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EXHIBIT 4.1
ONYX ACCEPTANCE FINANCIAL CORPORATION
Seller
ONYX ACCEPTANCE CORPORATION
Servicer
and
BANKERS TRUST COMPANY
Trustee
POOLING AND SERVICING AGREEMENT
Dated as of March 1, 1998
ONYX ACCEPTANCE GRANTOR TRUST, 1998-1
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TABLE OF CONTENTS
Page
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ARTICLE I Definitions.......................................................... 1
SECTION 1.1. Definitions..................................................... 1
SECTION 1.2. Usage of Terms.................................................. 15
SECTION 1.3. Section References.............................................. 15
SECTION 1.4. Calculations.................................................... 15
SECTION 1.5. Accounting Terms................................................ 15
ARTICLE II Conveyance of the Contracts; Representation
and Warranties of the Seller......................................... 16
SECTION 2.1. Sale and Assignment of Contracts................................ 16
SECTION 2.2. Representations and Warranties.................................. 18
SECTION 2.3. Repurchase of Certain Contracts................................. 23
SECTION 2.4. Duties and Appointment of Custodian............................. 24
SECTION 2.5. Duties of Servicer Relating to the Contracts.................... 25
SECTION 2.6. Instructions; Authority to Act.................................. 26
SECTION 2.7. Indemnification................................................. 26
SECTION 2.8. Effective Period and Termination................................ 27
SECTION 2.9. Nonpetition Covenant............................................ 27
SECTION 2.10. Collecting Title Documents Not Delivered at
the Closing Date................................................ 28
ARTICLE III Administration and Servicing of Contracts............................ 28
SECTION 3.1. Duties of Servicer.............................................. 28
SECTION 3.2. Collection of Contract Payments................................. 30
SECTION 3.3. Realization Upon Contracts...................................... 30
SECTION 3.4. Insurance....................................................... 31
SECTION 3.5. Maintenance of Security Interests in Financed Vehicles.......... 31
SECTION 3.6. Covenants, Representations and Warranties of Servicer........... 32
SECTION 3.7. Purchase of Contracts Upon Breach of Covenant................... 33
SECTION 3.8. Servicing Compensation.......................................... 34
SECTION 3.9. Reporting by the Servicer....................................... 34
SECTION 3.10. Annual Statement as to Compliance............................... 36
SECTION 3.11. Annual Independent Certified Public Accountant's Report......... 36
SECTION 3.12. Access to Certain Documentation and Information
Regarding Contracts............................................. 37
SECTION 3.13. Fidelity Bond................................................... 37
SECTION 3.14. Indemnification; Third Party Claims............................. 37
SECTION 3.15. Reports to Certificateholders and the Rating Agencies........... 37
ARTICLE IV Distributions; Statements to Certificateholders...................... 38
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SECTION 4.1. Accounts........................................................ 38
SECTION 4.2. Collections; Transfer to Payahead Account;
Realization Upon Financial Guarantee Insurance Policy;
Net Deposit..................................................... 39
SECTION 4.3. Distributions................................................... 40
SECTION 4.4. Remittance Of Repurchase Amount................................. 41
SECTION 4.5. Statements to Certificateholders................................ 41
ARTICLE V The Certificates..................................................... 42
SECTION 5.1. The Certificates................................................ 42
SECTION 5.2. Execution, Authentication and Delivery of Certificates.......... 42
SECTION 5.3. Registration of Transfer and Exchange of Certificates........... 42
SECTION 5.4. Mutilated, Destroyed, Lost or Stolen Certificates............... 43
SECTION 5.5. Persons Deemed Owners........................................... 43
SECTION 5.6. Access to List of Certificateholders' Names and Addresses....... 43
SECTION 5.7. Maintenance of Office or Agency................................. 44
SECTION 5.8. Book-Entry Certificates......................................... 44
SECTION 5.9. Notices to Clearing Agency...................................... 45
SECTION 5.10. Definitive Certificates......................................... 45
SECTION 5.11. Appointment of Paying Agent..................................... 45
SECTION 5.12. Authenticating Agent............................................ 46
SECTION 5.13. Actions of Certificateholders................................... 47
ARTICLE VI The Seller........................................................... 48
SECTION 6.1. Liability of Seller; Indemnities................................ 48
SECTION 6.2. Merger or Consolidation of, or Assumption of
the Obligations of, Seller...................................... 48
SECTION 6.3. Limitation on Liability of Seller and Others.................... 49
SECTION 6.4. Seller Not to Resign............................................ 49
SECTION 6.5. Seller May Own Certificates..................................... 49
ARTICLE VII The Servicer......................................................... 49
SECTION 7.1. Liability of Servicer; Indemnities.............................. 49
SECTION 7.2. Corporate Existence; Status as Servicer; Merger................. 50
SECTION 7.3. Performance of Obligations...................................... 51
SECTION 7.4. The Servicer Not to Resign; Assignment.......................... 51
SECTION 7.5. Limitation on Liability of Servicer and Others.................. 52
ARTICLE VIII Default.............................................................. 52
SECTION 8.1. Events of Default............................................... 52
SECTION 8.2. Trustee to Act; Appointment of Successor........................ 54
SECTION 8.3. Notification to Certificateholders.............................. 54
SECTION 8.4. Waiver of Past Defaults......................................... 55
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SECTION 8.5. Insurer Direction of Insolvency Proceedings..................... 55
ARTICLE IX The Trustee.......................................................... 55
SECTION 9.1. No Power to Engage in Business or to Vary Investments........... 55
SECTION 9.2. Duties of Trustee............................................... 56
SECTION 9.3. Trustee's Assignment of Purchased Contracts..................... 58
SECTION 9.4. Certain Matters Affecting the Trustee........................... 58
SECTION 9.5. Trustee Not Liable for Certificates or Contracts................ 60
SECTION 9.6. Trustee May Own Certificates.................................... 60
SECTION 9.7. Trustee's Fees and Expenses..................................... 60
SECTION 9.8. Indemnity of Trustee............................................ 61
SECTION 9.9. Eligibility Requirements for Trustee............................ 61
SECTION 9.10. Resignation or Removal of Trustee............................... 61
SECTION 9.11. Successor Trustee............................................... 62
SECTION 9.12. Merger or Consolidation of Trustee.............................. 63
SECTION 9.13. Appointment of Co-Trustee or Separate Trustee................... 63
SECTION 9.14. Representations and Warranties of Trustee....................... 64
SECTION 9.15. Tax Returns..................................................... 65
SECTION 9.16. Trustee May Enforce Claims Without Possession
of Certificates................................................. 65
SECTION 9.17. Suits for Enforcement........................................... 65
SECTION 9.18. Maintenance of Office or Agency................................. 65
ARTICLE X Termination.......................................................... 66
SECTION 10.1. Termination of the Trust........................................ 66
SECTION 10.2. Optional Purchase of All Contracts.............................. 67
ARTICLE XI Miscellaneous Provisions............................................. 67
SECTION 11.1. Amendment....................................................... 67
SECTION 11.2. Protection of Title to Trust.................................... 68
SECTION 11.3. Limitation on Rights of Certificateholders...................... 70
SECTION 11.4. Governing Law................................................... 70
SECTION 11.5. Notices......................................................... 70
SECTION 11.6. Severability of Provisions...................................... 71
SECTION 11.7. Assignment...................................................... 71
SECTION 11.8. Certificates Nonassessable and Fully Paid....................... 71
SECTION 11.9. Third Party Beneficiaries....................................... 71
SECTION 11.10. Insurer Default or Insolvency................................... 71
SECTION 11.11. Tax Matters..................................................... 72
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EXHIBITS
Exhibit A - Form of Appointment of Custodian
Exhibit B - Form of Certificate
Exhibit C - Form of Financial Guarantee Insurance Policy
Schedule I - Schedule of Contracts
Schedule II- Schedule of Accounts
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This Pooling and Servicing Agreement, dated as of March 1, 1998, is made
with respect to the formation of the Onyx Acceptance Grantor Trust, 1998-1,
among Onyx Acceptance Financial Corporation, a Delaware corporation, as
originator of the Trust and Seller, Onyx Acceptance Corporation, a Delaware
corporation, as Servicer, and Bankers Trust Company, a New York banking
corporation, as Trustee.
W I T N E S S E T H:
In consideration of the mutual agreements herein contained, and of other
good and valuable consideration the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
SECTION 1.1 Definitions. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"Accounts" have the meaning specified in Section 4.1. The location and
account numbers of the Accounts as of the Closing Date are set forth on Schedule
II.
"Affiliate" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purpose of this definition, "control" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "controlling" or "controlled" have meanings
correlative to the foregoing.
"Aggregate Scheduled Balance" means, with respect to any date, the
aggregate of the Scheduled Balances of the Contracts as of such date.
"Aggregate Scheduled Balance Decline" means, with respect to any
Distribution Date, the amount by which the Aggregate Scheduled Balance of the
Contracts as of the beginning of such related Collection Period exceeds the
Aggregate Scheduled Balance of such Contracts as of the end of such related
Collection Period.
"Agreement" means this Pooling and Servicing Agreement and all
supplements, modifications and amendments hereto.
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"Amount Available" means, with respect to any Distribution Date, the sum
of (i) the Collection Account Amount Available for such Distribution Date, and
(ii) the Policy Claim Amount actually received by the Trustee for such
Distribution Date.
"Appointment of Custodian" means the letter agreement between the
Trustee and the Servicer substantially in the form attached hereto as Exhibit A.
"APR" means the annual percentage rate used to determine the total
interest expected to be charged over the term of a Contract as of its inception,
as shown on such Contract.
"Authenticating Agent" shall have the meaning specified in Section 5.12.
"Bank" means the institution designated as such pursuant to the
Insurance Agreement, or a successor Person pursuant to the Insurance Agreement,
and thereafter "Bank" shall mean such successor Person.
"Blanket Insurance Policy" means the Lender's Blanket Consumer Loan
Insurance Policy covering losses with respect to the Contracts, which policy has
been issued by United Financial Casualty Company and the Servicer's rights
therein with respect to the Contracts have been validly assigned to the Trustee
acting on behalf of the Trust.
"Book-Entry Certificates" means beneficial interests in the Certificates
referred to in Section 5.8, the ownership and transfers of which shall be made
through book entries by a Clearing Agency as described in Section 5.8.
"Business Day" means any day other than a Saturday, a Sunday or other
day on which commercial banking institutions or savings associations located in
Los Angeles, California or New York, New York are authorized or obligated by
law, regulation, executive order or governmental decree to be closed.
"Certificate" means a certificate executed and authenticated by the
Trustee substantially in the form of Exhibit B hereto.
"Certificate Distribution Amount" means, with respect to any
Distribution Date, the sum of the Interest Distribution for such Distribution
Date and the Principal Distribution for such Distribution Date, plus, but only
in the case of any Distribution Date in respect of which the Servicer purchases
the corpus of the Trust pursuant to Section 10.2, an amount equal to (a) the
Pool Balance with respect to such Distribution Date minus (b) the Principal
Distribution for such Distribution Date.
"Certificate Owner" means, with respect to a Book-Entry Certificate, the
Person who is the owner of such Book-Entry Certificate, as reflected on the
books of the Clearing Agency, or on the books of a direct or indirect Clearing
Agency Participant.
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"Certificate Register" and "Certificate Registrar" mean, respectively,
the register maintained and the registrar appointed pursuant to Section 5.3.
"Certificateholder" or "Holder" means the Person in whose name the
respective Certificate shall be registered in the Certificate Register, except
that, solely for the purposes of giving any notices, consents or waivers
pursuant to this Agreement, the interest evidenced by any Certificate registered
in the name of the Seller or the Servicer, or any Person controlling, controlled
by, or under common control with the Seller or the Servicer, shall not be taken
into account in determining whether the requisite percentage necessary to effect
any such consent shall have been obtained.
"Clearing Account" means Account No. 4159359173 in the name of the
Seller maintained at Xxxxx Fargo Bank, N.A.
"Clearing Agency" means an organization registered as a "clearing
agency" pursuant to Section 17A of the Securities Exchange Act of 1934, as
amended. The initial Clearing Agency shall be The Depository Trust Company.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time a Clearing
Agency effects book-entry transfers of securities deposited with the Clearing
Agency.
"Closing Date" means March -, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collection Account" means the account established and maintained as the
"Collection Account" pursuant to Section 4.1.
"Collection Account Amount Available" means, with respect to any
Distribution Date and the related Collection Period, the sum of (i) all payments
of Monthly P&I, all partial prepayments, all Full Prepayments, Net Liquidation
Proceeds and Net Insurance Proceeds in each case, collected with respect to the
Contracts during such Collection Period, less partial prepayments of Rule of
78's Contracts collected with respect to the Contracts during such Collection
Period which are deposited in the Payahead Account pursuant to Section 4.2(a),
(ii) amounts withdrawn from the Payahead Account pursuant to Section 4.1(b) and
deposited in the Collection Account in such Collection Period, and (iii) the
aggregate Repurchase Amount for Repurchased Contracts deposited in or credited
to the Collection Account pursuant to Section 4.4 on the day preceding the
Servicer Report Date next preceding such Distribution Date.
"Collection Period" means, with respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs;
provided that for Liquidated Contracts the Collection Period will be the period
from but excluding the sixth Business Day preceding the immediately preceding
Distribution Date to and including the sixth Business Day preceding such
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Distribution Date; provided, further, however, that with respect to the first
Distribution Date the "Collection Period" for Liquidated Contracts shall be the
period from and including the Cut-Off Date to and including the sixth Business
Day preceding such first Distribution Date.
"Contract" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement and all proceeds
thereof and payments thereunder, which contract or agreement has been executed
by an Obligor and pursuant to which such Obligor purchased or financed the
Financed Vehicle described therein, agreed to pay the deferred purchase price
(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such contract or agreement. Each
Contract shall have been (i) either originated by Onyx or a subsidiary of Onyx,
or shall have been originated by a Dealer and assigned to Onyx in accordance
with the assignment provisions set forth therein, and (ii) subsequently conveyed
to the Trust pursuant to this Agreement.
"Contract Documents" means, with respect to each Contract, (a) the
Contract and the original credit application fully executed by the Obligor
thereunder; (b) either (i) the original Title Document for the related Financed
Vehicle or a duplicate copy thereof issued or certified by the Registrar of
Titles which issued the original thereof (or, with respect to Financed Vehicles
registered in the State of California, evidence of the electronic Title
Document), together with evidence of perfection of the security interest in the
related Financed Vehicle granted by such Contract, as determined by the Servicer
to be permitted or required to perfect such security interest under the laws of
the applicable jurisdiction, or (ii) written evidence that the Title Document
for such Financed Vehicle showing Onyx or a subsidiary of Onyx as first
lienholder has been applied for; and (c) any agreement(s) modifying the Contract
(including, without limitation, any extension agreement(s)).
"Contract Files" means the Contract Documents and all other papers and
computerized records customarily kept by the Servicer in connection with
servicing contracts and loans comparable to the Contracts.
"Contract Number" means, with respect to any Contract included in the
Trust, the number assigned to such Contract by the Servicer, which number is set
forth in the Schedule of Contracts.
