business or chief executive office is located or the location of the
Collateral as required under such law or other applicable laws with respect to
any Contracts sold to Recco, whether at the time of any Purchase or at any
subsequent time;
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(vi) any defense, setoff, counterclaim, recoupment or
reduction of liability whatsoever under any Purchased Contract, arising out of a
breach by the Seller of any obligation under such Purchased Contract or arising
out of any other agreement, indebtedness or liability at any time owing to or in
favor of any other Person from the Seller (it being understood that all such
obligations of the Seller shall be and remain enforceable against and only
against the Seller and shall not be enforceable against Recco);
(vii) any failure of the Seller or the Servicer (if the
Servicer is the Seller or any Affiliate of the Seller) to perform its duties or
obligations in accordance with the provisions of this Agreement;
(viii) any products liability claim or personal injury or
property damage suit or other similar or related claim or action of whatever
sort arising out of or in connection with merchandise or services which are the
subject of any Purchased Contract or any Vehicle;
(ix) the failure by the Seller or the Servicer (if the
Servicer is the Seller or any Affiliate of the Seller) to pay when due any taxes
payable by it, including without limitation, franchise taxes and sales, excise,
transfer or personal property taxes payable in connection with the Contracts or
the sale thereof;
(x) the failure by the Seller or the Servicer (if the
Servicer is the Seller or an Affiliate of the Seller) to be duly qualified to do
business, to be in good standing or to have filed appropriate fictitious or
assumed name registration documents in any jurisdiction;
(xi) the commingling of Collections at any time with other
funds; and
(xii) the failure of any Lock-Box Bank or the Clearing
Account Bank to remit any amounts held in its Lock-Box or in the Clearing
Account as the case may be whether by reason of the exercise of setoff rights or
otherwise.
Notwithstanding the foregoing, Recco hereby agrees that under no
circumstances shall the Seller be liable for, or required to pay any Indemnified
Amount, other than as set forth in Section 4.5, resulting from, (i) the credit
risk of an Obligor, or for which payment therefor would otherwise constitute
recourse to the Seller for an uncollectible Contract or Contracts (except to the
extent made uncollectible by acts or omissions of the Seller or, if the Servicer
is the Seller or an Affiliate thereof, the Servicer) or (ii) gross negligence or
willful misconduct on the part of the Indemnified Party to which such
Indemnified Amount would otherwise be due.
(b) Any Indemnified Amount due hereunder shall be payable 15 days
after demand.
Section 7.2 Rights of Inspection. Recco, its representatives and assigns,
the Administrative Agent, each Group Agent and the Surety Provider shall at all
times have full and free access, upon reasonable prior notice during normal
business hours (a) to the Seller's officers and independent accountants in order
to discuss the affairs, finances and accounts of the Seller
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insofar as they relate to the Purchased Contracts, the related Files and/or the
related Vehicles and the transactions contemplated hereby and (b) to all the
books, correspondence and records of the Seller insofar as they relate to the
Purchased Contracts, the related Files and/or the related Vehicles and the
transactions contemplated hereby, and Recco and its representatives and assigns,
the Administrative Agent, each Group Agent and the Surety Provider may examine
the same, take extracts therefrom and make photocopies thereof, and the Seller
agrees to render to Recco, its representatives and assigns, the Administrative
Agent, each Group Agent and the Surety Provider, at the Seller's sole cost and
expense, such clerical and other assistance as may be requested with regard
thereto. All such reasonable expenses of the Administrative Agent, each Group
Agent and the Surety Provider shall be for the account of the Seller and shall
be provided for or reimbursed within 15 days after presentment of an invoice
requesting same.
Section 7.3 Certain Litigation Matters.
(a) Recco and Onyx shall provide prompt written notice to the Surety
Provider, the Collateral Agent, the Administrative Agent and each Group Agent of
any action, proceeding or investigation of which a Responsible Officer of Recco
or Onyx (as applicable) has actual knowledge that could materially adversely
affect the rights or obligations of the Surety Provider, the Collateral Agent,
the Administrative Agent or any Group Agent under the Operative Documents or any
other document delivered with respect thereto.
(b) Recco and Onyx shall, upon written notice from (i) the
Controlling Party or, (ii) with prior written consent of or at the request of,
the Controlling Party, allow the Surety Provider, the Collateral Agent, the
Administrative Agent or any Group Agent to institute, assume or control the
defense of any action, proceeding or investigation that could materially
adversely affect the rights or obligations of the Surety Provider, the
Collateral Agent, the Administrative Agent or any Group Agent under the
Operative Documents or any other document delivered with respect thereto, if
Onyx or Recco (as the case may be) shall not be actively defending such action,
proceeding or investigation.
(c) Neither Recco nor Onyx shall, without the Controlling Party's
prior written consent or unless directed by the Controlling Party, agree to any
settlement of any action, proceeding or investigation that could materially
adversely affect the rights or obligations of the Surety Provider, the
Collateral Agent, the Administrative Agent or any Group Agent under the
Operative Documents or any other document delivered with respect thereto.
(d) For purposes of this Section 7.3 and the definition of "Surety
Provider Defense Costs" set forth in the Definitions List, and without limiting
the meaning of the term "materially," any of the following actions or
proceedings shall be deemed to materially adversely affect the rights or the
obligations of the Surety Provider, the Collateral Agent, the Administrative
Agent or any Group Agent: (i) any action or proceeding brought as a putative
class action or lawsuit where the plaintiff is proceeding in a representative
capacity, whether brought under federal or state procedural rules; or (ii) any
actions or proceedings where the aggregate amount of damages sought against Onyx
or Recco in such actions or proceedings shall be equal to or in excess of
$1,000,000 and in which the underlying causes of action are related to Onyx's
contract origination procedures, in each case, to the extent such action or
proceeding is related to the Purchased Contracts.
29
(e) Notwithstanding anything to the contrary herein, the terms of
this Section 7.3 and the definition of "Surety Provider Defense Costs" set forth
in the Definitions List shall not apply to any action or proceeding involving
any of the Seller, the Servicer or Recco or any Affiliate of any of them, on the
one hand, and any of the Surety Provider, the Lenders or CDC FP, or any
Affiliate of any of them, on the other hand, as adverse parties, in any action
or proceeding.
