EXHIBIT 10.135
EXECUTION COPY
SUBORDINATED SECURITY AGREEMENT
SUBORDINATED SECURITY AGREEMENT dated as of January 9, 2003 (the
"Subordinated Security Agreement" or this "Agreement") between ONYX ACCEPTANCE
RECEIVABLES CORPORATION, a Delaware corporation ("Recco") and ONYX ACCEPTANCE
CORPORATION, a Delaware corporation (the "Seller").
W I T N E S S E T H :
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WHEREAS, pursuant to the Sale and Servicing Agreement (the "Sale
Agreement") dated as of January 9, 2003 between the Seller and Recco, the Seller
from time to time will sell to Recco, and Recco from time to time will purchase
from the Seller certain contracts secured by automobiles, vans and light trucks
(the "Contracts");
WHEREAS, a portion of the purchase price for the Contracts will be
represented by the Subordinated Note;
WHEREAS, Recco has entered into the Security Agreement dated as of the
date hereof (the "Security Agreement") with Eiffel Funding, LLC ("Eiffel"), CDC
Financial Products Inc. ("CDC"), Onyx Acceptance Corporation, as servicer (the
"Servicer"), and JPMorgan Chase Bank, as collateral agent (the "Collateral
Agent") pursuant to which Recco has granted to the Collateral Agent, for the
benefit of itself and the holders of the Obligations, a first priority security
interest in the Contracts and certain other collateral;
WHEREAS, in order to secure the Subordinated Note, Recco will grant to
the Seller a subordinated security interest in the Contracts and certain other
collateral, subject to the prior rights of the Collateral Agent, pursuant to
this Subordinated Security Agreement;
WHEREAS, the Seller's security interests in the Contracts and certain
other collateral granted pursuant to this Agreement is subordinated to the
rights of the Collateral Agent and its rights to exercise any remedies under
this Agreement are limited for so long as any amounts secured under the Security
Agreement are outstanding; and
WHEREAS, the Seller and Recco wish to enter into the Subordinated
Security Agreement as hereinafter provided;
NOW, THEREFORE, in consideration of the premises and to induce the
Seller to sell Contracts to Recco pursuant to the Sale Agreement, Recco hereby
agrees with the Seller as follows:
SECTION 1. Defined Terms.
(a) As used in this Subordinated Security Agreement or any
certificate or other document made or delivered pursuant hereto, the capitalized
terms used herein and therein shall, unless otherwise defined herein, have the
meanings assigned to them in the Definitions List dated as of the date hereof
that is attached as Exhibit A to the Credit Agreement dated as of the date
hereof among Recco, the Lenders and the Collateral Agent, as the same may be
amended,
modified, restated or amended and restated from time to time, which is
incorporated herein by reference (the "Definitions List").
(b) As used herein and in any certificate or other document made
or delivered pursuant hereto, accounting terms not defined in the Definitions
List and accounting terms partly defined in the Definitions List to the extent
not defined, shall have the respective meanings given to them under GAAP.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Subordinated Security Agreement shall refer to
this Subordinated Security Agreement as a whole and not to any particular
provision of this Subordinated Security Agreement, and paragraph references are
to this Subordinated Security Agreement unless otherwise specified.
(d) Capitalized terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
(e) The following terms that are defined in the UCC are used
herein as so defined: Accounts, Chattel Paper, Deposit Accounts, Documents,
General Intangibles, Instruments, Supporting Obligations, Tangible Chattel Paper
and Proceeds.