"Contract Rate" means (i) with respect to a Rule of 78's Contract, the
Recomputed Yield for such Contract used in accordance with the definition of the
term "Scheduled Balance" to derive the Scheduled Balance from time to time of
such Rule of 78's Contract, and (ii) with respect to a Simple Interest Contract,
the APR.
"Corporate Trust Office" means the principal corporate trust office of
the Trustee at which at any particular time its corporate trust business shall
be administered, which office at the time of the execution of this Agreement is
located at Four Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attn.: Corporate Trust
and Agency Group, Structured Finance Team, or at such other address as the
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Trustee may designate from time to time by notice to the Certificateholders, the
Seller, the Servicer and the Insurer.
"Custodian" means initially, the Trustee, and thereafter any custodian
that may be appointed by the Trustee pursuant to Section 2.4(b).
"Cut-Off Date" means March 1, 1998.
"Dealer" means the seller of a Financed Vehicle, which seller originated
and assigned the related Contract.
"Default" means any occurrence which with the giving of notice or the
lapse of time or both would become an Event of Default.
"Defaulted Contract" means, with respect to any Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in an
aggregate amount equal to two monthly installments of Monthly P&I or (ii) with
respect to which the related Financed Vehicle has been repossessed or
repossession efforts with respect to the related Financed Vehicle have been
commenced.
"Deficiency Notice" means, with respect to any Distribution Date, the
notice for payment under the Financial Guarantee Insurance Policy delivered by
the Trustee to the Insurer and the Bank pursuant to Section 4.2(c).
"Definitive Certificates" has the meaning set forth in Section 5.8.
"Depository Agreement" shall mean the agreement among the Seller, the
Trustee and the initial Clearing Agency, in the form currently used by the
Clearing Agency.
"Distribution Account" means the segregated trust account established by
the Trustee denominated "Distribution Account--GT 1998-1, Bankers Trust Company,
Trustee."
"Distribution Date" means the 15th day of each month or if such date
shall not be a Business Day, the following Business Day, commencing in April
1998.
"Distribution Date Statement" has the meaning set forth in Section 3.9.
"Due Date" means, as to any Contract, the date in each month upon which
an installment of Monthly P&I is due.
"Eligible Account" means (i) a trust account that is either (a)
maintained by the Trustee, (b) maintained with a depository institution or trust
company the commercial paper or other short-term debt obligations of which have
credit ratings from Standard & Poor's at least equal to "A-1" and from Moody's
equal to "P-1," which account is fully insured up to applicable limits by the
Federal Deposit
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Insurance Corporation or (c) maintained with a depository institution acceptable
to the Insurer, as evidenced by a letter from the Insurer to that effect or (ii)
a general ledger account or deposit account at a depository institution
acceptable to the Insurer, as evidenced by a letter from the Insurer to that
effect.
"Eligible Investments" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:
(a) direct obligations of, and obligations fully guaranteed as to timely
payment of principal and interest by, the United States of America or any agency
or instrumentality of the United States of America the obligations of which are
backed by the full faith and credit of the United States of America and, to the
extent, at the time of investment, acceptable to the Insurer and each Rating
Agency for securities having a rating equivalent to the rating of the
Certificates at the Closing Date, the direct obligations of, or obligations
fully guaranteed by, the Federal Home Loan Mortgage Corporation and the Federal
National Mortgage Association;
(b) demand and time deposits in, certificates of deposit of, banker's
acceptances issued by, or federal funds sold by any depository institution or
trust company (including the Trustee) incorporated under the laws of the United
States of America or any State and subject to supervision and examination by
Federal and/or State banking authorities, so long as at the time of such
investment or contractual commitment providing for such investment either (i)
the long-term, unsecured debt obligations of such depository institution or
trust company have credit ratings from Standard & Poor's at least equal to "AA-"
and from Moody's at least equal to "Aa2" or (ii) such depository institution is
acceptable to the Insurer as evidenced by a letter from the Insurer to the
Trustee;
(c) repurchase obligations with respect to (i) any security described in
clause (a) above or (ii) any other security issued or guaranteed as to timely
payment of principal and interest by an agency or instrumentality of the United
States of America, in either case entered into with any depository institution
or trust company (including the Trustee), acting as principal, described in
clause (b) above;
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States of America or any
state thereof which at the time of such investment or contractual commitment
providing for such investment have long-term, unsecured debt obligations rated
by Standard & Poor's "AA-" or better and by Moody's "Aa2" or better; provided,
however, that securities issued by any corporation will not be Eligible
Investments to the extent that investment therein will cause the then
outstanding principal amount of securities issued by such corporation and held
as part of the Trust to exceed 10% of the aggregate Outstanding Principal
Balances of the Contracts and all amounts of Eligible Investments held as part
of the Trust;
(e) commercial paper having the highest rating by Standard & Poor's and
Moody's at the time of such investment;
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(f) investments in money market funds or money market mutual funds
having a rating from Standard & Poor's and Moody's in the highest investment
category granted thereby, including funds for which the Trustee or any of its
Affiliates is investment manager or advisor; and
(g) such other obligations or securities acceptable to the Insurer, as
evidenced by a letter from the Insurer to the Trustee (which acceptability may
be revoked at any time by the Insurer).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means an event specified in Section 8.1.
"Final Distribution Date" means July 15, 2004.
"Financial Guarantee Insurance Policy" means the principal/interest
insurance policy issued by the Insurer to the Trustee, the form of which is
attached hereto as Exhibit C.
"Financed Vehicle" means, as to any Contract, the automobile or
light-duty truck, together with all accessions thereto, securing an Obligor's
indebtedness under such Contract.
"Full Prepayment" means any of the following: (a) with respect to any
Contract other than a Contract referred to in clause (ii), (iii) or (iv) of the
definition of the term "Liquidated Contract", payment by or on behalf of the
Obligor of the total amount required by the terms of such Contract to be paid
thereunder, which amount shall be at least equal to the sum of (i) 100% of the
Scheduled Balance of such Contract, (ii) interest accrued thereon to the date of
such payment at the APR; and (iii) any overdue amounts; or (b) with respect to
any Contract, payment by the Seller to the Trustee of the Repurchase Amount of
such Contract in connection with their repurchase of such Contract pursuant to
Sections 2.3, or payment by the Servicer of the Repurchase Amount of such
Contract in connection with the purchase of such Contract pursuant to Section
3.7 or the purchase of all Contracts pursuant to Section 10.2.
"Insurance Agreement" means the Insurance and Reimbursement Agreement to
be dated as of the Closing Date, among the Seller, the Servicer, the Trustee and
the Insurer as amended, modified or restated from time to time.
"Insurance Proceeds" means proceeds paid pursuant to the Blanket
Insurance Policy and amounts (exclusive of rebated premiums) paid by any insurer
under any other insurance policy related to a Financed Vehicle or a Contract.
"Insurer" means MBIA Insurance Corporation or its successor in interest.
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"Insurer Insolvency" means (i) the entry of a decree or order for relief
by a court or regulatory authority having jurisdiction in respect of the Insurer
in an involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or any other present or future federal or state bank bankruptcy,
insolvency, rehabilitation or similar law, or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Insurer or with respect to any substantial part of its property, or ordering the
winding up or liquidation of the affairs of the Insurer and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days; or (ii) the commencement by the Insurer of a voluntary case under the
federal bankruptcy laws, as now or hereafter in effect, or any other present or
future federal or state bankruptcy, insolvency, rehabilitation or similar law,
or the consent by the Insurer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Insurer or of any substantial part of its property or
the making by the Insurer of an assignment for the benefit of creditors or the
failure by the Insurer generally to pay its debts as such debts become due or
the taking of corporate action by the Insurer in furtherance of any of the
foregoing.
"Interest Distribution" means, with respect to any Distribution Date
(referred to in this definition as the "current Distribution Date"), interest
equal to the product of one-twelfth of the Pass-Through Rate and the Pool
Balance as of the end of the Collection Period immediately preceding the related
Collection Period (or, if the current Distribution Date is the first
Distribution Date, as of the Cut-Off Date) plus the amount of interest
previously due but not paid to Certificateholders, if any.
"Lien" means a security interest, lien, charge, pledge, equity, or
encumbrance of any kind other than tax liens, mechanics' liens, and any liens
that attach to the applicable Contract by operation of law.
"Liquidated Contract" means a Contract which (i) is the subject of a
Full Prepayment; or (ii) is a Defaulted Contract with respect to which
Liquidation Proceeds constituting, in the Servicer's reasonable judgment, the
final amounts recoverable in respect of such Defaulted Contract have been
received and deposited in the Collection Account; or (iii) is paid in full on or
after its Maturity Date; or (iv) has been a Defaulted Contract for four or more
Collection Periods and with respect to which Liquidation Proceeds have not been
deposited in the Collection Account; provided, however, that in any event a
Contract that is delinquent in the amount of five monthly installments of
Monthly P&I at the end of a Collection Period is a Liquidated Contract. The
Scheduled Balance of a Contract that becomes a Liquidated Contract shall be
reduced to zero as provided in the definition of "Scheduled Balance."
"Liquidation Expenses" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Servicer in connection with the realization of the full amounts due under any
Defaulted Contract (including the attempted liquidation of a Contract which is
brought current and is no longer in default during such attempted liquidation)
and the sale of any property acquired in respect thereof which are not
recoverable as Insurance Proceeds.
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"Liquidation Proceeds" means amounts received by the Servicer (before
reimbursement for Liquidation Expenses) in connection with the realization of
the full amounts due and to become due under any Defaulted Contract and the sale
of any property acquired in respect thereof.
"Maturity Date" means with respect to any Contract, the date on which
the last scheduled payment of such Contract shall be due and payable, as such
date may be extended pursuant to Section 3.2.
"Monthly P&I" means, with respect to any Contract, the amount of each
monthly installment payment of principal and interest payable to the Obligee of
such Contract in accordance with the terms thereof, exclusive of any charges
allocable to the financing of any insurance premium and charges which represent
late payment charges or extension fees.
"Moody's" means Xxxxx'x Investors Service, Inc. and its successors in
interest.
"Net Insurance Proceeds" means, with respect to any Contract, Insurance
Proceeds, net of any such amount applied to the repair of the related Financed
Vehicle, released to an Obligor in accordance with the normal servicing
procedures of the Servicer or representing expenses incurred by the Servicer and
recoverable under the applicable policy.
"Net Liquidation Proceeds" means the amount derived by subtracting from
the Liquidation Proceeds of such Contract the related Liquidation Expenses.
"Obligee" means, with respect to any Contract, the Person to whom an
Obligor is indebted under such Contract.
"Obligor" means, with respect to any Contract, the purchaser or the
co-purchasers of the Financed Vehicle or any other Person who owes payments
under such Contract.
"Officers' Certificate" means a Certificate signed by the Chairman, the
President or a Vice President, and by the Treasurer, an Assistant Treasurer, the
Controller, an Assistant Controller, the Secretary or an Assistant Secretary of
any Person delivering such Certificate and delivered to the Person to whom such
Certificate is required to be delivered. In the case of an Officers' Certificate
of the Servicer, at least one of the signing officers must be a Servicing
Officer. Unless otherwise specified, any reference herein to an Officers'
Certificate shall be to an Officers' Certificate of the Servicer.
"Onyx" means Onyx Acceptance Corporation and its successors in interest.
"Opinion of Counsel" means a written opinion of counsel (who may be
counsel to the Seller or the Servicer) acceptable to the Trustee and the
Insurer.
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"Original Pool Balance" means the Aggregate Scheduled Balance as of the
Cut-Off Date, which is $-.
"Outstanding" means, with respect to a Contract and as of the time of
reference thereto, a Contract that has not reached its Maturity Date, has not
been fully prepaid, has not become a Liquidated Contract and has not been
repurchased or purchased pursuant to Sections 2.3, 3.7 or 10.2.
"Outstanding Principal Balance" means, as of the Cut-Off Date, (i) with
respect to any Rule of 78's Contract, the amount set forth as the Outstanding
Principal Balance of such Contract on the Schedule of Contracts, such amount
being the total of all unpaid Monthly P&I due on or after the Cut-Off Date,
minus any unearned (or earned but unpaid) interest as of the Cut-Off Date
computed in accordance with the Rule of 78's, and (ii) with respect to any
Simple Interest Contract, the amount set forth as the Outstanding Principal
Balance of such Contract on the Schedule of Contracts, such amount being the
total of all principal payments due on or after the Cut-Off Date.
"Pass-Through Rate" means -% per annum (computed on the basis of a
360-day year of twelve 30-day months payable monthly).
"Payahead Account" means the account established and maintained as the
"Payahead Account" pursuant to Section 4.1.
"Paying Agent" shall mean the Person acting as such as provided in
Section 5.11.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, trust,
unincorporated organization, or government or any agency or political
subdivision thereof.
"Policy Claim Amount" means, with respect to each Distribution Date, the
amount, if any, by which the Certificate Distribution Amount plus the Servicing
Fee for such Distribution Date exceeds the Collection Account Amount Available
for such Distribution Date.
"Pool Balance" means, with respect to a Distribution Date, the Aggregate
Scheduled Balance of the Contracts as of the end of the related Collection
Period, exclusive of all Contracts that are not Outstanding at the end of such
Collection Period.
"Pool Factor" means, as of a Distribution Date, a six-digit decimal
figure equal to the Pool Balance with respect to such Distribution Date divided
by the Original Pool Balance.
"Preference Claim" has the meaning set forth in Section 8.5.
"Premium" shall have the meaning assigned thereto in the Insurance
Agreement.
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"Principal Distribution" means, with respect to any Distribution Date,
the Aggregate Scheduled Balance Decline for such Distribution Date; provided
that the Principal Distribution on the Final Distribution Date will include the
Aggregate Scheduled Balance of all Contracts that are Outstanding at the end of
the Collection Period immediately prior to the Final Distribution Date.
"Purchase Agreement" means the Sale and Servicing Agreement dated as of
September 8, 1994 between Onyx Acceptance Corporation as seller and Onyx
Acceptance Financial Corporation as purchaser, and as such agreement may have
been or may be modified, supplemented or amended from time to time.
"Rating Agencies" means Moody's and Standard & Poor's.
"Recomputed Actuarial Method" means a method of accounting pursuant to
which each payment of Monthly P&I due on a Rule of 78's Contract will be deemed
to consist of interest equal to the product of 1/12 of the Recomputed Yield for
such Contract and the Scheduled Balance of the Contract as of the preceding Due
Date for such Contract and of principal to the extent of the remainder of such
scheduled installment of Monthly P&I, which will cause the Outstanding Principal
Balance as of the Cut-Off Date to be amortized in full at the Recomputed Yield.
"Recomputed Yield" for any Rule of 78's Contract means the per annum
rate determined as of the Cut-Off Date, such that the net present value of the
remaining scheduled payments due on such Contract, discounted at such rate from
the Due Date for each such scheduled payment to the Due Date for such Contract
immediately preceding the Cut-Off Date, will equal the Outstanding Principal
Balance.
"Record Date" means, with respect to any Distribution Date, the Business
Day prior to such Distribution Date, unless Definitive Certificates have been
issued, in which case Record Date shall mean the last day of the immediately
preceding calendar month.