ARTICLE VIII
THE SERVICER
Section 8.1 Appointment of Servicer. Recco hereby appoints the Seller to
act as servicer of the Purchased Contracts in the name of and on behalf of
Recco, its successors and assigns, in accordance with the provisions hereof and
the Seller hereby accepts such appointment. The Servicer shall use reasonable
care (and, in any event, no less care than it exercises with respect to all
Contracts it services for itself and others) in performing its duties as
servicer hereunder using at least that degree of skill and attention that a
prudent Person similarly situated and charged with similar functions would
utilize and, without limiting the foregoing, shall service the Purchased
Contracts in accordance with the Credit and Collection Policy, and all
applicable laws, rules and regulations. The Servicer or its agent shall hold the
Files.
The duties of the Servicer will include, without limitation,
collection and posting of all payments, responding to inquiries of Obligors
regarding the Purchased Contracts, investigating delinquencies, remitting
payments to the Group Agents, the Administrative Agent and the other Persons
entitled thereto in a timely manner, furnishing monthly, quarterly and annual
statements with respect to collections and payments in accordance with the
provisions of this Agreement, and maintaining the perfected first priority
security interest of the Collateral Agent in the Collateral as contemplated in
this Agreement and the Security Agreement. Subject to applicable laws, rules and
regulations, the Servicer shall accelerate the maturity of all or any scheduled
payments under any Purchased Contract under which a default under the terms
thereof has occurred and is continuing (after the lapse of any applicable grace
period) no later than the date such Contract becomes a Defaulted Contract. If
required by law, the Servicer shall collect all payments with respect to amounts
due for taxes, assessments and insurance premiums relating to such Contracts and
remit such amounts to the appropriate Governmental Authority or insurer on or
prior to the date such payments are due. In any case in which any Vehicle
related to a Purchased Contract has suffered damage, the Servicer will expend
funds in connection with any repair or toward the repossession of such Vehicle
if it reasonably determines that such repair and/or repossession will increase
the Recoveries by an amount greater than the amount expended.
The Servicer will be required to pay all expenses incurred by it in
connection with its activities under this Agreement, including fees and
disbursements of independent accountants, taxes imposed on the Servicer,
expenses incurred in connection with payments and reports pursuant to this
Agreement, and all other fees and expenses not expressly stated under this
Agreement to be for the account of the Seller. The Servicer will be required to
pay all reasonable fees and expenses owing to any bank or trust company in
connection with the
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maintenance of the Bank Accounts and the fees and reasonable expenses of the
Administrative Agent, each Group Agent and the Collateral Agent. The Servicer
shall be required to pay such fees and expenses for its own account and shall
not be entitled to any payment or reimbursement therefor other than as expressly
provided for in the Operative Documents.
Section 8.2 Collections.
(a) On each Business Day, all Collections received in any Lock-Box
shall be transferred to the Clearing Account on next Business Day. Except as
provided in Section 8.2(c), all Collections received by the Servicer in any
other manner shall be transferred to the Clearing Account on the next Business
Day following receipt and until so transferred, the Servicer shall hold such
cash and other items in trust for the benefit of Recco. All Collections in the
Clearing Account shall be transferred to the Collection Account on the next
Business Day after such Collections are transferred into the Clearing Account.
(b) The Servicer will, at the Servicer's cost and expense and as
agent in the name of and on behalf of Recco, but subject at any time to the
right of Recco to direct and control, endeavor to collect, as and when the same
becomes due, all amounts owing on each Purchased Contract. In the event of
default by an Obligor under any Purchased Contract, the Servicer shall have the
power and authority, on behalf of Recco, to take such action in respect of such
Purchased Contract and the Vehicle related thereto as the Servicer, in the
absence of contrary instructions from Recco, may deem advisable, including the
power to sell such Vehicle; provided however that in no event shall the Servicer
sell any Purchased Contract without the prior written consent of the Controlling
Party. In the enforcement or collection of any Purchased Contract, the Servicer
shall be entitled to ▇▇▇ thereon in its own name or as agent for Recco, in
either case, for the account of Recco.
(c) In the event the Servicer repossesses the Vehicle subject to any
Purchased Contract, the Servicer agrees to use its reasonable efforts to resell
such Vehicle for the account of Recco and the Collateral Agent and shall remit
by deposit in the Collection Account the gross sale proceeds thereof, net of any
costs incurred by any Person with respect to any such repossession and resale
which costs shall not exceed the gross sale proceeds. Recco shall have no
obligation to take any action or commence any proceedings to realize upon any
Purchased Contract or to enforce any of its rights or remedies with respect
thereto. Any moneys collected by the Servicer pursuant to this subsection shall
be segregated by the Servicer, held in trust by the Servicer for Recco and shall
be remitted to the Collection Account on the Business Day of receipt thereof by
the Servicer.
Section 8.3 Maintenance of Records; Quarterly and Annual Reports.
(a) The books of account and other records pertaining to the
Purchased Contracts are the property of Recco and subject to the Lien of the
Collateral Agent. Recco agrees that the Servicer shall hold such records as
custodian for the Collateral Agent (on behalf of the holders of the Obligations)
and Onyx. The Servicer shall maintain all books of account and other records
pertaining to the Purchased Contracts in such form as will enable Recco, the
Administrative Agent or any Group Agent or their designees to determine at any
time the status of the Purchased Contracts. The Servicer will permit Recco, the
Surety Provider, the Administrative Agent or any
31
Group Agent and any Person designated by Recco, the Surety Provider, the
Administrative Agent or any Group Agent, upon reasonable prior notice and during
regular business hours, to inspect, audit, check and make abstracts from all
books, accounts, records, or other papers pertaining to such Purchased
Contracts. From time to time, at the request of Recco, the Surety Provider, the
Administrative Agent or any Group Agent, the Servicer, at its own expense, will
deliver to Recco, the Surety Provider, the Administrative Agent, each Group
Agent and any Person designated by Recco, the Surety Provider or the
Administrative Agent or any Group Agent any records and invoices pertaining to
the Purchased Contracts and evidence thereof as Recco, the Surety Provider, the
Administrative Agent or any Group Agent or such designee may deem necessary to
enable it to enforce its rights thereunder. In addition, at the request of the
Controlling Party after delivery of a Servicer Termination Notice or earlier
termination or resignation of the Servicer, the Servicer will deliver all such
records and invoices pertaining thereto (including bills of lading) and other
evidence thereof to any Person selected by the Controlling Party. Whether or not
any such item is the property of Recco, each Contract, computer record, invoice,
ledger card, account record or other evidence of, or record relating to, the
Purchased Contracts maintained at the office of the Servicer or the office of
Seller, if requested by the Controlling Party, will be marked as the Controlling
Party may direct to indicate the ownership thereof by Recco and/or the Lien of
the Collateral Agent thereon. The Servicer will segregate from all other
Contracts then owned or being serviced by the Servicer all documents relating to
the Purchased Contracts and will hold in trust (if such document is not owned by
Recco) and safely keep such documents in separate filing cabinets or other
suitable containers marked to show Recco's and the Collateral Agent's interest
with such legend as shall be specified by the Controlling Party and maintained
in such place or places as shall be designated by the Controlling Party.
