EXHIBIT 10.147
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RESIDUAL INTEREST
LOAN AND SECURITY AGREEMENT
Dated as of January 13, 2004
ONYX ACCEPTANCE FUNDING CORPORATION
as Borrower
and
GALLEON CAPITAL, LLC,
as Lender
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND ACCOUNTING MATTERS.................................................................... 1
Section 1.01. Defined Terms............................................................................ 1
Section 1.02. Accounting Terms and Determinations...................................................... 1
Section 1.03. Construction............................................................................. 1
ARTICLE II LOANS, NOTE AND PREPAYMENTS.......................................................................... 1
Section 2.01. Loans.................................................................................... 1
Section 2.02. The Note................................................................................. 2
Section 2.03. Procedures for Borrowing................................................................. 2
Section 2.04. Repayment of Loans; Interest............................................................. 2
Section 2.05. Collateral Shortfall Event; Pledge and Removal of Residual Interest Instruments.......... 3
Section 2.06. Optional Prepayments..................................................................... 5
Section 2.07. Yield Protection......................................................................... 5
Section 2.08. Funding Losses........................................................................... 7
Section 2.09. Commitment Fee........................................................................... 7
ARTICLE III PAYMENTS; COMPUTATIONS.............................................................................. 7
Section 3.01. Payments................................................................................. 7
Section 3.02. Computations............................................................................. 8
Section 3.03. Settlement Procedures.................................................................... 8
ARTICLE IV COLLATERAL SECURITY.................................................................................. 10
Section 4.01. Collateral; Security Interest............................................................ 10
Section 4.02. Delivery of Pledged Residual Interest Instruments........................................ 11
Section 4.03. Further Documentation.................................................................... 11
Section 4.04. Changes in Locations, Name, etc.......................................................... 11
Section 4.05. Reimbursement for Performance by Lender of Borrower's Obligations........................ 12
Section 4.06. Proceeds................................................................................. 12
Section 4.07. Remedies................................................................................. 12
Section 4.08. Powers Coupled with an Interest.......................................................... 13
Section 4.09. Release of Lien.......................................................................... 13
Section 4.10. Rights of Secured Parties; Limitations on Secured Parties' Obligations................... 13
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ARTICLE V CONDITIONS PRECEDENT.................................................................................. 13
Section 5.01. Initial Loan............................................................................. 13
Section 5.02. Initial and Subsequent Loans............................................................. 15
ARTICLE VI REPRESENTATIONS AND WARRANTIES....................................................................... 16
Section 6.01. Representations and Warranties Relating to Borrower...................................... 16
Section 6.02. Representations and Warranties of Lender................................................. 21
Section 6.03. Representations and Warranties of Onyx................................................... 22
Section 6.04. Representations and Warranties of ▇▇▇▇▇.................................................. 23
ARTICLE VII COVENANTS........................................................................................... 24
Section 7.01. Affirmative Covenants of Borrower........................................................ 25
Section 7.02. Reporting Requirements................................................................... 27
Section 7.03. Negative Covenants of Borrower........................................................... 29
Section 7.04. Additional Covenants of Onyx and ▇▇▇▇▇................................................... 29
ARTICLE VIII EVENTS OF DEFAULT.................................................................................. 31
Section 8.01. Events of Default........................................................................ 31
Section 8.02. Remedies................................................................................. 32
ARTICLE IX CREDIT TRIGGER EVENTS................................................................................ 32
Section 9.01. Credit Trigger Events.................................................................... 32
Section 9.02. Remedies................................................................................. 33
ARTICLE X ACCOUNTS; REPORTS..................................................................................... 33
Section 10.01. Establishment of Blocked Account and Reserve Account.................................... 33
Section 10.02. Blocked Account Arrangement............................................................. 34
Section 10.03. Reserve Account Deposits and Withdrawals................................................ 34
ARTICLE XI INDEMNIFICATION AND EXPENSES......................................................................... 35
Section 11.01. Expenses of Lender...................................................................... 35
Section 11.02. Indemnification......................................................................... 35
Section 11.03. Survival of Indemnity and Expenses...................................................... 36
ARTICLE XII MISCELLANEOUS....................................................................................... 36
Section 12.01. No Waiver; Remedies Cumulative.......................................................... 36
Section 12.02. Notices................................................................................. 36
Section 12.03. Amendments; Waivers..................................................................... 37
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Section 12.04. Calculations............................................................................ 37
Section 12.05. Governmental Approval................................................................... 37
Section 12.06. Severability............................................................................ 38
Section 12.07. Captions................................................................................ 38
Section 12.08. Counterparts............................................................................ 38
Section 12.09. Governing Law........................................................................... 38
Section 12.10. Jurisdiction; Waiver of Jury Trial...................................................... 38
Section 12.11. Assignments; Participations............................................................. 38
Section 12.12. Confidentiality......................................................................... 39
Section 12.13. Entire Agreement........................................................................ 39
Section 12.14. Future Assurances....................................................................... 40
Section 12.15. Third-Party Beneficiaries............................................................... 40
Section 12.16. Termination............................................................................. 40
Section 12.17. No Proceedings; Limitation on Payments.................................................. 40
Section 12.18. Administrative Duties of State Street................................................... 40
Section 12.19. Administrative Duties of Onyx........................................................... 40
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APPENDICES
APPENDIX A Defined Terms A-1
EXHIBITS
EXHIBIT A Form of Note
EXHIBIT B Form of Borrowing Base Certificate
EXHIBIT C Example of Application of Certain Assumptions
in Collateral Value Model Amount
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RESIDUAL INTEREST LOAN AND SECURITY AGREEMENT
This RESIDUAL INTEREST LOAN AND SECURITY AGREEMENT (this "Loan
Agreement"), dated as of January 13, 2004, is by and between ONYX ACCEPTANCE
FUNDING CORPORATION (the "Borrower"), a Delaware corporation, and GALLEON
CAPITAL, LLC (the "Lender"), a Delaware corporation.
Borrower and Lender agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.01. Defined Terms. Whenever used in this Loan Agreement
(including, without limitation, in the preamble, the recitals and the exhibits
hereto), capitalized terms used and not otherwise defined herein shall have the
meanings set forth in Appendix A attached hereto. Any and all terms used in this
Loan Agreement which are defined in the UCC shall be construed and defined in
accordance with the meaning and definition ascribed to such terms under the UCC,
unless otherwise defined in Appendix A.
Section 1.02. Accounting Terms and Determinations. Except as otherwise
expressly provided herein, all accounting terms used herein shall be
interpreted, and all financial statements and certificates and reports as to
financial matters required to be delivered to Lender hereunder shall be
prepared, in accordance with GAAP.
Section 1.03. Construction. Any reference to this Loan Agreement, the
Note or any other Loan Documents shall (unless otherwise indicated) be deemed to
refer to such writing as the same may be amended and/or restated from time to
time in accordance with the terms thereof. The words "herein", "hereof",
"hereunder" and words of like import shall refer to this Loan Agreement as a
whole and not to any particular section or paragraph of this Loan Agreement.
ARTICLE II
LOANS, NOTE AND PREPAYMENTS
Section 2.01. Loans.
(a) Subject to the terms and conditions of this Loan Agreement, and
relying on the representations, warranties and covenants hereinafter set forth,
Lender agrees to make one or more loans (each, a "Loan" and, collectively, the
"Loans") to Borrower from time to time prior to the Conversion Date up to a
maximum principal amount at any one time outstanding equal to the Commitment
Amount; provided, however, that no Loan shall be made (i) on a date other than a
Permitted Funding Date, (ii) in an amount less than the Minimum Loan Amount,
(iii) in an amount which would exceed the Available Commitment on such Permitted
Funding Date, or (iv) in an amount which, when added to the Total Outstanding
Loans on such Permitted Funding Date (before giving effect to the Loan to be
made on such Permitted Funding Date), would result in a Collateral Shortfall
Event after giving effect to such Loan.
(b) Subject to the terms and conditions of this Loan Agreement, prior
to the Conversion Date Borrower may borrow, repay and reborrow hereunder in
accordance with the procedures set forth in Sections 2.03 and 2.04.
(c) In no event shall a Loan be made when any Default or Event of
Default has occurred and is continuing or would occur as a result of such Loan.
(d) Lender shall have no obligation to make any Loan on any Funding
Date unless each condition precedent set forth in Section 5.01 and Section 5.02,
as applicable, shall have been satisfied.
Section 2.02. The Note.
(a) The Loans made by Lender hereunder shall be evidenced by a single
promissory note of Borrower substantially in the form of Exhibit A hereto (the
"Note"), duly executed by Borrower, dated the date hereof, payable to the order
of Lender (or its designated agent) in a principal amount equal to the amount of
the Commitment Amount and otherwise duly completed.
(b) The date and amount of each Loan made by Lender to Borrower, and
each payment made on account of the principal and interest thereof, shall be
recorded by Lender on its books and, at the option of Lender, endorsed by Lender
on a schedule attached to and constituting part of the Note and any continuation
thereof. Such recordation and endorsement shall be conclusive in the absence of
manifest error; provided that the failure of Lender to make any such recordation
or endorsement or any error in such recordation or endorsement shall not affect
the obligation of Borrower to make a payment when due of any amount owing
hereunder or under the Note.
Section 2.03. Procedures for Borrowing.
(a) On any Business Day prior to the Conversion Date, Borrower may
request that Lender make a Loan hereunder by delivering to Lender written notice
of such request, which notice may be delivered by telecopy or other facsimile or
electronic transmission (each, a "Notice of Borrowing"). Such Notice of
Borrowing shall (i) contain the amount of the requested Loan to be made on the
applicable Funding Date, which shall in all events be at least equal to the
Minimum Loan Amount, (ii) specify the requested Funding Date, which Funding Date
shall be a Permitted Funding Date, (iii) include a certificate in the form
attached hereto as Exhibit B (a "Borrowing Base Certificate"), and (iv) attach
such other information reasonably requested by Lender from time to time.
(b) With respect to each requested Loan, upon satisfaction of all
conditions precedent set forth in Sections 5.01 and 5.02, as applicable, hereof
and the satisfaction of all procedures set forth in this Section 2.03, Lender
shall transfer an amount equal to the Loan to the Operating Account.
Section 2.04. Repayment of Loans; Interest.
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(a) No later than the Final Scheduled Maturity Date, Borrower shall pay
to Lender the Total Outstanding Loans, plus all accrued and unpaid interest
thereon, and shall pay all other Secured Obligations then accrued, in full.
(b) Borrower hereby promises to pay to Lender interest on the unpaid
principal amount of each Loan for each Accrual Period for such Loan until the
principal amount of such Loan is paid in full, at a rate per annum equal to the
Galleon Cost of Funds for such Loan plus the Applicable Margin (the "Note
Interest Rate"), calculated on the basis of the actual number of days elapsed in
a year of 360 days. The Galleon Cost of Funds as determined on the last day of
each Accrual Period shall be the Galleon Cost of Funds applicable for purposes
of calculating interest accruing at the Note Interest Rate for such Accrual
Period. Accrued interest on each Loan shall be payable on each Payment Date. If
the principal amount of a Loan varies during any Accrual Period, interest will
be computed on the average daily balance outstanding during the Accrual Period.
(c) If, by the terms of this Loan Agreement or the Note, Borrower at
any time is required or obligated to pay interest at a rate in excess of the
maximum rate permitted by applicable law, the rate of interest shall be deemed
to be immediately reduced to such maximum rate and the portion of all prior
interest payments in excess of such maximum rate shall be applied and shall be
deemed to have been payments made in reduction of the principal amount due
hereunder and under the Note.
Section 2.05. Collateral Shortfall Event; Pledge and Removal of
Residual Interest Instruments.
(a) If at any time the Total Outstanding Loans exceed the Borrowing
Base (a "Collateral Shortfall Event"), Borrower shall no later than 1:00 p.m.,
Boston time, on the third (3rd) Business Day after the discovery of such
Collateral Shortfall Event, either
(i) deliver and pledge one or more additional
Eligible Residual Interest Instruments to Lender pursuant to
Section 2.05(c), such that after giving effect to such pledge
the Total Outstanding Loans do not exceed the Borrowing Base;
or
(ii) prepay the outstanding principal amount of the
Note, in whole or in part, together with accrued and unpaid
interest thereon, such that after giving effect to such
prepayment, the Total Outstanding Loans do not exceed the
Borrowing Base.
(b) From time to time after the Closing Date, Borrower may (but shall
not be obligated to) request that Lender include within the definition of
Eligible Securitization Transactions, for all purposes of this Loan Agreement
and the other Loan Documents, securitization transactions with respect to which
the related Residual Interest Instrument was previously unpledged under this
Loan Agreement or securitization transactions occurring after the Closing Date,
in each case provided the related Residual Interest Instrument shall have been
issued and outstanding for a period of at least twelve (12) months
(collectively, the "Subsequent Securitization Transactions"). Any such inclusion
of a Subsequent Securitization Transaction
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within the definition of Eligible Securitization Transactions shall be
effected in accordance with the provisions of this Section 2.05(b) and
2.05(c) and shall be accomplished by written agreement among Borrower
and Lender, without necessity of formal amendment to this Loan
Agreement or any other Loan Document.
Lender hereby agrees with Borrower to review the Required Information
submitted by Borrower for designation of the related Subsequent Securitization
Transaction as an Eligible Securitization Transaction. Borrower shall pay all
reasonable attorneys' fees incurred by Lender in connection with such review.
Each such Subsequent Securitization Transaction will become an Eligible
Securitization Transaction only if Lender provides its written approval thereof
to Borrower (which Lender may grant or withhold in its sole and absolute
discretion). Written notification shall be issued from Lender to Borrower within
ten (10) Business Days of confirmed receipt of all Required Information
indicating whether Lender consents to the inclusion of a Subsequent
Securitization Transaction within the definition of Eligible Securitization
Transaction for purposes of this Loan Agreement. If Borrower does not receive
written notice from Lender approving the inclusion of the Subsequent
Securitization Transaction as an Eligible Securitization Transaction within ten
(10) Business Days of Lender's receipt of the Required Information, the request
for such Subsequent Securitization Transaction as an Eligible Securitization
Transaction shall be deemed to be denied by Lender.
Notwithstanding anything to the contrary in this Section 2.05(b) or
elsewhere in this Loan Agreement, Borrower shall have no obligation to submit
the Required Information relating to any Subsequent Securitization Transaction
to Lender on a right of first refusal basis, and shall have no obligation to
request that Lender include such Subsequent Securitization Transaction within
the definition of Eligible Securitization Transactions.
(c) Borrower and Lender may, from time to time by written agreement
signed by Borrower and Lender and without necessity of formal amendment to this
Loan Agreement or any other Loan Document (other than an amendment or the filing
of a financing statement, if necessary), designate certain of the Residual
Interest Instruments related to Eligible Securitization Transactions (each, an
"Eligible Residual Interest Instrument" and, collectively, the "Eligible
Residual Interest Instruments") for inclusion as a Pledged Residual Interest
Instrument in the Borrowing Base. As of the Closing Date, the Residual Interest
Instruments related to the following Eligible Securitization Transactions are
included in the Borrowing Base: Onyx Acceptance Owner Trust 2001-B, Onyx
Acceptance Owner Trust 2001-C, Onyx Acceptance Owner Trust 2001-D, Onyx
Acceptance Owner Trust 2002-A, Onyx Acceptance Owner Trust 2002-B, Onyx
Acceptance Owner Trust 2002-C and Onyx Acceptance Owner Trust 2002-D (the
"Initial Pledged Residual Interest Instruments"). Lender shall maintain
possession of each of the Pledged Residual Interest Instruments from time to
time included in the Borrowing Base. Upon request of Borrower, Lender shall
provide a written record of those Pledged Residual Interest Instruments included
in the Borrowing Base as of the date of such request.
(d) If Onyx fails to exercise a Clean-up Call with respect to an
Eligible Securitization Transaction, the Collateral Value Model Amount for the
Pledged Residual Interest Instruments shall be recalculated in accordance with
the assumptions set forth in the definition of Collateral Value Model Amount.
Upon the occurrence of a Credit Trigger Event with respect to a Pledged Residual
Interest Instrument, such Pledged Residual Interest Instrument shall be excluded
from
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the calculation of the Borrowing Base. If a Pledged Residual Interest Instrument
is not included in the calculation of the Borrowing Base and no Collateral
Shortfall Event, Default or Event of Default has occurred and is continuing,
upon the written request of Borrower, Lender shall release its Lien on such
Pledged Residual Interest Instrument and any related Collateral. Upon any such
release, such Residual Interest Instrument shall no longer be a Pledged Residual
Interest Instrument or constitute part of the Collateral hereunder and Lender
shall execute and deliver or cause to be executed and delivered (at the cost and
expense of Borrower), such instruments and documents and take such further
actions as are reasonably requested by Borrower to evidence the release of
Lender's Lien in the Pledged Residual Interest Instrument, including, without
limitation, the delivery of the Residual Interest Instrument so released and any
instruments of assignment with respect thereto.
Section 2.06. Optional Prepayments. With at least three (3) Business
Days' prior written notice to Lender, Borrower may, at its option, prepay the
Note in whole or in part (as designated below), without a premium or penalty of
any kind attributable to such prepayment, following the occurrence of either of
the following events:
(i) an Affected Party demands payment by Borrower of
any amounts pursuant to Section 2.07, in which case Borrower
may prepay the Loan in whole on any Payment Date following
such occurrence; or
(ii) a Collateral Shortfall Event has occurred, in
which case Borrower may prepay the Loan in whole or in part on
any date following such occurrence to cure such Collateral
Shortfall Event; provided that if such prepayment is made on a
day other than a Payment Date, Borrower shall become obligated
to pay funding losses, if any, pursuant to Section 2.08.
Any optional prepayment of the Note pursuant to this Section 2.06 shall be made
together with all accrued interest on the amount prepaid to the date of such
prepayment and all other fees and expenses due Lender hereunder. Except as set
forth in this Section 2.06, Borrower may not prepay the Note in whole or in
part.
Section 2.07. Yield Protection.