SECTION 2. Grant of Security Interest. As collateral security for the
prompt and complete payment and performance when due (whether at the stated
maturity or otherwise) of the Subordinated Note and all other obligations of
Recco to the Seller hereunder and under the Sale Agreement (collectively, the
"Subordinated Obligations") and subject to the prior rights of the Collateral
Agent under the Security Agreement, Recco hereby assigns, pledges, grants,
conveys, transfers, delivers and sets over to the Seller a security interest in
all Recco's right, title and interest in, to and under the following, whether
now owned or hereafter acquired, in each case, only as related to the Purchased
Contracts (collectively, the "Collateral"):
(a) all Chattel Paper related to the Purchased Contracts, and
other contracts and Supporting Obligations related to the Purchased Contracts
(as the same may be amended, modified, supplemented, restated or replaced from
time to time) and amounts paid or payable with respect thereto;
(b) all Files (including all Dealer Assignments) and Contract
Lists, and all right, title and interest of Recco in and to the documents,
agreements and instruments included in the Files, including, without limitation,
rights of recourse of Recco against Vehicle Dealers;
(c) all Insurance Policies and all rights of Recco in all
Insurance Policies;
(d) all security interests, Liens, guaranties, mortgages and other
encumbrances in favor of or assigned or transferred to Recco in and to Purchased
Contracts and Vehicles, and all accessions thereto and replacements thereof, and
in any other property in which a security interest is assigned or transferred to
Recco;
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(e) all of Recco's General Intangibles, Documents, Instruments,
Accounts, general ledger sheets, files, records, books of account, invoices,
bills, certificates or documents of ownership, bills of sale, business papers,
correspondence, tapes, cards, computer tapes and all other data and data storage
systems (whether in the possession of Recco or any other Person) relating to any
of the foregoing;
(f) all Deposit Accounts, moneys, deposits, funds, accounts and
instruments relating to the foregoing;
(g) each Lock-Box, the funds on deposit in the Clearing Account
pursuant to Section 5(d) of the Security Agreement, the Hedge Agreement Reserve
Account and the Collection Account (including, without limitation, all funds at
any time on deposit therein and all Permitted Investments in which such funds
may at any time be invested);
(h) the Sale Agreement and all other Operative Documents to which
Recco is a party, including, without limitation, all rights of Recco to amounts
due or to become due under or in connection with, and to enforce, such
agreements;
(i) any Hedge Agreement and any guarantees or other credit
enhancement associated therewith; and
(j) to the extent not otherwise included, all Proceeds and
products of any and all of the foregoing.
SECTION 3. Notice to Obligors. Subject to the terms of Section 21 hereof
and Section 5.3 of the Sale Agreement and of the other Operative Documents, at
any time upon the request of the Seller, Recco shall notify the Obligors that
the Purchased Contracts have been reassigned to the Seller and that payments in
respect thereof shall be made directly to the Seller. Subject to the terms of
Section 21 hereof and Section 5.3 of the Sale Agreement and of the other
Operative Documents, the Seller may in its own name or in the name of others
communicate with the Obligors to verify with them to its satisfaction the
existence, amount and terms of any Purchased Contracts.
(a) Analysis of Contracts. Subject to the terms of Section 21
hereof and Section 5.3 of the Sale Agreement and of the other Operative
Documents, the Seller shall have the right to make test verifications of the
Purchased Contracts in any manner and through any medium that it considers
advisable, and Recco shall furnish or cause to be furnished by the Servicer all
such assistance and information as the Seller may require in connection
therewith. In addition, at any time and from time to time, upon the Seller's
request, Recco shall cause independent public accountants or others satisfactory
to the Seller to furnish to the Seller reports showing reconciliations, aging
and test verifications of, and trial balances for, the Purchased Contracts.
(b) Proceeds. Subject to the terms of Section 21 hereof and
Section 5.3 of the Sale Agreement and of the other Operative Documents, any
Proceeds, when collected by Recco or the Servicer, shall be forthwith turned
over to the Seller by Recco or the Servicer (as the case may
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be) in the exact form received, duly endorsed to the Seller, and until so turned
over, shall be held by Recco or the Servicer (as the case may be) in trust for
the Seller. Such Proceeds shall continue to be collateral security for all of
the Subordinated Obligations and shall not constitute payment thereof until
applied as set forth in the Security Agreement. Subject to the terms of Section
21 hereof and Section 5.3 of the Sale Agreement and of the other Operative
Documents, upon the request of the Seller, Recco shall deliver or cause to be
delivered to the Seller (or such other Person as then may be acting as custodian
for the Purchased Contracts) all Files relating to the Purchased Contracts,
including original and other documents evidencing, and relating to, the
transactions which created the Purchased Contracts, including, without
limitation, all original orders, invoices, receipts and similar documents.