(b) The Servicer will deliver to Recco, the Surety Provider ,the
Administrative Agent, each Group Agent and any Person designated by the
Controlling Party, within 45 days after the end of each fiscal quarter of the
Servicer, a certificate of a Responsible Officer of the Servicer stating that
(a) a review of the activities of the Servicer during the preceding fiscal
quarter and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) based on such
review, the Servicer has fully performed all its obligations under this
Agreement throughout such period (including its obligations to prepare and
deliver each Daily Report and Monthly Report) in compliance with the terms of
this Agreement, or, if there has been a default in the performance of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(c) The Servicer, at its expense, will cause a firm of Independent
public accountants satisfactory to the Administrative Agent, each Group Agent
and the Surety Provider to furnish a report (the "Annual Report") to Recco, the
Administrative Agent, each Group Agent and any Person designated by the
Administrative Agent or any Group Agent, on or before March 31st of each year,
beginning March 31, 2004, stating that such firm has examined certain documents
and records relating to the servicing of the Contracts during the preceding
fiscal year and that such examination, which has been conducted substantially in
accordance with audit guides or audit programs generally recognized to be
applicable to audits of receivables similar to the Contracts, has disclosed no
items of noncompliance with the provisions of this Agreement
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throughout such period which, in the opinion of such firm, are material, except
for such items of non-compliance as shall be set forth in such report.
Section 8.4 Servicing Fee. On each Determination Date, to the extent
provided for in the Security Agreement and subject to Section 8.11(c) in the
case of any Successor Servicer, as full compensation for its servicing
activities hereunder, the Servicer shall be entitled to receive the Servicing
Fee.
Section 8.5 Resignation; Sub-Contracting.
(a) The obligation of the Servicer to service the Purchased
Contracts is personal to the Servicer and the parties recognize that another
Person may not be qualified to perform such obligations. Accordingly, the
Servicer's obligation to service the Purchased Contracts hereunder shall be
specifically enforceable and shall be absolute and unconditional in all
circumstances, including, without limitation, after the occurrence and during
the continuation of any Servicer Termination Event hereunder; provided, however,
that a Successor Servicer may be appointed pursuant to Section 8.11 hereof.
(b) The Servicer shall not resign from the obligations and duties
hereby imposed on it as Servicer except upon determination that (i) the
performance of its duties hereunder is no longer permissible under any
applicable law and (ii) there is no reasonable action which the Servicer could
take to make the performance of its duties hereunder permissible under any such
applicable law. Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (i) above by an opinion of counsel to such
effect delivered to Recco, the Surety Provider, the Administrative Agent and
each Group Agent. Except to the extent inconsistent with any such applicable
law, no such resignation shall become effective until a Successor Servicer shall
have assumed the responsibilities and obligations of the Servicer in accordance
with Section 8.11 hereof.
(c) If the performance of its duties hereunder is no longer
permissible under applicable law or the cost of such performance is such that
its continuation as Servicer is not warranted as a financial matter, the
Servicer may, with the prior written consent of the Controlling Party and to the
extent permitted by applicable law, subcontract with any other Person to
service, administer or collect the Purchased Contracts, provided that the Person
with whom the Servicer so subcontracts shall not become the Servicer hereunder
and the Servicer shall remain liable for the performance of the duties and
obligations of the Servicer pursuant to the terms hereof.
Section 8.6 Termination. The Servicer's obligations under this Agreement
shall terminate upon the termination of both the Credit Agreement and the
Insurance Agreement; provided, however, that the Servicer shall continue to be
obligated to do all things necessary to apply Collections on the Purchased
Contracts that it receives after such termination in the manner provided in this
Agreement and to perform its obligations hereunder with respect thereto. Upon
termination of this Agreement all authority and power granted to the Servicer
under this Agreement shall pass to and be vested in Recco. The Servicer shall
transfer (i) its electronic records relating to the Purchased Contracts to Recco
in such electronic form as Recco may reasonably request, (ii) all other records,
correspondence and documents to Recco in the manner
33
and at such times as Recco may reasonably request, (iii) at Recco's expense,
upon the request of Recco, notify all Obligors that the Servicer is no longer
the Servicer, (iv) at Recco's expense, take all such further action as Recco
shall reasonably request to effect the termination of the rights of the Servicer
to conduct servicing hereunder, including, without limitation, the transfer to
Recco of all authority of the Servicer to (A) service Purchased Contracts as
provided hereunder, and (B) receive Collections which shall on the date of such
termination be held by the Servicer for deposit or which shall thereafter be
received with respect to any Purchased Contract.
Section 8.7 Daily Report. No later than 3:00 PM (New York City time) on
each Purchase Date, the Servicer shall deliver a report, substantially in the
form of Exhibit G (the "Daily Report"), to Recco, the Surety Provider, the
Administrative Agent, who shall promptly deliver such Daily Report to each Group
Agent, together with a Certificate of the Servicer, substantially in the form of
Exhibit F (the "Servicer's Certificate").
Section 8.8 Monthly Report. No later than 3:00 P.M. (New York City time)
on each Determination Date, the Servicer shall deliver a report, substantially
in the form of Exhibit H (the "Monthly Report") to Recco, the Surety Provider,
the Administrative Agent, who shall promptly deliver such Monthly Report to each
Group Agent,, together with a Servicer's Certificate, covering the Determination
Period immediately preceding such Determination Date.