"Registrar of Titles" means the agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
"Repurchase Amount" means the amount, as of the date of purchase or
repurchase of any Contract, equal to the Scheduled Balance of such Contract as
of the Due Date in the Collection Period in which such purchase or repurchase
occurs plus interest on such Contract through such Due Date, to the extent not
previously collected.
"Repurchased Contract" means a Contract (i) purchased as of the Business
Day prior to the respective Servicer Report Date by the Servicer pursuant to
Section 3.7 or (ii) repurchased by the Seller pursuant to Section 2.3. The
Scheduled Balance of a Contract that becomes a Repurchased Contract shall be
reduced to zero as provided in the definition of "Scheduled Balance."
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"Responsible Officer" means any officer of the Trustee within the
Corporate Trust Office including any vice president, assistant vice president,
assistant treasurer, assistant secretary or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers with direct responsibility for the administration of this
Agreement, respectively, or to whom any corporate trust matter is referred
because of his knowledge of and familiarity with the particular subject.
"Rule of 78's Contract" means a Contract as to which the portion of
payments allocable to earned interest and principal thereunder is determined
according to the "Rule of 78's." Under the "Rule of 78's," the amount of each
payment allocable to interest on a Contract is determined by multiplying the
total amount of add-on interest payable over the term of the Contract by a
fraction, the denominator of which is equal to the sum of a series of numbers
representing the total number of monthly payments due under the Contract and the
numerator of which is the number of payments remaining before giving effect to
the payment to which the fraction is being applied.
"Schedule of Contracts" means the list of Contracts, attached hereto as
Schedule I, which are being sold to the Trust as part of the Trust Estate,
together with supplemental data regarding the Contracts calculated by Xxxxxxx
Xxxxx & Co. and verified by the Servicer. The Schedule of Contracts attached
hereto as Schedule I sets forth the Original Pool Balance, as well as the
following information with respect to each Contract in columns:
Contract Number ("ACCT NBR")
Date of Origination ("ORG DT")
Maturity Date ("MAT DT")
Monthly P&I ("P&I")
Original Principal Balance ("ORIG AMT")
Outstanding Principal Balance ("PRIN BAL")
Annual Percentage Rate ("APR")
In addition, the information contained in Schedule I shall also be contained on
a computer disk or tape (the "Disk") that shall be delivered by the Servicer to
the Trustee not later than the 5th Business Day following the Closing Date. The
Recomputed Yield and the Scheduled Balance of each Rule of 78's Contract for
each Due Date after the Cut-Off Date, computed in accordance with the definition
of Scheduled Balance set forth herein, as calculated by Xxxxxxx Xxxxx & Co. and
verified by the Servicer, shall supplement Schedule I and shall be a part of the
Schedule of Contracts and made available by the Servicer to the Trustee upon
reasonable request.
"Scheduled Balance" means, with respect to any Simple Interest Contract
as of the Cut-Off Date, the amount set forth as the "Original Principal Balance"
of such Contract on the Schedule of Contracts. "Scheduled Balance" means, with
respect to any Simple Interest Contract for the Due Date or any other date in
each month, the original principal balance of such Contract reduced by the
portion of Monthly P&I paid on or prior to the date of calculation that is
allocated to principal under the Simple Interest Method. "Scheduled Balance"
means, with respect to any Rule of 78's Contract
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for the Due Date in each month and as of the Cut-Off Date, the amount set forth
as the "Scheduled Balance" of such Contract for the Due Date or the Cut-Off
Date, as applicable, on the Schedule of Contracts. For a Rule of 78's Contract,
the "Scheduled Balance" of such Contract as of the Cut-Off Date or for any date
in each month shall be the present value as of the Cut-Off Date or other date of
calculation for the applicable month (determined as provided below), of all
payments of Monthly P&I on the Contract due after such month (or due during or
after the first Collection Period in the case of a Scheduled Balance as of the
Cut-Off Date). Such present value as of the Cut-Off Date shall be determined by
discounting, on a monthly basis, each such scheduled payment of Monthly P&I from
the Due Date for such payment back to the Cut-Off Date, using the Recomputed
Yield for such Contract as the discount rate. Such present value as of any date
in each month shall be determined by discounting, on a monthly basis, each such
scheduled payment of Monthly P&I from the Due Date for such payment back to the
Due Date for such Contract in the Collection Period in which the date of
calculation falls, using the Recomputed Yield for such Contract as the discount
rate. The Scheduled Balance of a Rule of 78's Contract that becomes a Liquidated
Contract or a Repurchased Contract shall be reduced to zero as of the close of
business on the Due Date for such Contract in the Collection Period in which
such Contract became a Liquidated Contract or a Repurchased Contract. The
Scheduled Balance of a Simple Interest Contract that becomes a Liquidated
Contract or a Repurchased Contract shall be reduced to zero as of the close of
business on the date the Contract becomes a Liquidated Contract or is
repurchased, as the case may be.
"Seller" means Onyx Acceptance Financial Corporation in its capacity as
the seller of the Contracts under this Agreement, and each successor to Onyx
Acceptance Financial Corporation (in the same capacity) pursuant to Section 6.2.
"Servicer" means Onyx Acceptance Corporation in its capacity as the
servicer of the Contracts under Section 3.1, and, in each case upon such
succession in accordance herewith, each successor to Onyx Acceptance Corporation
in the same capacity pursuant to Section 7.2 and each successor servicer
pursuant to Section 8.2.
"Servicer Report Date" means the fifth Business Day prior to the related
Distribution Date.
"Servicing Fee" means, as to any Distribution Date, the fee payable to
the Servicer for services rendered during the Collection Period ending
immediately prior to such Distribution Date, which shall equal with respect to
each Outstanding Contract, the product of (A) one-twelfth of the Servicing Fee
Percent and (B) the Scheduled Balance of such Contract as of the opening of
business on the first day of such Collection Period; provided, however, that
with respect to the first Distribution Date the aggregate of the Servicing Fees
for all of the Contracts shall be the product of (A) one-twelfth of the
Servicing Fee Percent and (B) the Original Pool Balance. As additional
compensation, the Servicer will be entitled to any late fees and other
administrative fees and expenses or similar charges collected with respect to
the Contracts. The Servicer or its designee will also receive as servicing
compensation all investment earnings on funds credited to the Collection Account
and the amount, if any, by which the outstanding principal balance of a Rule of
78's Contract (calculated in accordance with the Rule of 78's method) that is
subject to a Full Prepayment
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exceeds the Scheduled Balance of such Contract; provided, however, that the
Servicer agrees that each amount payable to it in respect of a Full Prepayment
on a Rule on 78's Contract that exceeds such Contract's Scheduled Balance shall
be deposited in the Spread Account and applied in accordance with the Insurance
Agreement.
"Servicing Fee Percent" means 1.00% per annum.
"Servicing Officer" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing officers furnished to the Trustee by the
Servicer, as such list may be amended or supplemented from time to time.
"Servicing Standards" means at any time the quality of the Servicer's
performance with respect to (i) compliance with the terms of this Agreement and
(ii) adequacy, measured in accordance with industry standards and current and
historical standards of the Servicer, in respect of the servicing of all
Contracts serviced by the Servicer, regardless of whether any such Contract is
owned by the Servicer or otherwise.
"Simple Interest Contract" means a Contract as to which the portion of
payments allocable to earned interest and principal thereunder is determined
according to the Simple Interest Method. For such Contracts, interest accrued as
of the Due Date is paid first, and then the remaining payment is applied to the
unpaid principal balance. Accordingly, if an Obligor pays the fixed monthly
installment in advance of the Due Date, the portion of the payment allocable to
interest for the period since the preceding payment will be less than it would
be if the payment were made on the Due Date, and the portion of the payment
allocable to reduce the principal balance will be correspondingly greater.
Conversely, if an Obligor pays the fixed monthly installment after its Due Date,
the portion of the payment allocable to interest for the period since the
preceding payment will be greater than it would be if the payment were made on
the Due Date, and the portion of the payment allocable to reduce the principal
balance will be correspondingly smaller. When necessary, an adjustment will be
made at the maturity of the Contract to the scheduled final payment to reflect
the larger or smaller, as the case may be, allocations of payments to the amount
financed under the Contract as a result of early or late payments, as the case
may be.
"Simple Interest Method" means the method for calculating interest on a
Contract whereby interest due is calculated each day based on the actual
principal balance of the Contract on that day.
"Spread Account" means the account so denominated and provided for in
the Insurance Agreement.
"Standard & Poor's" means Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies, Inc., or its successor in interest.
"Successor Custodian" shall have the meaning as set forth in Section
2.4(b).
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"Title Document" means, with respect to any Financed Vehicle, the
certificate of title for, or other evidence of ownership of, such Financed
Vehicle issued by the Registrar of Titles in the jurisdiction in which such
Financed Vehicle is registered. For Financed Vehicles registered in the State of
California, Title Document may consist of electronic evidence of ownership on
the Electronic Lien and Title system of the California Department of Motor
Vehicles.
"Transfer Agent" shall mean the Person acting as such as provided in
Section 5.3.
"Trust" means the Onyx Acceptance Grantor Trust, 1998-1 created by this
Agreement.
"Trust Estate" has the meaning set forth in Section 2.1 hereof. The
Spread Account and the Payahead Account and amounts on deposit therein and
credited thereto shall not be part of the Trust Estate.
"Trustee" means Bankers Trust Company, a New York banking corporation,
until a successor Person shall have become the Trustee pursuant to the
applicable provisions of this Agreement, and thereafter "Trustee" shall mean
such successor Person.
"UCC" means the Uniform Commercial Code as in effect, as applicable, in
California, Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Indiana,
Missouri, Montana, New Jersey, New York, Nevada, Oregon, Texas, Utah, Virginia
or Washington, or if the context requires, any other applicable state.
SECTION 1.2 Usage of Terms. With respect to all terms in this Agreement,
the singular includes the plural and the plural the singular; words importing
any gender include the other genders; references to "writing" include printing,
typing, lithography, and other means of reproducing words in a visible form;
references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "including" means "including without limitation."
SECTION 1.3 Section References. All section references, unless otherwise
indicated, shall be to Sections in this Agreement.
SECTION 1.4 Calculations. Except as otherwise provided in this
Agreement, all interest rate and basis point calculations under this Agreement
will be made on the basis of a 360-day year and twelve thirty-day months and
will be carried out to at least three decimal places. Collections of interest on
Rule of 78's Contracts shall be calculated as if such Contracts were actuarial
contracts the scheduled principal balances of which are the Scheduled Balances
thereof.
SECTION 1.5 Accounting Terms. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
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ARTICLE II
Conveyance of the Contracts;
Representation and Warranties of the Seller
SECTION 2.1 Sale and Assignment of Contracts.
(a) In consideration of the Trustee's delivery to, or upon the order of,
the Seller of authenticated Certificates in an aggregate amount equal to the
Original Pool Balance, the Seller hereby sells, grants, transfers, conveys and
assigns to the Trustee on behalf of the Trust for the benefit of the
Certificateholders and the Insurer, without recourse (except as expressly
provided in Section 2.3 hereof) effective upon the Closing Date, all of its
right, title and interest in, to and under:
(i) the Contracts listed in the Schedule of Contracts including,
without limitation, all payments of Monthly P&I due on or after the
Cut-Off Date, all Net Liquidation Proceeds and Net Insurance Proceeds
with respect to any Financed Vehicle to which a Contract relates
received on or after the Cut-Off Date and all other proceeds received on
or after the Cut-Off Date in respect of such Contracts and any and all
security interests in the Financed Vehicles;
(ii) the Contract Documents relating to the Contracts (except the
Contract Documents for Contracts which have been the subject of a Full
Prepayment received on or after the Cut-Off Date but no later than two
Business Days prior to the Closing Date, in lieu of which the Seller
shall have deposited in or credited to the Collection Account on or
prior to the Closing Date an amount equal to such Full Prepayment);
(iii) all amounts on deposit in the Collection Account, including
all Eligible Investments credited thereto (but excluding investment
earnings thereon);
(iv) the right of the Seller, as purchaser under the Purchase
Agreement, to cause Onyx as seller thereunder to repurchase Contracts
listed in the Schedule of Contracts under certain circumstances;
(v) the security interest of the Seller in the Financed Vehicles
and the rights to receive proceeds from claims on certain insurance
policies covering the Financed Vehicles or the individual Obligors under
each related Contract;
(vi) the Seller's right to proceeds under the Blanket Insurance
Policy; and
(vii) all proceeds in any way delivered with respect to the
foregoing, all rights to payments with respect to the foregoing and all
rights to enforce the foregoing.
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The foregoing items of property listed in this Section 2.1, together
with the rights of the Trustee under the Financial Guarantee Insurance Policy,
are the Trust Estate.
It is the intention of the Seller and the Trustee that the assignment
and transfer herein contemplated constitute (and shall be construed and treated
for all purposes as) a true and complete sale of the Trust Estate (other than
the Financial Guarantee Insurance Policy), conveying good title thereto free and
clear of any liens and encumbrances, from the Seller to the Trust. However, in
the event that such conveyance is deemed to be a pledge to secure a loan (in
spite of the express intent of the parties hereto that this conveyance
constitutes (and shall be construed and treated for all purposes) as a true and
complete sale), the Seller hereby grants to the Trustee on behalf of the Trust
for the benefit of the Certificateholders a first priority perfected security
interest in all of the Seller's right, title and interest in the Trust Estate
whether now existing or hereafter created (other than the Financial Guarantee
Insurance Policy), and all proceeds of the foregoing to secure the loan deemed
to be made in connection with such pledge and, in such event, this Agreement
shall constitute a security agreement under applicable law.
(b) In connection with the sale of the Contracts pursuant to the
Purchase Agreement, Onyx has filed with the office of the Secretary of State of
the State of California UCC-1 financing statements naming Onyx as seller and
including the Contracts in the description of the assets being sold thereunder.
In connection with the sale of the Contracts pursuant to this Agreement, the
Seller has filed or caused to be filed UCC-1 financing statements, executed by
the Seller as seller, naming the Trust as purchaser and describing the Contracts
as the assets being sold by it to the Trust, with the office of the Secretary of
State of the State of California. The Seller shall have caused UCC-2 termination
statements to have been filed with the office of Secretary of State of the State
of California terminating any effective UCC-1 financing statements with respect
to any outstanding security interests in the Contracts. From time to time, the
Servicer shall cause to be taken such actions as are necessary to continue the
perfection of the Trust's ownership interest in the Contracts and to continue
the first priority security interest of the Trust in the Financed Vehicles and
their proceeds (other than, as to such priority, any statutory lien arising by
operation of law after the Closing Date which is prior to such interest),
including, without limitation, the filing of financing statements, amendments
thereto or continuation statements and the making of notations on records or
documents of title.