(c) Document Delivery. Subject to the terms of Section 21 hereof
(it being understood that for so long as the Security Agreement is in effect the
provisions of that Agreement shall control), as necessary, Recco shall ▇▇▇▇ the
computer tape with respect to each Purchased Contract and File to reflect the
interest of the Seller.
SECTION 4. Representations and Warranties. Recco hereby represents and
warrants that:
(a) Title; No Other Liens. Except for the Lien granted to the
Collateral Agent pursuant to the Security Agreement and the Lien granted to the
Seller pursuant to this Subordinated Security Agreement and the other Liens
permitted pursuant to any of the other Operative Documents, Recco owns each item
of the Collateral free and clear of any and all Liens or claims of others. No
security agreement, financing statement or other public notice with respect to
all or any part of the Collateral is on file or of record in any public office,
except such as may have been filed in favor of the Collateral Agent pursuant to
the Security Agreement and in favor of the Seller pursuant to this Subordinated
Security Agreement or as may be permitted pursuant to any Operative Document.
(b) Perfected Liens. The Liens granted pursuant to this
Subordinated Security Agreement constitute perfected Liens on the Collateral in
favor of the Seller, subject only to the prior Lien of the Collateral Agent, and
are enforceable as such against all creditors of and purchasers from Recco.
(c) Chief Executive Office; Incorporation. Recco's chief executive
office and chief place of business is located at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ and its state of incorporation is
Delaware.
(d) Locations. All Collateral is located at the addresses listed
on Schedule 4(d) hereto.
SECTION 5. Covenants. Subject to the terms of Section 21 hereof and
Section 5.3 of the Sale Agreement and of the other Operative Documents, Recco
covenants and agrees with the Seller that until the Subordinated Obligations are
paid in full and the Sale Agreement is terminated:
(a) Further Documentation. At any time and from time to time, upon
the written request of the Seller, and at the sole expense of Recco, Recco will
promptly and duly execute
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and deliver such further instruments and documents and take such further action
as the Seller may request for the purpose of obtaining or preserving the full
benefits of this Subordinated Security Agreement and of the rights and powers
herein granted, including, without limitation, the filing of any financing or
continuation statements under the UCC with respect to the Liens created hereby,
including all steps necessary to maintain perfection of the security interest of
Recco in each Vehicle; provided, however, that Recco shall notify the
Controlling Party of any such proposed actions and shall not be obligated to
take any action which, in the reasonable judgment of the Controlling Party,
would violate or conflict with the terms of the Security Agreement or any other
Operative Document.
(b) Maintenance of Records. Recco will keep and maintain, or cause
to be maintained by the Servicer, at its cost and expense satisfactory and
complete records of the Collateral, including, without limitation, a record of
all payments received and all credits granted with respect to the Purchased
Contracts. Recco will ▇▇▇▇ or cause the Servicer to ▇▇▇▇ its books and records
pertaining to the Collateral to evidence this Subordinated Security Agreement
and the subordinated security interest granted hereby. With the prior written
consent of the Controlling Party, at any time upon the request of the Seller,
Recco shall, during normal business hours, turn over or cause the Servicer to
turn over any books and records to the Seller or to its designated
representatives.
(c) Compliance with Laws, etc. Recco will comply with all
Requirements of Law applicable to the Collateral or any part thereof or to the
operation of Recco's business; provided, however, that Recco may contest any
Requirement of Law in any reasonable manner which shall not, in the sole opinion
of the Seller, adversely affect the Seller's rights or the priority of its Liens
on the Collateral.