(a) If (i) Regulation D or (ii) any Regulatory Change occurring after
the date hereof:
(i) shall subject an Affected Party to any tax, duty
or other charge with respect to any portion of the Commitment
Amount owned by or funded by it, or any obligations or right
to provide funding therefor, or shall change the basis of
taxation of payments to the Affected Party in relation to any
funding of the Commitment Amount or interest owned by, owed to
or funded in whole or in part by it or any other amounts due
under this Loan Agreement in respect of any portion of the
Commitment Amount owned by or funded by it or its obligations
or rights, if any, to provide funding therefor (except for
taxes based on, or measured by, net income, or changes in the
rate of tax on or determined by reference to the overall net
income, of such Affected Party imposed by the United States of
America, by the jurisdiction in which such Affected Party's
principal executive office is located or, if such Affected
Party's principal executive office is not in the
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United States of America, by the jurisdiction where such
Affected Party's principal office in the United States is
located); or
(ii) shall impose, modify or deem applicable any
reserve (including, without limitation, any reserve imposed by
the Federal Reserve Board, but excluding any reserve included
in the determination of interest), special deposit or similar
requirement against assets of any Affected Party, deposits or
obligations with or for the account of any Affected Party or
with or for the account of any Affiliate (or entity deemed by
the Federal Reserve Board to be an Affiliate) of any Affected
Party, or credit extended by any Affected Party; or
(iii) shall change the amount of capital maintained,
or required or requested or directed to be maintained, by any
Affected Party; or
(iv) shall impose any other condition affecting any
portion of the Commitment Amount owned or funded in whole or
in part by any Affected Party, or its obligations or rights,
if any, to provide funding or liquidity or credit support
therefor; or
(v) shall change the rate for, or the manner in which
the Federal Deposit Insurance Corporation (or a successor
thereto) assesses, deposit insurance premiums or similar
charges;
and the result of any of the foregoing is or would be:
(x) to increase the cost to or to impose a cost on (I) an
Affected Party funding or making or maintaining any portion of the Commitment
Amount, any purchases, reinvestments, or loans or other extensions of credit
under any Program Support Agreement, or any commitment of such Affected Party
with respect to any of the foregoing, or (II) an Affected Party for continuing
its or Borrower's relationship with Lender, in each case, in an amount deemed to
be material by such Affected Party,
(y) to reduce the amount of any sum received or receivable by
an Affected Party under this Loan Agreement or under any related Program Support
Agreement, or
(z) in the reasonable determination of such Affected Party, to
reduce the rate of return on the capital of an Affected Party as a consequence
of its obligations under this Loan Agreement or any related Program Support
Agreement, or arising in connection with this Loan Agreement or any related
Program Support Agreement to a level below that which such Affected Party could
otherwise have achieved,
then, within forty-five (45) days after demand by such Affected Party (which
demand shall be accompanied by a certificate setting forth, in reasonable
detail, the basis of such demand and the methodology for calculating, and the
calculation of, the amounts claimed by the Affected Party), Borrower shall
either (I) pay directly to such Affected Party such additional amount or amounts
as will compensate such Affected Party for such additional or increased cost or
such reduction or (II) repay the Note and all other Secured Obligations
hereunder, in full, and cause the termination of this Loan Agreement.
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(b) Each Affected Party will promptly notify Borrower of any event of
which it has knowledge which will entitle such Affected Party to compensation
pursuant to this Section 2.07; provided, however, no failure to give or delay in
giving such notification shall adversely affect the rights of any Affected Party
to such compensation.
(c) In determining any amount provided for or referred to in this
Section 2.07, an Affected Party may use any reasonable averaging and attribution
methods (consistent with its ordinary business practices) that it (in its
reasonable discretion) shall deem applicable. Any Affected Party when making a
claim under this Section 2.07 shall submit to Borrower the above-referenced
certificate as to such increased cost or reduced return (including calculation
thereof in reasonable detail), which statement shall, in the absence of
demonstrable error, be conclusive and binding upon Borrower.
Section 2.08. Funding Losses. In the event that Lender or any Program
Support Provider shall incur any loss or expense (including any loss or expense
incurred by reason of the liquidation or reemployment of deposits or other funds
acquired by Lender or such Program Support Provider to make any funding
hereunder or under any Program Support Agreement or maintain any funding
hereunder or under any Program Support Agreement, but excluding loss of profits)
as a result of (i) any payment or other settlement with respect to the Loan or
the Commitment Amount (or portion thereof) funded by Lender or a funding under
any Program Support Agreement being made on any day other than a Payment Date,
or (ii) any funding of the Loan or the Commitment Amount not being made in
accordance with a request therefor under Section 2.03 as the result of any
action by Borrower or failure to satisfy the conditions precedent set forth in
Section 5.01 and 5.02, then, upon written notice from Lender or such Program
Support Provider to Borrower, Borrower shall pay to Lender or such Program
Support Provider, as applicable, the amount of such loss or expense. Such
written notice (which shall include the methodology for calculating, and the
calculation of, the amount of such loss or expense, in reasonable detail) shall,
in the absence of demonstrable error, be conclusive and binding upon Borrower.
Section 2.09. Commitment Fee. Borrower shall pay to Lender a commitment
fee (the "Commitment Fee") for the period commencing on the Closing Date to and
including the Conversion Date, equal to twenty one-hundredths of one percent
(0.20%) per annum (computed on the basis of the actual number of days elapsed
over a 360-day year) of the average daily unused portion of the Commitment
Amount. If at any time prior to the Conversion Date the outstanding principal
balance of Loans made hereunder is less than 50% of the Commitment Amount, the
Commitment Fee shall be equal to fifty one-hundredths of one percent (0.50%) per
annum of the unused portion of the Commitment Amount until such time as the
outstanding principal balance of the Loans is greater than 50% of the Commitment
Amount. The Commitment Fee shall be paid from amounts distributed pursuant to
Section 3.03 on each Payment Date with respect to the immediately preceding
Accrual Period.
ARTICLE III
PAYMENTS; COMPUTATIONS
Section 3.01. Payments.
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(a) Except to the extent otherwise provided herein, all payments of
principal, interest and other amounts to be made by Borrower to Lender under
this Loan Agreement, the Note and the other Loan Documents shall be made in
Dollars, in immediately available funds, without deduction, set-off or
counterclaim, to Lender from available funds on deposit in the Blocked Account,
not later than 1:00 p.m., Boston time, on the date on which such payment shall
become due (and each such payment made after such time on such due date shall be
deemed to have been made on the next succeeding Business Day). Borrower
acknowledges that it has no rights of withdrawal from the Blocked Account.
(b) Except to the extent otherwise expressly provided herein, if the
due date of any payment under this Loan Agreement, the Note or the other Loan
Documents would otherwise fall on a day that is not a Business Day, such date
shall be extended to the next succeeding Business Day, and interest shall accrue
and be payable at the then applicable rate for any principal so extended for the
period of such extension.
Section 3.02. Computations. Interest on the Loans shall be computed on
the basis of a 360-day year for the actual days elapsed in the period for which
payable.
Section 3.03. Settlement Procedures.
(a) Borrower shall cause the depository, paying agent, spread account
trustee or other trustee or paying agent maintaining any Spread Account or other
account from which proceeds of the Collateral are to be released to Borrower
pursuant to the Pledged Residual Interest Instruments, to deposit such proceeds
directly into the Blocked Account.
(b) Prior to the Conversion Date or the commencement of the Accelerated
Amortization Period, Lender shall, on each Payment Date, apply available funds
on deposit in the Blocked Account as follows:
First, to Lender in respect of the Commitment Fee, if any;
Second, to the payment of the accrued but unpaid interest on
the Note;
Third, to the outstanding principal balance of the Note in the
amount necessary to cure any Collateral Shortfall Event;
Fourth, to the Reserve Account (after giving effect to the
distribution made in priority "Second" and "Third" above) to
the extent necessary to cause the amount on deposit in the
Reserve Account to equal the Required Reserve Account Amount;
Fifth, to Lender, for its own account or for the account of
any Affected Party, as applicable, in an amount equal to the
aggregate amount of all Secured Obligations, other than the
Note, then due and owing from Borrower to Lender pursuant to
any Loan Document; and
Sixth, to the Operating Account or to such other accounts as
may from time to time be designated by Borrower in writing.
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(c) Upon and after the earlier to occur of the Conversion Date or the
commencement of the Accelerated Amortization Period based on the occurrence of
the event described in clause (ii) of the definition of Accelerated Amortization
Period, until the Note and all other Secured Obligations are paid in full,
Lender shall, on each Payment Date, apply available funds on deposit in the
Blocked Account:
First, to the payment of the accrued but unpaid interest on
the Note;
Second, on each Payment Date prior to the commencement of the
Accelerated Amortization Period, to the outstanding principal
balance of the Note in an amount equal to $1,250,000;
Third, to the outstanding principal balance of the Note in the
amount necessary to cure any Collateral Shortfall Event;
Fourth, on each Payment Date prior to the commencement of the
Accelerated Amortization Period, to the Reserve Account (after
giving effect to the distributions made in priority "Second"
and "Third" above, if applicable) to the extent necessary to
cause the amount on deposit in the Reserve Account to equal
the Required Reserve Account Amount;
Fifth, on each Payment Date on and after the commencement of
the Accelerated Amortization Period, all available funds on
deposit in the Blocked Account to the outstanding principal
balance of the Note;
Sixth, to Lender, for its own account or for the account of
any Affected Party, as applicable, in an amount equal to the
aggregate amount of all Secured Obligations, other than the
Note, then due and owing from Borrower to Lender pursuant to
any Loan Document; and
Seventh, to the Operating Account or to such other accounts as
may from time to time be designated by Borrower in writing.
(d) Notwithstanding anything herein to the contrary, from and after the
occurrence of an Event of Default, such Event of Default not having previously
been waived, and without prejudice to any other rights or remedies of Lender,
all available funds on deposit in the Blocked Account shall be applied by Lender
as follows:
First, to the payment of the reasonable costs and expenses
incurred by Lender in connection with such Event of Default;
Second, to the payment in full of all accrued and unpaid
interest and fees due and owing on the Note;
Third, all available funds on deposit in the Blocked Account
to the outstanding principal balance of the Note;
9
Fourth, to Lender, for its own account or for the account of
any Affected Party, as applicable, in an amount equal to the
aggregate amount of all Secured Obligations, other than the
Note, then due and owing from Borrower to Lender pursuant to
any Loan Document; and
Fifth, to the Operating Account or to such other accounts as
may from time to time be designated by Borrower in writing.
Lender's application of amounts on deposit in the Blocked Account in
accordance with this Section 3.03(d) shall not affect, limit or impair in any
manner the rights and remedies of Lender set forth in Section 8.02 below (other
than to reduce the amount owed by Borrower under the Loans).
ARTICLE IV
COLLATERAL SECURITY
Section 4.01. Collateral; Security Interest.
(a) The Note and all other Secured Obligations of Borrower hereunder
and/or under the other Loan Documents shall be secured by a first priority
perfected security interest in the following:
(i) The Initial Pledged Residual Interest Instruments
and each additional Eligible Residual Interest Instrument made
a part of the Borrowing Base pursuant to Section 2.05(c) (the
"Pledged Residual Interest Instruments");
(ii) All proceeds of the Pledged Residual Interest
Instruments and all other monies remitted, received or
otherwise recovered in respect of the Pledged Residual
Interest Instruments on or after the Closing Date;
(iii) The Reserve Account and the Blocked Account and
the balances, investments, and all Proceeds thereof and other
items of value attributable or credited to the Blocked Account
and the Reserve Account and all rights with respect thereto;
(iv) All rights of Borrower under the Residual Sale
Agreements with respect to the Pledged Residual Interest
Instruments; and
(v) Any and all replacements, substitutions,
distributions on, or Proceeds or products of any and all of
the foregoing, including, without limitation, all present and
future claims, demands, causes and choses in action in respect
of any or all of the foregoing and all payments on or under
and all Proceeds of every kind and nature whatsoever in
respect of any or all of the foregoing, including all Proceeds
of the conversion, voluntary or involuntary, into cash or
other liquid property, all cash Proceeds, accounts, accounts
receivable, notes, drafts, acceptances, chattel paper, checks,
deposit accounts, insurance proceeds, condemnation awards,
rights to payment of any and every kind and
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other forms of receivables, instruments and other supporting
obligations and other property which at any time constitute
all or part of or are included in the Proceeds of any of the
foregoing.
All of the property described in clauses (i), (ii), (iii) and (iv) of
this subsection, together with any additions thereto or replacements or proceeds
thereof, and any other real or personal property hereafter securing the Note and
the other Secured Obligations, are sometimes referred to herein collectively as
the "Collateral".
(b) As collateral security for the prompt and complete payment and
performance when due (whether at the stated maturity, by acceleration or
otherwise) of the Note and the other Secured Obligations, Borrower hereby
pledges, assigns and transfers to Lender and its successors, endorsees,
transferees and assigns, and hereby grants to Lender and its successors,
endorsees, transferees and assigns, a continuing security interest in all of
Borrower's right, title and interest in, to and under all of the Collateral
whether now owned or existing or at any time hereafter acquired or arising by
Borrower or in which Borrower now has or at any time in the future may acquire
any right, title or interest.
Section 4.02. Delivery of Pledged Residual Interest Instruments. Prior
to or contemporaneous with the Closing Date, Borrower shall deliver the Initial
Pledged Residual Interest Instruments to Lender, each such Initial Pledged
Residual Interest Instrument to be issued in the name of Lender (or its
designated agent). Lender shall hold or cause its duly appointed agent to hold
such Pledged Residual Interest Instrument until released to Borrower pursuant to
Section 2.05(d) or Section 4.09. Upon the addition of any additional Pledged
Residual Interest Instrument to the Borrowing Base pursuant to Section 2.05(c),
Borrower shall deliver each such additional Pledged Residual Interest Instrument
to Lender, each of which shall be issued in the name of Lender (or its
designated agent).
Section 4.03. Further Documentation. At any time and from time to time,
and at the sole expense of Borrower, Borrower will promptly and duly execute and
deliver, or will promptly cause to be executed and delivered, such further
instruments and documents and take such further actions as are reasonably
necessary (or as are reasonably requested by Lender) for the purpose of
obtaining or preserving the full benefits of this Loan Agreement and of the
rights and powers herein granted, including, without limitation, the filing of
any financing or continuation statements under the UCC in effect in any
jurisdiction with respect to the Liens on the Collateral created hereby and the
taking of any other action necessary to preserve the status of the Liens on the
Collateral created hereby as first priority perfected Liens. Borrower also
hereby authorizes Lender to file any such financing or continuation statement to
the extent permitted by applicable law. A photographic or other reproduction of
this Loan Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
Section 4.04. Changes in Locations, Name, etc. Borrower shall not
change its name, identity, structure or jurisdiction of formation or change the
location where it maintains its records with respect to the Collateral unless it
shall have given Lender at least thirty (30) days' prior written notice thereof
and shall have delivered to Lender all UCC financing statements and amendments
thereto and taken all other actions as are necessary (or as are requested by
Lender) to continue the status of Lender's Liens on the Collateral as perfected
first priority Liens.
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Section 4.05. Reimbursement for Performance by Lender of Borrower's
Obligations. If Borrower fails to perform or comply with any of its agreements
contained in this Loan Agreement or the other Loan Documents and Lender shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the out-of-pocket expenses of Lender incurred in connection with
such performance or compliance shall be payable by Borrower to Lender on demand
and shall constitute Secured Obligations.
Section 4.06. Proceeds. If an Event of Default shall occur, (a) all
Proceeds of Collateral received by Borrower consisting of cash, checks and other
cash equivalents shall be held by Borrower in trust for Lender, segregated from
other funds of Borrower, and shall forthwith upon receipt by Borrower be turned
over to Lender in the exact form received by Borrower (duly endorsed by Borrower
to Lender) and (b) any and all such Proceeds received by Lender (whether from
Borrower or otherwise) shall be held by Lender as collateral security for, and
shall be applied by Lender against, the Secured Obligations (whether matured or
unmatured) in the order set forth in Section 3.03(d). Any balance of such
Proceeds remaining after the Secured Obligations shall have been paid in full
and this Loan Agreement shall have been terminated shall be paid over to
Borrower or to whomsoever may be lawfully entitled to receive the same.
Section 4.07. Remedies. If an Event of Default under Section 8.01(e) or
(f) shall occur, Lender may exercise, in addition to all other rights and
remedies granted to it in this Loan Agreement, in the other Loan Documents and
in any other instrument or agreement securing, evidencing or relating to the
Secured Obligations, all rights and remedies of a secured party under the UCC.
Without limiting the generality of the foregoing, Lender, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below) to or upon
Borrower or any other Person (each and all of which demands, presentments,
protests, advertisements and notices are hereby waived to the extent allowed by
law), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels or as an entirety at public or private sale
or sales, at any exchange, broker's board or office of Lender or elsewhere upon
such terms and conditions as it may deem advisable and at such prices as it may
deem best, for cash or on credit or for future delivery without assumption of
any credit risk. Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity of redemption in Borrower, which right or equity is hereby waived or
released, and Lender's purchase of the Collateral shall be deemed full
satisfaction of this Loan Agreement, the Note and the Secured Obligations by
Borrower. Lender shall apply the net Proceeds of any such collection, recovery,
receipt, appropriation, realization or sale, after deducting all costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of Lender hereunder, including, without limitation, reasonable attorneys' fees
and disbursements, to the payment in whole or in part of the Secured
Obligations, in the order and priority specified in Section 3.03(d). To the
extent permitted by applicable law, Borrower waives all claims, damages and
demands it may acquire against Lender arising out of the exercise by Lender of
any of its rights hereunder, other than those claims, damages and demands
arising from the gross negligence or willful misconduct of Lender. Lender shall
provide to Borrower at least 30 days' prior notice of a proposed sale or
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other disposition of Collateral following an Event of Default. Lender may
specifically disclaim any warranties of title or the like. This procedure will
not be considered to adversely affect the commercial reasonableness of any sale
of the Collateral. If Lender sells any of the Collateral upon credit, Borrower
will be credited only with payments actually made by the purchaser, received by
Lender and applied to the Secured Obligations. In the event that the purchaser
fails to pay for the Collateral, Lender may resell the Collateral and Borrower
will be credited with the proceeds of such sale received by Lender. Lender may
comply with any applicable state or federal law requirements in connection with
a disposition of the Collateral and compliance will not be considered adversely
to affect the commercial reasonableness of any sale of the Collateral.
Section 4.08. Powers Coupled with an Interest. All authorizations and
agencies herein contained with respect to the Collateral are irrevocable and are
powers coupled with an interest.
Section 4.09. Release of Lien. Upon the termination of this Loan
Agreement, repayment of all Secured Obligations and the performance of all other
obligations under the Loan Documents, Lender shall release its Lien in any
remaining Collateral; provided that if any payment, or any part thereof, of any
of the Secured Obligations is rescinded or must otherwise be restored or
returned upon the insolvency, bankruptcy, dissolution, liquidation or
reorganization of Borrower or any Trust, or upon or as a result of the
appointment of a receiver, intervenor or conservator of, or a trustee or similar
officer for Borrower or any Trust or any substantial part of its property, or
otherwise, this Loan Agreement, all rights hereunder and the Liens created
hereby shall continue to be effective, or be reinstated, as though such payments
had not been made.