Section 8.9 Servicer Termination Events. If any of the following events
(each a "Servicer Termination Event") shall have occurred and be continuing:
(a) the Servicer shall fail to make any payment, transfer or deposit
required to be made hereunder or under any other Operative Document within two
Business Days of the date on which such payment, transfer or deposit is due to
be made;
(b) the Servicer shall fail to give any notice within three Business
Days after the same is required to be given hereunder;
(c) the Servicer shall fail to submit (i) a Monthly Report within
three Business Days of the day on which such report shall have been required to
be submitted, (ii) a Daily Report within one Business Day of the day on which
such report is required to be submitted or (iii) an Annual Report within 10 days
of the day on which such Annual Report shall have been required to be submitted;
(d) the Servicer shall fail to observe or perform any other covenant
or agreement applicable to it contained herein or in any other Operative
Document and such failure shall remain unremedied for a period of 10 days; or,
if the Seller or one of its affiliates is the Servicer, the Seller shall breach
any of the financial covenants contained in Section 4.6;
(e) the Servicer shall enter a transaction in breach of the covenant
at Section 4.4(f) hereof;
(f) any representation, warranty, certification or statement made by
the Servicer in this Agreement, in any other Operative Document or in any
certificate, financial statement or other document delivered hereunder or
thereunder shall prove to have been incorrect in any material respect when made;
(g) a Bankruptcy Event shall have occurred with respect to the
Servicer or;
34
(h) the Wind-Down Date shall have occurred;
then, the Administrative Agent shall, at the request of the Controlling Party,
terminate the Servicer by giving notice thereof in writing to the Servicer and
Seller which notice shall state the effective date of such termination (a
"Servicer Termination Notice"); provided that, in the case of a Servicer
Termination Event described in (g) above, the Servicer shall be terminated
automatically without the necessity to deliver a Servicer Termination Notice.
Upon termination of the Servicer, the Administrative Agent shall, at the request
of the Controlling Party, implement a Complete Servicing Transfer.
Section 8.10 Servicer Termination.
(a) After the termination of the Servicer, (i) prior to the
appointment of a Successor Servicer pursuant to Section 8.11, the Controlling
Party or any Person designated by the Controlling Party may administer the
administrative, servicing and collection functions of the Servicer, in any
manner the Controlling Party directs, (ii) the Controlling Party or any Person
designated by the Controlling Party shall, at any time thereafter, be entitled
to notify the Obligors on any Purchased Contracts to make payment of amounts due
thereunder directly to Recco or the Administrative Agent or as the Controlling
Party may direct and (iii) the Servicer shall, at its own expense, (A) if so
requested by the Controlling Party, endorse each instrument that is payable to
the Servicer, if any, evidencing any Purchased Contract to the Controlling Party
or any Person designated by the Controlling Party in such manner as the
Controlling Party shall direct and (B) perform any and all acts and execute any
and all documents as may be reasonably requested by Controlling Party in order
to effect the purposes of this Agreement. If the Controlling Party does not
elect to terminate the Servicer and replace the Servicer with a Successor
Servicer, the Controlling Party shall have the right to appoint a firm of public
accountants or any other Person the Controlling Party may choose, to monitor the
servicing of the Purchased Contracts by the Servicer and to furnish to Recco, at
the expense of the Servicer, such letters, certificates or reports thereon as
the Controlling Party shall reasonably request. The Servicer shall cooperate
with such firm in the subsequent monitoring of its servicing of the Purchased
Contracts pursuant to this Agreement and any fees and expenses in connection
therewith shall be paid by the Servicer.
(b) After termination of the Servicer:
(i) On the date that a Successor Servicer shall have been
appointed pursuant to Section 8.11, all authority and power of the then Servicer
under this Agreement shall pass to and be vested in such Successor Servicer,
and, without limitation, the Controlling Party or any Person designated by the
Controlling Party (at the direction of the Controlling Party) is hereby
authorized and empowered to execute and deliver on behalf of the Servicer, as
attorney-in-fact or otherwise, all documents and other instruments upon the
failure of the Servicer to execute or deliver such documents or instruments, and
(upon the failure of the Servicer to cooperate) to do and accomplish all other
acts or things necessary or appropriate to effect the purposes of such transfer
of servicing rights.
(ii) The Servicer agrees to cooperate with the Controlling
Party or any Person Designated by the Controlling Party and the Successor
Servicer in effecting the
35
termination of the responsibilities and rights of the Servicer to conduct
servicing hereunder, including, without limitation, the transfer to such
Successor Servicer of all authority of the Servicer to service the Purchased
Contracts provided for under this Agreement, including, without limitation, all
authority to utilize necessary software and programs and to receive Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which shall thereafter be received with respect to the Purchased Contracts.
(iii) The Servicer shall promptly transfer duplicate, back-up,
or original tapes, and all other electronic media constituting all of its
electronic records relating to the Purchased Contracts and records relating to
the Commercial Paper Notes to the Successor Servicer in such electronic form as
the Successor Servicer may reasonably request and shall promptly transfer to the
Successor Servicer all other records, correspondence and documents necessary for
the continued servicing of the Purchased Contracts in the manner and at such
times as the Successor Servicer shall reasonably request.
(iv) At any time following the appointment of a Successor
Servicer, such Successor Servicer shall be authorized to take any and all steps
in the name of the previous Servicer and on behalf of the previous Servicer
necessary or desirable, in the determination of such Successor Servicer, to
collect all amounts due under any and all Purchased Contracts, including,
without limitation endorsing the name of the previous Servicer on checks and
other instruments representing Collections, and enforcing the Purchased
Contracts.
Section 8.11 Appointment of Successor Servicer.
(a) On and after the termination of the Servicer, the Servicer shall
continue to perform all servicing functions under this Agreement until the later
of (i) the appointment of a Successor Servicer or (ii) the date specified in the
Servicer Termination Notice or otherwise specified by the Controlling Party in
writing or, if no such date is specified in the Servicer Termination Notice (if
any), until a date mutually agreed upon by the Servicer and the Controlling
Party. The Administrative Agent shall appoint a successor servicer at the
direction of the Controlling Party (the "Successor Servicer") and such Successor
Servicer shall accept its appointment by a written assumption in a form
acceptable to the Controlling Party.
(b) Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer. Any Successor Servicer, by its
acceptance of its appointment, will automatically agree to be bound by the terms
and provisions of the Liquidity Agreement, if any are applicable. Any Successor
Servicer shall make all representations and warranties that the Servicer makes
hereunder.
(c) In connection with such appointment and assumption, the
Controlling Party may, subject to the provisions of the Security Agreement, make
arrangements for the payment of the Servicing Fee to the Successor Servicer.
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(d) Notwithstanding anything to the contrary in this Agreement, no
termination of the Servicer shall be effective until a Successor Servicer shall
be appointed and have accepted such appointment.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices, Etc. 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 United
States 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 subsection,
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:
Onyx Acceptance Corporation
If to the Seller: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President and
Chief Financial Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Onyx Acceptance Corporation
If to the Servicer: ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President
and Chief Financial Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to Recco: Onyx Acceptance Receivables Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
37
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Administrative Agent CDC Financial Products, Inc.
or to the Eiffel Group Agent: ▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wachovia Capital Markets, LLC
If to the VFCC Group Agent: ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
XL Capital Assurance Inc.