(d) Compliance with Terms etc. Recco will perform and comply with
all its Contractual Obligations relating to the Subordinated Note.
(e) Limitation on Liens on Collateral. Recco will not create,
incur or permit to exist, will defend the Collateral against, and will take such
other action as is necessary to remove, any Lien or claim on or to the
Collateral, other than the Liens created by the Security Agreement, the Liens
created hereby and other than as permitted pursuant to the Operative Documents,
and will defend the right, title and interest of the Seller in and to any of the
Collateral against the claims and demands of all Persons whomsoever.
(f) Limitations on Dispositions of Collateral. Recco will not
sell, transfer, lease or otherwise dispose of any of the Collateral, or attempt,
offer or contract to do so, except as permitted by the Operative Documents.
(g) Limitations on Modifications, Waivers, Extensions of Purchased
Contracts. Recco will not, and will not permit the Servicer to, (i) amend,
modify, terminate or waive any provision of any Purchased Contract in any manner
which could have an adverse effect on the value of such Purchased Contract as
Collateral, (ii) fail to exercise promptly and diligently each
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and every right which Recco may have under each Purchased Contract and (iii) act
otherwise than in accordance with the Credit and Collection Policy.
(h) Limitations on Discounts, Compromises, Extensions of
Contracts. Other than pursuant to the Credit and Collection Policy, Recco will
not, and will not permit the Servicer to, grant any extension of the time of
payment of any of the Purchased Contracts, compromise, compound or settle the
same for less than the full amount thereof, release, wholly or partially, any
Person liable for the payment thereof, or allow any credit or discount
whatsoever thereon.
(i) Changes in Locations, Name, etc. Recco will not, without
providing thirty (30) days prior written notice to the Seller, and without
filing any UCC financing statements necessary or desirable (in the opinion of
the Seller) to maintain the perfection and priority of the Seller's security
interest in the Collateral, as provided for herein (i) change the location of
its state of incorporation from that specified in Section 4(c) or remove its
books and records from such location, or (ii) change its name, identity or
corporate structure to such an extent that any financing statement filed by the
Seller in connection with this Subordinated Security Agreement would become
misleading.
SECTION 6. Seller's Appointment as Attorney-in-Fact.
(a) Powers. Subject to the terms of Section 21 hereof and Section
5.3 of the Sale Agreement and the other Operative Documents, and subject to the
powers granted to the Collateral Agent pursuant to Section 9 of the Security
Agreement, Recco hereby irrevocably constitutes and appoints the Seller and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full irrevocable power and authority in the place
and stead of Recco and in the name of Recco or in its own name, from time to
time in the Seller's discretion, for the purpose of carrying out the terms of
this Subordinated Security Agreement, to take any and all lawful and appropriate
action and to execute any and all documents and instruments which may be
necessary or desirable to accomplish the purposes of this Subordinated Security
Agreement, and, without limiting the generality of the foregoing, Recco hereby
gives the Seller the power and right, on behalf of Recco, without notice to or
assent by Recco, to do the following:
(i) upon the occurrence and during the continuance of any
Wind-Down Event, in the name of Recco or its own name, or otherwise, to take
possession of and endorse and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due under any Instrument, General
Intangible or Purchased Contract and to file any claim or to take any other
action or proceeding in any court of law or equity or otherwise deemed
appropriate by the Seller for the purpose of collecting any and all such moneys
due under any Instrument, General Intangible or Purchased Contract whenever
payable;
(ii) to pay or discharge taxes and Liens levied or placed
on or threatened against the Collateral; and
(iii) upon the occurrence and during the continuance of any
Wind-Down Event, (A) to direct any party liable for any payment under any of the
Collateral to make
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payment of any and all moneys due or to become due thereunder directly to the
Seller or as the Seller shall direct and to notify the Lock-Box Banks to follow
the instructions of the Seller; (B) to ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and other amounts due or