Section 4.10. Rights of Secured Parties; Limitations on Secured
Parties' Obligations. Lender shall not have any obligation or liability under
any Pledged Residual Interest Instrument or any other Collateral by reason of or
arising out of this Loan Agreement or the receipt by Lender of any payment
relating to such Pledged Residual Interest Instrument or any other Collateral
pursuant hereto, nor shall Lender be obligated in any manner to perform any of
the obligations of Borrower under or pursuant to any Trust Agreement or any
Collateral, to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Pledged Residual Interest Instrument or any
other Collateral, to present or file any claim, to take any action to enforce
any performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01. Initial Loan. The obligation of Lender to make the
initial Loan requested to be made by it hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such Loan,
of the following conditions precedent:
(a) Loan Agreement. Lender shall have received this Loan Agreement,
executed and delivered by the duly authorized officers of the parties hereto.
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(b) Note. Lender shall have received the Note, conforming to the
requirements hereof and executed and delivered by a duly authorized officer of
Borrower.
(c) Other Loan Documents. Lender shall have received each Loan
Document, each of which shall conform to the requirements hereof and shall have
been executed and delivered by the parties thereto.
(d) Eligible Securitization Transfer Documents. Lender shall have
received all Eligible Securitization Transfer Documents, as such term is defined
in Section 10.02, each of which shall have been executed and delivered by the
parties thereto.
(e) Filings, Registrations, Recordings; Lien Searches. All documents
(including, without limitation, financing statements) required to be filed,
registered or recorded in order to create in favor of Lender a perfected
first-priority security interest in the Collateral, subject to no Liens other
than those created hereunder, shall have been properly prepared and authorized
(and if required, executed) for filing, registration or recording in each office
in each jurisdiction in which such filings, registrations and recordations are
required to perfect such first-priority security interest; evidence that all
other actions necessary to perfect Lender's first-priority security interest in
the Collateral granted under this Loan Agreement have been taken; and lien
search results with respect to Borrower (dated as of a date that is as close to
the Closing Date as is practicable, but in no event dated as of a date occurring
more than ten Business Days prior to the Closing Date) in each such jurisdiction
(and in each other jurisdiction requested by Lender, as the case may be, in each
case in its sole discretion) that are in form and substance satisfactory to
Lender.
(f) Closing Certificates. Lender shall have received a certificate of a
Responsible Officer of Borrower certifying that the conditions precedent
specified in this Section 5.01 have been fulfilled and such other certificates
of Borrower certifying as to such matters as Lender may reasonably request,
including without limitation an Officer's Certificate, dated as of the initial
Funding Date, as to the absence of (i) any Default or Event of Default, (ii) any
Credit Trigger Event and (iii) any event or condition which could have a
Material Adverse Effect.
(g) Legal Opinions. Lender shall have received the executed legal
opinions of counsel of Borrower, dated the Closing Date and otherwise in form
and substance acceptable to Lender and covering such other matters incident to
the transactions contemplated by the Loan Documents as Lender shall reasonably
request.
(h) Due Diligence Review. Lender shall have completed to its
satisfaction its standard and customary credit and due diligence review of
Borrower.
(i) No Material Adverse Change. No Material Adverse Change with respect
to Borrower, ▇▇▇▇▇ or Onyx shall have occurred since September 30, 2003.
(j) Additional Matters. All corporate and other proceedings, and all
documents, instruments and other legal matters in connection with the
transactions contemplated by this Loan Agreement, the Note and the other Loan
Documents shall be satisfactory in form and substance to Lender, and Lender
shall have received such other documents and legal opinions in
14
respect of any aspect or consequence of the transactions contemplated hereby or
thereby as it shall reasonably request.
Section 5.02. Initial and Subsequent Loans. Lender's obligation to make
any Loan to Borrower (including the initial Loan) on any Funding Date is subject
to the satisfaction of the following further conditions precedent and the
delivery of a Notice of Borrowing by Borrower pursuant to Section 2.03(a), and
the acceptance of the proceeds of any Loan by Borrower shall constitute
certification by Borrower that the following conditions shall have been
satisfied, both immediately prior to the making of such Loan and also after
giving effect thereto and to the intended use thereof:
(a) No Default or Event of Default. No Default or Event of Default
shall have occurred and be continuing, and no Default or Event of Default will
occur as a result of making such Loan.
(b) Representations and Warranties. Each representation and warranty
made by Borrower in this Loan Agreement and in each other Loan Document to which
it is a party shall be true and correct on and as of such Funding Date, both
before and after giving effect to such Loan and the application of the proceeds
therefrom with the same force and effect as if made on and as of such date (or,
if any such representation or warranty is expressly stated to have been made as
of a specific date, as of such specific date). Borrower shall also be in
compliance with all governmental licenses and authorizations and qualified to do
business and in good standing in all required jurisdictions where the failure to
be in compliance or so qualified could reasonably be expected to have a Material
Adverse Effect.
(c) Permitted Funding Date. The Funding Date (other than the initial
Funding Date) shall be on a Permitted Funding Date.
(d) Notice of Borrowing. Lender shall have received a Notice of
Borrowing with respect to such Loan, as required to be delivered in accordance
with Section 2.03(a) hereof.
(e) No Material Adverse Effect. There shall not have occurred one or
more events that constitutes, or could reasonably be expected to constitute, a
Material Adverse Effect.
(f) Principal Balance; Borrowing Base. The principal amount of such
Loan (i) does not exceed the Available Commitment on such Funding Date and (ii)
when added to the Total Outstanding Loans on such Funding Date (before giving
effect to the Loan to be made on such Funding Date), does not result in a
Collateral Shortfall Event after giving effect to such Loan. Lender shall have
received a completed Borrowing Base Certificate, showing minimum availability
under the Borrowing Base of an amount equal to or greater than the Loan
requested on such Funding Date.
(g) Filings, Registrations, Recordings. All documents (including,
without limitation, financing statements) required to be filed, registered or
recorded in order to create, in favor of Lender, a perfected, first-priority
security interest in the Collateral, subject to no Liens other than those
created hereunder, shall have been properly prepared (and if required, executed)
for filing,
15
registration or recording in each office in each jurisdiction in which such
filings, registrations and recordations are required to perfect such
first-priority security interest.
(h) Payoff Letters. Lender shall have received UCC-3 partial release
financing statements (or other appropriate forms including any "in-lieu"
financing statements or amendments to financing statements) in appropriate form
for filing, together with one or more Payoff Letters, in each case duly executed
by the applicable Prior Lender releasing the Previously Financed Residual
Interest Instrument(s) to be pledged by Borrower to Lender under this Loan
Agreement on such Funding Date from the security interest of such Prior Lender,
and Lender shall have received a copy of each such Payoff Letter.
(i) Fees and Expenses. Lender shall have received all fees, expenses
and other amounts required to be paid by Borrower on or prior to such Funding
Date.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6.01. Representations and Warranties Relating to Borrower. In
order to induce Lender to enter into this Loan Agreement and to make the Loans
provided for hereunder, Borrower makes the following representations and
warranties, which shall survive the execution and delivery hereof and of the
Notes, and which shall be deemed re-made by Borrower each time Borrower submits
a Notice of Borrowing to Lender:
(a) Corporate Existence; Compliance with Law. Borrower is (i) duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware, (ii) has the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, (iii) had at all relevant times, and
shall have, power, authority, and legal right to acquire and own the Collateral
and (iv) is in compliance with all Requirements of Law and its obligations under
this Loan Agreement.
(b) Due Qualification. Borrower is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a Material Adverse Effect.
(c) Power and Authority. Borrower has the power and authority to
execute and deliver this Loan Agreement and the other Loan Documents to which it
is a party and to carry out their respective terms; Borrower has full power and
authority to grant a security interest in the Collateral to Lender and has duly
authorized such grant by all necessary action; and the execution, delivery and
performance of this Loan Agreement and the other Loan Documents to which it is a
party have been duly authorized by Borrower by all necessary action.
16
(d) Binding Obligation. This Loan Agreement, the Note and each other
Loan Document to which Borrower is a party has been duly and validly executed
and delivered by Borrower and constitutes the legal, valid and binding
obligation of Borrower enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.
(e) No Violation. The execution, delivery and performance by Borrower
of this Loan Agreement, the Note and the other Loan Documents and the
consummation of the transactions contemplated hereby and thereby and the
fulfillment by Borrower of the terms hereof and thereof do not (A) conflict
with, result in any breach of any of the terms and provisions of, or constitute
(with or without notice or lapse of time or both) a default under, the
certificate of incorporation or bylaws of Borrower; (B) conflict with, result in
any breach of any of the terms and provisions of, or constitute (with or without
notice or lapse of time) a default under any indenture, agreement, mortgage,
deed of trust, or other instrument to which Borrower is a party or by which it
is bound or any of its properties are subject; (C) result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of any
such indenture, agreement, mortgage, deed of trust, or other instrument (other
than this Loan Agreement and the other Loan Documents); or (D) violate any law,
order, rule, or regulation applicable to Borrower of any court or of any federal
or state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Borrower or its properties, which, in
the case of clause (D), could reasonably be expected to result in a Material
Adverse Effect.
(f) No Proceedings. There are no proceedings or investigations pending,
or to Borrower's best knowledge, threatened, before any court, regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over Borrower or its properties: (A) asserting the invalidity of this Loan
Agreement, the Note or the other Loan Documents to which Borrower is a party,
(B) seeking to prevent the consummation of any of the transactions contemplated
by this Loan Agreement or the other Loan Documents, (C) seeking any
determination or ruling that could materially and adversely affect the
performance by Borrower of its obligations under, or the validity or
enforceability of, this Loan Agreement or the other Loan Documents, or (D)
which, if adversely determined, would be reasonably likely to have a Material
Adverse Effect.
(g) Approvals. All licenses, approvals, authorizations, consents,
orders or other actions of any Person or other organization, or of any court,
governmental agency or body or official, required to be obtained by Borrower in
connection with the execution and delivery of this Loan Agreement and the other
Loan Documents have been or will be taken or obtained, and will be in full force
and effect, on or prior to the Closing Date where the failure to take or obtain
the same could be reasonably likely to result in a Material Adverse Effect.
(h) Credit Trigger Events. Without limiting the scope of Section
6.01(e), no Credit Trigger Event has occurred and is continuing under any
Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument.
(i) Offices. The principal place of business and chief executive office
of Borrower is located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other
17
address with respect to which the requirements of Section 12.02 have been met.
Borrower's books and records evidencing or relating to the Pledged Residual
Interest Instruments, the related Eligible Securitization Transactions and other
Collateral are located at such address.
(j) Legal Names. Since the date of its formation, (i) Borrower has not
(i) been known by any legal name other than its corporate name as of the date
hereof, or (ii) been the subject of any merger or other corporate reorganization
that resulted in a change of name, identity or its structure. Borrower uses no
trade names other than its actual corporate name.
(k) Insolvency. Borrower is not insolvent, and will not be made
insolvent after giving effect to the transactions contemplated by this Loan
Agreement.
(l) No Liens. Borrower has not assigned, pledged, or otherwise conveyed
or encumbered any of the Collateral to any Person other than Lender, and
immediately prior to the pledge of such Collateral, Borrower was the sole owner
of the Collateral and had good and marketable title thereto, free and clear of
all Liens, in each case except for Liens that have been released or are to be
released simultaneously with the Liens granted in favor of Lender hereunder. No
security agreement, financing statement or other public notice similar in effect
with respect to all or any part of the Collateral is or will be on file or of
record in any public office, except such as have been or may hereinafter be
filed pursuant to this Loan Agreement.
(m) Security Interest. The provisions of this Loan Agreement are
effective to create in favor of Lender a valid and enforceable first priority
security interest in all right, title and interest of Borrower in, to and under
the Collateral free and clear of all other Liens. There are no agreements in
effect adversely affecting the rights of Borrower to make, or cause to be made,
the grant of the security interest in the Collateral contemplated by Section
4.01.
(n) Special Purpose Entity; No Other Business. Borrower is a limited
purpose, bankruptcy remote entity authorized to engage in transactions of the
type contemplated by this Loan Agreement. Borrower engages in no other business
activities other than the acquisition of Residual Interest Instruments, pledging
such Residual Interest Instruments to obtain financing and other activities
relating to the foregoing to the extent permitted by the organizational
documents of Borrower.
(o) No Fraudulent Conveyance. As of the Closing Date and immediately
after giving effect to each Loan, the fair value of the assets of Borrower is
greater than the fair value of its liabilities (including, without limitation,
contingent liabilities of Borrower), and Borrower is and will be solvent, is and
will be able to pay its debts as they mature and does not and will not have an
unreasonably small capital to engage in the business in which it is engaged and
proposes to engage. Borrower does not intend to incur, or believe that it has
incurred, debts beyond its ability to pay such debts as they mature. Borrower is
not contemplating the commencement of insolvency, bankruptcy, liquidation or
consolidation proceedings or the appointment of a receiver, liquidator,
conservator, trustee or similar official in respect of Borrower or any of its
assets. Borrower is not transferring any Collateral with any intent to hinder,
delay or defraud any of its creditors.
(p) No Subsidiaries. Borrower has no Subsidiaries.
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(q) Use of Proceeds. No proceeds of any Loans will be used by Borrower
to acquire any security in any transaction which is subject to Section 13 or 14
of the Securities Exchange Act of 1934, as amended. No part of the proceeds of
any Loans will be used for "purchasing" or "carrying" any "margin stock" within
the respective meanings of each of the quoted terms under, or for any other
purpose which violates or would be inconsistent with the provisions of,
Regulation T, U or X.
(r) Investment Company Act. Borrower is not an "investment company" or
an "affiliated person" of or "promoter" or "principal underwriter" for an
"investment company' as such terms are defined in the Investment Company Act nor
is Borrower otherwise subject to regulation thereunder.
(s) Statutes and Regulations Regarding Indebtedness. Borrower is not
subject to regulation under any federal or state statute or regulation which
limits its ability to incur Indebtedness.
(t) No Default or Event of Default. No Default or Event of Default has
occurred and is continuing. Borrower is not in default in the performance,
observance or fulfillment of any obligation, covenant or condition in any
agreement or instrument to which it is a party or by which it is bound the
result of which could reasonably be expected to have a Material Adverse Effect.
(u) ERISA.
(i) No Plan is or has been a Multiemployer Plan.
Except for Onyx, neither Borrower nor any ERISA Affiliate of
Borrower 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 Onyx, 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 subject Borrower 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.
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 Borrower nor any ERISA Affiliate has
materially breached any
19
of the responsibilities, obligations or duties imposed on it
by ERISA, the Code or regulations promulgated thereunder with
respect to any Plan.
(iv) Neither Borrower 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 Borrower 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 Borrower 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 Borrower 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 Borrower 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.
(v) Taxes. Borrower has filed or caused to be filed all Federal, state
and other tax returns which are required to be filed by it and has paid all
taxes shown to be due and payable on said returns or on any Federal, state or
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 taxes, fees or other
charges being contested in good faith for which Borrower has reserved on its
books and records; no tax Lien has been filed against it, and no claim is being
asserted by any Governmental Authority, with respect to any such tax, fee or
other charge.
(w) Accurate Information. No Monthly Servicer Report, Collateral Value
Model Amount, Eligible Securitization Document or other information, exhibit,
financial statement, document, book, record or report furnished by or on behalf
of Borrower to Lender or Program Support Provider in connection with any of the
Loan Documents was inaccurate in any material
20
respect as of the date so furnished except as otherwise disclosed to Lender or
Program Support Provider at such time, or contained any material misstatement of
fact or omitted to state a material fact or any fact necessary to make the
statements contained therein not misleading. All such documents and materials
are complete and include all amendments, modifications and waivers, if any, made
to such documents and materials on or prior to the date of delivery thereof.
(x) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to Borrower.
Section 6.02. Representations and Warranties of Lender. Lender makes
the following representations and warranties, which shall survive the execution
and delivery hereof and of the Note, and which shall be deemed re-made by Lender
on each Funding Date:
(a) Corporate Existence; Compliance with Law. Lender is (i) duly
organized and validly existing as a limited liability company in good standing
under the laws of the State of Delaware, (ii) has the corporate power and
authority to own its properties and to conduct its business as such properties
are currently owned and such business is presently conducted, (iii) had at all
relevant times, and shall have, power, authority, and legal right to make the
Loans as described hereunder and (iv) is in compliance with all Requirements of
Law and its obligations under this Loan Agreement.
(b) Due Qualification. The Lender is duly qualified to do business as a
foreign entity in good standing, and has obtained all necessary licenses and
approvals, in all jurisdictions in which the ownership or lease of property, or
the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of Lender to perform hereunder and under the Loan Documents.
(c) Power and Authority. Lender has the power and authority to execute
and deliver this Loan Agreement and the other Loan Documents to which it is a
party and to carry out their respective terms; and the execution, delivery and
performance of this Loan Agreement and the other Loan Documents to which it is a
party have been duly authorized by the Lender by all necessary action.
(d) Binding Obligation. This Loan Agreement and each other Loan
Document to which Lender is a party has been duly and validly executed and
delivered by Lender and constitutes the legal, valid and binding obligation of
Lender enforceable in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforceability of creditors' rights generally and by
general equitable principles.
(e) No Violation. The execution, delivery and performance by Lender of
this Loan Agreement and the other Loan Documents and the consummation of the
transactions contemplated hereby and thereby and the fulfillment by Lender of
the terms hereof and thereof do not (A) conflict with, result in any breach of
any of the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, the limited liability company
21
agreement of Lender; (B) conflict with, result in any breach of any of the terms
and provisions of, or constitute (with or without notice or lapse of time) a
default under any indenture, agreement, mortgage, deed of trust, or other
instrument to which Lender is a party or by which it is bound or any of its
properties are subject; or (C) violate any law, order, rule, or regulation
applicable to Lender of any court or of any federal or state regulatory body,
administrative agency, or other governmental instrumentality having jurisdiction
over Lender or its properties, which, in the case of clause (C), could
reasonably be expected to result in a material adverse effect on the ability of
Lender to perform hereunder and under the Loan Documents.
(f) Liquidity Facility. Lender maintains a back-up liquidity facility
with State Street Bank & Trust Company pursuant to which it may satisfy its
obligations under this Agreement, and Lender will provide Borrower with 30 days
advance written notice of the termination of such facility.