(c) If any change in the name, identity or corporate structure of Onyx,
the Seller or the relocation of the chief executive office of any of them would
make any financing or continuation statement or notice of lien filed under this
Agreement misleading within the meaning of applicable provisions of the UCC or
any title statute, the Servicer, within the time period required by applicable
law, shall file such financing statements or amendments as may be required to
preserve and protect the interests of the Trustee, on behalf of the Trust for
the benefit of the Certificateholders and the Insurer, in the Contracts and in
the related Financed Vehicles and proceeds thereof. Promptly thereafter, and in
any event within 30 days of such change or relocation, the Servicer shall
deliver to the Trustee an Opinion of Counsel stating that, in the opinion of
such counsel, all financing statements or amendments necessary fully to preserve
and protect such interests of the Trustee in the
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Contracts and in the related Financed Vehicles and proceeds thereof have been
filed, and reciting the details of such filings.
(d) During the term of this Agreement, the Seller and Onyx shall each
maintain its chief executive office in one of the states of the United States.
(e) The Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
Persons other than the Trustee, of the Trust's right, title and interest in and
to the Contracts and in connection with maintaining the first priority security
interest in the related Financed Vehicles and the proceeds of such Financed
Vehicles.
SECTION 2.2 Representations and Warranties. The Seller represents and
warrants to the Trustee and the Trust for the benefit of the Certificateholders
and the Insurer as follows:
(a) As to the Seller:
(i) the Seller is duly organized and validly existing as a
corporation organized and existing and in good standing under the laws
of the State of Delaware, with power and authority to own its properties
and to conduct its business and had at all relevant times, and has,
power, authority, and legal right to originate or acquire and own the
Contracts;
(ii) the Seller is duly qualified to do business as a foreign
corporation in good standing, and shall have obtained all necessary
licenses and approvals in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualifications;
(iii) the Seller has the power and authority to execute and
deliver this Agreement and to carry out its terms; the Seller has full
power and authority to sell and assign the property to be sold and
assigned to and deposited with the Trustee on behalf of the Trust as
part of the Trust and has duly authorized such sale and assignment to
the Trustee on behalf of the Trust by all necessary corporate action;
and the execution, delivery, and performance of this Agreement has been
duly authorized by the Seller by all necessary corporate action;
(iv) this Agreement constitutes (A) a valid sale, transfer, and
assignment of the Contracts, enforceable against creditors of and
purchasers from the Seller and (B) a legal, valid, and binding
obligation of the Seller enforceable in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights in general and by general principles of equity,
regardless of whether such enforceability shall be considered in a
proceeding in equity or at law;
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(v) the consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms hereof shall not conflict
with, result in any breach of any of the terms and provisions of, nor
constitute (with or without notice or lapse of time) a default under,
the Certificate of Incorporation or Bylaws of the Seller, or any
indenture, agreement, or other instrument to which the Seller is a party
or by which it shall be bound; nor result in the creation or imposition
of any Lien upon any of the properties of the Seller pursuant to the
terms of any such indenture, agreement, or other instrument (other than
this Agreement); nor violate any law or any order, rule, or regulation
applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties;
and
(vi) to the Seller's best knowledge after due inquiry, there are
no proceedings or investigations pending, or threatened, before any
court, regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over the Seller or its properties:
(A) asserting the invalidity of this Agreement or the Certificates, (B)
seeking to prevent the issuance of the Certificates or the consummation
of any of the transactions contemplated by this Agreement, (C) seeking
any determination or ruling that might materially and adversely affect
the performance by the Seller of its obligations under, or the validity
or enforceability of, this Agreement or the Certificates, or (D) naming
the Seller which might adversely affect the federal income tax
attributes of the Certificates.
(b) As to each Contract (except as noted below as being applicable only
to either Rule of 78's Contracts or Simple Interest Contracts):
(i) the information pertaining to such Contract set forth in the
related Schedule of Contracts was true and correct in all material
respects at the Closing Date and the calculations of the Scheduled
Balances appearing in such Schedule of Contracts for each such Contract
at the Cut-Off Date, and in the case of Rule of 78's Contracts at each
Distribution Date thereafter prior to the related Maturity Date, have
been performed in accordance with this Agreement and are accurate;
(ii) as of the Closing Date, such Contract was secured by a valid
and enforceable first priority security interest in favor of Onyx in the
related Financed Vehicle, and such security interest has been duly
perfected and is prior to all other liens upon and security interests in
such Financed Vehicle which now exist or may hereafter arise or be
created (except, as to priority, for any lien for unpaid taxes or unpaid
storage or repair charges which may arise after the Closing Date); such
security interest had been assigned by Onyx to the Seller pursuant to
the Purchase Agreement and, as of the Closing Date, has been assigned
by the Seller to the Trust pursuant to Section 2.1(a)(i) hereof;
(iii) (A) if the related Financed Vehicle was originated in a
state in which notation of a security interest on the Title Document (or
in the electronic title records, in the case of
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the State of California) is required or permitted to perfect such
security interest, the Title Document or the electronic title records
for such Financed Vehicle shows, or, if a new or replacement Title
Document is being applied for with respect to such Financed Vehicle, the
Title Document will be received within 180 days of the Closing Date and
will show, Onyx or a subsidiary of Onyx named as the original secured
party under the related Contract as the holder of a first priority
security interest in such Financed Vehicle, and (B) if the related
Financed Vehicle was originated in a state in which the filing of a
financing statement under the UCC is required to perfect a security
interest in motor vehicles, such filings or recordings have been duly
made and show Onyx or a subsidiary of Onyx named as the original secured
party under the related Contract, and in either case, the Trustee on
behalf of the Trust has the same rights as such secured party has or
would have (if such secured party were still the owner of such Contract)
against all parties claiming an interest in such Financed Vehicle. With
respect to each Contract for which the Title Document has not yet been
returned from the Registrar of Titles (or evidenced in the electronic
title records, in the case of the State of California), Onyx has written
evidence that such Title Documents showing Onyx or a subsidiary of Onyx
as first lienholder have been applied for;
(iv) as of the Closing Date, the Seller had good and marketable
title to and was the sole owner of each Contract to be transferred to
the Trust pursuant to Section 2.1 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Trustee
pursuant to Section 2.1, the Trust will have good and marketable title
to, will have a first priority perfected security interest in and will
be the sole owner of such Contract free of liens, encumbrances and
rights of others;
(v) as of the Cut-Off Date, the most recent scheduled payment due
on each such Contract had been made or was not delinquent more than 30
days and, to the best of the Seller's knowledge, all payments on the
Contract were made by the related Obligors;
(vi) as of the Closing Date, there is no lien against the related
Financed Vehicle for delinquent taxes;
(vii) as of the Closing Date, there is no right of rescission,
offset, defense or counterclaim to the obligation of the related
Obligor(s) to pay the unpaid principal or interest due under such
Contract; the operation of the terms of such Contract or the exercise of
any right thereunder will not render such Contract unenforceable in
whole or in part or subject such Contract to any right of rescission,
offset, defense or counterclaim, and the Seller has no knowledge that
such right of rescission, offset, defense or counterclaim has been
asserted or threatened;
(viii) as of the Closing Date, to the best of the Seller's
knowledge, there are no liens or claims which have been filed, including
liens for work, labor, material or storage affecting the related
Financed Vehicle which are or may become a lien prior to or equal with
the security interest granted by such Contract;
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(ix) such Contract, and the sale of the Financed Vehicle sold
thereunder, complied, at the time it was made, in all material respects
with all applicable federal, state and local laws (and regulations
thereunder), including without limitation usury, equal credit
opportunity, fair credit reporting, truth-in-lending or other similar
laws, the Federal Trade Commission Act, and applicable state laws
regulating retail installment sales contracts and loans in general and
motor vehicle retail installment contracts and loans in particular; and
the consummation of the transactions herein contemplated, including,
without limitation, the transfer of ownership of the Contracts to the
Trustee and the receipt of interest by the Certificateholders, will not
violate any applicable federal, state or local law;
(x) such Contract is the legal, valid and binding obligation of
the related Obligor(s) thereunder and is enforceable in accordance with
its terms, except only as such enforcement may be limited by bankruptcy,
insolvency or similar laws affecting the enforcement of creditors'
rights generally; each party to such Contract had full legal capacity to
execute and deliver such Contract and all other documents related
thereto and to grant the security interest purported to be granted
thereby; the terms of such Contract have not been waived, amended or
modified in any respect, except by instruments that are part of the
related Contract Documents, and no such waiver, amendment or
modification has caused such Contract to fail to meet all of the
representations, warranties and conditions, set forth herein with
respect thereto;
(xi) such Contract contains customary and enforceable provisions
such as to render the rights and remedies of the holder or assignee
thereof adequate for the practical realization against the collateral of
the benefits of the security, subject, as to enforceability, to
bankruptcy, insolvency, reorganization or similar laws affecting the
enforcement of creditors' rights generally;
(xii) as of the Closing Date, there was no default, breach,
violation or event permitting acceleration existing under such Contract
(except payment delinquencies permitted by subparagraph (v) above) and
no event which, with notice and the expiration of any grace or cure
period, would constitute such a default, breach, violation or event
permitting acceleration under such Contract, and the Seller has not
waived any such default, breach, violation or event permitting
acceleration except payment delinquencies permitted by subparagraph (v)
above;
(xiii) at the Closing Date each related Financed Vehicle will be
covered by the Blanket Insurance Policy; each of Onyx and the Seller
shall at all times comply with all of the provisions of such insurance
policy applicable to it;
(xiv) at the Closing Date, (a) such Contract will require that
the related Obligor(s) obtain and maintain in effect for the related
Financed Vehicle a comprehensive and collision insurance policy (i) in
an amount at least equal to the lesser of (x) its maximum insurable
value or (y) the principal amount due from the related Obligor(s) under
such Contract, (ii)
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naming Onyx or a subsidiary of Onyx as a loss payee and (iii) insuring
against loss and damage due to fire, theft, transportation, collision
and other risks generally covered by comprehensive and collision
coverage and (b) the Servicer shall have put in place a vendor's single
interest insurance policy providing coverage upon repossession of the
related Financed Vehicle in an amount equal to the lesser of the actual
cash value of such Financed Vehicle, the cost of repair or replacement
for such Financed Vehicle and the unpaid balance of the related
Contract. Each of Onyx and the Seller shall, and Onyx shall cause any
subsidiary of Onyx which originated a Contract to, at all times comply
with all of the provisions of such insurance policies applicable to it;
(xv) such Contract was either originated by a subsidiary of Onyx,
purchased by a subsidiary of Onyx or acquired by Onyx from a Dealer with
which it ordinarily does business, and no adverse selection procedures
have been utilized in selecting such Contract from all other similar
contracts purchased or originated by Onyx or any such subsidiary;
(xvi) payments under such Contract have been applied in
accordance with the Rule of 78's or the Simple Interest Method, as
provided in the applicable Contract, and are due monthly in
substantially equal amounts through its Maturity Date sufficient to
fully amortize the principal balance of such Contract by its Maturity
Date;
(xvii) there is only one original of such Contract and such
original, together with all other related Contract Documents, is being
held by the Trustee; provided, however, that upon the execution by the
Trustee and the Servicer of a letter agreement revocably appointing the
Servicer as agent of the Trustee to act as custodian of the Contract
Documents in accordance with Section 2.4, such original Contracts
together with all other Contract Documents may be held by the Servicer.
Each original Contract has been segregated to show the Trust as owner
thereof, unless the Insurer has waived the requirement for such
segregation by notice in writing to the Trustee and the Servicer;
(xviii)as of the Closing Date, the Servicer has clearly marked
its electronic records to indicate that such Contract is owned by the
Trust;
(xix) at the Cut-Off Date, such Contract has a Maturity Date no
later than March 1, 2004;
(xx) at the date of origination of the Contract, the original
principal balance of such Contract was not greater than the purchase
price to the related Obligor(s) (including taxes, warranties, licenses
and related charges) of the related Financed Vehicle;
(xxi) as of the Cut-Off Date, the Seller has not received notice
that any Obligor under such Contract has filed for bankruptcy;
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(xxii) the related Obligor(s) were located in either California,
Arizona, Colorado, Florida, Georgia, Idaho, Illinois, Indiana, Missouri,
Montana, New Jersey, New York, Nevada, Oregon, Texas, Utah, Virginia or
Washington on the date of origination of such Contract;
(xxiii) the yield (using the Recomputed Yield for Rule of 78's
Contracts) on such Contract is at least equal to -%;
(xxiv) as of the Cut-Off Date, such Contract had an original
maturity of not more than 72 months and such Contract has a remaining
maturity of 72 months or less;
(xxv) the first payment under such Contract is due on or before
April 15, 1998;
(xxvi) as of the Cut-Off Date, such Contract has a remaining
principal balance of at least $-; and
(xxvii)as of the Cut-Off Date, such Contract is secured by a
Financed Vehicle that has not been repossessed without reinstatement.
(c) As to all of the Contracts:
(i) the aggregate Outstanding Principal Balance payable by
Obligors of the Contracts as of the Cut-Off Date equals the Original
Pool Balance; and
(ii) as of the Cut-Off Date, approximately -% of the Outstanding
Principal Balance of all Contracts is attributable to loans to purchase
new Financed Vehicles and approximately -% of the Outstanding Principal
Balance of all Contracts is attributable to used Financed Vehicles.
(d) None of the foregoing representations and warranties shall be
construed as, and the Seller is specifically not making, any representations and
warranties regarding the collectibility of the Contracts or the future
performance of the Contracts.
(e) The Seller has not prepared any financial statement which accounts
for the transfer of the Trust Estate (other than the Financial Guarantee
Insurance Policy) hereunder to the Trust in any manner other than a sale of the
Trust Estate (other than the Financial Guarantee Insurance Policy) by it to the
Trust, and the Seller has not in any other respect (including, but not limited
to, for accounting and tax reporting purposes) accounted for or treated the
transfer of the Trust Estate (other than the Financial Guarantee Insurance
Policy) hereunder in any manner other than as a sale and absolute assignment to
the Trust of the Seller's full right, title and ownership interest in the Trust
Estate (other than the Financial Guarantee Insurance Policy) to the Trust.
SECTION 2.3 Repurchase of Certain Contracts. The representations and
warranties of the Seller set forth in Section 2.2 with respect to each Contract
shall survive delivery of the Contract
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Documents to the Trustee and shall continue until the termination of this
Agreement. Upon discovery by the Seller, the Servicer, the Insurer or a
Responsible Officer of the Trustee that any of such representations or
warranties was incorrect or that any of such conditions was unsatisfied as of
the time made or that any of the Contract Documents relating to any such
Contract has not been properly executed by the Obligor or contains a material
defect or has not been received by the Trustee (or the Servicer in its capacity
as custodian of the Trustee pursuant to Section 2.4), such Person making such
discovery shall give prompt notice to the other such Persons. If any such
defect, incorrectness or omission materially and adversely affects the interest
of the Certificateholders, the Trustee or the Insurer, the Seller shall cure the
defect or eliminate or otherwise cure the circumstances or condition in respect
of which such condition, representation or warranty was incorrect as of the time
made; provided that if the Seller is unable to do so by the last day of the
Collection Period following the Collection Period (or, if the Seller elects, the
last day of such Collection Period) during which the Seller becomes aware of or
receives written notice from the Trustee, the Insurer or the Servicer of such
defect, incorrectness or omission, it shall repurchase such Contract on the last
day of the applicable Collection Period from the Trust at the Repurchase Amount
in the manner set forth in Section 4.4. Upon any such repurchase, the Trustee on
behalf of the Trust shall execute and deliver such instruments of transfer or
assignment, in each case without recourse, as shall be necessary to vest in the
Seller any Contract purchased hereunder. The sole remedy of the Trustee, the
Trust, or the Certificateholders with respect to a breach of the Seller's
representations and warranties pursuant to Section 2.2 shall be to require the
Seller to repurchase Contracts pursuant to this Section provided, however, that
the Seller shall indemnify the Trustee, its officers, directors, agents and
employees, the Insurer, the Trust and the Certificateholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third-party claims arising out of the events or facts giving rise to
such breach.