to become due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (D) to commence and prosecute any suits, actions or proceedings at
law or in equity in any court of competent jurisdiction to collect the
Collateral or any proceeds thereof and to enforce any other right in respect of
any Collateral; (E) to defend any suit, action or proceeding brought against
Recco with respect to any Collateral; (F) to settle, compromise or adjust any
suit, action or proceeding described in clause (E) above and, in connection
therewith, to give such discharges or releases as the Seller may deem
appropriate; (G) generally, to sell, transfer, pledge and make any agreement
with respect to or otherwise deal with any of the Collateral pursuant to Section
8 hereof as fully and completely as though the Seller were the absolute owner
thereof for all purposes, and to do, at the Seller's option and Recco's expense,
at any time, or from time to time, all lawful acts and things which the Seller
deems necessary to protect, preserve or realize upon the Collateral and the
Seller's Liens thereon and to effect the intent of this Subordinated Security
Agreement, all as fully and effectively as Recco might do; and (H) compel the
transfer of Recco's interest in all rights (by license, sublicense or otherwise)
of any computer software necessary to collect the Purchased Contracts.
Recco hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof.
(b) Other Powers. Subject to the terms of Section 21 hereof and
Section 5.3 of the Sale Agreement and the other Operative Documents and subject
to the other powers granted to the Collateral Agent pursuant to Section 9 of the
Security Agreement, Recco also authorizes the Seller, at any time and from time
to time, to execute, in connection with the sale provided for in Section 8
hereof, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral.
(c) No Duty on Seller's Part. The powers conferred on the Seller
hereunder are solely to protect the Seller's interests in the Collateral and
shall not impose any duty upon it to exercise any such powers. The Seller shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to Recco for any act or failure to act
hereunder, except for its own gross negligence or willful misconduct.
SECTION 7. Performance by Seller of Recco's Obligations. Subject to the
terms of Section 21 hereof and Section 5.3 of the Sale Agreement and of the
other Operative Documents, if Recco fails to perform or comply with any of its
agreements contained herein, the Seller, as provided for by the terms of this
Subordinated Security Agreement, shall itself perform or comply, or otherwise
cause performance or compliance, with such agreement.
SECTION 8. Remedies. Subject to the terms of Section 21 hereof and
Section 5.3 of the Sale Agreement and of the other Operative Documents, if a
Wind-Down Event shall occur and be
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continuing, the Seller may exercise in addition to all other rights and remedies
granted to it in this Subordinated Security Agreement and in any other
instrument or agreement securing, evidencing or relating to the Subordinated
Obligations, all rights and remedies of a secured party under the UCC. Without
limiting the generality of the foregoing, the Seller, without demand of
performance or other demand, presentment, protest, advertisement or notice of
any kind (except the notice specified below of time and place of public or
private sale) to or upon Recco or any other Person (all and each of which
demands, defenses, advertisements and notices are hereby waived), may in such
circumstances forthwith collect, receive, appropriate and realize upon the
Collateral, or any part thereof, and/or may forthwith sell, lease, assign, give
an option or options to purchase, or otherwise dispose of and deliver said
Collateral or any part thereof (or contract to do any of the foregoing), in one
or more parcels at public or private sale or sales, at any exchange, broker's
board or office of the Seller or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for cash or on credit
or for future delivery without assumption of any credit risk. The Seller shall
have the right upon any such public sale or sales, and, to the extent permitted
by law, upon any such private sale or sales, to purchase the whole or any part
of said Collateral so sold, free of any right or equity of redemption in Recco,
which right or equity is hereby waived or released. Recco further agrees, at the
Seller's request, to assemble the Collateral and the Files and make them
available to the Seller at places which the Seller shall select, whether at
Recco's premises or elsewhere. The Seller shall apply the net proceeds of any
such collection, recovery, receipt, appropriation, realization or sale, after
deducting all costs and expenses of every kind incurred therein or incidental to