Section 6.03. Representations and Warranties of Onyx. Onyx makes the
following representations and warranties, which shall survive the execution and
delivery hereof, and which shall be deemed re-made by Onyx on each Funding Date:
(a) Corporate Existence; Compliance with Law. Onyx is (i) duly
organized and validly existing as a corporation in good standing under the laws
of the State of Delaware, (ii) has the corporate power and authority to own its
properties and to conduct its business as such properties are currently owned
and such business is presently conducted, (iii) had at all relevant times, and
shall have, power, authority, and legal right to enter into and perform its
obligations under this Loan Agreement and (iv) is in compliance with all
Requirements of Law and its obligations under this Loan Agreement.
(b) Due Qualification. Onyx is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of Onyx to perform hereunder.
(c) Power and Authority. Onyx has the power and authority to execute
and deliver this Loan Agreement and each Eligible Securitization Transfer
Document to which Onyx is a party and to carry out their respective terms; and
the execution, delivery and performance of this Loan Agreement and each Eligible
Securitization Transfer Document to which Onyx is a party have been duly
authorized by Onyx by all necessary action.
(d) Binding Obligation. This Loan Agreement and each Eligible
Securitization Transfer Document to which Onyx is a party has been duly and
validly executed and delivered by Onyx and constitutes the legal, valid and
binding obligation of Onyx enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.
22
(e) No Violation. The execution, delivery and performance by Onyx of
this Loan Agreement and each Eligible Securitization Transfer Document to which
Onyx is a party and the consummation of the transactions contemplated hereby and
thereby and the fulfillment by Onyx of the terms hereof and thereof do not (A)
conflict with, result in any breach of any of the terms and provisions of, or
constitute (with or without notice or lapse of time or both) a default under,
the certificate of incorporation or bylaws of Onyx ; (B) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under any indenture, agreement,
mortgage, deed of trust, or other instrument to which Onyx is a party or by
which it is bound or any of its properties are subject; or (C) violate any law,
order, rule, or regulation applicable to Onyx of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Onyx or its properties, which, in the
case of clause (C), could reasonably be expected to result in a material adverse
effect on the ability of Onyx to perform hereunder.
(f) Accurate Information. No Monthly Servicer Report, Collateral Value
Model Amount, Eligible Securitization Document, or other information, exhibit,
financial statement, document, book, record or report furnished by or on behalf
of Onyx to Lender or Program Support Provider in connection with any of the Loan
Documents was inaccurate in any material respect as of the date so furnished
except as otherwise disclosed to Lender or Program Support Provider at such
time, or contained any material misstatement of fact or omitted to state a
material fact or any fact necessary to make the statements contained therein not
misleading. All such documents and materials are complete and include all
amendments, modifications and waivers, if any, made to such documents and
materials on or prior to the date of delivery thereof.
(g) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to Onyx.
Section 6.04. Representations and Warranties of ▇▇▇▇▇. ▇▇▇▇▇ makes the
following representations and warranties, which shall survive the execution and
delivery hereof, and which shall be deemed re-made by ▇▇▇▇▇ on each Funding
Date:
(a) Corporate Existence; Compliance with Law. ▇▇▇▇▇ is (i) duly
organized and is validly existing as a corporation in good standing under the
laws of the State of Delaware, (ii) has the corporate power and authority to own
its properties and to conduct its business as such properties are currently
owned and such business is presently conducted, (iii) had at all relevant times,
and shall have, power, authority, and legal right to enter into and perform its
obligations under this Loan Agreement and (iv) is in compliance with all
Requirements of Law and its obligations under this Loan Agreement.
(b) Due Qualification. ▇▇▇▇▇ is duly qualified to do business as a
foreign corporation in good standing, and has obtained all necessary licenses
and approvals, in all jurisdictions in which the ownership or lease of property,
or the conduct of its business shall require such qualifications, licenses and
approvals and where the failure to so qualify or to obtain such licenses and
approvals could be reasonably expected to have a material adverse effect on the
ability of ▇▇▇▇▇ to perform hereunder.
23
(c) Power and Authority. ▇▇▇▇▇ has the power and authority to execute
and deliver this Loan Agreement and each Eligible Securitization Transfer
Document to which ▇▇▇▇▇ is a party and to carry out their respective terms; and
the execution, delivery and performance of this Loan Agreement and each Eligible
Securitization Transfer Document to which ▇▇▇▇▇ is a party have been duly
authorized by ▇▇▇▇▇ by all necessary action.
(d) Binding Obligation. This Loan Agreement and each Eligible
Securitization Transfer Document to which ▇▇▇▇▇ is a party has been duly and
validly executed and delivered by ▇▇▇▇▇ and constitutes the legal, valid and
binding obligation of ▇▇▇▇▇ enforceable in accordance with its terms, except as
such enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforceability of creditors'
rights generally and by general equitable principles.
(e) No Violation. The execution, delivery and performance by ▇▇▇▇▇ of
this Loan Agreement and each Eligible Securitization Transfer Document to which
▇▇▇▇▇ is a party and the consummation of the transactions contemplated hereby
and thereby and the fulfillment by ▇▇▇▇▇ of the terms hereof and thereof do not
(A) conflict with, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default under,
the certificate of incorporation or bylaws of ▇▇▇▇▇; (B) conflict with, result
in any breach of any of the terms and provisions of, or constitute (with or
without notice or lapse of time) a default under any indenture, agreement,
mortgage, deed of trust, or other instrument to which ▇▇▇▇▇ is a party or by
which it is bound or any of its properties are subject; or (C) violate any law,
order, rule, or regulation applicable to ▇▇▇▇▇ of any court or of any federal or
state regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over ▇▇▇▇▇ or its properties, which, in the
case of clause (C), could reasonably be expected to result in a material adverse
effect on the ability of ▇▇▇▇▇ to perform hereunder.
(f) Accurate Information. No Eligible Securitization Document or other
information, exhibit, financial statement, document, book, record or report
furnished by or on behalf of ▇▇▇▇▇ to Lender or Program Support Provider in
connection with any of the Loan Documents was inaccurate in any material respect
as of the date so furnished except as otherwise disclosed to Lender or Program
Support Provider at such time, or contained any material misstatement of fact or
omitted to state a material fact or any fact necessary to make the statements
contained therein not misleading. All such documents and materials are complete
and include all amendments, modifications and waivers, if any, made to such
documents and materials on or prior to the date of delivery thereof.
(g) True Sale and Non-Consolidation Opinion. All factual statements set
forth under the heading "Assumptions of Fact" in the True Sale and
Non-Consolidation Opinion are true, accurate and complete in all respects as
they relate to ▇▇▇▇▇.
ARTICLE VII
COVENANTS
24
Section 7.01. Affirmative Covenants of Borrower. So long as any of the
Loans shall remain outstanding, and until the principal of and interest on the
Note and all other Secured Obligations due hereunder shall have been paid in
full, Borrower agrees that it will:
(a) Compliance with Laws, Etc. Comply in all material respects with all
applicable laws, rules, regulations and orders, including those with respect to
the Pledged Residual Interest Instruments and related Collateral, where the
failure to so comply could reasonably be expected to have a Material Adverse
Effect.
(b) Preservation of Corporate Existence. Preserve and maintain its
corporate existence, rights, licenses, permits and privileges in the
jurisdiction of its organization, and qualify and remain qualified in good
standing as a foreign corporation, in each jurisdiction where the failure to
preserve and maintain such existence, rights, licenses, permits, privileges and
qualification could have a Material Adverse Effect.
(c) Financial Covenants. Maintain a cumulative dollar weighted average
Net Yield for all Eligible Securitization Transactions relating to the Pledged
Residual Interest Instruments for any period of three (3) consecutive months at
greater than 0.0%.
(d) Monthly Servicer's Reports. Deliver to Lender prior to each Payment
Date each Monthly Servicer Report for the immediately preceding calendar month.
(e) Books and Records; Inspection. Keep proper books and records of
account in which full, true and correct entries in conformity with GAAP and all
Requirements of Law shall be made of all dealings and transactions in relation
to its business and activities, and permit representatives of Lender, including
certified public accountants or other auditors, to inspect, at Borrower's
expense, such books and records of account that relate to this Loan Agreement,
the Pledged Residual Interest Instruments and the other Collateral at any time
on prior notice during normal business hours; provided the maximum expense to
Borrower pursuant to this Section 7.01(e), together with Section 7.04(d), shall
not exceed $5,000 per annum, except that following and during the continuance of
an Event of Default the maximum expense to Borrower pursuant to Section this
7.01(e), together with Section 7.04(d), shall not exceed $5,000 per calendar
quarter.
(f) Eligible Securitization Documents. Comply in all respects with
Borrower's obligations under each Eligible Securitization Document.
(g) Maintain Security Interest. Take all actions necessary to obtain
and maintain, for the benefit of Lender, a first lien on and a first priority,
perfected security interest in the Collateral, including the execution or
authorization, as applicable, and delivery of all such supplements and
amendments hereto and all such financing statements, continuation statements,
instruments of further assurance and other instruments and take such other
action necessary or advisable to:
(i) grant more effectively all or any portion of the
Collateral;
25
(ii) maintain or preserve the lien and security
interest (and the priority thereof) created by this Loan
Agreement or carry out more effectively the purposes hereof;
(iii) perfect, publish notice of or protect the
validity of the grant of a security interest in the Collateral
made by this Loan Agreement;
(iv) enforce any of the Collateral;
(v) preserve and defend title to the Collateral and
the rights of Lender in such Collateral against the claims of
all persons and parties; or
(vi) pay all taxes or assessments levied or assessed
upon the Collateral when due.
(h) At all times:
(i) maintain its own deposit account or accounts,
separate from those of any Affiliate, with commercial banking
institutions and, except as otherwise provided in the Loan
Documents, ensure that its funds will not be diverted to any
other Person or for other than its own corporate uses, nor
will such funds be commingled with the funds of any Affiliate;
(ii) to the extent that it shares the same officers
or other employees as any of its Affiliates, the salaries of
and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among
such entities, and each such entity shall bear its fair share
of the salary and benefit costs associated with all such
common officers and employees;
(iii) to the extent that it jointly contracts with
any of its Affiliates to do business with vendors or service
providers or to share overhead expenses, the costs incurred in
so doing shall be allocated fairly among such entities, and
each such entity shall bear its fair share of such costs; to
the extent that it contracts or does business with vendors or
service providers where the goods and services provided are
partially for the benefit of any other Person, the costs
incurred in so doing shall be fairly allocated to or among
such entities for whose benefit the goods or services are
provided, and each such entity shall bear its fair share of
such costs;
(iv) enter into all material transactions with its
Affiliates, whether currently existing or hereafter entered
into, only on an arm's length basis;
(v) maintain office space that is distinct from the
office space of any of its Affiliates and, to the extent that
it and any of its Affiliates have offices in the same
location, there shall be a fair and appropriate allocation of
overhead costs among them, and each such entity shall bear its
fair share of such expenses;
26
(vi) conduct its affairs strictly in accordance with
its certificate of incorporation and observe all necessary,
appropriate and customary corporate formalities, including,
but not limited to, separate stationery, holding all regular
and special stockholders' and directors' meetings appropriate
to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or
consents necessary to authorize actions taken or to be taken,
and maintaining accurate and separate books, records,
financial records and accounts, including, but not limited to,
payroll and intercompany transaction accounts;
(vii) act solely in its own name, hold itself out as
a separate entity, pay its own liabilities out of its own
funds, and not assume or guarantee any of the liabilities of
any of its Affiliates; and
(viii) take, or refrain from taking, as the case may
be, all other actions that are necessary to be taken or not to
be taken in order to comply with this Section 7.01(h).
(i) Collateral Shortfall Event. Upon discovery by Borrower of any
Collateral Shortfall Event (including, without limitation, pursuant to a notice
delivered by Lender to Borrower), deliver written notice to Lender no later than
1:00 p.m., Boston time, on the third (3rd) Business Day immediately succeeding
such discovery, which written notice shall (x) contain a description of the
cause of such deficiency and (y) set forth the manner in which Borrower will
cure such deficiency, if applicable. If at any time there exists a Collateral
Shortfall Event, Borrower shall cure the same in accordance with the terms of
this Loan Agreement.
(j) Further Assurances. From time to time hereafter, execute and
deliver, or will cause to be executed and delivered, such additional
instruments, certificates or documents, and will take all such actions, as
Lender may reasonably request, for the purposes of implementing or effectuating
the provisions of this Loan Agreement or the Notes, or of more fully perfecting
or renewing the rights of Lender with respect to the Collateral pursuant hereto.
Upon the exercise by Lender of any power, right, privilege or remedy pursuant to
this Loan Agreement which requires any consent, approval, registration,
qualification or authorization of any governmental authority or instrumentality,
Borrower will execute and deliver, or will cause the execution and delivery of,
all applications, certifications, instruments and other documents and papers
that Lender may be required to obtain for such governmental consent, approval,
registration, qualification or authorization.
(k) True Sale and Non-Consolidation Opinion. Comply in all respects
applicable to Borrower with the assumptions set forth under the heading
"Assumptions of Fact" in the True Sale and Non-Consolidation Opinion.
Section 7.02. Reporting Requirements. Borrower will furnish, or cause
to be furnished, to Lender:
(a) Monthly Borrowing Base Certificate. On the Business Day immediately
preceding each Payment Date, a Borrowing Base Certificate.
27
(b) Quarterly Financial Statements. As soon as available and in any
event within 60 days after the end of each of the first three quarters of each
fiscal year of Onyx, (i) copies of Onyx's consolidated and consolidating
quarterly financial reports prepared in accordance with GAAP, and (ii) a
calculation of the financial covenants set forth in Sections 7.01(c) and 7.04(a)
and (b) demonstrating that there is no breach of such Section, all certified by
the chief financial officer or chief accounting officer of Onyx;
(c) Annual Financial Statements. As soon as available and in any event
within 120 days after the end of each fiscal year of Onyx, a copy of Onyx's
consolidated and consolidating annual financial statements as reported on by
nationally recognized independent certified public accountants, along with
consolidated and consolidating schedules of Borrower;
(d) Compliance Certificate. Concurrently with the delivery of the
financial statements required pursuant to Section 7.02(b) and (c) hereof, one or
more certificates signed by an officer of each of Borrower and Onyx authorized
to execute such certificates on behalf of Borrower or Onyx, as the case may be,
stating that:
(i) a review of Borrower's performance under the Loan
Documents during such period has been made under such
officer's supervision;
(ii) to the best of such officer's knowledge
following reasonable inquiry, no Default or Event of Default
has occurred, or if a Default or an Event of Default has
occurred, specifying the nature thereof and, if Borrower has a
right to cure pursuant to Section 8.01 hereof, stating in
reasonable detail (including, if applicable, any supporting
calculations) the steps, if any, being taken by Borrower to
cure such Default or Event of Default or to otherwise comply
with the terms of this Loan Agreement to which such Default or
Event of Default relates; and
(iii) in the case of financial statements submitted
in accordance with Section 7.02(b) hereof, such financial
statements are complete and correct in all material respects
and present fairly the financial condition and results of
operations of Onyx and Borrower as of the dates for the
periods indicated, in accordance with GAAP consistently
applied; and
(e) Defaults. As soon as possible and in any event within five (5)
Business Days after obtaining knowledge of the occurrence of a Default or an
Event of Default, or a default or event of default under any instruments or
agreement evidencing, securing or providing for the issuance of indebtedness or
repurchase obligations of Borrower, a written statement of the chief financial
officer or chief accounting officer of Borrower setting forth details of such
event and the action that Borrower propose to take with respect thereto.
(f) Notices. Promptly, notice of the occurrence of any of the following
events:
(i) any material litigation, investigation or
proceeding which may exist at any time affecting Borrower or
the Collateral;
(ii) any Material Adverse Change; or
28
(iii) any Change in Control.
Section 7.03. Negative Covenants of Borrower. So long as any of the
Loans shall remain outstanding, and until the principal of and interest on the
Note and all other Secured Obligations due hereunder shall have been paid in
full, Borrower agrees that it will not:
(a) Sales, Liens, Etc. Except pursuant hereto or in accordance with
this Loan Agreement, sell, assign (by operation of law or otherwise) or
otherwise dispose of, or create or suffer to exist any Lien (other than a tax
lien, so long as the taxes related thereto are not at the time due and payable)
upon or with respect to, any Pledged Residual Interest Instrument or related
Collateral, or any interest therein, or any right to receive income or Proceeds
from or in respect of any of the foregoing.
(b) Mergers, Acquisitions, Sales, etc. Be a party to any merger or
consolidation, or purchase or otherwise acquire all or substantially all of the
assets or any stock of any class of, or any partnership or joint venture
interest in, any other Person, or sell, transfer, convey or lease all or any
substantial part of its assets, or sell or assign with or without recourse any
of the Pledged Residual Interest Instruments or any interest therein (other
than, in each case, pursuant hereto).
(c) Amendment to Certain Eligible Securitization Documents. Borrower
will not amend, modify, change or waive its rights pursuant to (or consent to
any such amendment, modification, change or waiver to) any of the Eligible
Securitization Documents in any manner adverse to Lender's interest in the
Pledged Residual Interest Instruments, without the prior written consent of
Lender. Without limiting the foregoing, Borrower will not consent or agree,
without Lender's consent, to any increase in the amount on deposit in any Spread
Account related to a Pledged Residual Interest Instrument so as to maintain the
rating of the related securitization transaction. Borrower shall provide Lender
with (i) advance written notice of each proposed amendment, modification, change
or waiver to any Eligible Securitization Document and (ii) an executed copy of
each such amendment, modification, change or waiver, in each case, as soon as
practicable upon receipt by Borrower.
(d) Amendment of Certificate of Incorporation; Change in Borrower's
Business. Amend its certificate of incorporation or bylaws, or engage in any
business other than as contemplated by the Borrower's certificate of
incorporation.
Section 7.04. Additional Covenants of Onyx and ▇▇▇▇▇. So long as any
portion of the Loan shall remain outstanding, and until the principal of and
interest on the Note and all other Secured Obligations due hereunder shall have
been paid in full, each of Onyx and ▇▇▇▇▇, as applicable, hereby covenants as
follows:
(a) Net Worth. Onyx's Net Worth as of the last day of any fiscal
quarter of Onyx ending after December 31, 2003, shall not be less than an amount
equal to (x) $50,000,000 plus, (y) on a cumulative basis, an amount equal to
fifty percent (50%) of Onyx's positive Net Income during each such fiscal
quarter ending after December 31, 2003 minus (z) on a cumulative basis from and
after December 31, 2003, up to $3,000,000 in respect of "FASB 125 Net Worth
Adjustments". As used herein, the term "FASB 125 Net Worth Adjustments" shall
mean downward adjustments in Net Worth required by Financial Accounting Standard
No. 125 issued
29
by the Financial Accounting Standards Board. Other than up to $3,000,000 in
respect of FASB 125 Net Worth Adjustments, the minimum Net Worth covenant amount
shall never decrease, regardless of whether Onyx shall have negative Net Income
during any fiscal quarter.