SECTION 2.4 Duties and Appointment of Custodian.
(a) Duties of Custodian. The Trustee, and any Custodian appointed
pursuant to Section 2.4(b), while acting as Custodian shall:
(i) segregate and maintain continuous custody of the Contract
Documents in secure and fireproof facilities in accordance with
customary standards for such custody;
(ii) with respect to the Contract Documents, (A) act exclusively
as the Custodian for the benefit of the Certificateholders and for the
Insurer and (B) hold all Contract Documents for the exclusive use
(notwithstanding Sections 2.4(a)(iii) and 2.4(a)(iv) below) and for the
benefit of the Certificateholders and the Insurer;
(iii) to the extent the Servicer directs the Custodian in
writing, deliver certain specified Contract Documents to the Servicer to
enable the Servicer to service the Contracts pursuant to this Agreement.
At such time as the Servicer returns such Contract Documents to the
Custodian, the Servicer shall provide written notice of such return to
the Custodian.
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The Custodian shall acknowledge receipt of the returned materials by
signing the Servicer's notice and shall promptly send copies of such
acknowledgment or receipt to the Servicer;
(iv) upon reasonable prior written notice, permit the Servicer
and the Insurer to examine the Contract Documents in the possession, or
under the control, of the Custodian; and
(v) at its own expense, maintain at all times while acting as
Custodian, and keep in full force and effect (A) fidelity insurance, (B)
theft of documents insurance, (C) fire insurance, and (d) forgery
insurance. All such insurance shall be in amounts, with standard
coverage and subject to deductibles, as are customary for similar
insurance typically maintained by banks that act as custodian in similar
transactions.
(b) Appointment of Custodian. As of the Closing Date, the Trustee shall
be the Custodian of the Contract Files; provided, however, that upon the
execution by the Trustee of a letter agreement with the consent of the Insurer
(such consent not to be unreasonably withheld) substantially in the form of
Exhibit A attached hereto (the "Appointment of Custodian"), revocably appointing
the Servicer or such other entity acceptable to the Insurer as agent of the
Trustee to act as Custodian (the "Successor Custodian") of the Contract
Documents, such Successor Custodian shall be so appointed and shall from the
effective date of such Appointment of Custodian retain custody of the Contract
Documents and any and all other documents relating to a Contract or the related
Obligor or Financed Vehicle. As of the effective date of such Appointment of
Custodian, the Contract Documents and any and all other documents relating to a
Contract or the related Obligor or Financed Vehicle will be delivered to the
Successor Custodian in its capacity as agent of the Trustee acting as Custodian.
If the Servicer is appointed Successor Custodian as of the date
specified in the Appointment of Custodian, the Servicer shall maintain the
Contract Documents held by it in a file area physically separate from the other
installment sales contracts owned or serviced by it or any of its Affiliates,
which area shall be clearly marked to indicate the Trust as the owner of, and
the holder of the security interest in, the Contract Documents; except that if
the Insurer has waived the requirement for such segregation by notice in writing
to the Trustee and the Servicer, such file area may contain contract documents
for other installment sales contracts serviced by the Servicer.
SECTION 2.5 Duties of Servicer Relating to the Contracts.
(a) Safekeeping. The Servicer, in its capacity as servicer, shall
maintain such accurate and complete accounts, records, and computer systems
pertaining to each Contract File as shall enable the Trustee to comply with this
Agreement. In performing its duties as servicer the Servicer shall act with
reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to the files relating to all comparable automobile
contracts that the Servicer services for itself or others. The Servicer shall:
(i) conduct, or cause to be conducted, periodic physical inspections of the
Contract Files (other than the Contract Documents, unless the Servicer is acting
as Custodian)
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held by it under this Agreement, and of the related accounts, records, and
computer systems; (ii) maintain the Contract Files in such a manner as shall
enable the Trustee and the Insurer to verify the accuracy of the Servicer's
record keeping; (iii) promptly report to the Trustee and the Insurer any failure
on its part to hold the Contract Files (other than the Contract Documents,
unless the Servicer is acting as Custodian) and maintain its accounting,
records, and computer systems as herein provided; and (iv) promptly take
appropriate action to remedy any such failure.
(b) Maintenance of and Access to Records. The Servicer shall maintain
each Contract File (other than the Contract Documents, unless the Servicer is
acting as Custodian) at the address of the Servicer set forth in Section 11.5,
or at such other location as shall be specified to the Trustee and the Insurer
by 30 days' prior written notice. The Servicer shall permit the Trustee or the
Insurer or their duly authorized representatives, attorneys, or auditors to
inspect the Contract Files and the related accounts, records, and computer
systems maintained by the Servicer at such times as the Trustee or the Insurer
may request.
(c) Release of Documents. If the Servicer is acting as Custodian
pursuant to Section 2.4, upon instruction from the Trustee (a copy of which
shall be furnished to the Insurer), the Servicer shall release any document in
the Contract Files to the Trustee, the Trustee's agent, or the Trustee's
designee, as the case may be, at such place or places as the Trustee may
designate, as soon as practicable.
(d) Monthly Reports. On the Servicer Report Date of each month,
commencing with the month of the Closing Date, the Servicer shall deliver to the
Trustee and Insurer, a certificate of a Servicing Officer stating (i) the
Contract Number and outstanding principal balance of each Contract that has
become a Liquidated Contract since the Business Day immediately preceding the
date of the last certificate delivered pursuant to this Section 2.5(d) (or since
the Closing Date in the case of the first such certificate); (ii) that, if such
Contract has been the subject of a Full Prepayment pursuant to clause (a) of the
definition of the term "Full Prepayment" or is a Liquidated Contract pursuant to
clause (iii) of the definition of the term "Liquidated Contract," all proceeds
received in respect thereof have been deposited in or credited to the Collection
Account in accordance with Section 4.2; (iii) that, if such Contract has been
the subject of a Full Prepayment pursuant to clause (b) of the definition of the
term "Full Prepayment," the correct Repurchase Amount has been deposited in or
credited to the Collection Account in accordance with Section 4.4; (iv) that, if
such Contract is a Liquidated Contract pursuant to clause (ii) of the definition
of the term "Liquidated Contract," there have been deposited in or credited to
the Collection Account the related Net Liquidation Proceeds in accordance with
Section 4.2; and (v) that the Trustee is authorized to release such Contract and
the related Contract Documents as provided herein.
(e) Schedule of Title Documents. The Servicer shall deliver to the
Trustee and the Insurer (i) within 60 days of the Closing Date, a schedule of
Title Documents which as of the Closing Date did not show Onyx or a subsidiary
of Onyx as first lienholder and (ii) within 180 days of the Closing Date as to
the Contracts, a schedule of Title Documents which as of the date prior to such
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delivery do not show the Onyx or a subsidiary of Onyx as first lienholder and as
to which the Seller is obligated to repurchase pursuant to the provisions
hereof.
(f) Electronic Marking of Contracts; Possession. The Servicer shall
cause the electronic record of the Contracts maintained by it to be clearly
marked to indicate that the Contracts have been sold to the Trust and shall not
in any way assert or claim an ownership interest in the Contracts. It is
intended that pursuant to the applicable provisions of Sections 2.4 and 2.5
hereof and the Appointment of Custodian, the Trustee on behalf of the Trust
shall be deemed to have possession of the Contract Documents for purposes of
Section 9-305 of the UCC of the State in which the Contract Documents are
located.
SECTION 2.6 Instructions; Authority to Act. The Servicer shall be deemed
to have received proper instructions (a copy of which shall be furnished to the
Insurer) with respect to the Contract Files upon its receipt of written
instructions signed by a Responsible Officer of the Trustee.
SECTION 2.7 Indemnification. The Servicer, as custodian, shall indemnify
the Trustee and its officers, directors, agents and employees, the Insurer, the
Trust and the Certificateholders for any and all liabilities, obligations,
losses, compensatory damages, payments, costs, or expenses of any kind
whatsoever (including the reasonable fees and expenses of counsel) that may be
imposed on, incurred, or asserted against the Trustee, the Insurer, the Trust
and the Certificateholders as the result of any act or omission in any way
relating to the maintenance and custody by the Servicer of the Contract Files,
or the failure of the Servicer to perform its duties and service the Contracts
in compliance with the terms of this Agreement; provided, however, that the
Servicer shall not be liable for any portion of any such amount resulting from
the willful misfeasance, bad faith, or gross negligence of the Trustee or the
Insurer. The Servicer shall also indemnify and hold harmless the Trust, the
Trust Estate, the Trustee, the Insurer and the Certificateholders against any
taxes that may be asserted at any time against any of them with respect to the
Contracts, including any sales, gross receipts, general corporation, personal
property, privilege or license taxes (but exclusive of federal or other income
taxes arising out of payments on the Contracts) and the costs and expenses in
defending against such taxes. The Servicer shall immediately notify the Trustee
if a claim is made by a third party with respect to the Contracts, shall assume,
with the consent of the Trustee, the defense of any such claim and shall pay all
expenses in connection therewith, including counsel fees, and shall promptly
pay, discharge and satisfy any judgment or decree which may be entered against
it, the Trustee or the Trust with respect to the Contracts.
SECTION 2.8 Effective Period and Termination. The Trustee's appointment
as Custodian shall become effective as of the Closing Date and shall continue in
full force and effect until the earlier of (i) the execution of the Appointment
of Custodian, (ii) the removal of the Trustee pursuant to Section 9.10 or (iii)
the Final Distribution Date. Following the execution of the Appointment of
Custodian, the Successor Custodian's appointment as Custodian shall continue in
full force and effect until terminated under this Section 2.8 or until the Final
Distribution Date, whichever occurs first. If Onyx shall resign as Servicer
under Section 7.4 or if all of the rights and obligations of the Servicer shall
have been terminated under Section 8.1, the appointment of the Servicer as
Custodian
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may be terminated by the Trustee, the Insurer, or by the Holders of Certificates
evidencing in the aggregate at least 25% of the Pool Balance, in the same manner
as the Trustee, the Insurer, or such Holders may terminate the rights and
obligations of the Servicer under Section 8.1 (but no occurrence of an Event of
Default shall be a precondition to termination). As soon as practicable after
any termination of such appointment, the Custodian shall, at its own expense,
deliver or cause the delivery of the Contract Files to the Trustee or the
Trustee's agent at such place or places as the Trustee may reasonably designate
and shall cooperate in good faith to effect such delivery. The foregoing
notwithstanding, if the Servicer is acting as Custodian, the Servicer shall, at
the request of the Insurer, redeliver the Contract Documents to the Trustee in
the event that such redelivery is required by any Rating Agency to consider the
Certificates investment grade without consideration of the Financial Guarantee
Insurance Policy.
SECTION 2.9 Nonpetition Covenant.
(a) Neither the Seller nor the Servicer shall petition or otherwise
invoke the process of any court or government authority for the purpose of
commencing or sustaining a case against the Trust under any federal or state
bankruptcy, insolvency or similar law or appointing a receiver, liquidator,
assignee, trustee, custodian, sequestrator or other similar official of the
Trust or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Trust.
(b) The Servicer shall not, nor cause the Seller to, petition or
otherwise invoke the process of any court or government authority for the
purpose of commencing or sustaining a case against the Seller under any federal
or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Seller.
SECTION 2.10 Collecting Title Documents Not Delivered at the Closing
Date. In the case of any Contract in respect of which, in place of a Title
Document, the Trustee received on the Closing Date written evidence from the
Dealer selling the related Financed Vehicle, or from Onyx, that the Title
Document for such Financed Vehicle showing Onyx or a subsidiary of Onyx as first
lienholder has been applied for from the Registrar of Titles, the Servicer shall
use its best efforts to collect (or, in the case of the State of California, to
obtain evidence in the electronic title records of) such Title Document from the
Registrar of Titles as promptly as possible. If such Title Document showing Onyx
or a subsidiary of Onyx as first lienholder is not received by the Servicer (or,
in the case of the State of California, verified by the Servicer in the
electronic title records) within 180 days after the Closing Date with respect to
the Contracts, then the representation and warranty in Section 2.2(b)(iii) as to
such Contracts in respect of such Contract shall be deemed to have been
incorrect in a manner that materially and adversely affects the
Certificateholders and the Seller shall be obligated to repurchase such Contract
in accordance with Section 2.3.
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ARTICLE III
Administration and Servicing of Contracts
SECTION 3.1 Duties of Servicer. The Servicer shall manage, service,
administer, and make collections on the Contracts. The Servicer agrees that its
servicing of the Contracts shall be carried out in accordance with reasonable
care and, to the extent more exacting, the procedures used by the Servicer in
respect of such contracts serviced by it for its own account; provided, however,
that, subject to Section 3.2 as to extensions, the Servicer shall not release or
waive the right to collect the unpaid balance of any Contract. The Servicer's
duties shall include collection and posting of all payments, responding to
inquiries of Obligors on the Contracts, investigating delinquencies, sending
payment coupons to Obligors, reporting tax information to Obligors, accounting
for collections, furnishing monthly and annual statements to the Trustee and the
Insurer with respect to distributions and the preparation of U.S. Grantor Trust
Tax Returns (Form 1041) for the Trustee to sign and file on an annual basis,
based on a tax year for the Trust that is the calendar year and any other tax
forms required by any federal, state or local tax authority including with
respect to original issue discount, if any. The Servicer shall have, subject to
the terms hereof, full power and authority, acting alone, and subject only to
the specific requirements and prohibitions of this Agreement, to do any and all
things in connection with such managing, servicing, administration, and
collection that it may deem necessary or desirable; provided, however, that the
Servicer shall commence repossession efforts in respect of any Financed Vehicle
any payment on the related Contract of which is four or more months delinquent.
Without limiting the generality of the foregoing, but subject to the provisions
of this Agreement, the Servicer is authorized and empowered by the Trustee to
execute and deliver, on behalf of itself, the Trust, the Insurer, the
Certificateholders, or the Trustee or any of them, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other comparable instruments, with respect to the Contracts or to the Financed
Vehicles. The Trustee shall furnish the Servicer any documents necessary or
appropriate to enable the Servicer to carry out its servicing and administrative
duties hereunder. The Servicer may engage agents and subservicers to fulfill its
duties hereunder; provided, however, that the Servicer shall remain at all times
personally liable for the acts (and failures to act) of such agents and
subservicers.
On or prior to the Closing Date, the Servicer shall deliver to the
Insurer and the Trustee a list of Servicing Officers of the Servicer involved
in, or responsible for, the administration and servicing of the Contracts, which
list shall from time to time be updated by the Servicer on request of the
Trustee or the Insurer.