If the 1221 Avenue of the Americas
Surety Provider: ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ 1001
Attention: Surveillance
Tel. No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of any notice delivered to or required to be sent by the Seller or
Servicer hereunder shall be sent by the Seller or the Servicer to the holder of
the Subordinated Note.
Section 9.2 Successors and Assigns. This Agreement shall be binding upon
the parties hereto and their respective successors and assigns and shall inure
to the benefit of the parties hereto, the holders of the Obligations (each of
which shall be a third party beneficiary hereto) and their respective successors
and assigns; provided that the Seller shall not assign any of its rights or
obligations hereunder without the prior written consent of the Surety Provider,
the Administrative Agent and each Group Agent. Except as expressly permitted
hereunder or in the Operative Documents, Recco shall not assign any of its
rights or obligations hereunder without the prior written consent of the
Controlling Party.
Section 9.3 Confirmation of Intent; Security Interest. The Seller and
Recco intend that the sales, contributions, transfers and assignments herein
contemplated constitute sales and/or contributions, transfers and assignments
outright, and not for security, of the Purchased Contracts and the Other
Conveyed Property, conveying good title thereto free and clear of any Liens,
from Seller to Recco, and that the Purchased Contracts and the Other Conveyed
Property shall not be a part of Seller's estate in the event of the bankruptcy,
reorganization, arrangement, insolvency or liquidation proceeding, or other
similar proceeding under any federal or state bankruptcy law with respect to the
Seller. In the event that such conveyance is determined to be made as security
for a loan made by Recco or the holders of the Lender Note to the Seller, the
38
Seller hereby grants to Recco a first priority security interest in all of the
Seller's right, title and interest in and to the Purchased Contracts and the
Other Conveyed Property conveyed pursuant to Section 2.1(a) hereof, and hereby
agree that this Sale Agreement shall constitute a security agreement under the
UCC and applicable law.
Section 9.4 Payments. All payments made hereunder, except as provided for
in Section 2.3(b) hereof, shall be made by 2:00 P.M. (New York City time) on the
day provided for herein. Amounts not paid when due under this Agreement shall
bear interest until paid in full at a rate equal at all times to the lesser of
(a) the Default Rate and (b) the maximum rate permitted by applicable law,
payable on demand. Whenever any payment to be made under this Agreement shall be
stated to be due on a day other than a Business Day, such payment shall be made
on the next succeeding Business Day.
Section 9.5 Rights to Enable Successor Servicing. The Servicer hereby
represents and warrants to Recco and the Collateral Agent that each of Recco and
the Collateral Agent will have full and free access to, and use of, all rights
and properties necessary or appropriate for the servicing and collecting
functions with respect to Purchased Contracts including, without limitation, all
software rights, and hereby covenants that to the extent Recco or the Collateral
Agent deem it necessary or appropriate, it will immediately transfer, assign and
set over to Recco, the Collateral Agent or such party as the Collateral Agent
shall designate such rights and properties and any other rights or assets upon
the occurrence of a Wind-Down Event to enable and ease successor servicing
hereunder.
Section 9.6 Costs; Expenses and Taxes. In addition to the rights of
indemnification granted pursuant to Section 7.1 hereof, the Seller agrees to pay
on demand to Recco, the Collateral Agent, the Surety Provider, the
Administrative Agent and Group Agents (a) all costs and expenses in connection
with the development, preparation, execution, delivery and administration
(including periodic auditing by Recco, the Collateral Agent, the Surety
Provider, the Administrative Agent and Group Agents or their agents or
representatives) of this Agreement, including, without limitation, the
reasonable fees and expenses of counsel for any Indemnified Party with respect
hereto and with respect to advising any such Indemnified Party as to their
respective rights and remedies under this Agreement, and (b) all costs and
expenses, if any (including reasonable counsel fees and expenses), in connection
with the enforcement of this Agreement.
Section 9.7 Severability Clause. Any provisions of this Agreement which
are 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 provisions in any other jurisdiction.
Section 9.8 Amendments; Governing Law; JURY TRIAL WAIVER. This Agreement
and the rights (including those of the Administrative Agent, each Group Agent,
the Surety Provider and the Collateral Agent) and obligations of the parties
hereunder (a) may not be changed orally but only by an instrument in writing
signed by the parties hereto, the Surety Provider, the Administrative Agent and
each Group Agent and (b) shall be construed in accordance with and governed by
the laws of the State of New York without regard to conflict of
39
laws principles which may require the application of the laws of any other
jurisdiction. No amendment shall be effective without prior written notice
thereof to S&P and ▇▇▇▇▇'▇. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ALL
RIGHTS TO TRIAL BY JURY IN ANY ACTION OR PROCEEDING (ARISING OUT OF OR RELATING
TO THIS AGREEMENT OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY OR BY ANY OF
THE OTHER OPERATIVE DOCUMENTS) IN WHICH THEY SHALL BE ADVERSE PARTIES.
Section 9.9 No Recourse. Except as otherwise expressly provided in Section
4.5 and 7.1 of this Agreement, it is understood and agreed that the Seller shall
not be liable for the payment of the principal of the Loans, or any Commercial
Paper or for the payment of any business taxes or for any losses suffered by
Recco in respect of ownership of the Purchased Contracts. The preceding sentence
shall not relieve the Seller from any liability hereunder with respect to its
representations, warranties, covenants and other payment and performance
obligations herein described. The Seller is not making any representations or
warranties regarding the collectibility of the Purchased Contracts or the future
performance of the Obligors under the Purchased Contracts.
Section 9.10 Further Assurances. The Seller agrees to do such further acts
and things and to execute and deliver to Recco such assignments, agreements,
powers and instruments as may be necessary or desirable in order for Recco to
carry into effect the purposes of this Agreement and the other Operative
Documents or to better assure and confirm unto Recco its rights, powers and
remedies hereunder and under the other Operative Documents, including, without
limitation, to record, notify, obtain consents and file and to re-record,
re-notify, re-obtain consents and re-file all such documents and instruments, at
such time or times, in such manner and at such places, all as may be necessary
to preserve and protect the position of the Seller or Recco, as the case may be,
hereunder and under the other Operative Documents. This covenant shall survive
the termination of this Agreement.