Solely by way of example, if Onyx had Net Income of $1,000,000 for the
first fiscal quarter of 2004, the minimum Net Worth covenant at March 31, 2004
would be $50,000,000 plus ($l,000,000)(50%) = $50,500,000. Going forward, the
minimum Net Worth covenant at June 30, 2004 (the end of the second fiscal
quarter of 2004) would be an amount equal to $50,500,000 plus fifty percent
(50%) of Onyx's Net Income for such second fiscal quarter. The numbers used in
this paragraph are for informational purposes only. The actual step-up in the
minimum Net Worth covenant will be calculated based upon Onyx's actual Net
Income.
(b) Minimum Servicing Balance. Onyx shall at all times maintain a
Minimum Servicing Balance of $2,000,000,000.
(c) Amendment to Certain Eligible Securitization Documents. Each of
Onyx and ▇▇▇▇▇ shall comply in all respects with their respective obligations
under each Eligible Securitization Document. Further, neither Onyx nor ▇▇▇▇▇
shall amend, modify, change or waive its rights pursuant to (or consent to any
such amendment, modification, change or waiver to) any of the Eligible
Securitization Documents in any manner adverse to Lender's interest in the
Pledged Residual Interest Instruments, without the prior written consent of
Lender. Without limiting the foregoing, neither Onyx nor ▇▇▇▇▇ shall consent or
agree, without Lender's consent, to any increase in the amount on deposit in any
Spread Account related to a Pledged Residual Interest Instrument so as to
maintain the rating of the related securitization transaction. Onyx or ▇▇▇▇▇, as
applicable, shall provide Lender with (i) advance written notice of each
proposed amendment, modification, change or waiver to any Eligible
Securitization Document and (ii) an executed copy of each such amendment,
modification, change or waiver, in each case, as soon as practicable upon
receipt by Onyx or ▇▇▇▇▇, as applicable.
(d) Books and Records; Inspection. Each of ▇▇▇▇▇ and Onyx shall keep
proper books and records of account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made of all dealings
and transactions in relation to its business and activities, and permit
representatives of Lender, including certified public accountants or other
auditors, to inspect, at Borrower's expense, such books and records of account
that relate to this Loan Agreement, the Pledged Residual Interest Instruments
and the other Collateral at any time on prior notice during normal business
hours; provided the maximum expense to Borrower pursuant to this Section
7.04(d), together with Section 7.01(e), shall not exceed $5,000 per annum,
except that following and during the continuance of an Event of Default the
maximum expense to Borrower pursuant to this Section 7.04(d), together with
Section 7.01(e), shall not exceed $5,000 per calendar quarter.
(e) True Sale and Non-Consolidation Opinion. Each of Onyx and ▇▇▇▇▇
shall comply in all respects applicable to Onyx and ▇▇▇▇▇, respectively, with
the assumptions set forth under the heading "Assumptions of Fact" in the True
Sale and Non-Consolidation Opinion.
30
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.01. Events of Default. Each of the following events shall
constitute an "Event of Default":
(a) Borrower shall default in the payment of principal of or interest
on the Note when the same becomes due and payable, whether at maturity or at a
date fixed for the payment of any installment or prepayment thereof or
otherwise; or
(b) Borrower, Onyx or ▇▇▇▇▇ shall default in the performance of or
compliance with any term contained herein and such default shall not have been
remedied or waived by Lender within thirty (30) days after the earlier of
discovery and receipt of written notice thereof from Lender; provided, that, an
Event of Default shall occur automatically upon any breach of Section 7.03(c) or
7.04(c) of this Loan Agreement; or
(c) Any representation or warranty made by Borrower, Onyx or ▇▇▇▇▇
herein or pursuant hereto shall prove to have been false or incorrect in any
material respect when made and such failure (if in the reasonable judgment of
Lender such failure is capable of being cured) shall continue unremedied for a
period of thirty (30) days after the earlier of (x) the date on which written
notice of such failure, requiring the same to be remedied, shall have been given
to Borrower by Lender, or (y) the date on which an officer of Borrower has
actual knowledge of such failure; or
(d) A default shall have occurred and be continuing under any
instrument or agreement evidencing, securing or providing for (i) the issuance
of Indebtedness of Borrower or (ii) the issuance of Indebtedness of Onyx or
▇▇▇▇▇ or any Affiliate of either of them under any Warehouse Facility, which
default, in either case (A) is a default in payment of any principal or interest
on such Indebtedness when due or, if later, within any applicable grace period,
or (B) shall have resulted in acceleration of the maturity of such Indebtedness
without such acceleration having been rescinded or annulled or such Indebtedness
shall not have been discharged within a period of 30 days after such default or
acceleration; or
(e) Borrower shall discontinue its business or Borrower shall make an
assignment for the benefit of creditors, or shall fail generally to pay its
debts as such debts become due, or shall apply for or consent to the appointment
of or taking possession by a trustee, receiver or liquidator (or other similar
official) of Borrower or any substantial part of the property of Borrower, or
shall commence a case or have an order for relief entered against it under the
federal bankruptcy laws, as now or hereafter constituted, or any other
applicable federal or state bankruptcy, insolvency or other similar law, or
Borrower shall take any action to dissolve or liquidate Borrower; or
(f) If, within 60 days after the commencement against Borrower of a
case under the federal bankruptcy laws, as now or hereafter constituted, or any
other applicable federal or state bankruptcy, insolvency or other similar law,
such case shall have been consented to or shall not have been dismissed or all
orders or proceedings thereunder affecting the operations or the
31
business of Borrower stayed, or if the stay of any such order or proceeding
shall thereafter be set aside, or if within 60 days after the entry of a decree
appointing a trustee, receiver or liquidator (or other similar official) of
Borrower or any substantial part of the property of Borrower, such appointment
shall not have been vacated; or
(g) Onyx is replaced as servicer of any Eligible Securitization
Transaction related to a Pledged Residual Interest Instrument; or
(h) Any other event or condition occurs or exists which in Lender's
reasonable judgment impairs or creates a material risk of impairment of
Borrower's legal right to receive payments in respect of the Collateral; or
(i) Borrower, ▇▇▇▇▇ or Onyx shall fail to perform or observe any of its
obligations under any of the Loan Documents or the Eligible Securitization
Documents related to a Pledged Residual Interest Instrument, and such failure
could reasonably be expected to have a Material Adverse Effect (a default under
any Insurance Agreement shall be deemed to have a Material Adverse Effect), or
if the validity of this Loan Agreement, the Notes or other Loan Document, or of
any Eligible Securitization Document related to a Pledged Residual Interest
Instrument shall be challenged or disaffirmed by any party hereto or thereto
(other than Lender), or shall in any manner cease to be in full force and effect
(other than pursuant to its expiration or termination in accordance with its
terms), or if any notice of default shall be issued thereunder by any party
thereto; or
(j) A Change in Control shall occur.
Section 8.02. Remedies. If any Event of Default shall have occurred and
be continuing, Lender may, by written notice to Borrower, declare the
commencement of the Accelerated Amortization Period, whereupon the obligation of
Lender to make Loans hereunder shall automatically terminate without any other
notice of any kind; provided that, in the case of an Event of Default arising by
reason of the occurrence of any event described in Sections 8.01(e) or 8.01(f),
the Accelerated Amortization Period shall automatically commence with no action
required by Lender, and the obligations of the Lender to make Loans hereunder
shall automatically terminate without any other notice of any kind by Lender,
and further, all obligations of Borrower to Lender shall automatically become
due and payable without presentment, demand, protest or notice of any kind, all
of which are hereby expressly waived by Borrower.
ARTICLE IX
CREDIT TRIGGER EVENTS
Section 9.01. Credit Trigger Events. The occurrence of any "Trigger
Event" (or other event or condition, however defined, which has a substantially
similar meaning to the term "Trigger Event" as defined in the Insurance
Agreements), under any agreement between Onyx, ▇▇▇▇▇ or Borrower and any Credit
Enhancer, or any default, event of default or credit trigger under and as
defined in any Eligible Securitization Document related to a Pledged Residual
32
Interest Instrument included in the calculation of the Borrowing Base shall be a
"Credit Trigger Event."
Section 9.02. Remedies.
(a) Without notice to Borrower or any other required action or notice
by Lender, the Eligible Securitization Transaction experiencing the Credit
Trigger Event shall automatically be removed from the calculation of the
Borrowing Base.
(b) Notwithstanding any other terms contained in this Loan Agreement or
any other Loan Document, if any Pledged Residual Interest Instrument ceases to
be included in the calculation of the Borrowing Base as a result of a Credit
Trigger Event, Borrower may obtain the release of Lender's security interest in
such Pledged Residual Interest Instrument provided the following conditions are
satisfied:
(i) Borrower deposits the Repurchase Price related to
such Pledged Residual Interest Instrument into the Blocked
Account; and
(ii) there is no Collateral Shortfall Event
continuing following the removal of such Pledged Residual
Interest Instrument from the calculation of Borrowing Base.
ARTICLE X
ACCOUNTS; REPORTS
Section 10.01. Establishment of Blocked Account and Reserve Account.
(a) Prior to the Closing Date, Borrower shall establish the following
deposit accounts in its name for the benefit of Lender with State Street Bank
and Trust Company:
(i) an account denominated "Onyx Acceptance Funding
Corporation Residual Blocked Account for the benefit of State
Street Bank and Trust Company" (the "Blocked Account"); and
(ii) an account denominated "Onyx Acceptance Funding
Corporation Residual Reserve Account for the benefit of State
Street Bank and Trust Company" (the "Reserve Account").
(b) Except as otherwise provided herein, the Blocked Account and the
Reserve Account shall be under the sole dominion and control of Lender.
Notwithstanding the immediately preceding sentence, Lender shall not withdraw or
otherwise remove any funds in the Reserve Account or Blocked Account, other than
in accordance with this Loan Agreement.
(c) Funds on deposit in the Blocked Account and the Reserve Account
shall be invested by Lender (or any custodian with respect to funds on deposit
in any such account) in Permitted Investments selected in writing by Borrower
(pursuant to standing instructions or otherwise). In the absence of any contrary
instruction, the investments that shall be deemed to
33
have been selected shall be the investments specified in clause (iv) of the
definition of "Permitted Investments" set forth in Appendix A to this Loan
Agreement. Other than as permitted by Lender, funds on deposit in the Blocked
Account or the Reserve Account shall be invested in Permitted Investments that
will mature so that such funds will be available at the close of business on the
Business Day immediately preceding the following Payment Date. All Permitted
Investments will be held to maturity.
(d) All Investment Earnings of monies deposited in the Blocked Account
shall be deposited by Lender in the Blocked Account no later than the close of
business on the Business Day immediately preceding the related Payment Date, and
any loss resulting from such investments shall be charged to the Blocked
Account. All Investment Earnings of monies deposited in the Reserve Account
shall be deposited by Lender in the Reserve Account no later than the close of
business on the Business Day immediately preceding the related Payment Date, and
any loss resulting from such investments shall be charged to the Reserve
Account.
(e) If (i) Borrower shall have failed to give investment directions for
any funds on deposit in the Blocked Account or the Reserve Account to Lender by
1:00 p.m., Boston time (or such other time as may be agreed by Borrower and
Lender), on any Business Day; or (ii) a Default shall have occurred and be
continuing; then Lender shall, to the fullest extent practicable, invest and
reinvest funds in the Blocked Account and the Reserve Account in one or more
Permitted Investments pursuant to paragraph (c) above.
Section 10.02. Blocked Account Arrangement. Prior to the initial
Funding Date, Borrower, for the benefit of Lender, shall establish and maintain
an arrangement with State Street Bank and Trust Company with respect to the
Blocked Account and shall execute and cause to be executed by all necessary
parties all such agreements or instruments as may be deemed necessary by Lender
or the trustee or paying agent under each Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument to ensure that (i) each
Pledged Residual Interest Instrument is transferred to the name of Lender, (ii)
each trustee or paying agent under each Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument is directed to deposit
payments due to the residual interest holder directly to the Blocked Account,
(iii) the Collateral and all proceeds thereof will be deposited directly to the
Blocked Account, and (iv) the transactions contemplated by this Loan Agreement
are given effect (all such agreements, documents and instruments are referred to
collectively as the "Eligible Securitization Transfer Documents"). To the extent
that, notwithstanding the execution and delivery of the Eligible Securitization
Transfer Documents, Borrower, Onyx or ▇▇▇▇▇ receive any amounts attributable to
any Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument which should have been deposited in the Blocked Account, the party in
receipt of such amounts shall hold the same in trust for Lender immediately upon
receipt thereof, and deliver the same to Lender in the form received, together
with such party's endorsement thereon where necessary to permit collection
thereof for deposit into the Blocked Account.
Section 10.03. Reserve Account Deposits and Withdrawals.
(a) On the initial Funding Date, Borrower shall make a deposit into the
Reserve Account equal to $500,000 from the Loan effected on such Funding Date.
Thereafter, pursuant to Section 3.03(b) or (c), as applicable, Lender, on each
Payment Date (after giving effect to the
34
payment of principal, if any, and interest on the Note) shall deposit an amount
from the Blocked Account into the Reserve Account necessary to increase the
amount on deposit in the Reserve Account to the Required Reserve Account Amount.
To the extent that on any Payment Date (after giving effect to the payment of
principal, if any, and interest on the Note) the amount on deposit in the
Reserve Account is greater than the Required Reserve Account Amount, then such
excess amount shall constitute available funds to be distributed by Lender on
such Payment Date in accordance with the priority of payments set forth in
Section 3.03 of this Loan Agreement.
(b) On any Payment Date for which available funds on deposit in the
Blocked Account are insufficient to fully satisfy the required payments of
interest pursuant to Section 3.03 hereof, Lender may withdraw from the Reserve
Account an amount necessary to satisfy any such shortfall. On any Payment Date
after the earlier to occur of the commencement of the Accelerated Amortization
Period or the Conversion Date, for which available funds on deposit in the
Blocked Account are insufficient to fully satisfy the required payments of
principal pursuant to Section 3.03 hereof, Lender may withdraw from the Reserve
Account an amount necessary to satisfy any such shortfall.
ARTICLE XI
INDEMNIFICATION AND EXPENSES
Section 11.01. Expenses of Lender. Whether or not the transactions
contemplated hereby shall be consummated, Borrower agrees (i) to pay all
reasonable expenses, including reasonable fees and disbursements of counsel for
Lender (subject to the term sheet), which Lender has incurred or may hereafter
incur in connection with the preparation and review of this Loan Agreement, the
Note, the Eligible Securitization Documents related to Pledged Residual Interest
Instruments and all other documents related hereto and thereto (including any
amendment, consent or waiver hereafter requested by Borrower hereunder or
thereunder) and the transactions contemplated hereby or the protection,
preservation and/or enforcement of the rights of Lender hereunder or under the
Note upon the occurrence of a Default or an Event of a Default hereunder or
thereunder or otherwise (including without limitation amounts incurred with
respect to any so-called "workout" of the Loan) and (ii) to pay all taxes (other
than Lender's income taxes) and fees (including interest and penalties),
including, without limitation, all recording and filing fees, transfer and
documentary stamp and similar taxes, which may be payable in respect of the
execution and delivery of this Loan Agreement, the Note, the Eligible
Securitization Documents related to Pledged Residual Interest Instruments and
all other documents related hereto and thereto (including any amendment, consent
or waiver hereafter requested by Borrower hereunder or thereunder) and to
indemnify Lender and hold Lender harmless against any loss or liability
resulting from non-payment or delay in payment of any such tax.
Section 11.02. Indemnification. Each of Borrower and Onyx, jointly and
severally, agrees to indemnify Lender, each Affected Party, their respective
directors, officers and employees and each other Person, if any, who controls
Lender or such Affected Party (each, an "Indemnified Party"), and will hold each
Indemnified Party harmless from and against any and all claims, damages, losses,
liabilities, judgments and expenses (including without limitation all reasonable
fees and expenses of counsel and all expenses of litigation or preparation
therefor) which such Indemnified
35
Party may incur or which may be asserted against such Indemnified Party in
connection with or arising out of the Loan Documents (other than any loss
incurred as a result of Borrower's failure to pay principal or interest on the
Loans as a result of: (i) credit losses under the Pledged Residual Interest
Instruments, (ii) actual cash flow from the Pledged Residual Interest
Instruments being insufficient to pay principal and interest on the Loans or
(iii) actions taken, or the failure to take action, by parties to the Loan
Documents or Eligible Securitization Documents other than Onyx, ▇▇▇▇▇ or
Borrower), including any investigation, litigation or proceeding involving
Borrower or any Affiliate of Borrower (including compliance with or contesting
of any subpoenas or other process issued against an Indemnified Party in any
proceeding involving Borrower or any Affiliate of Borrower), whether or not
Lender is party thereto, other than claims, damages, losses, liabilities or
judgments with respect to any matter as to which such Indemnified Party shall
have been grossly negligent or shall have committed willful misconduct in its
actions or inactions. Promptly upon receipt by any Indemnified Party hereunder
of notice of the commencement of any action, such Indemnified Party shall, if a
claim in respect thereof is to be made against Borrower hereunder, notify
Borrower in writing of the commencement thereof.
Section 11.03. Survival of Indemnity and Expenses. Each of Borrower and
Onyx acknowledges and agrees that its agreements and obligations under this
Article XI shall survive the termination of this Loan Agreement and repayment in
full of the Note and the other Secured Obligations.
ARTICLE XII
MISCELLANEOUS
Section 12.01. No Waiver; Remedies Cumulative. No failure or delay on
the part of Lender in exercising any right, remedy, power or privilege under
this Loan Agreement, the Note or any other Loan Document shall operate as a
waiver thereof, nor shall any single or partial exercise of, or any abandonment
or discontinuance of steps to enforce any right, remedy, power or privilege
under this Loan Agreement, the Note or any other Loan Document preclude any
other or further exercise thereof or the exercise of any other rights, remedies
or privileges thereunder. The rights, remedies, powers and privileges provided
in this Loan Agreement, the Note or any other Loan Documents are cumulative and
may be exercised singularly or concurrently and are not exclusive of any other
rights, remedies, powers or privileges provided by law.