On the Closing Date, the Servicer shall deposit in the Collection
Account (i) all installments of Monthly P&I due on or after the Cut-Off Date and
received by the Servicer at least two Business Days prior to the Closing Date;
(ii) the proceeds of each Full Prepayment of any Contract and all partial
prepayments on Simple Interest Contracts received by the Servicer on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date; and
(iii) all Net Liquidation Proceeds and Net Insurance Proceeds received with
respect to a Financed Vehicle to which a Contract relates received on or after
the Cut-Off Date and at least two Business Days prior to the Closing Date.
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Subject to Section 4.2(a) respecting deposits in the Payahead Account,
the Servicer shall deposit in or credit to the Collection Account within two
Business Days of receipt all collections of Monthly P&I due on or after the
Cut-Off Date received by it on the Contracts together with the proceeds of all
Full Prepayments on all Contracts and all partial prepayments on Simple Interest
Contracts, and any accompanying interest. The Servicer shall likewise deposit in
the Collection Account within two Business Days of receipt all Net Liquidation
Proceeds and Net Insurance Proceeds. As of the last day of each Collection
Period, all amounts received in each Collection Period shall be applied by the
Servicer with respect to each Contract, first, to the Servicer as additional
servicing compensation any amounts due for late fees, extension fees or similar
charges, second to the payment of Monthly P&I, and third, in the case of partial
prepayments on Rule of 78's Contracts, to the Payahead Account. The foregoing
requirements for deposit in the Collection Account are exclusive, it being
understood that collections in the nature of late payment charges or extension
fees may, but need not be deposited in the Collection Account and may be
retained by the Servicer as additional servicing compensation.
With respect to payments of Monthly P&I made by Obligors to the
Servicer's lock box, the Servicer shall direct the Person maintaining the lock
box to deposit the amount collected on the Contracts within one Business Day to
the Clearing Account. Such amounts shall be withdrawn from the Clearing Account
and deposited in the Collection Account no later than the next following
Business Day.
In order to facilitate the servicing of the Contracts by the Servicer,
the Servicer shall retain, subject to and only to the extent permitted by the
provisions of this Agreement, all collections on the Contracts prior to the time
they are remitted or credited, in accordance with such provisions, to the
Collection Account or the Payahead Account, as the case may be. The Servicer
acknowledges that the unremitted collections on the Contracts are part of the
Trust Estate and the Servicer agrees to act as custodian and bailee of the
Trustee and the Insurer in holding such monies and collections. The Servicer
agrees, for the benefit of the Trustee, the Trust, the Certificateholders and
the Insurer, to act as such custodian and bailee, and to hold and deal with such
monies and such collections, as custodian and bailee for the Trustee and the
Insurer, in accordance with the provisions of this Agreement.
The Servicer shall retain all data (including, without limitation,
computerized title records) relating directly to or maintained in connection
with the servicing of the Contracts at the address of the Servicer set forth in
Section 11.5, or, upon 15 days' notice to the Insurer and the Trustee, at such
other place where the servicing offices of the Servicer are located, and shall
give the Trustee and the Insurer access to all data (including, without
limitation, computerized title records) at all reasonable times, and, while an
Event of Default shall be continuing, the Servicer shall, on demand of the
Trustee or the Insurer deliver or cause to be delivered to the Trustee on behalf
of the Trust and to the Insurer all data (including, without limitation,
computerized title records and, to the extent transferable, related operating
software) necessary for the servicing of the Contracts and all monies collected
by it and required to be deposited in or credited to the Collection Account or
the Payahead Account, as the case may be.
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SECTION 3.2 Collection of Contract Payments. The Servicer shall use its
best efforts to collect all payments called for under the terms and provisions
of the Contracts as and when the same shall become due and shall use its best
efforts to cause each Obligor to make all payments in respect of his or her
Contract to the Servicer. Consistent with the foregoing, the Servicer may in its
discretion (i) waive any late payment charges in connection with delinquent
payments on a Contract or prepayment charges and (ii) in order to work out a
default or an impending default due to the financial condition of an Obligor,
grant up to three extensions of the Due Date of any payment for periods of 30
days or less, such that the Maturity Date of no Contract shall, under any
circumstances, extend more than 90 days past the originally scheduled date of
the last payment on such Contract and in no event beyond the Final Distribution
Date. The Servicer shall not extend the Maturity Date of a Contract except as
provided in clause (ii) of the preceding sentence. Except as explicitly
permitted by this paragraph, the Servicer shall not change any material term of
a Contract, including but not limited to the interest rate, the payment amounts
or due dates, or the property securing such Contract.
SECTION 3.3 Realization Upon Contracts. The Servicer shall use its best
efforts, consistent with the servicing standard specified in Section 3.1, to
repossess or otherwise convert the ownership of the Financed Vehicle securing
any Contract as to which no satisfactory arrangements can be made for collection
of delinquent payments. Such servicing procedures may include reasonable efforts
to realize upon any recourse to Dealers and selling the Financed Vehicle at
public or private sale. In connection with such repossession or other
conversion, the Servicer shall follow such practices and procedures as it shall
deem necessary or advisable and as shall be normal and usual for prudent holders
of retail installment sales contracts and as shall be in compliance with all
applicable laws, and, in connection with the repossession of any Financed
Vehicle or any contract in default, may commence and prosecute any proceedings
in respect of such Contract in its own name or, if the Servicer deems it
necessary, in the name of the Trust or on behalf of the Trust. The Servicer's
obligations under this Section are subject to the provision that, in the case of
damage to a Financed Vehicle from an uninsured cause, the Servicer shall not be
required to expend its own funds in repairing such motor vehicle unless it shall
determine (i) that such restoration will increase the proceeds of liquidation of
the related Contract, after reimbursement to itself for such expenses and (ii)
that such expenses will be recoverable by it either as Liquidation Expenses or
as expenses recoverable under an applicable insurance policy. The Servicer shall
be responsible for all other costs and expenses incurred by it in connection
with any action taken in respect of a Defaulted Contract; provided, however,
that it shall be entitled to reimbursement of such costs and expenses to the
extent they constitute Liquidation Expenses or expenses recoverable under an
applicable insurance policy. All Net Liquidation Proceeds and Net Insurance
Proceeds shall be deposited directly in or credited to the Collection Account
(without deposit in any intervening account) to the extent required by Section
4.2.
SECTION 3.4 Insurance. The Servicer shall cause to be maintained the
Blanket Insurance Policy with the Trustee as the named payee thereunder with
respect to the Contracts.
SECTION 3.5 Maintenance of Security Interests in Financed Vehicles. The
Servicer shall take such steps as are necessary to maintain continuous
perfection and priority of the security interest
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created by each Contract in the related Financed Vehicle, including but not
limited to, obtaining the execution by the related Obligor and the recording,
registering, filing, re-recording, re-registering, and refiling of all security
agreements, financing statements, continuation statements or other instruments
as are necessary to maintain the security interest granted by such Obligor under
each respective Contract. The Trustee hereby authorizes the Servicer to take
such steps as are necessary to re-perfect such security interest on behalf of
the Trust in the event of the relocation of a Financed Vehicle or for any other
reason. In the event that the assignment of a Contract to the Trust is
insufficient, without a notation on the related Financed Vehicle's certificate
of title (or, in the case of the State of California, the electronic title
record), or without fulfilling any additional administrative requirements under
the laws of the state in which the Financed Vehicle is located, to grant to the
Trust a perfected security interest in the related Financed Vehicle, Onyx hereby
agrees that the identification of Onyx or a subsidiary of Onyx as the secured
party on the certificate of title (or, in the case of the State of California,
the electronic title record) is deemed to be in its capacity as agent of the
Trust and further agrees to hold such certificate of title (or, in the case of
the State of California, the electronic title record) as the Trustee's agent and
custodian; provided that Onyx shall not make, nor shall the Trustee or
Certificateholders have the right to require that Onyx make, any such notation
on the related Financed Vehicles' certificate of title (or, in the case of the
State of California, the electronic title record) or fulfill any such additional
administrative requirement of the laws of the state in which a Financed Vehicle
is located.
SECTION 3.6 Covenants, Representations and Warranties of Servicer. The
Servicer hereby makes the following covenants, representations and warranties on
which the Trustee shall rely accepting the Contracts in trust and authenticating
the Certificates.
(a) The Servicer covenants as to the Contracts:
(i) the Financed Vehicle securing each Contract shall not be
released from the lien granted by the Contract in whole or in part,
except as contemplated herein;
(ii) the Servicer shall not impair the rights of the Trust in
the Contracts;
(iii) the Servicer shall not increase the number of payments
under a Contract, nor increase the amount financed under a Contract, nor
extend or forgive payments on a Contract, except as provided in Section
3.2; and
(iv) the Servicer may consent to the sale or transfer by an
Obligor of any Financed Vehicle if the original Obligor under the
related Contract remains liable under such Contract and the transferee
assumes all of the Obligor's obligations thereunder and upon doing so
the credit profile with respect to such Obligor will not be changed from
adequate to speculative by virtue of the addition of the transferee's
obligation thereunder.
(b) The Servicer represents and warrants as of the Closing Date:
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(i) the Servicer (1) has been duly organized, is validly existing
and in good standing as a corporation organized and existing under the
laws of the State of Delaware, (2) has qualified to do business as a
foreign corporation and is in good standing in each jurisdiction where
the character of its properties or the nature of its activities makes
such qualification necessary, and (3) has full power, authority and
legal right to own its property, to carry on its business as presently
conducted, and to enter into and perform its obligations under this
Agreement;
(ii) the execution and delivery by the Servicer of this Agreement
are within the corporate power of the Servicer and have been duly
authorized by all necessary corporate action on the part of the
Servicer. Neither the execution and delivery of this Agreement, nor the
consummation of the transactions herein contemplated, nor compliance
with the provisions hereof, will conflict with or result in a breach of,
or constitute a default under, any of the provisions of any law,
governmental rule, regulation, judgment, decree or order binding on the
Servicer or its properties or the Certificate of Incorporation or Bylaws
of the Servicer, or any of the provisions of any indenture, mortgage,
contract or other instrument to which the Servicer is a party or by
which it is bound or result in the creation or imposition of any lien,
charge or encumbrance upon any of its property pursuant to the terms of
any such indenture, mortgage, contract or other instrument;
(iii) other than consents that have been obtained prior to the
Closing Date, the Servicer is not required to obtain the consent of any
other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity
or enforceability of this Agreement;
(iv) this Agreement has been duly executed and delivered by the
Servicer and, assuming the due authorization, execution and delivery
thereof by the Trustee, constitutes a legal, valid and binding
obligation of the Servicer enforceable against the Servicer in
accordance with its terms (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of
creditors' rights generally);
(v) there are no actions, suits or proceedings pending or, to the
knowledge of the Servicer, threatened against or affecting the Servicer,
before or by any court, administrative agency, arbitrator or
governmental body with respect to any of the transactions contemplated
by this Agreement, or which will, if determined adversely to the
Servicer, materially and adversely affect it or its business, assets,
operations or condition, financial or otherwise, or adversely affect the
Servicer's ability to perform its obligations under this Agreement. The
Servicer is not in default with respect to any order of any court,
administrative agency, arbitrator or governmental body so as to
materially and adversely affect the transactions contemplated by the
above-mentioned documents; and
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(vi) the Servicer has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
nongovernmental persons, in each case, in connection with the execution
and delivery of this Agreement, and the consummation of all the
transactions herein contemplated.
SECTION 3.7 Purchase of Contracts Upon Breach of Covenant. The Servicer
or the Trustee shall inform the other party and the Insurer promptly, in
writing, upon the discovery of any breach of the representation and warranties
set forth in Section 3.6 or of the covenants set forth in Section 3.5. Unless
the breach shall have been cured within 30 days following such discovery or
receipt of notice of such breach, the Servicer shall purchase any Contract
materially and adversely affected by such breach from the Trust. As
consideration for the Contract, the Servicer shall remit the Repurchase Amount
on the Business Day preceding the Servicer Report Date next succeeding the end
of such 30-day cure period in the manner specified in Section 4.4. The sole
remedy of the Trustee, the Trust, or the Certificateholders with respect to a
breach pursuant to Section 3.5 (other than as specified therein) and Section 3.6
shall be to require the Servicer to purchase Contracts pursuant to this Section
3.7; provided, however, that the Servicer shall indemnify the Trustee and its
officers, directors, agents and employees, the Insurer, the Trust and the
Certificateholders against all costs, expenses, losses damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third-party claims
arising out of the events or facts giving rise to such breach.
Any successor Servicer appointed pursuant to Section 8.2 shall not be
obligated to purchase Contracts pursuant to this Section 3.7 with respect to any
breaches by any prior Servicer.
SECTION 3.8 Servicing Compensation. As compensation for the performance
of its obligations under this Agreement and subject to the terms of this Section
3.8, the Servicer shall be entitled to receive on each Distribution Date the
Servicing Fee in respect of each Contract that was Outstanding at the beginning
of the Collection Period ending immediately prior to such Distribution Date;
provided, however, that with respect to the first Distribution Date the Servicer
will be entitled to receive the Servicing Fee in respect of each Outstanding
Contract as of the Cut-Off Date. As servicing compensation in addition to the
Servicing Fee, the Servicer shall be entitled (i) to retain all late payment
charges, extension fees and similar items paid in respect of Contracts, (ii) to
receive, in respect of each Rule of 78's Contract that is prepaid in full prior
to its Maturity Date, the amount by which the outstanding principal balance of
such Contract (determined in accordance with the Rule of 78's method) exceeds
the Scheduled Balance of such Contract at the time of such prepayment and (iii)
to receive all investment earnings on funds credited to the Collection Account
and the Payahead Account; provided, however, that the Servicer agrees that each
amount payable to it pursuant to clause (ii) of this Section 3.8 shall be
deposited in the Spread Account and applied in accordance with the Insurance
Agreement. The Servicer shall pay all expenses incurred by it in connection with
its servicing activities hereunder and shall not be entitled to reimbursement of
such expenses except to the extent provided in Section 3.3.
SECTION 3.9 Reporting by the Servicer.
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(a) No later than 3:00 p.m. New York City time on each Servicer Report
Date, the Servicer shall transmit to the Trustee and the Insurer a statement
(the "Distribution Date Statement") setting forth with respect to the next
succeeding Distribution Date:
(i) the Interest Distribution for such Distribution Date;
(ii) the Principal Distribution for such Distribution Date;
(iii) the Certificate Distribution Amount for such Distribution
Date;
(iv) the Premium payable to the Insurer and the amount to be
deposited in the Spread Account;
(v) the aggregate Servicing Fee with respect to the Contracts
for the related Collection Period;
(vi) the number of, and aggregate amount of monthly principal
and interest payments due on, the Contracts which are delinquent as of
the end of the related Collection Period presented on a 30-day, 60-day
and 90-day basis;
(vii) the Collection Account Amount Available and the Policy
Claim Amount, if any, for such Distribution Date;
(viii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(ix) the net credit losses for the Collection Period;
(x) the number and net outstanding balance of Contracts for
which the Financed Vehicle has been repossessed; and
(xi) the Pool Balance.