the care or safekeeping of any of the Collateral or in any way relating to the
Collateral or the rights of the Seller hereunder, including, without limitation,
attorneys' fees and disbursements, to the payment in whole or in part of the
Subordinated Obligations, in such order as the Seller may elect, and only after
such application and after the payment by the Seller of any other amount
required by any provision of law, including, without limitation, Section
9-615(a)(3) of the UCC, need the Seller account for the surplus, if any, to
Recco. To the extent permitted by applicable law, Recco waives all claims,
damages, and demands against the Seller arising out of the repossession,
retention or sale of the Collateral. If any notice of a proposed sale or
disposition of Collateral shall be required by law, such notice shall be deemed
reasonably and properly given if given (effective upon dispatch) in any manner
provided in the Sale Agreement at least ten (10) days before such sale or
disposition. Recco shall remain liable for any deficiency if the proceeds of any
sale or other disposition of the Collateral are insufficient to pay the
Subordinated Obligations and the fees and disbursements of any attorneys
employed by the Seller to collect such deficiency.
SECTION 9. Limitation on Seller's Duties in Respect of Collateral. The
Seller's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under the UCC or otherwise,
shall be to deal with it in the same manner as the Seller deals with similar
property for its own account. Neither the Seller nor any of its directors,
officers, employees or agents shall be liable for failure to demand, collect or
realize upon all or any part of the Collateral or for any delay in doing so or
shall be under any obligation to sell or otherwise dispose of any Collateral
upon the request of Recco or otherwise.
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SECTION 10. Powers Coupled with an Interest. All powers of attorney,
authorizations and agencies herein contained with respect to the Collateral are
irrevocable and are powers coupled with an interest.
SECTION 11. Severability. Any provision of this Subordinated Security
Agreement which is prohibited or unenforceable in any jurisdiction shall, as to
such jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 12. Assignment. Recco does hereby acknowledge that the Seller may
pledge or otherwise transfer the Subordinated Note and all security therefore
granted hereunder with the prior written consent of Eiffel and the Program
Manager.
SECTION 13. Section and Paragraph Headings. The section and paragraph
headings used in this Subordinated Security Agreement are for convenience of
reference only and are not to affect the construction hereof or be taken into
consideration in the interpretation hereof.
SECTION 14. No Waiver; Cumulative Remedies. The Seller shall not by any
act (except pursuant to the execution of a written instrument pursuant to
Section 15 hereof), delay, indulge, omit or otherwise be deemed to have waived
any right or remedy hereunder or in any breach of any of the terms and
conditions hereof. No failure to exercise, nor any delay in exercising, on the
part of the Seller, any right, power or privilege hereunder shall operate as a
waiver thereof. No single or partial exercise of any right, power or privilege
hereunder shall preclude any other or further exercise thereof or the exercise
or any other right, power or privilege. A waiver by the Seller of any right or
remedy hereunder on any one occasion shall not be construed as a bar to any
right or remedy which the Seller would otherwise have on any future occasion.
The rights and remedies herein provided are cumulative, may be exercised singly
or concurrently and are not exclusive of any rights or remedies provided by law.
SECTION 15. Waivers and Amendments; Successors and Assigns. None of the
terms or provisions of this Subordinated Security Agreement may be waived,
amended, supplemented or otherwise modified except by a written instrument
executed by Recco and the Seller with the prior written consent of the
Collateral Agent and the Program Manager; provided, however, that for so long as
the Security Agreement shall be in effect, if the Collateral Agent shall have
consented to a waiver, amendment, supplement or modification under the Security
Agreement, the consent of the Seller shall be deemed automatically given under
the comparable provision of this Subordinated Security Agreement. No amendment
shall be effective without prior written notice thereof to S&P and ▇▇▇▇▇'▇. This
Subordinated Security Agreement shall be binding upon the successors and assigns
of the parties hereto and shall inure to the benefit of each of the parties
hereto and their successors and assigns.