Section 9.11 Termination. This Agreement shall terminate on the later of
(a) the date after the Commitment Termination Date of the payment in full of all
amounts due hereunder and the performance of all obligations hereunder and (b)
the date on which the Credit Agreement and the Insurance Agreement are
terminated; provided, however, that all representations, warranties, remedies
and indemnities of the Seller herein, and the agreements of the Seller and the
Servicer made pursuant to Section 9.15 hereof shall survive the termination of
this Agreement.
Section 9.12 Assignment to Collateral Agent. Recco hereby assigns to the
Collateral Agent, for the benefit of the holders of the Obligations, all of its
rights hereunder, including, without limitation, the rights of Recco under
Section 6.2. The Seller consents to such assignment and agrees that the
Collateral Agent shall be entitled to enforce this Agreement directly against
the Seller. In addition, Recco agrees to act as agent on behalf of the
Collateral Agent and shall not consent or agree to any waiver, amendment or
other modification of this Agreement or any of the other Operative Documents to
which it is a party without the Controlling Party's prior written consent, and
shall take and refrain from taking any action, and shall exercise and refrain
from exercising any of its rights under the Operative Documents as requested by
the Controlling
40
Party from time to time, including, without limitation, the right to deliver a
Servicer Termination Notice.
Section 9.13 Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties hereto on the same or separate
counterparts, each of which shall be deemed to be an original instrument.
Section 9.14 Headings. Section headings used in this Agreement are for
convenience of reference only and shall not affect the construction or
interpretation of this Agreement.
Section 9.15 No Bankruptcy Petition Against Recco. The Seller and the
Servicer each covenants and agrees that it will not institute against, or join
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.
41
IN WITNESS WHEREOF, the Seller and Recco have caused this Sale and
Servicing Agreement to be duly executed by their duly authorized officers, all
on the day and year first above written.
ONYX ACCEPTANCE CORPORATION, as Seller
and Servicer
By: ______________________________
Name:
Title:
ONYX ACCEPTANCE RECEIVABLES CORPORATION
By: ______________________________
Name:
Title:
Acknowledged and Agreed:
CDC FINANCIAL PRODUCTS INC., as Administrative Agent
and Eiffel Group Agent
By: ______________________________
Name:
Title:
By: ______________________________
Name:
Title:
JPMORGAN CHASE BANK, as Collateral Agent
By: ______________________________
Name:
Title:
42
WACHOVIA CAPITAL MARKETS, LLC, as VFCC Group Agent
By: ______________________________
Name:
Title:
43
EXHIBIT A
SELLER NOTE
New York, New York
January 29, 2004
ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware corporation ("Recco"),
hereby promises to pay to the order of ONYX ACCEPTANCE CORPORATION, a California
corporation (the "Seller"), the principal amount of this Seller Note, determined
as described below, together with interest thereon equal to the Seller Note
Interest Rate in lawful money of the United States of America. Capitalized terms
used herein but not defined herein shall have the meanings assigned to such
terms in Exhibit A to the Credit Agreement (as defined in the Sale Agreement),
dated as of the date hereof, entered into in connection with the Amended and
Restated Sale and Servicing Agreement, dated as of January 29, 2004, between the
Seller and Recco (such agreement, as it may from time to time be amended,
supplemented or otherwise modified in accordance with its terms, the "Sale
Agreement").
The principal amount of this Seller Note at any time shall be determined
in accordance with the provisions of Section 5.1 of the Sale Agreement,
provided, however, that it shall at no time exceed the Maximum Seller Interest.
All principal and accrued interest on this Seller Note shall be due and payable
on the Scheduled Maturity Date; provided, however, that, no payments may be
made, directly or indirectly, on this Seller Note (and if made, the Seller
agrees to return such payments to Recco) until Recco has paid all amounts
required pursuant to the Security Agreement to be paid prior to any payments in
respect of this Seller Note. This Seller Note represents solely an obligation of
Recco to make certain payments from funds available under the Security Agreement
and only to the extent, in the manner and at the times set forth in the Security
Agreement. This Seller Note does not represent a security interest in the
Collateral.
Payments of principal of and interest on this Seller Note shall be made by
wire transfer of immediately available funds to such account of the Seller as
the Seller may designate in writing.
This Seller Note is the Seller Note referred to in the Sale Agreement.
Recco hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. The nonexercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
All amounts evidenced by this Seller Note and all payments and prepayments
of the principal hereof and the respective dates and maturity dates thereof
shall be endorsed by the holder hereof on Schedule 1 attached hereto and made a
part hereof or on a continuation thereof which shall be attached hereto and made
a part hereof, or otherwise recorded by such holder in its internal records;
provided, however, that the failure of the holder hereof to make such a notation
or any error in such a notation shall not affect the obligations of Recco under
this Seller Note.
It is the intention of Recco and the Seller to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law
(including the laws of the State of New York and the laws of the United States
of America), then, in that event, notwithstanding anything to the contrary in
any agreement entered into in connection with this Seller Note, it is agreed as
follows: (i) the aggregate of all consideration that constitutes interest under
applicable law that is taken, reserved, contracted for, charged or received
under this Seller Note or any other agreement or document executed in connection
with this Seller Note shall under no circumstances exceed the maximum amount of
interest allowed by applicable law, and any excess shall be credited to other
amounts due under this Seller Note by the holder hereof (or if this Seller Note
shall have been paid in full, refunded to Recco); and (ii) in the event that the
maturity of this Seller Note is accelerated for any reason or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount allowed by applicable
law, and excess interest, if any, provided for in this Seller Note or otherwise
shall be canceled automatically as of the date of such acceleration or
prepayment and, if theretofore prepaid, shall be credited to other amounts due
under this Seller Note (or if this Seller Note shall have been paid in full,
refunded to Recco). In the event that applicable law provides for a ceiling on
the rate of interest chargeable hereunder, that ceiling shall be the indicated
rate ceiling.
The Seller agrees that it shall have no right to cause, by way of
acceleration or otherwise, any payment of principal hereunder to become due or
payable prior to the times provided in the Security Agreement.
Each holder of this Seller Note agrees to be bound by all of the
provisions of the Operative Documents, including, without limitation, the
covenant that prior to the date which is one year and one day after the payment
in full of all Loans made, by the Lenders and all other obligations under the
Operative Documents, it will not institute, or join any other Person in
instituting, against Recco any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings or other similar proceedings under any
federal or state bankruptcy law or similar law.