Each such Distribution Date Statement shall be accompanied by an Officers'
Certificate of the Servicer, which Officers' Certificate shall state that the
computations reflected in such statement were made in conformity with the
requirements of this Agreement.
(b) On each Servicer Report Date, the Servicer shall render to the
Trustee and the Insurer a report, in respect of the immediately preceding
Collection Period, setting forth the following:
(i) the aggregate amount, if any, paid by or due from it for the
purchases of Contracts which the Seller or the Servicer has become
obligated to repurchase or purchase pursuant to Sections 2.3 or 3.7;
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(ii) the net amount of funds which have been deposited in or
credited to the Collection Account or the Payahead Account in respect of
such Collection Period (including amounts, if any, collected during the
next preceding Collection Period and deposited in the Payahead Account
pursuant to Section 4.2) after giving effect to all permitted deductions
therefrom pursuant to Section 4.2;
(iii) with respect to each Contract that became a Liquidated
Contract during the Collection Period, the following information:
(A) its Contract Number;
(B) the effective date as of which such Contract became a
Liquidated Contract;
(C) its Monthly P&I and Scheduled Balance as of the close
of business on the last day of the Collection Period relating to
the prior Distribution Date (or as of the Closing Date in the
case of the first Distribution Date); and
(D) the amount of the Net Liquidation Proceeds or Net
Insurance Proceeds;
(iv) with respect to each Contract which was the subject of a
Full Prepayment during such Collection Period, the following
information:
(A) its Contract Number; and
(B) the date of such Full Prepayment;
(v) the Contract Numbers, Monthly P&I, Scheduled Balances and
Maturity Dates of all Contracts which became Defaulted Contracts during
such Collection Period;
(vi) any other information relating to the Contracts reasonably
requested by the Trustee or the Insurer; and
(vii) the amount of Net Liquidation Proceeds and Net Insurance
Proceeds which have been deposited in or credited to the Collection
Account in respect of the Collection Period ending immediately prior to
such Servicer Report Date and the cumulative amount of Net Liquidation
Proceeds and Net Insurance Proceeds deposited in or credited to the
Collection Account during the preceding Collection Periods.
SECTION 3.10 Annual Statement as to Compliance.
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(a) The Servicer shall deliver to the Trustee and the Insurer, on or
before March 15, 1999 and on or before March 15 of each fiscal year thereafter,
an Officers' Certificate of the Servicer stating that (i) a review of the
activities of the Servicer during the preceding fiscal year (since the Closing
Date in the case of the first of such Officers' Certificates required to be
delivered) and of its performance under this Agreement has been made under such
officers' supervision and (ii) to the best of such officers' knowledge, based on
such review, the Servicer has fulfilled all its obligations under this Agreement
throughout such year and that no default under this Agreement has occurred and
is continuing, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof.
(b) The Servicer shall deliver to the Trustee, the Insurer and each
Rating Agency promptly after having obtained knowledge thereof, but in no event
later than five Business Days thereafter, an Officer's Certificate specifying
any event which with the giving of notice or lapse of time, or both, would
become an Event of Default under Section 8.1.
SECTION 3.11 Annual Independent Certified Public Accountant's Report. On
or before March 15, 1999 and on or before March 15 of each fiscal year
thereafter, the Servicer at its expense shall cause a firm of
nationally-recognized independent certified public accountants (who may also
render other services to the Servicer) to furnish a report to the Trustee and
the Insurer to the effect that (i) they have audited the balance sheet of the
Servicer as of the last day of said fiscal year and the related statements of
operations, retained earnings and cash flows for such fiscal year and have
issued an opinion thereon, specifying the date thereof, (ii) they have also
audited the reports delivered by the Servicer pursuant to Section 3.9(b) and
certain other documents and the records relating to the servicing of the
Contracts and the distributions on the Certificates under this Agreement, (iii)
their audit as described under clauses (i) and (ii) above was made in accordance
with generally accepted auditing standards and accordingly included such tests
of the accounting records and such other auditing procedures as they considered
necessary in the circumstances, and (iv) their audits described under clauses
(i) and (ii) above disclosed no exceptions which, in their opinion, were
material, relating to the servicing of such Contracts in accordance with this
Agreement and the making of distributions on the Certificates in accordance with
this Agreement, or, if any such exceptions were disclosed thereby, setting forth
those exceptions which, in their opinion, were material.
SECTION 3.12 Access to Certain Documentation and Information Regarding
Contracts. If the Servicer is acting as Custodian, the Servicer shall provide to
the Certificateholders, the Trustee and the Insurer reasonable access to the
Contract Files. Access shall be afforded without charge, but only upon
reasonable request and during normal business hours at designated offices of the
Servicer. Nothing in this Section shall affect the obligation of the Servicer to
observe any applicable law prohibiting disclosure of information regarding the
Obligors, and the failure of the Servicer to provide access to information as a
result of such obligation shall not constitute a breach of this Section 3.12.
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SECTION 3.13 Fidelity Bond. The Servicer shall maintain a fidelity bond
in such form and amount as is customary for banks acting as custodian of funds
and documents in respect of mortgage loans or consumer contracts on behalf of
institutional investors.
SECTION 3.14 Indemnification; Third Party Claims. The Servicer agrees to
indemnify and hold the Trust, the Trustee and its officers, directors, agents
and employees, and the Certificateholders harmless against any and all claims,
losses, penalties, fines, forfeitures, reasonable legal fees and related costs,
judgments, and any reasonable other costs, fees and expenses that the Trustee or
the Certificateholders may sustain because of the failure of the Servicer to
perform its duties and service the Contracts in compliance with the terms of
this Agreement. The Servicer shall immediately notify the Trustee if a claim is
made by a third party with respect to the Contracts, shall assume, with the
consent of the Trustee, the defense of any such claim and shall pay all expenses
in connection therewith, including counsel fees, and shall promptly pay,
discharge and satisfy any judgment or decree which may be entered with respect
to such claim against it or the Trustee or the Certificateholders.
SECTION 3.15 Reports to Certificateholders and the Rating Agencies.
(a) The Trustee at its own expense shall provide to each
Certificateholder a copy of each Distribution Date Statement described in
Section 3.9(a) concurrently with the delivery of the statement described in
Section 4.5 below.
(b) The Trustee shall provide to any Certificateholder who so requests
in writing (addressed to the Corporate Trust Office) a copy of the annual audit
statement described in Section 3.10, or the annual audit report described in
Section 3.11. The Trustee may require the Certificateholder to pay a reasonable
sum to cover the cost of the Trustee's complying with such request.
(c) The Trustee shall forward to the Rating Agencies and the Insurer the
statement to Certificateholders described in Section 4.5 and any other reports
it may receive pursuant to this Agreement to (i) Standard & Poor's Ratings
Services, Asset-Backed Surveillance Group, 00 Xxxxxxxx, Xxxxxxxxx Xxxxx, Xxx
Xxxx, Xxx Xxxx 00000, (ii) Xxxxx'x Investors Service, Inc., ABS Monitoring
Dept., 00 Xxxxxx Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (iii) the
address of the Insurer at the address set forth in the Insurance Agreement.
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ARTICLE IV
Accounts; Distributions; Statements to Certificateholders
SECTION 4.1 Accounts.
(a) Prior to the Closing Date, the Servicer shall open, at a depository
institution (which may be the Trustee), the following accounts for the benefit
of the Certificateholders: (i) an account denominated "Collection Account--GT
1998-1, Bankers Trust Company, Trustee" (the "Collection Account") and (ii) an
account denominated "Payahead Account--GT 1998-1, Bankers Trust Company, as
agent" (the "Payahead Account") and, collectively, with the Collection Account,
the "Accounts"). The Accounts shall be Eligible Accounts. The location and
account numbers of the Accounts as of the Closing Date are set forth on Schedule
II. The Servicer shall give the Trustee and the Insurer at least five Business
Days' written notice of any change in the location of any Account and any
related account identification information. All moneys deposited in or credited
to, from time to time, the Collection Account shall be part of the Trust and all
moneys deposited in or credited to, from time to time, the Collection Account
shall be invested by the Trustee, or on behalf of the Trustee by the depository
institution maintaining such account, in Eligible Investments pursuant to
Section 4.1(c).
(b) If as of the last day of a Collection Period a payment in an amount
less than the scheduled payment of Monthly P&I has been made for a Rule of 78's
Contract with respect to which amounts have been deposited in or credited to the
Payahead Account in a preceding Collection Period in accordance with Sections
3.1 and 4.2(a), the Servicer shall withdraw from the Payahead Account and
deposit into the Collection Account by the fifth Business Day preceding the
Distribution Date immediately succeeding such Collection Period the amount equal
to the difference between such scheduled payment of Monthly P&I and such actual
payment, to the extent available from amounts deposited in or credited to the
Payahead Account with respect to such Contract. Amounts on deposit in the
Payahead Account shall be invested by the depository institution maintaining the
Payahead Account upon the written direction of the Servicer in Eligible
Investments which mature not later than the fifth Business Day prior to the
Distribution Date to which such amounts relate, and any earnings on such
Eligible Investments shall be payable to the Servicer monthly. The Payahead
Account and all amounts on deposit therein or credited thereto shall not be
considered part of the Trust Estate.
(c) All funds in the Collection Account shall be invested by the
Trustee, or on behalf of the Trustee by the depository institution maintaining
such account, in Eligible Investments. The Insurer shall direct the Trustee in
writing to invest funds, or cause the depository institution maintaining the
Collection Account in the Trustee's name to invest funds, in the Collection
Account in Eligible Investments; provided that in the absence of such directions
from the Insurer, the Servicer may so direct the Trustee. All such investments
shall be in the name of the Trustee as trustee of the Trust. All income or other
gain from investment of monies deposited in or credited to the Collection
Account shall be paid by the Trustee to the Servicer monthly, unless earlier
requested by the
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Servicer. The maximum permissible maturities of any such investments pursuant to
this Section 4.1(c) on any date shall not be later than the Servicer Report Date
preceding the Distribution Date next succeeding the date of such investment;
provided, however, that such funds may be invested by the Trustee in Eligible
Investments of the entity that is serving as Trustee (or an entity which meets
the criteria in clauses (i)(b) or (i)(c) of the definition of Eligible Account)
that mature on the Business Day prior to such Distribution Date. No such
investment may be sold prior to its maturity.
SECTION 4.2 Collections; Transfer to Payahead Account; Realization Upon
Financial Guarantee Insurance Policy; Net Deposit.
(a) Subject to Section 4.4 below, the Servicer shall remit or credit all
payments on a daily basis, within two Business Days of receipt, by or on behalf
of the Obligors on the Contracts and all Net Liquidation Proceeds and Net
Insurance Proceeds to the Collection Account. Prior to the Servicer Report Date,
amounts with respect to Rule of 78's Contracts which had been deposited in or
credited to the Collection Account pursuant to the next preceding sentence
during the preceding Collection Period shall be deposited in or credited to the
Payahead Account (in accordance with the Distribution Date Statement) to the
extent that such amounts are installments of Monthly P&I which are due in a
Collection Period relating to a Distribution Date subsequent to the Distribution
Date immediately succeeding such Collection Period.
(b) Based upon the report referenced in Section 3.9(b) delivered by the
Servicer to the Trustee on the Servicer Report Date, the Servicer shall
determine the Collection Account Amount Available, compare such amount to the
amounts required to be distributed pursuant to Section 4.3, and determine the
Policy Claim Amount, if any, which exists with respect to the related
Distribution Date.
(c) The Trustee shall, no later than 12:00 p.m. New York time on the
third Business Day prior to each Distribution Date, make a claim under the
Financial Guarantee Insurance Policy for the Policy Claim Amount, if any, for
such Distribution Date by delivering to the Insurer and the Bank, with a copy to
the Servicer, by hand delivery, telex or facsimile transmission, a Deficiency
Notice specifying the Policy Claim Amount. In making any such claim, the Trustee
shall comply with all the terms and conditions of the Financial Guarantee
Insurance Policy. The notice of such claim shall direct the Insurer and Bank to
remit such Policy Claim Amount (no later than 11:00 a.m. on the Business Day
immediately preceding such Distribution Date) to the Trustee for deposit in the
Collection Account.
(d) So long as Onyx is the Servicer, the Servicer may make deposits in
or credits to the Collection Account net of amounts to be paid to the Servicer
under this Agreement. Notwithstanding the foregoing, the Servicer shall maintain
the records and accounts for such deposits and credits on a gross basis.
SECTION 4.3 Distributions.
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(a) On the Business Day immediately preceding each Distribution Date,
the Trustee shall transfer, or cause to be transferred, to the Paying Agent for
deposit in the Distribution Account from the Amount Available in the Collection
Account, the amounts set forth in clauses (ii) and (iii) below, to the extent
that such amounts are available after giving effect to the amount to be
distributed on the Distribution Date set forth in clause (i).
On each Distribution Date, the following amounts shall be distributed
from the Amount Available in the following order of priority in accordance with
the Distribution Date Statement:
(i) by the Trustee from the Collection Account to the Servicer,
the Servicing Fee payable on such Distribution Date pursuant to Section
3.8, to the extent of the Amount Available;
(ii) by the Paying Agent from the Distribution Account, to the
Certificateholders, the Interest Distribution with respect to such
Distribution Date to the extent of the Amount Available remaining after
the distribution made pursuant to clause (i) above;
(iii) by the Paying Agent from the Distribution Account, to the
Certificateholders, the Principal Distribution with respect to such
Distribution Date to the extent of the Amount Available remaining after
the distributions made pursuant to clauses (i) and (ii) above; and
(iv) by the Trustee from the Collection Account, to the Insurer,
the Premium with respect to such Distribution Date to the extent of the
Amount Available remaining after the distributions made pursuant to
clauses (i), (ii) and (iii) above.
Any amounts remaining in the Collection Account after giving effect to
the distributions set forth in items (i) through (iv) above shall be deposited
in the Spread Account and shall be held or distributed in accordance with the
provisions of the Insurance Agreement.
All distributions to Certificateholders shall be made pro rata by check
mailed to each Certificateholder of record on the Record Date next preceding the
Distribution Date for such distribution; provided, that if so directed by the
Servicer in the case of Certificates registered in the name of a Clearing
Agency, such distribution shall be made by wire transfer in immediately
available funds.
SECTION 4.4 Remittance Of Repurchase Amount. The Servicer and the
Seller, as the case may be, each shall remit or credit to the Collection Account
each Repurchase Amount to be remitted by it with respect to Repurchased
Contracts on the Business Day preceding the Servicer Report Date next succeeding
(i) the end of the Collection Period in which the applicable Contract is
repurchased by the Seller pursuant to Section 2.3, in the case of the Seller or
(ii) the last day of the related cure period specified in Section 3.7, in the
case of the Servicer.
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SECTION 4.5 Statements to Certificateholders. On each Distribution Date,
the Trustee shall include with each distribution to each Certificateholder a
statement, based on information set forth in the Distribution Date Statement
furnished pursuant to Section 3.9, setting forth for such Distribution Date the
following information:
(a) the amount of such Certificateholder's distribution allocable to
principal, separately identifying the aggregate amount included therein of any
(i) Full Prepayments of principal on Rule of 78's Contracts, and (ii) Full
Prepayments and partial prepayments of principal on Simple Interest Contracts;
(b) the amount of such Certificateholder's distribution allocable to
interest;
(c) the Certificateholder's pro rata portion of expenses allocable to
the Servicing Fee paid to the Servicer and the Premium paid to the Insurer; and
(d) the Pool Balance and the Pool Factor as of the Distribution Date
(after giving effect to the distribution made on such Distribution Date).