Section 12.02. Notices. Except as otherwise expressly permitted by this
Loan Agreement, all notices, requests and other communications provided for
under the Loan Documents (including without limitation any modifications of, or
waivers, requests or consents under, this Loan Agreement) shall be given or made
in writing (including without limitation by telecopy) delivered to the intended
recipient at the address specified for each party hereto below; or, as to any
party, at such other address as shall be designated by such party in a written
notice to each other party:
BORROWER: Onyx Acceptance Funding Corporation
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇. ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
36
Attention: ▇▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
LENDER: Galleon Capital, LLC
c/o State Street Global Markets, LLC
State Street Financial Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
State Street Global Markets, LLC
State Street Financial Center
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇.▇. ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Except as otherwise provided in this Loan Agreement and except for
notices given under Article II (which shall be effective only on receipt), all
such communications shall be deemed to have been duly given when transmitted by
telecopy (evidenced by electronic receipt) or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 12.03. Amendments; Waivers. Any term or provision of any Loan
Document may be amended, supplemented or otherwise modified only by an
instrument in writing signed by Borrower and Lender. Any provision of a Loan
Document may be waived only by the written agreement of Lender. In the case of
any waiver of a Default or Event of Default, any Default or Event of Default
waived shall be deemed to be cured and not continuing; but no such waiver shall
extend to any subsequent or other Default or Event of Default, or impair any
right consequent thereon.
Section 12.04. Calculations. Calculations hereunder shall be made and
financial data required hereby shall be prepared, both as to classification of
items and as to amounts, in accordance with GAAP and practices which principles
and practices shall be consistently applied and in conformity with those used in
the preparation of the financial statements referred to herein.
Section 12.05. Governmental Approval. Borrower agrees to take any
action which Lender may reasonably request in order to obtain and enjoy the full
rights and benefits granted to Lender by this Loan Agreement, including
specifically, at Borrower's own cost and expense, the use of its best efforts to
assist in obtaining approval of any applicable governmental or regulatory
37
authority or court for any action or transaction contemplated by this Loan
Agreement which is then required by law.
Section 12.06. Severability. Any provision of this Loan Agreement, the
Note or any other Loan Document which is prohibited, unenforceable or not
authorized in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition, unenforceability or non-authorization without
invalidating the remaining provisions hereof or thereof or affecting the
validity, enforceability or legality of such provisions in any other
jurisdiction.
Section 12.07. Captions. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this Loan
Agreement.
Section 12.08. Counterparts. This Loan Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Loan Agreement
by signing any such counterpart.
Section 12.09. Governing Law. THIS LOAN AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF CALIFORNIA.
Section 12.10. Jurisdiction; Waiver of Jury Trial. BORROWER, TO THE
EXTENT THAT IT MAY LAWFULLY DO SO, HEREBY CONSENTS TO SERVICE OF PROCESS, AND TO
BE SUED, IN THE STATE OF CALIFORNIA AND CONSENTS TO THE JURISDICTION OF THE
COURTS OF ORANGE COUNTY, IN THE STATE OF CALIFORNIA AND THE UNITED STATES
DISTRICT COURT FOR THE CENTRAL DISTRICT OF CALIFORNIA, AS WELL AS TO THE
JURISDICTION OF ALL COURTS TO WHICH AN APPEAL MAY BE TAKEN FROM SUCH COURTS, FOR
THE PURPOSE OF ANY SUIT, ACTION OR OTHER PROCEEDING ARISING OUT OF ANY OF ITS
OBLIGATIONS HEREUNDER OR UNDER THE NOTE OR ANY OF THE LOAN DOCUMENTS OR WITH
RESPECT TO THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND EXPRESSLY WAIVES
ANY AND ALL OBJECTIONS IT MAY HAVE AS TO VENUE IN ANY SUCH COURTS. BORROWER
FURTHER AGREES THAT A SUMMONS AND COMPLAINT COMMENCING AN ACTION OR PROCEEDING
IN ANY OF SUCH COURTS SHALL BE PROPERLY SERVED AND SHALL CONFER PERSONAL
JURISDICTION IF SERVED PERSONALLY OR AS OTHERWISE PROVIDED UNDER THE LAWS OF THE
STATE OF CALIFORNIA.
EACH OF BORROWER AND LENDER IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY
JURY IN ANY PROCEEDING HEREAFTER INSTITUTED IN RESPECT OF THIS LOAN AGREEMENT,
THE NOTE, THE LOAN DOCUMENTS, OR ANY OTHER DOCUMENTS EXECUTED IN CONNECTION
HEREWITH OR THEREWITH. EACH OF BORROWER AND LENDER HEREBY CERTIFIES TO THE OTHER
THAT THE NONE OF THE OTHER PARTY OR ANY OF ITS REPRESENTATIVES, AGENTS OR
COUNSEL HAVE REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF ANY SUCH SUIT, ACTION OR PROCEEDING, SEEK TO ENFORCE THIS
WAIVER OF RIGHT TO TRIAL BY JURY. BORROWER ACKNOWLEDGES THAT LENDER HAS BEEN
INDUCED TO ENTER INTO THIS LOAN AGREEMENT BY, AMONG OTHER THINGS, THIS WAIVER.
BORROWER ACKNOWLEDGES THAT IT HAS READ THE PROVISIONS OF THIS LOAN AGREEMENT AND
IN PARTICULAR THIS PARAGRAPH; HAS CONSULTED LEGAL COUNSEL; UNDERSTANDS THE
RIGHTS IT IS GRANTING IN THIS LOAN AGREEMENT AND IS WAIVING UNDER THIS SECTION
IN PARTICULAR; AND MAKES THE ABOVE WAIVER KNOWINGLY, VOLUNTARILY AND
INTENTIONALLY.
Section 12.11. Assignments; Participations.
38
(a) This Loan Agreement shall be binding upon and inure to the benefit
of the parties hereto and their respective successors and permitted assigns.
Borrower may not assign any of its rights or obligations hereunder or under the
Note or under any other Loan Document without the prior written consent of
Lender. Lender may assign, participate or otherwise transfer to any Affiliate of
Lender, any Program Support Provider or any Affiliate of any Program Support
Provider all or any of its rights or obligations under this Loan Agreement and
the other Loan Documents to not more than ten investors.
(b) Borrower agrees to cooperate with Lender in connection with any
such assignment or transfer, to execute and deliver such replacement notes, and
to enter into such restatements of, and amendments, supplements and other
modifications to, this Loan Agreement and the other Loan Documents in order to
give effect to such assignment or transfer.
Section 12.12. Confidentiality. Lender and Borrower agree to keep
confidential the terms of this Loan Agreement, the Note and the other Loan
Documents; provided, that Lender and Borrower shall have the right to
disseminate such information (i) to any outside accounting firm performing
analyses in connection with this Loan Agreement, the Note or any other Loan
Document or the transactions contemplated hereunder or thereunder which agrees
to comply with the provisions of this Section 12.12, to any proposed assignee or
transferee of Lender which agrees to comply with the provisions of this Section
12.12, (ii) to their respective employees, directors, agents, attorneys,
accountants and other professional advisors (other than competitors of Borrower
or Lender) who agree to comply with the provisions of this Section 12.12, (iii)
to the Rating Agencies and the employees, directors, agents and attorneys of the
Rating Agencies, (iv) upon the request or demand of any examiner or other
governmental authority having jurisdiction over such party, (v) in response to
any order of any court or other governmental authority, (vi) as may otherwise be
required pursuant to any Requirement of Law (including, without limitation, any
filing of information with the United States Securities and Exchange Commission
required under the Securities Exchange Act of 1934), (vii) in connection with
the exercise of any remedy hereunder, and (viii) to any other Person which
agrees to comply with the provisions of this Section 12.12 if such dissemination
is necessary in connection with this Loan Agreement, the Note or any other Loan
Document or the transactions contemplated hereunder or thereunder, in the good
faith determination of Borrower or Lender.
(b) Notwithstanding anything herein to the contrary, either party to
this Loan Agreement (and any employee, representative, or other agent of any
party to this agreement) may disclose to any and all persons, without limitation
of any kind, the tax treatment and tax structure of the transactions
contemplated by this Loan Agreement and all materials of any kind (including
opinions or other tax analyses) that are provided to such party relating to such
tax treatment and tax structure; provided, however, that such disclosure may not
be made to the extent any information is required to be kept confidential to
comply with any federal or state securities laws.
Section 12.13. Entire Agreement. This Loan Agreement, the Note and the
other Loan Documents constitute the entire agreement among the parties relative
to the subject matter hereof. Any previous agreement among the parties with
respect to the subject matter hereof is superseded by this Loan Agreement, the
Note and the other Loan Documents. Subject to Article XI, nothing in this Loan
Agreement, the Note or in the other Loan Documents, expressed or implied, is
intended to confer upon any Person other than the parties hereto and thereto any
39
rights, remedies, obligations or liabilities under or by reason of this Loan
Agreement, the Note or the other Loan Documents.
Section 12.14. Future Assurances. At its sole cost and without expense
to Lender, on demand, Borrower shall do, execute, acknowledge and deliver all
and every such further acts, deeds, conveyances, assignments, notices of
assignment, transfers and assurances as Lender shall from time to time request
for better assuring, conveying, assigning, transferring and confirming unto
Lender the property and rights pledged or assigned or intended now or hereafter
so to be, or which Borrower may be or may hereafter become bound to convey,
pledge or assign to Lender, or for carrying out the intention or facilitating
the performance of the terms of this Loan Agreement, the Note or any of the
other Loan Documents, or for filing, registering or recording any UCC financing
statements.
Section 12.15. Third-Party Beneficiaries. This Loan Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. Except as otherwise expressly
provided in this Loan Agreement, no other Person will have any right or
obligation hereunder.
Section 12.16. Termination. This Loan Agreement and the obligations of
the parties hereunder shall terminate upon the repayment of the Note and all
other Secured Obligations hereunder.
Section 12.17. No Proceedings; Limitation on Payments.
(a) Borrower hereby covenants and agrees that it will not institute
against, or join any other Person in instituting against, the Lender, any
bankruptcy, reorganization, arrangement, insolvency or liquidation proceeding,
or other proceeding under any federal or state bankruptcy or similar law, for
one year and one day after the latest maturing commercial paper note issued by
the Lender is paid in full.
(b) Notwithstanding any provisions contained in this Agreement to the
contrary, the Lender shall not, nor shall be obligated to, pay any amount
pursuant to this Agreement unless the Lender has excess cash flow from
operations or has received funds with respect to such obligation or under its
liquidity facility with State Street Bank & Trust Company, which may be used to
make such payment and which funds or excess cash flow are not required to repay
its commercial paper notes when due. Any amounts which the Lender does not pay
pursuant to the operation of the preceding sentence shall not constitute a claim
against the Lender for any such insufficiency unless and until the condition
described in the preceding sentence are satisfied.
Section 12.18. Administrative Duties of State Street. Borrower hereby
acknowledges and agrees that any action to be taken by or right to be exercised
by Lender hereunder may be taken or exercised, as applicable, by State Street
Global Markets, LLC, as administrator for Lender.
Section 12.19. Administrative Duties of Onyx. Borrower and Onyx hereby
agree that Onyx shall provide certain administrative, clerical and record
keeping duties to Borrower, necessary for Borrower to perform its reporting
obligations set forth in the Loan Agreement,
40
including but not limited to the preparation of the Monthly Borrowing Base
Certificate as required by Section 7.02(a), and Borrower shall reimburse Onyx
for any direct costs and expenses related to such services.
[SIGNATURE PAGES FOLLOW]
41
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed and delivered as of the day and year first above written.
ONYX ACCEPTANCE FUNDING CORPORATION, as Borrower
By:___________________________________________
Name:
Title:
GALLEON CAPITAL, LLC
as Lender
By:___________________________________________
Name:
Title:
AGREED TO AND ACKNOWLEDGED BY:
ONYX ACCEPTANCE CORPORATION,
for purposes of Sections 6.03, 7.04, 10.02, 11.02, 11.03 and 12.19 only
By:_____________________________________
Name:
Title:
ONYX ACCEPTANCE FINANCIAL CORPORATION,
for purposes of Sections 6.04, 7.04 and 10.02 only:
By:_____________________________________
Name:
Title:
Signature Page - Residual Interest Loan and Security Agreement
APPENDIX A
DEFINED TERMS
"ABS" is calculated as ((1/Actual Balance)-(1/Scheduled Balance)) /
((Age Y/Actual Balance)-(Age X/Scheduled Balance))
Where:
Actual Balance equals the balance at period Y
Age X equals the weighted average number of months from the applicable
cut-off date to period X
Age Y equals the weighted average number of months from the applicable
cut-off date to period Y
Scheduled Balance equals Beginning Period Balance*((1-(1+(WAC/12))(Pmt
Interval-Remaining Term))/(1-(1+WAC/12))(-Remaining Term)))
Where:
Beginning Period Balance equals the balance at Period X
WAC equals the weighted average coupon at Period X
Payment Interval equals Age Y minus Age X
Remaining Term equals the weighted average maturity of the remaining
pool at period X.
"Accelerated Amortization Period" means the period beginning on the
earliest to occur of (i) the date that is one calendar year after the Conversion
Date; (ii) the date on which Lender declares the commencement of the Accelerated
Amortization Period following an Event of Default, as provided in Section 8.02;
and (iii) the date on which an Event of Default of the type described under
Section 8.01(e) or 8.01(f) occurs.
"Accrual Period" means with respect to any Payment Date the period from
and including the previous Payment Date to, but excluding, such Payment Date;
provided that with respect to the first Payment Date occurring after the
extension of any Loan hereunder, the Accrual Period for such Loan shall be the
period from and including the applicable Funding Date, to but excluding such
first Payment Date.
"Affected Party" means Lender, State Street Global Markets, LLC, as
agent for Lender, any Program Support Provider and any assignee or participant
of any Program Support Provider.
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"Affiliate" means, with respect to any Person, any other Person
which, directly or indirectly, controls, is controlled by, or is under common
control with, such Person. For purposes of this definition, "control" (together
with the correlative meanings of "controlled by" and "under common control
with") means possession, directly or indirectly, of the power (a) to vote 50% or
more of the securities or interests (on a fully diluted basis) having ordinary
voting power for the directors or managing partners (or their equivalent) of
such Person, or (b) to direct or cause the direction of the management or
policies of such Person, whether through the ownership of voting securities or
interests, by contract, or otherwise.
"Applicable Margin" means, for each Loan and (i) any date prior to
the occurrence and continuance of a Collateral Shortfall Event (and after any
cure thereof), 4.25% or (ii) any date that occurs on or after the occurrence and
during the continuance of a Collateral Shortfall Event, 6.25%.
"Available Commitment" means, as of any date of determination, the
amount by which the Commitment Amount exceeds the Total Outstanding Loans.
"Blocked Account" means the account designated as such, established and
maintained pursuant to Section 10.01(a) of this Loan Agreement.
"Borrower" means Onyx Acceptance Funding Corporation, a Delaware
corporation.
"Borrowing Base" means, as of any date of determination, the lesser of
(a) $30,000,000 and (b) the sum of the Collateral Value Model Amounts for all
Pledged Residual Interest Instruments.
"Borrowing Base Certificate" has the meaning assigned to such term in
Section 2.03(a) of this Loan Agreement.
"Business Day" means any day other than (i) a Saturday or Sunday or
(ii) a day on which banking institutions in New York or Boston are authorized or
obligated by law or executive order to be closed. Any action required to be
taken on a day which falls on a day other than a Business Day shall be taken on
the next Business Day. Any notice received after 3:00 p.m., Boston time on any
Business Day shall be deemed receive on the next succeeding Business Day.
"Change in Control" means Onyx fails to own 100% of the capital stock
of Borrower.
"Clean-up Call" means the purchase by Onyx, as servicer under an
Eligible Securitization Transaction related to a Pledged Residual Interest
Instrument, of the collateral underlying such Eligible Securitization
Transaction on or prior to the first Distribution Date (as defined in the
Eligible Securitization Documents) occurring after the Distribution Date on
which the Pool Balance (as defined in the Eligible Securitization Documents)
reaches 10% or less of the Original Pool Balance (as defined in the Eligible
Securitization Documents).
"Closing Date" means January 13, 2004.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
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"Collateral" shall have the meaning provided in Section 4.01(a) of this
Loan Agreement.
"Collateral Shortfall Event" shall have the meaning provided in Section
2.05(a) of this Loan Agreement.
"Collateral Value Model Amount" means, with respect to each Pledged
Residual Interest Instrument, an estimate of the present value of cash flows
related thereto using a financial model developed and owned by Woodcliff
Company, LLC in the format existing as of the Closing Date, which financial
model has been delivered to Borrower and State Street Global Markets, LLC, as
agent for Lender, prior to the Closing Date and which financial model shall not
be changed or altered after the Closing Date without the consent of both Lender
and Borrower. The model will be run monthly by Borrower within three (3)
Business Days of receipt of the Monthly Servicer Reports. Lender, in its
discretion, may recalculate any Collateral Value Model Amount and if such
recalculation differs from Borrower's calculation, Lender's calculation shall be
used, absent manifest error. The key assumptions utilized in the calculation of
the Collateral Value Model Amount include, as applicable:
(i) The base case cumulative net credit loss assumptions will
be 4.5% for each of Onyx Acceptance Owner Trust 2001-B and Onyx
Acceptance Owner Trust 2001-C, unless the actual cumulative net credit
loss percentages, as set forth in the related Monthly Servicer Report,
exceed the base case cumulative net credit loss assumption percentages
initially assumed in the model, in which case, the base case cumulative
net credit loss assumption percentages for such related Eligible
Securitization Transaction will be increased as set forth in the model
and specified below.
The base case cumulative net credit loss assumptions will be
3.5% for each of Onyx Acceptance Owner Trust 2001-D, Onyx Acceptance
Owner Trust 2002-A, Onyx Acceptance Owner Trust 2002-B, Onyx Acceptance
Owner Trust 2002-C and Onyx Acceptance Owner Trust 2002-D, unless the
actual cumulative net credit loss percentages, as set forth in the
related Monthly Servicer Report, exceed the base case cumulative net
credit loss assumption percentages initially assumed in the model, in
which case the base case cumulative net credit loss assumption
percentages for such related Eligible Securitization Transaction will
be increased as set forth in the model and specified below.
If the cumulative net credit loss percentage with respect to
any given month for any given Eligible Securitization Transaction as a
percentage of the base case cumulative net credit loss assumption
percentage for that Eligible Securitization Transaction exceeds the
level specified for the corresponding month in Table A, then a "Credit
Loss Assumption Revaluation Event" has occurred.
Other than as set forth in the following paragraph, the
occurrence of the Credit Loss Assumption Revaluation Event will result
in a permanent increase in the base case cumulative net credit loss
assumption for that particular transaction by the greater of:
(1) 0.05%; or
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(2) the actual excess (i.e., the excess of the actual
cumulative net credit loss percentage over the product of the base case
cumulative net credit loss assumption percentage multiplied by the
percentage specified for the applicable month in Table A).
Subsequent, consecutive occurrences of Credit Loss Assumption
Revaluation Events will result in an increase in the base case
cumulative net credit loss assumption for that particular transaction
by the multiple of consecutive months breached and the greater of (1)
and (2) above.