SECTION 16. Integration. This Subordinated Security Agreement represents
the agreement of Recco with respect to the subject matter hereof, and there are
no promises, undertakings, representations or warranties by the Seller relative
to subject matter hereof not expressly set forth or referred to herein or in the
other Operative Documents.
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SECTION 17. Counterparts. This Subordinated Security Agreement may be
executed by one or more of the parties to this Subordinated Security Agreement
on any number of separate counterparts, and all of said counterparts taken
together shall be deemed to constitute one and the same instrument.
SECTION 18. GOVERNING LAW. THIS SUBORDINATED SECURITY AGREEMENT AND THE
RIGHTS AND OBLIGATIONS OF THE PARTIES HERETO UNDER THIS SUBORDINATED SECURITY
AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE
WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS
PRINCIPLES WHICH MAY REQUIRE THE APPLICATION OF THE LAWS OF ANY OTHER
JURISDICTION.
SECTION 19. Termination and Release.
(a) This Subordinated Security Agreement and the security
interests created or granted hereby shall remain in full force and effect until
the indefeasible payment in full in cash of the Subordinated Obligations and the
Subordinated Note, at which time, following the receipt by the Seller of (i)
written notice from the Program Manager that the Subordinated Obligations have
been so paid, and (ii) payment in full of the Subordinated Note, the security
interest created or granted hereby shall terminate and the Seller shall, execute
and deliver such documents and instruments (including without limitation UCC
termination statements) necessary to evidence the termination of such security
interest, as Recco may reasonably request.
(b) (i) Recco Request for Release. Recco intends from time to
time to sell Purchased Contracts and other related Collateral (x) to entities
which will then privately or publicly sell securities backed by such Purchased
Contracts and Collateral or (y) in whole loan bulk sales to Onyx Acceptance
Corporation, Onyx Acceptance Financial Corporation or with the prior written
consent of the Controlling Party, unaffiliated third parties, in each case, for
a cash purchase price of not less than the aggregate Outstanding Balance of such
Purchased Contracts plus accrued and unpaid interest thereon and other unpaid
Finance Charges with respect thereto. The proceeds of all sales by Recco
pursuant to clauses (x) and (y) above shall be applied first, to prepay the
Lender Notes in an amount such that no Borrowing Base Deficiency exists after
giving effect to such sale and such prepayment, second, to pay all amounts owing
to the Surety Provider, the Lenders, the Collateral Agent and the Program
Manager, and third, to prepay the Subordinated Note. Upon not less than five (5)
Business Days' prior written notice to the Seller, Recco may request that
specified Purchased Contracts and other related Collateral be released in
connection with such sales and prepayment. In connection with such request,
Recco shall execute and deliver to the Seller a Lien Release Request Certificate
in the form attached hereto as Exhibit A. In selecting the Purchased Contracts
enumerated in its Lien Release Request Certificate delivered to the Seller
pursuant hereto, Recco shall employ selection procedures which are not adverse
to the interests of the Seller.
(ii) Seller Release. Upon the release by the Collateral
Agent of its interest in whole or in part in the Purchased Contracts pursuant to
Section 23(b) of the Security Agreement, the Seller shall, at the sole expense
of Recco, execute and deliver a Seller Lien Release
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Certificate in the form attached hereto as Exhibit B which shall evidence the
release of its security interest in the Purchased Contracts released by the
Collateral Agent under the Security Agreement.
(iii) Documents and Filings. In connection with any such
release pursuant to this Section 19, Recco and the Seller, shall at the sole
expense of Recco, execute and deliver any documents and instruments necessary to
evidence the release of the Seller's security interest in such Purchased
Contracts and other Collateral, including without limitation, UCC release forms
prepared for filing in all appropriate jurisdictions.