This Seller Note may not be assigned, transferred, exchanged, pledged,
hypothecated, participated or otherwise conveyed, except with the prior written
consent of the Administrative Agent, each Group Agent and the Surety Provider.
A-2
THIS SELLER NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:________________________________________
Name:
Title:
A-3
Schedule 1 to
Seller Note
Principal Payments and Maturity Notation Made
Date Amount Pre-payments Date By
---- ------ ------------ ---- --
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
A-4
EXHIBIT B
SUBORDINATED NOTE
THIS SUBORDINATED NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND MAY NOT BE OFFERED OR SOLD EXCEPT
FOR ANY OFFER OR SALE PURSUANT TO, AND IN COMPLIANCE WITH, THE SECURITIES ACT
AND THE RULES AND REGULATIONS THEREUNDER.
THIS SUBORDINATED NOTE IS THE SUBORDINATED NOTE REFERRED TO IN THE SALE
AND SERVICING AGREEMENT, AND IS SUBORDINATE AND JUNIOR IN RIGHT OF PAYMENT TO
ALL OF THE OBLIGATIONS TO THE EXTENT AND IN THE MANNER PROVIDED IN ARTICLE V OF
THE SALE AND SERVICING AGREEMENT; AND THE HOLDER BY ACCEPTANCE HEREOF AGREES TO
BE BOUND BY ALL THE PROVISIONS OF ARTICLE V OF THE SALE AND SERVICING AGREEMENT.
New York, New York
January 29, 2004
ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware corporation ("Recco"),
hereby promises to pay to the order of ONYX ACCEPTANCE CORPORATION, a California
corporation (the "Seller"), the principal amount of this Subordinated Note,
determined as described below, together with interest thereon at a rate per
annum of LIBOR + 6% in lawful money of the United States of America. Capitalized
terms used herein but not defined herein shall have the meanings assigned to
such terms in Exhibit A to the Credit Agreement (as defined in the Sale
Agreement) entered into in connection with the Amended and Restated Sale and
Servicing Agreement dated as of January 29, 2004, between Recco and the Seller
(such agreement, as it may from time to time be amended, supplemented or
otherwise modified in accordance with its terms, the "Sale Agreement").
The principal amount of this Subordinated Note at any time shall be
determined in accordance with the provisions of Section 5.3 of the Sale
Agreement; provided, however, that it shall at no time exceed the Maximum
Subordinated Interest. All principal of and interest on this Subordinated Note
shall be due and payable at the times provided in the Sale Agreement, it being
understood and agreed that, except as provided in Section 5.3 of the Sale
Agreement, no payments may be made, directly or indirectly, on this Subordinated
Note until all the Obligations have been indefeasibly paid in full in cash. This
Subordinated Note is secured by the Collateral pursuant to the Subordinated
Security Agreement subject to the prior lien of the Collateral Agent under the
Security Agreement. No payments may be received, directly or indirectly, by the
Seller (and if received, the Seller agrees to return such payments to Recco) on
this Subordinated Note unless Recco has paid all amounts required pursuant to
the Security Agreement to be paid prior to any payment in respect of this
Subordinated Note.
Payments of principal on this Subordinated Note shall be made by wire
transfer of immediately available funds to such account of the Seller as the
Seller may designate in writing.
This Subordinated Note is the Subordinated Note referred to in the Sale
Agreement, and is subordinate and junior in right of payment to all the
Obligations to the extent and in the manner provided in Section 5.3 of the Sale
Agreement and the holder by acceptance hereof agrees to be bound by all the
provisions of Section 5.3 of the Sale Agreement.
Recco hereby waives diligence, presentment, demand, protest and notice of
any kind whatsoever. The nonexercise by the holder of any of its rights
hereunder in any particular instance shall not constitute a waiver thereof in
that or any subsequent instance.
All amounts evidenced by this Subordinated Note and all payments and
prepayments of the principal hereof and the respective dates and maturity dates
thereof shall be endorsed by the holder hereof on Schedule 1 attached hereto and
made a part hereof or on a continuation thereof which shall be attached hereto
and made a part hereof, or otherwise recorded by such holder in its internal
records; provided, however, that the failure of the holder hereof to make such a
notation or any error in such a notation shall not affect the obligations of
Recco under this Subordinated Note.
It is the intention of Recco and the Seller to conform strictly to
applicable usury laws. Accordingly, if the transactions contemplated hereby
would be usurious under applicable law (including the laws of the State of New
York and the laws of the United States of America), then, in that event,
notwithstanding anything to the contrary in any agreement entered into in
connection with this Subordinated Note, it is agreed as follows: (i) the
aggregate of all consideration that constitutes interest, if any, under
applicable law that is taken, reserved, contracted for, charged or received
under this Subordinated Note or any other agreement or document executed in
connection with this Subordinated Note shall under no circumstances exceed the
maximum amount of interest allowed by applicable law, and any excess shall be
credited to other amounts due under this Subordinated Note by the holder hereof
(or if this Subordinated Note shall have been paid in full, refunded to Recco);
and (ii) in the event that maturity of this Subordinated Note is accelerated for
any reason, or in the event of any required or permitted prepayment, then such
consideration that constitutes interest may never include more than the maximum
amount allowed by applicable law, and excess interest, if any, provided for in
this Subordinated Note or otherwise shall be cancelled automatically as of the
date of such acceleration or prepayment and, if theretofore prepaid, shall be
credited to other amounts due under this Subordinated Note (or if this
Subordinated Note shall have been paid in full, refunded to Recco). In the event
that applicable law provides for a ceiling on the rate of interest, if any,
chargeable hereunder, that ceiling shall be the indicated rate ceiling.
The Seller agrees that it shall have no right to cause, by way of
acceleration or otherwise, any payment of principal hereunder to become due or
payable, prior to the times provided in the Security Agreement.
Each holder of this Note agrees to be bound by all of the provisions of
the Operative Documents, including, without limitation, the covenant that prior
to the date which is one year and one day after the payment in full of all Loans
made, by the Lenders and all other Obligations
B-2
under the Operative Documents, it will not institute against, or join any other
Person in instituting against, Recco any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar proceeding
under the law of the United States or any state of the United States.
This Subordinated Note shall not be assigned, transferred, exchanged,
pledged, hypothecated, participated or otherwise conveyed, except with the prior
written consent of the Administrative Agent, each Group Agent and the Surety
Provider.