TABLE A
Cumulative Net
Credit Loss
Month Percentage
----- ----------
1 0.000%
2 0.000%
3 0.341%
4 0.780%
5 1.804%
6 3.998%
7 6.728%
8 9.751%
9 12.969%
10 16.967%
11 20.819%
12 24.671%
13 28.181%
14 31.789%
15 35.056%
16 38.372%
17 42.272%
18 45.929%
19 48.903%
20 52.072%
21 54.803%
22 57.094%
23 59.532%
24 62.457%
25 64.749%
26 66.309%
27 68.454%
28 70.648%
29 72.355%
30 74.500%
31 76.304%
32 78.157%
33 80.156%
34 81.570%
35 83.130%
36 84.983%
37 86.251%
38 87.811%
39 89.127%
40 89.956%
41 91.224%
42 92.199%
43 93.028%
44 93.759%
45 94.149%
46 94.539%
47 94.929%
48 95.319%
49 95.709%
50 96.099%
51 96.490%
52 96.880%
53 97.270%
54 97.660%
55 98.050%
56 98.440%
57 98.830%
58 99.220%
59 99.610%
60 100.000%
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See Exhibit C for examples of the application of this assumption.
(ii) Credit losses on each Eligible Securitization Transaction will
be two times the base case net credit losses for such Eligible
Securitization Transaction.
(iii) Any cash held in the Reserve Account or the Blocked Account
will accrue interest at the State Street Global Advisors net
offered Money Market Rate.
(iv) Future cash flows available for repayment of the Note will be
discounted at a rate equal to the sum of (a) the 2 year SWAP
rate (ask) as quoted on Bloomberg as USSWAP2 and (b) 6.25%.
(v) The prepayment speed for each Eligible Securitization
Transaction will be 1.75 ABS.
(vi) Each Clean-up Call will be exercised; provided, however:
(A) if (1) Onyx fails to exercise a Clean-up Call with
respect to any Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument and
(2) delivers (a) a certificate to Lender certifying
that it has adequate liquidity to exercise such
Clean-up Call but has made a business determination
not to do so and (b) any other documentation or
information requested by Lender in support of such
certificate, then, for purposes of calculating the
Collateral Value Model Amount, it will be assumed
(until the related Pledged Residual Interest
Instrument is released from the Lien created by the
Loan Agreement) that the Clean-up Call will not be
exercised for such Eligible Securitization
Transaction related to such Pledged Residual Interest
Instrument; or
(B) if (1) Onyx fails to exercise a Clean-up Call with
respect to any Eligible Securitization Transaction
related to a Pledged Residual Interest Instrument and
(2) clause A has not been satisfied, then, for
purposes of calculating the Collateral Value Model
Amount, it will be assumed (until clause (A) is
satisfied, provided such clause (A) is satisfied
within 30 days of Onyx's failure to exercise the
Clean-up Call) that the Clean-up Call will not be
exercised for any Eligible Securitization
Transactions related to any Pledged Residual Interest
Instrument; or
Each of Borrower and Lender acknowledges that such party has received
and reviewed the "Collateral Value Model" used for the calculation of the
Collateral Value Model Amount, and each party expressly approves such Collateral
Value Model for all purposes of this Loan Agreement, including for purposes of
calculating the Borrowing Base.
"Commitment Amount" means $30,000,000.
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"Commitment Fee" shall have the meaning provided in Section 2.09 of
this Loan Agreement.
"Conversion Date" means the first anniversary of the Closing Date;
provided, however, that if Lender, in its sole discretion, opts to extend the
term of this Loan Agreement, the "Conversion Date" shall be the date specified
by Lender as such in the writing to Borrower prior to the Conversion Date.
"Credit Enhancer" means XL Capital Assurance Inc., MBIA Insurance
Corporation and/or any other entity which is not an Affiliate of Borrower that
issues any surety bond, letter of credit or other credit enhancement in
connection with any securitization transaction in which a Trust is the issuer.
"Credit Trigger Event" shall have the meaning provided in Section 9.01
of this Loan Agreement.
"Default" means an Event of Default or any condition, act or event that
with notice or lapse of time or both would constitute an Event of Default.
"Dollars" and "$" means lawful money of the United States of America.
"Eligible Residual Interest Instrument" shall have the meaning provided
in Section 2.05(c) of this Loan Agreement.
"Eligible Securitization Documents" shall mean, collectively, the
Eligible Securitization Transfer Documents and all agreements, documents,
instruments and certificates executed and delivered in connection with any
securitization transaction which from time to time becomes an Eligible
Securitization Transaction in accordance with the terms of this Agreement and
with respect to which the Residual Interest Instrument becomes a Pledged
Residual Interest Instrument.
"Eligible Securitization Transfer Documents" shall have the meaning
provided in Section 10.02 of this Loan Agreement.
"Eligible Securitization Transactions" means each securitization
approved by Lender from time to time pursuant to Section 2.05(b) for which the
Residual Interest Instrument related thereto is an Eligible Residual Interest
Instrument and which is partially supported by internal credit enhancements in
the form of a separate Spread Account.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and all rulings
issued thereunder.
"ERISA Affiliate" means with respect to any Person (a) any corporation
which is a member of the same controlled group of corporations (within the
meaning of Section 414(b) of the Code) as such Person, (b) a partnership or
other trade or business (whether or not incorporated) under common control
(within the meaning of Section 414(c) of the Code) with such Person, (c) a
member of the same affiliated service group (within the meaning of section
414(m) of the Code) as such Person, any corporation described in clause (a)
above or any
A-6
partnership or other trade or business described in clause (b) above or (d) any
other Person or entity which would be treated as a single employer with such
Person under Section 4001(b) of ERISA.
"ERISA Termination Event" means a Reportable Event, the filing of a
notice of intent to terminate under Section 4041(c) of ERISA or any other event
or condition which is reasonably likely to constitute grounds under Section 4042
of ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan.
"Event of Default" shall have the meaning provided in Section 8.01 of
this Loan Agreement.
"FDIC" means the Federal Deposit Insurance Corporation.
"Final Scheduled Maturity Date" means the date that is eight (8) years
after the occurrence of the Conversion Date.
"▇▇▇▇▇" means Onyx Acceptance Financial Corporation, a Delaware
corporation.
"Funding Date" means, with respect to a Loan, the date set forth in the
Notice of Borrowing on which Lender makes such Loan to Borrower hereunder and
which shall constitute a Permitted Funding Date.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America, applied on a consistent basis.
"Galleon Cost of Funds" means, on any day, a per annum interest rate,
as determined by Lender, equivalent to (i) if Lender is funding the applicable
portion of its investment in the Note with commercial paper notes, the "weighted
average cost" related to the issuance of Lender's commercial paper notes or any
portion thereof designated by Lender or its agent (and which may also be
allocated in part to the funding of other assets of Lender); provided, however,
that if any component of such rate is a discount rate, such component shall be
converted to an interest bearing equivalent rate per annum and (ii) otherwise,
LIBOR. As used above, "weighted average cost" shall consist of (i) the actual
interest rate paid to purchasers of Lender's commercial paper notes, (ii) dealer
fees and commissions to commercial paper dealers in connection with the issuance
of such commercial paper notes and (iii) interest on other borrowing or funding
sources of Lender (other than under any liquidity facility) to fund small or odd
dollar amounts that are not easily accommodated in the commercial paper market.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government and any court or arbitrator.
"Indebtedness" as applied to any Person, means (i) all items (except
items of capital or surplus or of retained earnings) which in accordance with
GAAP would be included in determining total liabilities as shown on the
liability side of the balance sheet of such Person as of the date of which
Indebtedness is to be determined, (ii) all indebtedness secured by any mortgage,
pledge, lien or conditional sale or other title retention agreement to which any
A-7
property or asset owned or held by such Person is subject, whether or not the
indebtedness secured thereby shall have been assumed, and (iii) all indebtedness
of others which such Person has directly or indirectly guaranteed, endorsed
(otherwise than for collection or deposit in the ordinary course of business),
discounted or sold with recourse or agreed (contingently or otherwise) to
purchase or repurchase or otherwise acquire, or in respect of which such Person
has agreed to supply or advance funds (whether by way of loan, stock purchase,
capital contributions or otherwise) or otherwise to become directly or
indirectly liable.
"Indemnified Party" has the meaning assigned to such term in Section
11.02 of this Loan Agreement.
"Initial Pledged Residual Interest Instruments" has the meaning
assigned to such term in Section 2.05(c) of this Loan Agreement.
"Intercreditor Agreement" means that certain Intercreditor Agreement,
dated as of January 13, 2004, by and among Borrower, Credit Suisse First Boston
(Europe) Limited, Credit Suisse First Boston LLC, ▇▇▇▇▇▇▇ ▇▇▇▇▇ International,
Merrill, Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and Galleon Capital, LLC.
"Insurance Agreement" means the agreement pursuant to which, with
respect to any Eligible Securitization Transaction related to Pledged Residual
Interest Instruments, the Credit Enhancer agrees to issue a surety bond,
financial guarantee insurance policy or other similar credit enhancement with
respect to the obligations of the related Trust.
"Investment Company Act" means the Investment Company Act of 1940, as
amended.
"Investment Earnings" means, with respect to the Blocked Account and
Reserve Account, the investment earnings on amounts on deposit in the applicable
account.
"IRS" means the Internal Revenue Service, and its successors
"Lender" means Galleon Capital, LLC and its successors and assigns
under this Loan Agreement.
"LIBOR" means, for each Accrual Period, the rate per annum for the
second London Business Day preceding the first day of each Accrual Period shown
on page 3750 of Telerate or any successor page as the composite offered rate for
London interbank deposits for a 30-day period, as shown under the heading "USD"
as of 11:00 a.m. (London time); provided that in the event no such rate is
shown, the LIBOR shall be the rate per annum (rounded upwards, if necessary, to
the nearest 1/16th of one percent) based on the rates at which Dollar deposits
for a 30-day period are displayed on page "LIBOR" of the Reuters Screen as of
11:00 a.m. (London time) on the date of determination (it being understood that
if at least two such rates appear on such page, the rate will be the arithmetic
mean of such displayed rates); provided further, that in the event fewer than
two such rates are displayed, or if no such rate is relevant, the LIBOR shall be
the rate per annum equal to the average of the rates at which deposits in
Dollars are offered by State Street Bank and Trust Company at approximately
11:00 a.m. (London time) on the date of determination to prime banks in the
London interbank market for a 30-day period.
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"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement and any financing lease
having substantially the same economic effect as any of the foregoing).
"Loan" shall have the meaning set forth in Section 2.01(a) of this Loan
Agreement.
"Loan Agreement" means this Residual Interest Loan and Security
Agreement, as the same may be amended, supplemented or otherwise modified from
time to time in accordance with the terms hereof.
"Loan Documents" means, collectively, this Loan Agreement, the Note,
the Intercreditor Agreement and all other documents and instruments executed and
delivered in connection herewith or therewith and any appendices, annexes,
schedules and exhibits thereto.
"Material Adverse Change" means a material adverse change in, or the
disclosure or discovery of any information not previously disclosed to Lender
which Lender deems material and adverse relating to, the business, operations,
properties or condition (financial or otherwise) of Borrower, Onyx or ▇▇▇▇▇.
"Material Adverse Effect" means a material adverse effect on (a) the
Pledged Residual Interest Instruments, (b) the property, business or condition
(financial or otherwise) of Borrower, Onyx or ▇▇▇▇▇ (c) the ability of Borrower,
Onyx or ▇▇▇▇▇ to perform its obligations under any of the Loan Documents to
which it is a party, (d) the validity or enforceability of any of the Loan
Documents, (e) the rights and remedies of Lender under any of the Loan
Documents, (f) the timely payment of the principal of or interest on the Loans
or other amounts payable in connection therewith or (h) the Collateral or
Lender's first priority perfected security interest therein.
"Minimum Loan Amount" means $500,000.
"Minimum Servicing Balance" shall mean the aggregate outstanding amount
of all motor vehicle installment contracts owned or serviced by Onyx under any
pooling and servicing agreement or (without duplication) sale and servicing
agreement.
"Monthly Servicer Report" means, with respect to each Pledged
Residual Interest Instrument, each report delivered on a monthly basis by the
servicer to the indenture trustee related to the performance of the assets of
the related Trust and certain other information under any Eligible
Securitization Transaction related to such Pledged Residual Interest Instrument.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc., or its successor.
"Multiemployer Plan" means a Plan which constitutes a "multiemployer
plan" as defined in Section 4001(a)(3) of ERISA.
"Net Income" means net income (or loss), for the period in question,
determined in accordance with GAAP.
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"Net Worth" means, with respect to any Person, on any date of
determination, the Total Assets minus Total Liabilities of such Person,
determined in accordance with GAAP.
"Net Yield" with respect to any Eligible Securitization Transaction
relating to a Pledged Residual Instrument, shall have the meaning assigned to
such term in the related Eligible Securitization Documents.
"Note" shall have the meaning assigned to such term in Section 2.02(a)
of this Loan Agreement.
"Note Interest Rate" shall have the meaning assigned to such term in
Section 2.04(b) of this Loan Agreement
"Notice of Borrowing" shall have the meaning assigned to such term in
Section 2.03(a) of this Loan Agreement.
"Officers' Certificate" or "Officer's Certificate" means a certificate
signed by any of the chairman of the board, the president, any executive vice
president, any senior vice president, or any treasurer or secretary of Borrower.
"Onyx" means Onyx Acceptance Corporation, a Delaware corporation and
the parent of Borrower.
"Operating Account" means the Onyx Acceptance Corporation account,
number 4159359082, maintained at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇.
"Opinion of Counsel" means an opinion of counsel acceptable to Lender
in form and substance acceptable to Lender.
"Payment Date" means the first Business Day following the date which is
the 15th day of each month (or if the 15th day is not a Business Day, the next
succeeding Business Day) beginning in January 2004.
"Payoff Letter" means a letter that (i) is addressed to Lender, (ii) is
signed by a Prior Lender, (iii) identifies particular Previously Financed
Residual Interest Instruments, (iv) specifies that, upon receipt of a specified
dollar amount by such Prior Lender, all Liens and other interests of such Prior
Lender in such Previously Financed Residual Interest Instruments shall
automatically be released and, if applicable, transferred to Borrower, without
any further action by any Person, and (v) is otherwise satisfactory in form and
substance satisfactory to Lender.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permitted Funding Date" means (i) with respect to the initial Loan
made hereunder, any Business Day for which a Notice of Borrowing has been
received by Lender at least three (3) Business Days prior to the applicable
Funding Date, and (ii) with respect to any Loan other than the initial Loan made
hereunder, any Payment Date prior to the Conversion Date for which a
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Notice of Borrowing has been received by Lender at least three (3) Business Days
prior to such Payment Date.
"Permitted Investments" means:
(i) Direct obligations of, and obligations fully guaranteed as
to timely payment by, the United States of America;
(ii) Demand deposits, time deposits or certificates of deposit
of any depository institution or trust company incorporated under the
laws of the United States of America or any state thereof (or any
domestic branch of a foreign bank) and subject to supervision and
examination by federal or state banking or depository institution
authorities; provided, however, that at the time of the investment or
contractual commitment to invest therein, the commercial paper or other
short-term unsecured debt obligations (other than such obligations the
rating of which is based on the credit of a Person other than such
depository institution or trust company) thereof shall have a
short-term credit rating of A-1+ or better by S&P and P-1 or better
from Moody's;
(iii) Commercial paper having, at the time of the investment
or contractual commitment to invest therein, a rating from Moody's of
P-1 or better and a rating of A-1+ or better from S&P;
(iv) Investments in money market funds having a rating from
Moody's in the highest investment category granted thereby and a rating
of AAA from S&P;
(v) Demand deposits, time deposits and certificates of deposit
that are fully insured by the FDIC;
(vi) Bankers' acceptances issued by any depository institution
or trust company referred to in clause (ii) above;
(vii) Repurchase obligations with respect to any security that
is a direct obligation of, or fully guaranteed by, the United States of
America or any agency or instrumentality thereof the obligations of
which are backed by the full faith and credit of the United States of
America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (ii) above; and
(viii) Any other investments approved in writing by Lender.
"Person" means any individual, corporation, company, association,
partnership, joint venture, limited liability company, trust, unincorporated
association, government (or any agency, instrumentality or political subdivision
thereof) or any other entity of whatever nature.
"Plan" means any employee benefit plan defined in Section 3(3) of ERISA
in respect of which Borrower, Onyx or any ERISA Affiliate thereof is or at any
time within the immediately preceding five years was an "employer" as defined in
Section 3(5) of ERISA or may have, or in the past five years have had,
liability, including but not limited to liability as a substantial
A-11
employer, within the meaning of Section 4063 of ERISA and liability as a
contributing sponsor under Section 4069 of ERISA
"Pledged Residual Interest Instrument" shall have the meaning assigned
to such term in Section 4.01(a) of this Loan Agreement.
"Pool Factor" shall mean the percentage equivalent of a fraction, the
numerator of which is the outstanding principal balance of notes or certificates
issued in connection with an Eligible Securitization Transaction related to a
Pledged Residual Interest Instrument as of any date of calculation, and the
denominator of which is the outstanding principal balance of notes or
certificates originally issued in connection with such Eligible Securitization
Transaction.
"Previously Financed Residual Interest Instrument" means any Residual
Interest Instrument that at any time was subject to a Lien (other than the Lien
arising hereunder).
"Prior Lender" means any creditor, purchaser or other Person (other
than Lender) that has held a Lien on a Residual Interest Instrument to be
included in the Borrowing Base.
"Proceeds" means whatever is receivable or received from or upon the
sale, lease, license, collection, use, exchange or other disposition, whether
voluntary or involuntary, of any Collateral, including "proceeds" as defined in
the UCC, any and all proceeds of any insurance, indemnity, warranty or guaranty
payable under or in connection with any of the Collateral, any and all payments
(in any form whatsoever) made or due and payable from time to time in connection
with any requisition, confiscation, condemnation, seizure or forfeiture of all
or any part of the Collateral by any Governmental Authority (or any Person
acting under color of Governmental Authority), any and all other amounts from
time to time paid or payable under or in connection with any of the Collateral
or for or on account of any damage or injury to or conversion of any Collateral
by any Person, any and all other tangible or intangible property received upon
the sale or disposition of Collateral, and all proceeds of proceeds.