SECTION 20. Conflict. In the event of any conflict between the terms of
this Subordinated Security Agreement, on the one hand, and the terms of the
Subordinated Note, Section 5.3 of the Sale Agreement or any other Operative
Document, on the other hand, the terms of the Subordinated Note, Section 5.3 of
the Sale Agreement or such other Operative Document, as the case may be, shall
prevail.
SECTION 21. Standstill on Exercise of Rights. The Seller and Recco agree
that neither the Seller nor any permitted assignee of the Seller may exercise or
take any action to enforce any of the rights granted by Recco to the Seller in
this Subordinated Security Agreement until such time as the holders of all of
the Obligations of Recco have been indefeasibly paid in full in cash.
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IN WITNESS WHEREOF, the parties hereto have caused this Subordinated
Security Agreement to be duly executed and delivered as of the date first above
written.
ONYX ACCEPTANCE RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
ONYX ACCEPTANCE CORPORATION
By:_______________________________
Name:
Title:
SCHEDULE 4(d)
Locations of Collateral
The Collateral is located at:
1. Onyx Acceptance Corporation
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2. ▇▇▇▇▇▇ DataBank
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EXHIBIT A
LIEN RELEASE REQUEST CERTIFICATE
from Recco to the Collateral Agent and Seller
pursuant to Section 23 of Security Agreement
and Section 19 of Subordinated Security Agreement
[date]
JPMorgan Chase Bank,
as Collateral Agent
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Attention: Institutional Trust Services/Structured Finance Services
Onyx Acceptance Corporation,
as Seller
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Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Re: Onyx Acceptance Receivables Corporation/
Commercial Paper Program - Request for Release of Lien
Ladies and Gentlemen:
Onyx Acceptance Receivables Corporation ("Recco") refers to
(i) the Security Agreement dated as of January 9, 2003 (as amended, supplemented
or otherwise modified, the "Security Agreement"), among Recco, Onyx Acceptance
Corporation and the Collateral Agent, and (ii) the Subordinated Security
Agreement dated as of January 9, 2003 (as amended, supplemented or otherwise
modified, the "Subordinated Security Agreement"), between Recco and Onyx
Acceptance Corporation. Terms not otherwise defined herein are used herein as
defined in the Definitions List dated January 9, 2003.
Recco submits this Lien Release Request Certificate pursuant
to Section 23 of the Security Agreement and Section 19 of the Subordinated
Security Agreement and requests that the Collateral Agent and the Seller release
(and the Seller cause its assignee to release) all of their liens on and
security interests in the assets described on Schedule 1 attached hereto (and
all proceeds thereof, all books, records and computer records pertaining thereto
and all other assets that constitute Collateral which are specifically related
to the assets described in Schedule 1).
ONYX ACCEPTANCE RECEIVABLES CORPORATION
By:_______________________________
Name:
Title:
EXHIBIT B
SELLER LIEN RELEASE CERTIFICATE
pursuant to Section 19 of Subordinated Security Agreement
[Date]
Onyx Acceptance Receivables Corporation
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Re: Partial Collateral Release
Ladies and Gentlemen:
We hereby refer to the Lien Release Request Certificate
submitted by Onyx Acceptance Receivables Corporation ("Recco") dated
__________________________, a copy of which is attached hereto (the "Request
Certificate"). Pursuant to the Request Certificate, Onyx Acceptance Corporation,
acting in its capacity as Seller under the Subordinated Security Agreement,
hereby releases (and represents and warrants that it has caused its assignee to
so release) its liens on and security interests in the assets identified in
Schedule 1 attached to the Request Certificate (and all proceeds thereof, all
books, records and computer records pertaining thereto and all other assets that
constitute Collateral which are specifically related to the assets described in
that Schedule 1).
ONYX ACCEPTANCE CORPORATION,
as Seller
By:_________________________________
Name:_______________________________
Title:______________________________