B-3
THIS SUBORDINATED NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE
PERFORMED ENTIRELY WITHIN SUCH STATE.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:_________________________________
Name:
Title:
B-4
Schedule 1 to
Subordinated Note
Principal Payments and Maturity Notation Made
Date Amount Pre-payments Date By
---- ------ ------------ ---- --
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
_____________ _________________ ____________________ ________________ _____________________
B-5
EXHIBIT C
ONYX ACCEPTANCE CORPORATION
OFFICER'S CERTIFICATE
AND ▇▇▇▇ OF SALE
The undersigned certifies that he is the [President] [Chief Financial
Officer] [an Executive Vice President] of Onyx Acceptance Corporation, a
Delaware corporation (the "Seller"), and that as such he is duly authorized to
execute and deliver this certificate on behalf of the Seller in connection with
the Amended and Restated Sale and Servicing Agreement dated as of January 29,
2004 (the "Sale Agreement"), between the Seller and Onyx Acceptance Receivables
Corporation, a Delaware corporation ("Recco") (all capitalized terms used herein
without definition having the respective meanings specified in the Definitions
List attached to the Sale Agreement), and further certifies that:
1. No event with respect to the Seller has occurred and is
continuing which would constitute a Wind-Down Event or Unmatured
Wind-Down Event;
2. Each of the agreements and conditions of the Seller to
be performed on or before the date hereof pursuant to the Sale
Agreement have been performed in all material respects;
3. The Seller has possession of each Contract set forth on
the Contract List delivered to the Lenders, the Surety Provider, the
Administrative Agent and each Group Agent on the date hereof (the
"Specified Contracts");
4. On the date hereof, the Seller shall apply the cash
proceeds of the Purchase Price paid to it on the date hereof by
Recco to purchase the Specified Contracts;
5. The Seller has delivered the Specified Contracts to
Recco on or prior to the date hereof; and
6. Each of the representations and warranties made in the
Operative Documents by the Seller and the Servicer are true and
correct on and as of the date hereof, both before and after giving
effect to the purchase to be made on the date hereof.
In Receipt of adequate consideration hereto for the Purchase Price of
$_____________, the Seller hereby assigns, sells, transfers and convey the
specified contracts and all of its right, title and interest therein, to Recco.
IN WITNESS WHEREOF, I have affixed hereunto my signature this _____ day of
____, 200_.
ONYX ACCEPTANCE CORPORATION
By:_________________________________
Name:
Title:
B-2
EXHIBIT D
LIST OF LOCK-BOX BANKS AND NUMBERS OF LOCK-BOXES
LOCK-BOX BANK:
▇▇▇▇▇ Fargo Bank
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Lock-Box Account
Acct. # 4159359066
EXHIBIT E
CLEARING ACCOUNT BANK AND ACCOUNT NUMBER
The Clearing Account, No. 4159359173, is maintained at ▇▇▇▇▇ Fargo Bank,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT F
[FORM OF SERVICER'S CERTIFICATE]
This Servicer's Certificate is delivered pursuant to the Amended and
Restated Sale and Servicing Agreement (the "Sale Agreement") dated as of January
29, 2004 between Onyx Acceptance Corporation and Onyx Acceptance Receivables
Corporation. Capitalized terms not defined herein have the meanings ascribed to
such terms in the Definitions List attached to the Sale Agreement.
The undersigned hereby certifies that he is a Responsible Officer of Onyx
Acceptance Corporation holding the office set forth beneath his signature below,
and that he is duly authorized to execute this Servicer's Certificate on behalf
of the Servicer and further certifies that the information set forth in the
report to which this Certificate is attached is true and correct in all material
respects, that there is currently no Servicer Termination Event, Unmatured
Wind-Down Event or Wind-Down Event and that all calculations and applications of
cash were performed in accordance with the Operative Documents.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day
of ________.
ONYX ACCEPTANCE CORPORATION
By:
Name:
Title:
EXHIBIT G
FORM OF DAILY REPORT
EXHIBIT H
FORM OF MONTHLY REPORT
EXHIBIT I
CREDIT AND COLLECTION POLICY
SCHEDULE 4.1(h)-1
PRINCIPAL PLACE OF BUSINESS, ETC. OF SELLER
Onyx Acceptance Corporation's (the "Seller") principal place of business,
chief executive office and the location of the offices where it keeps all of the
records relating to the Contracts including, without limitation, the Files, is:
27051 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ DataBank
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
SCHEDULE 4.1(h)-2
PRINCIPAL PLACE OF BUSINESS, ETC. OF SERVICER
Onyx Acceptance Corporation's (the "Servicer") principal place of
business, chief executive office and the location of the offices where it keeps
all of the records relating to the Contracts including, without limitation, the
Files, is:
27051 ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ DataBank
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
SCHEDULE 4.1(k)-1
TRADE NAMES OF SELLER
Onyx Acceptance Corporation (the "Seller") has no trade names, fictitious
names, assumed names or "doing business as" names other than the following:
"Doing Business As" Name Business for which Name is Used
------------------------ -------------------------------
1. Mesa Auto Used car sales
2. Auto Fund Name reserved but not used
3. Automotive Funding Services Name reserved but not used
4. OAC Systems Name reserved but not used
5. Dove Financial Corporation Name reserved but not used
6. ePartner Network Internet marketing
SCHEDULE 4.1(k)-2
TRADE NAMES OF SERVICER
Onyx Acceptance Corporation (the "Servicer") has no trade names,
fictitious names, assumed names or "doing business as" names other than the
following:
"Doing Business As" Name Business for which Name is Used
------------------------ -------------------------------
1. Mesa Auto Used car sales
2. Auto Fund Name reserved but not used
3. Automotive Funding Services Name reserved but not used
4. OAC Systems Name reserved but not used
5. Dove Financial Corporation Name reserved but not used
6. ePartner Network Internet marketing
SCHEDULE 4.1(r)-1
SUBSIDIARIES OF SELLER
The subsidiaries of the Onyx Acceptance Corporation (the "Seller") are as
follows:
(i) Onyx Acceptance Financial Corporation
(ii) Onyx Acceptance Funding Corporation
(iii) ABNI, Inc.
(iv) C.U. Acceptance Corporation
(v) Onyx Acceptance Receivables Corporation
SCHEDULE 4.1(r)-2
SUBSIDIARIES OF SERVICER
The subsidiaries of Onyx Acceptance Corporation (the "Servicer") are
as follows:
(i) Onyx Acceptance Financial Corporation
(ii) Onyx Acceptance Funding Corporation
(iii) ABNI, Inc.
(iv) C.U. Acceptance Corporation
(v) Onyx Acceptance Receivables Corporation