"Program Support Agreement" with respect to Lender, means and includes
any agreement entered into by any Program Support Provider providing for the
issuance of one or more letters of credit for the account of Lender, the
issuance of one or more surety bonds for which Lender is obligated to reimburse
the applicable Program Support Provider for any drawings thereunder, the sale by
Lender to any Program Support Provider of its interest hereunder (or portions
thereof or participations therein) or the making of loans or other extensions of
liquidity or credit to Lender in connection with Lender's commercial paper
program, together with any letter of credit, surety bond or other instrument
issued thereunder.
"Program Support Provider" means and includes any Person now or
hereafter extending liquidity or credit or having a commitment to extend
liquidity or credit to or for the account of, or to make purchases from Lender
or issuing a letter of credit, surety bond or other instrument to support any
obligations arising under or in connection with Lender's commercial paper
program.
"Rating Agencies" means Standard & Poor's and Moody's.
"Regulation D" means Regulation D of the Federal Reserve Board, or any
other regulation of the Federal Reserve Board that prescribes reserve
requirements applicable to
A-12
nonpersonal time deposits or "Eurocurrency Liabilities" as presently defined in
Regulation D, as in effect from time to time.
"Regulations T, U and X" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System (or any successor), as the same may be
amended, modified or supplemented and in effect from time to time.
"Regulatory Change" means, relative to any Affected Party
(a) any change in, or the adoption, implementation, phase-in or
commencement of effectiveness, after the date of this Agreement of, any
(i) United States federal or state law or foreign law
applicable to such Affected Party;
(ii) regulation, interpretation, directive, requirement or
request (whether or not having the force of law) applicable to such
Affected Party of (A) any court, Governmental Authority charged with
the interpretation or administration of any law referred to in clause
(a)(i) or of (B) any fiscal, monetary or other authority having
jurisdiction over such Affected Party; or
(iii) GAAP or regulatory accounting principles applicable to
such Affected Party and affecting the application to such Affected
Party of any law, regulation, interpretation, directive, requirement or
request referred to in clause (a)(i) or (a)(ii) above; or
(b) any change in the application to such Affected Party of any
existing law, regulation, interpretation, directive, requirement, request or
accounting principles referred to in clause (a)(i), (a)(ii) or (a)(iii) above
(other than such changes resulting from a change in the status of such Affected
Party). For avoidance of doubt, any interpretation or implementation of
Accounting Research Bulletin No. 51 by the Financial Accounting Standards Board
(including Interpretation No. 46: Consolidation of Variable Interest Entities)
shall constitute an adoption, change, request or directive, and any
implementation thereof shall be a "Regulatory Change".
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA or the regulations thereunder other than those events as to which the
thirty (30) day notice period is waived.
"Repurchase Price" means, for any Pledged Residual Interest Instrument
on any date of determination, an amount equal to (i) the Collateral Value Model
Amount for such Pledged Residual Interest Instrument on such date multiplied by
(ii) an amount equal to (a) the Total Outstanding Loans on such date divided by
(b) the sum of the Collateral Value Model Amounts for all Pledged Residual
Interest Instruments on such date.
"Required Information" with respect to any Subsequent Securitization
Transaction, shall mean: (i) the prospectus or, if a prospectus is not yet
available, a report outlining: initial pool balance; initial loan balance;
prefunding amount (if any); spread account initial deposit; spread account
maintenance level; spread account floor; spread account trigger levels; weighted
average
A-13
coupon; weighted average maturity; estimated note coupon rate; and (ii) Monthly
Servicer Reports to date (if any); (iii) original book value; (iv) current book
value; and (vi) pool selection, with tables showing breakdowns and averages of:
original balances; current balances; coupon (APR) rate report; original terms;
remaining terms; collateral code (e.g., new, used, new light truck, used light
truck); vehicle model years; borrower monthly incomes; borrower length of
employment; borrower length of residency; borrower debt ratios; loan to values;
and geographic distribution.
"Required Reserve Account Amount" means as of any date of determination
the greater of (a) the Note Interest Rate for the most recently ended Accrual
Period multiplied by the Total Outstanding Loans (after giving effect to the
Loans made on such date of determination, if applicable) and (b) the Required
Reserve Account Floor Amount.
"Required Reserve Account Floor Amount" means the lesser of (i)
$500,000 and (ii) the Total Outstanding Loans.
"Requirement of Law" means as to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Reserve Account" means the account designated as such, established and
maintained pursuant to Section 10.01(a) of this Loan Agreement.
"Reserve Account Available Amount" means, as of any date, all amounts
then on deposit in the Reserve Account (including, without limitation, all
Investment Earnings with respect to the Reserve Account).
"Residual Interest Instrument" means an instrument or certificate
evidencing 100% of the residual interest in a Trust, which represents the right
to receive amounts to be distributed or paid to the holders of the "Residual
Interests" as defined in and pursuant to the Eligible Securitization Documents.
"Residual Sale Agreements" means, collectively, (i) the Agreement for
Sale of Residual Certificates, dated as of September 3, 1998, between Onyx and
Borrower, (ii) the Amended and Restated Agreement for Sale of Residual
Certificates, dated as of May 2, 2003, between Onyx and Borrower and (iii) any
similar agreement pursuant to which Onyx conveys Residual Interest Instruments
to Borrower.
"Responsible Officer" means, as to any Person, the chief executive
officer or, with respect to financial matters, the chief financial officer of
such Person; provided, that in the event any such officer is unavailable at any
time he or she is required to take any action hereunder, Responsible Officer
shall mean any officer authorized to act on such officer's behalf as
demonstrated to Lender to its satisfaction.
"Secured Obligations" means the unpaid principal amount of, and
interest on, the Loans and all other obligations and liabilities of Borrower to
Lender or any Affected Party whether
A-14
direct or indirect, absolute or contingent, due or to become due, or now
existing or hereafter incurred, which may arise under, out of or in connection
with this Loan Agreement, the Note, any other Loan Document and any other
document made, delivered or given in connection herewith or therewith, whether
on account of principal, interest, reimbursement obligations, fees, indemnities,
costs, expenses (including, without limitation, all fees and disbursements of
counsel to Lender). For purposes hereof, "interest" shall include, without
limitation, interest accruing after the maturity of the Loans and interest
accruing after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to Borrower, whether
or not a claim for post-filing or post-petition interest is allowed in such
proceeding.
"Spread Account" means, with respect to each Eligible Securitization
Transaction, the named "Spread Account," together with all other cash collateral
accounts or other escrow or reserve accounts established and maintained by the
trustee for the benefit of security holders and/or the Credit Enhancer; provided
that each Spread Account is subject to certain maximum and minimum balances
determined on a pool-by-pool basis, depending on the performance of the
underlying motor vehicle installment contracts, and after the applicable maximum
Spread Account balance has been achieved, and subject to (i) a certain minimum
Spread Account balance being maintained, and (ii) a certain
overcollateralization requirement being met and maintained, excess cash is
released to the holders of the related Residual Interest Instruments. The
maximum Spread Account balance for a particular Eligible Securitization
Transaction may increase or decrease over time as a result of floors, caps and
triggers set forth in the related Insurance Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, or its
successor.
"Subsequent Securitization Transaction" shall have the meaning assigned
to such term in Section 2.05(b) of this Loan Agreement.
"Subsidiary" means, as to any Person, a corporation, partnership or
other entity of which shares of stock or other ownership interests having
ordinary voting power (other than stock or such other ownership interests having
such power only by reason of the happening of a contingency) to elect a majority
of the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
controlled, directly or indirectly through one or more intermediaries, or both,
by such Person.
"Total Assets" means, with respect to any Person, all assets of such
Person which may be properly classified as assets in accordance with GAAP.
"Total Liabilities" means, with respect to any Person, all Indebtedness
of such Person, and all other liabilities which may be properly classified as
liabilities in accordance with GAAP.
"Total Outstanding Loans" means, as of any date of determination, the
unpaid principal amount of all Loans outstanding hereunder.
"True Sale and Non-Consolidation Opinion" means that certain true sale
and non-consolidated opinion rendered by ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP to Lender and the
Rating Agencies on the
A-15
date hereof related to the contribution of Residual Interest Instruments from
▇▇▇▇▇ to Onyx and from Onyx to Borrower.
"Trust" means the statutory trust established pursuant to a Trust
Agreement to accept and hold a discrete pool of motor vehicle installment
contracts conveyed by ▇▇▇▇▇, Onyx or an Affiliate of either of them pursuant to
the related Eligible Securitization Documents, the beneficial ownership of which
is evidenced by the Residual Interest Instrument issued by such statutory trust.
"Trust Agreement" means an agreement between ▇▇▇▇▇ or Onyx, as
depositor, and another Person, as owner trustee, pursuant to which a Trust is
established and governed.
"UCC" means the Uniform Commercial Code as in effect from time to time
in the applicable jurisdiction.
"Warehouse Facility" means any funding arrangement with Triple-A One
Funding Corporation or Eiffel Funding, LLC to the extent such arrangement is
entered into to finance the purchase or origination of motor vehicle installment
contracts by Onyx or ▇▇▇▇▇ for the purpose of pooling such motor vehicle
installment contracts prior to their securitization or sale in the ordinary
course of business.
A-16
EXHIBIT A
PROMISSORY NOTE
January 13, 2004
Amount: U.S. $30,000,000
FOR VALUE RECEIVED, Onyx Acceptance Funding Corporation (the
"Borrower") unconditionally promises to pay on the Final Scheduled Maturity Date
(as defined in the Loan Agreement referred to below) to the order of State
Street Global Markets, LLC, as agent for Galleon Capital, LLC (the "Lender") in
federal or other immediately available funds in lawful money of the United
States of America the principal sum of THIRTY MILLION DOLLARS (U.S. $30,000,000)
or, if less, the aggregate unpaid principal amount of the Loans made by Lender
to Borrower pursuant to the Loan Agreement, and to pay interest thereon from the
date hereof until this Note is repaid in full at the rates per annum and in the
manner set forth in the Loan Agreement.
The principal of and interest on this Note shall be payable in
immediately available funds without set-off or counterclaim, at the rates, on
the dates and otherwise in the manner set forth in the Loan Agreement.
This Note is issued pursuant to the terms of the Residual Interest Loan
and Security Agreement dated as of January __, 2004, among Lender and Borrower
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Loan Agreement"), and is subject to the terms
thereof and is entitled to the benefits therein provided.
This Note is secured by and entitled to the benefits specified in
Article IV of the Loan Agreement, and reference is hereby made to such Section
for a description of the nature and extent of the Collateral and the rights of
the parties to and beneficiaries of the Loan Agreement in respect of such
Collateral.
In addition to and not in limitation of the foregoing and the
provisions of the Loan Agreement, the undersigned further agrees, subject only
to any limitation imposed by applicable law, to pay on demand all expenses,
including reasonable attorneys' fees and legal expenses, incurred by the holder
of this Note, in endeavoring to collect any amounts payable hereunder which are
not paid when due, whether by acceleration or otherwise.
Upon the occurrence of an Event of Default (as defined in the Loan
Agreement), the principal of and accrued interest on this Note may be declared
due and payable in the manner and with the effect provided in the Loan
Agreement, without presentment, demand, protest or notice of any kind, each of
which is hereby expressly waived by Borrower.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAW
OF THE STATE OF CALIFORNIA.
ONYX ACCEPTANCE FUNDING
CORPORATION
By: _________________________
Name:
Title:
EXHIBIT B
BORROWING BASE CERTIFICATE
FOR PERIOD ENDED: JANUARY 15, 2004
Prior Month Borrowing Base per Collateral Value Model
----------------
Current Month Borrowing Base per Collateral Value Model $0
----------------
Underlying Securitizations and current month valuations
Trust Valuation
----- ---------
OT2001B ----------------
OT2001C ----------------
OT2001D ----------------
OT2002A ----------------
OT2002B ----------------
OT2002C ----------------
OT2002D ----------------
Performance Compliance of Underlying Securitizations
Trust Net Yield In Compliance?
----- --------- --------------
OT2001B 4.00% Yes
OT2001C 4.00% Yes
OT2001D 4.00% Yes
OT2002A 4.00% Yes
OT2002B 4.00% Yes
OT2002C 4.00% Yes
OT2002D 4.00% Yes
New Eligible Securitization Transactions to be added to facility
--------------
--------------
Prior Month Borrowing Outstandings
--------------
Current Amount Requested Borrowing
--------------
Each of Onyx and Borrower hereby certify that Onyx and Borrower are in
compliance with all of their respective covenants, representations and
warranties contained within the Loan Agreement, that (i) the calculations set
forth above have been gleaned from the output of the Collateral Value Model and
that the integrity of the Collateral Value Model is the same as it was at the
execution of the Loan Agreement, other than changes agreed to by Borrower and
Lender, and (ii) the Borrower has paid all Commitment Fees due and payable under
the Loan Agreement, and (iii) the Borrower has used the proceeds of all Loans
solely for purposes permitted by the Loan Agreement.
ONYX ACCEPTANCE FUNDING CORPORATION ONYX ACCEPTANCE CORPORATION
By:---------------------------------- By:---------------------------------
Name:-------------------------------- Name:-------------------------------
Title:------------------------------- Title:------------------------------
EXHIBIT C
EXAMPLE #1
2001-C
------------------------------------------------------------------
MONTH % OF LOSS MONTH ACTUAL CUMULATIVE LOSS ASSUMPTION
----- --------- ----- ---------------------- ----------
1 0.000% 29 2.52% 4.50%
2 0.000%
3 0.341%
4 0.780% 56.00%(2.52% / 4.50%)
5 1.804%
6 3.998%
7 6.728% CORRESPONDING PERIOD
8 9.751%
9 12.969%
10 16.967%
11 20.819%
12 24.671%
13 28.181%
14 31.789%
15 35.056%
16 38.372%
17 42.272%
18 45.929%
19 48.903% NO TRIGGER. 56% DOES NOT EXCEED 72.355%
20 52.072%
21 54.803%
22 57.094%
23 59.532%
24 62.457%
25 64.749%
26 66.309%
27 68.454%
28 70.648%
29 72.355%
30 74.500%
31 76.304%
32 78.157%
33 80.156%
34 81.570%
35 83.130%
36 84.983%
37 86.251%
38 87.811%
39 89.127%
40 89.956%
41 91.224%
42 92.199%
43 93.028%
44 93.759%
45 94.149%
46 94.539%
47 94.929%
48 95.319%
49 95.709%
50 96.099%
51 96.490%
52 96.880%
53 97.270%
54 97.660%
55 98.050%
56 98.440%
57 98.830%
58 99.220%
59 99.610%
60 100.000%
EXAMPLE #2
2001-C
----------------------------------------------------------------------------
MONTH % OF LOSS MONTH ACTUAL CUMULATIVE LOSS ASSUMPTION
----- --------- ----- ---------------------- ----------
1 0.000% 29 3.32% 4.50%
2 0.000%
3 0.341%
4 0.780% 73.78%(3.32% / 4.50%)
5 1.804%
6 3.998%
7 6.728% CORRESPONDING PERIOD
8 9.751%
9 12.969%
10 16.967%
11 20.819%
12 24.671%
13 28.181%
14 31.789%
15 35.056%
16 38.372%
17 42.272%
18 45.929%
19 48.903% TRIGGER. 73.78% DOES EXCEED 72.355%
20 52.072% WE NOW NEED TO CALCULATE BY
21 54.803% HOW MUCH IN ORDER TO FIGURE OUT THE PERMANENT INCREASE TO THE
22 57.094% ASSUMPTION
23 59.532%
24 62.457% Actual Cumulative Loss Amount: 3.32%
25 64.749% Target Trigger (72.355% * 4.50%): 3.26%
26 66.309% ----
27 68.454% Actual Difference: 0.06%
28 70.648% ----
29 72.355%
30 74.500% PER THE DOCUMENT WE INCREASE THE ASSUMPTION IN THE MODEL BY THE GREATER
31 76.304% OF (.05%*1) OR (THE ACTUAL DIFFERENCE*1) I.E.TIMES THE NUMBER OF
32 78.157% CONSECUTIVE VIOLATIONS OF THE TRIGGER
33 80.156%
34 81.570% SO, IN THIS EXAMPLE, WE WOULD INCREASE THE DIFFERENCE BY: 0.06%
35 83.130%
36 84.983%
37 86.251%
38 87.811%
39 89.127%
40 89.956%
41 91.224%
42 92.199%
43 93.028%
44 93.759%
45 94.149%
46 94.539%
47 94.929%
48 95.319%
49 95.709%
50 96.099%
51 96.490%
52 96.880%
53 97.270%
54 97.660%
55 98.050%
56 98.440%
57 98.830%
58 99.220%
59 99.610%
60 100.000%
EXAMPLE #3
2001-C
---------------------------------------------------------------------
MONTH % OF LOSS MONTH ACTUAL CUMULATIVE LOSS ASSUMPTION
----- --------- ----- ---------------------- ----------
1 0.000% 30 3.42% 4.56% NOTE ASSUMPTION
2 0.000% NOW CHANGED
3 0.341%
4 0.780%
5 1.804% 75.00%(3.42% / 4.56%)
6 3.998%
7 6.728% CORRESPONDING PERIOD
8 9.751%
9 12.969%
10 16.967%
11 20.819%
12 24.671%
13 28.181%
14 31.789%
15 35.056%
16 38.372%
17 42.272%
18 45.929%
19 48.903% TRIGGER. 75.00% DOES EXCEED 74.50%
20 52.072% WE NOW NEED TO CALCULATE BY
21 54.803% HOW MUCH THE ACTUAL EXCEEDS THE TRIGGER IN ORDER TO
22 57.094% FIGURE OUT THE PERMANENT INCREASE TO THE ASSUMPTION
23 59.532%
24 62.457% Actual Cumulative Loss Amount: 3.42%
25 64.749% Target Trigger (74.50% * 4.56%): 3.40%
26 66.309% ----
27 68.454% Actual Difference: 0.02%
28 70.648% ----
29 72.355%
30 74.500% PER THE DOCUMENT WE INCREASE THE ASSUMPTION IN THE MODEL
31 76.304% BY THE GREATER OF (.05%*2) OR (THE ACTUAL DIFFERENCE*2)
32 78.157% i.e.TIMES THE NUMBER OF CONSECUTIVE VIOLATIONS OF THE TRIGGER
33 80.156%
34 81.570% SO, IN THIS EXAMPLE, WE WOULD INCREASE THE DIFFERENCE BY: 0.05%*2 OR 0.10%
35 83.130%
36 84.983%
37 86.251%
38 87.811%
39 89.127%
40 89.956%
41 91.224%
42 92.199%
43 93.028%
44 93.759%
45 94.149%
46 94.539%
47 94.929%
48 95.319%
49 95.709%
50 96.099%
51 96.490%
52 96.880%
53 97.270%
54 97.660%
55 98.050%
56 98.440%
57 98.830%
58 99.220%
59 99.610%
60 100.000%