In the case of the information furnished pursuant to clauses (a), (b)
and (c) above, the amounts shall be expressed as a dollar amount per Certificate
evidencing a $1,000 denomination.
Within a reasonable period of time after the end of each calendar year
but not later than the latest date permitted by law, the Servicer shall prepare
and furnish to the Trustee and the Paying Agent and the Paying Agent shall
furnish, to each Person who on any Record Date during such calendar year shall
have been a Certificateholder, a statement containing the sum of the amounts
determined in clauses (a) through (c) and such other information as is
reasonably necessary for the preparation of such Person's federal income tax
return in respect of the Certificates, for such calendar year or, in the event
such Person shall have been a Certificateholder during a portion of such
calendar year, for the applicable portion of such year, for the purposes of such
Certificateholder's preparation of federal income tax returns.
ARTICLE V
The Certificates
SECTION 5.1 The Certificates. Unless otherwise specified in this
Agreement, the Certificates shall be substantially in the form set forth in
Exhibit B and shall be issued in denominations of $1,000 and integral multiples
thereof; provided, however, that one Certificate may be issued in a denomination
that includes any residual portion of the Original Pool Balance. The
Certificates shall be executed on behalf of the Trust by manual or facsimile
signature of a Responsible Officer of the Trustee. Certificates bearing the
manual or facsimile signatures of individuals who were, at the time when such
signatures shall have been affixed, authorized to sign
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on behalf of the Trust, shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them shall have ceased to be so
authorized prior to the authentication and delivery of such Certificates or did
not hold such offices at the date of the issuance of such Certificates. No
Certificate shall entitle its holder to any benefit under this Agreement, or
shall be valid for any purpose, unless there shall appear on such Certificate a
certificate of authentication substantially in the form set forth in Exhibit B
hereto executed by the Trustee by manual signature; such authentication shall
constitute conclusive evidence that such Certificate shall have been duly
authenticated and delivered hereunder. All Certificates shall be dated the date
of their authentication. Upon issuance pursuant to the terms of this Agreement,
the Certificates will be entitled to the benefits of this Agreement.
SECTION 5.2 Execution, Authentication and Delivery of Certificates. In
exchange for the Contracts and the other assets of the Trust as of the Closing
Date, simultaneously with the sale, assignment and transfer to the Trustee of
the Contracts, the delivery to the Trustee of the Contract Documents, the
constructive delivery to the Trust of the Contract Files other than the Contract
Documents and the delivery to the Trustee of the other components of the Trust,
the Trustee shall deliver to, or upon the written order of, the Seller,
Certificates duly executed by the Trustee, on behalf of the Trust, and
authenticated by the Trustee in authorized denominations equaling in the
aggregate the Original Pool Balance, and evidencing the entire ownership of the
Trust.
SECTION 5.3 Registration of Transfer and Exchange of Certificates. The
Trustee shall cause to be kept at the office or agency to be maintained by a
transfer agent and certificate registrar (the "Transfer Agent" and "Certificate
Registrar") and maintain, pursuant to Section 5.7, a Certificate Register in
which, subject to such reasonable regulations as it may prescribe, the Trustee
shall provide for the registration of Certificates and of transfers and
exchanges of Certificates as herein provided. The Trustee shall be the initial
Transfer Agent and Certificate Registrar.
Subject to the other provisions of this Section, upon surrender for
registration or transfer of any Certificate at the Corporate Trust Office, the
Trustee shall execute on behalf of the Trust, authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
in authorized denominations of a like aggregate amount. At the option of a
Certificateholder, Certificates may be exchanged for other Certificates of
authorized denominations of a like aggregate amount at the Corporate Trust
Office.
Every Certificate presented or surrendered for registration of transfer
or exchange shall be accompanied by a written instrument of transfer in form
satisfactory to the Trustee and the Certificate Registrar duly executed by the
Holder. Each Certificate surrendered for registration of transfer and exchange
shall be canceled and subsequently destroyed by the Trustee.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Trustee may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any transfer or exchange of Certificates.
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SECTION 5.4 Mutilated, Destroyed, Lost or Stolen Certificates. If (i)
any mutilated Certificate shall be surrendered to the Certificate Registrar, or
if the Certificate Registrar shall receive evidence to its satisfaction of the
destruction, loss, or theft of any Certificate and (ii) there shall be delivered
to the Certificate Registrar or the Trustee such security or indemnity as may be
required by them to save each of them harmless, then in the absence of notice
that such Certificate shall have been acquired by a bona fide purchaser, the
Trustee on behalf of the Trust shall execute and the Trustee shall authenticate
and deliver, in exchange for or in lieu of any such mutilated, destroyed, lost
or stolen Certificate, a new Certificate of like tenor and denomination. In
connection with the issuance of any new Certificate under this Section 5.4, the
Trustee and the Certificate Registrar may require the payment of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
connection therewith. Any duplicate Certificate issued pursuant to this Section
5.4 shall constitute conclusive evidence of ownership in the Trust, as if
originally issued, whether or not the lost, stolen, or destroyed Certificate
shall be found at any time.
SECTION 5.5 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration or transfer, the Trustee or the Certificate
Registrar may treat the Person in whose name any Certificate shall be registered
as the owner of such Certificate for the purpose of receiving distributions
pursuant to Section 4.3 and for all other purposes whatsoever, and neither the
Trustee nor the Certificate Registrar shall be bound by any notice to the
contrary.
SECTION 5.6 Access to List of Certificateholders' Names and Addresses.
The Trustee shall furnish or cause to be furnished to the Servicer, within 15
days after receipt by the Trustee of a request therefor from the Servicer in
writing, a list of the names and addresses of the Certificateholders as of the
most recent Record Date. If three or more Certificateholders, or one or more
Holders of Certificates evidencing in the aggregate not less than 25% of the
Pool Balance (hereinafter referred to as "applicants"), apply in writing to the
Trustee, and such application states that the applicants desire to communicate
with other Certificateholders with respect to their rights under this Agreement
or under the Certificates and such application shall be accompanied by a copy of
the communication that such applicants propose to transmit, then the Trustee
shall, within five Business Days after the receipt of such application, afford
such applicants access during normal business hours to the current list of
Certificateholders. Each Certificateholder, by receiving and holding a
Certificate, shall be deemed to have agreed to hold neither the Servicer nor the
Trustee accountable by reason of the disclosure of its name and address,
regardless of the source from which such information was derived.
SECTION 5.7 Maintenance of Office or Agency. The Trustee shall maintain
in the Borough of Manhattan, the City of New York, an office or offices or
agency or agencies where Certificates may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Trustee in
respect of the Certificates and this Agreement may be served. The Trustee
initially designated the Corporate Trust Office as specified in this Agreement
as its office for such purposes. The Trustee shall give prompt written notice to
the Servicer and to Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
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SECTION 5.8 Book-Entry Certificates. The Certificates (other than a
Certificate representing any residual portion of the Original Pool Balance),
upon original issuance, shall be issued in the form of typewritten Certificates
representing the Book-Entry Certificates, to be delivered to The Depository
Trust Company, the initial Clearing Agency, by the Seller or on its behalf. The
Certificates shall initially be registered on the Certificate Register in the
name of Cede & Co., the nominee of the initial Clearing Agency, and no
Certificate Owner will receive a definitive certificate representing such
Certificate Owner's interest in the Certificates, except as provided in Section
5.10. Unless and until definitive, fully registered Certificates ("Definitive
Certificates") have been issued to Certificateholders pursuant to Section 5.10:
(i) the provisions of this Section 5.8 shall be in full force
and effect;
(ii) the Seller, the Servicer, the Paying Agent, the Transfer
Agent and Certificate Registrar and the Trustee may deal exclusively
with the Clearing Agency for all purposes (including the making of
distributions in respect of the Certificates and the taking of actions
by the Certificateholders) as the authorized representative of the
Clearing Agency Participants and the Certificate Owners;
(iii) to the extent that the provisions of this Section 5.8
conflict with any other provisions of this Agreement, the provisions of
this Section 5.8 shall control;
(iv) the rights of Certificate Owners shall be exercised only
through the Clearing Agency (or to the extent Certificate Owners are not
Clearing Agency Participants through the Clearing Agency Participants
through which such Certificate Owners own Book-Entry Certificates) and
shall be limited to those established by law and agreements between such
Certificate Owners and the Clearing Agency and/or the Clearing Agency
Participants and all references in this Agreement to actions by
Certificateholders shall refer to actions taken by the Clearing Agency
upon instructions from the Clearing Agency Participants, and all
references in this Agreement to distributions, notices, reports and
statements to Certificateholders shall refer to distributions, notices,
reports and statements to the Clearing Agency or its nominee, as
registered holder of the Certificates, as the case may be, for
distribution to Certificate Owners in accordance with the procedures of
the Clearing Agency; and
(v) pursuant to the Depository Agreement, the initial Clearing
Agency will make book-entry transfers among the Clearing Agency
Participants and receive and transmit distributions of principal and
interest on the Certificates to the Clearing Agency Participants, for
distribution by such Clearing Agency Participants to the Certificate
Owners or their nominees.
The Clearing Agency Participants shall have no rights under this
Agreement under or with respect to any of the Certificates held on their behalf
by the Clearing Agency, and the Clearing
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Agency may be treated by the Trustee, and its agents, employees, officers and
directors, as the absolute owner of the Certificates for all purposes
whatsoever.
SECTION 5.9 Notices to Clearing Agency. Whenever notice or other
communication to the Certificateholders is required under this Agreement, unless
and until Definitive Certificates shall have been issued to Certificate Owners
pursuant to Section 5.10, the Trustee and the Paying Agent shall give all such
notices and communications specified herein to be given by it to
Certificateholders to the Clearing Agency.
SECTION 5.10 Definitive Certificates. If (i)(A) the Seller advises the
Trustee in writing that the Clearing Agency is no longer willing or able to
discharge properly its responsibilities under the Depository Agreement, and (B)
the Trustee and the Seller are unable to locate a qualified successor or (ii)
after the occurrence of an Event of Default, Certificate Owners representing
beneficial interests aggregating more than 50% of the Pool Balance advise the
Clearing Agency and the Trustee (and the Clearing Agency shall notify the
Trustee in writing thereof) through the Clearing Agency Participants in writing
that the continuation of a book-entry system with respect to the Certificates
through a depository is no longer in the best interests of the Certificate
Owners, the Trustee shall notify the Clearing Agency of the occurrence of any
event described in clauses (i) and (ii) above and of the availability of
Definitive Certificates to Certificate Owners requesting the same. Upon
surrender to the Transfer Agent and Certificate Registrar by the Clearing Agency
of Certificates registered in the name of such Clearing Agency or its nominee,
accompanied by re-registration instructions from the Clearing Agency for
registration of the Definitive Certificates, the Trustee shall execute on behalf
of the Trust, authenticate and (if the Transfer Agent and Certificate Registrar
is different than the Trustee, then the Transfer Agent and Certificate Registrar
shall) deliver Definitive Certificates. The Servicer shall arrange for, and will
bear all costs of, the printing and issuance of such Definitive Certificates.
None of the Seller, the Servicer, the Transfer Agent and Certificate Registrar
or the Trustee shall be liable for any delay in delivery of such instructions
and may conclusively rely on, and shall be protected in relying on such
instruction. Upon the issuance of Definitive Certificates, all references herein
to obligations imposed upon or to be performed by the Clearing Agency shall be
deemed to be imposed upon and performed by the Transfer Agent and Certificate
Registrar, to the extent applicable with respect to such Definitive
Certificates, and the Trustee, the Paying Agent and the Transfer Agent and
Certificate Registrar shall recognize the Holders of the Definitive Certificates
as Certificateholders hereunder.
SECTION 5.11 Appointment of Paying Agent.
(a) The Paying Agent shall have the revocable power to withdraw funds
from the Distribution Account and make distributions to the Certificateholders.
The Trustee may revoke such power and remove the Paying Agent, if the Trustee
determines in its sole discretion that the Paying Agent shall have failed to
perform its obligations under this Agreement in any material respect or for
other good cause. The Paying Agent shall initially be Bankers Trust Company.
Bankers Trust Company shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Servicer
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and the Trustee. In the event that Bankers Trust Company shall no longer be the
Paying Agent, the Trustee shall appoint a successor to act as Paying Agent,
which shall be a bank or trust company.
(b) The Trustee shall cause the Paying Agent (if other than itself) to
execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee that such Paying Agent will hold all sums, if any,
held by it for payment to the Certificateholders or any other party entitled
thereto, and the Trustee in trust for the benefit of the Certificateholders or
such other party until such sums shall be paid to such Certificateholders or
such other party and shall agree that it shall comply with all requirements of
the Code regarding the withholding of payments in respect of federal income
taxes due from Certificate Owners.
(c) Bankers Trust Company in its capacity as initial Paying Agent
hereunder agrees that it (i) will hold all sums held by it hereunder for payment
to the Certificateholders or any other party entitled thereto, in trust for the
benefit of the Certificateholders or such other party until such sums shall be
paid to such Certificateholders or such other party and (ii) shall comply with
all requirements of the Code regarding the withholding of payments in respect of
federal income taxes due from Certificate Owners.
SECTION 5.12 Authenticating Agent.
(a) The Trustee may appoint one or more authenticating agents (each an
"Authenticating Agent") with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the Certificates in
connection with the issuance, delivery, registration of transfer, exchange or
repayment of the Certificates. Whenever reference is made in this Agreement to
the authentication of Certificates by the Trustee or the Trustee's certificate
of authentication, such reference shall be deemed to include authentication on
behalf of the Trustee by an authenticating agent and a certificate of
authentication executed on behalf of the Trustee by an authenticating agent. Any
authenticating agent appointed by the Trustee shall require the consent of the
Seller, which consent may not be unreasonably withheld.
(b) Any institution succeeding to the corporate agency business of an
authenticating agent shall continue to be an authenticating agent without the
execution or filing of any paper or any further act on the part of the Trustee
or such authenticating agent.
(c) An authenticating agent may at any time resign by giving written
notice of resignation to the Trustee and the Seller. The Trustee may at any time
terminate the agency of an authenticating agent by giving notice of termination
to such authenticating agent and to the Seller. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time an authenticating
agent shall cease to be acceptable to the Trustee or the Seller, the Trustee
promptly may appoint a successor authenticating agent with the consent of the
Seller. Any successor authenticating agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of its
predecessor hereunder, with like effect as if originally named as an
authenticating agent.
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Any successor authenticating agent appointed by the Trustee shall require the
consent of the Seller, which consent may not be unreasonably withheld.
(d) The Servicer shall pay the Authenticating Agent from time to time
reasonable compensation for its services under this Section 5.12.
(e) Pursuant to an appointment made under this Section 5.12, the
Certificates may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternate certificate of authentication in substantially the
following form:
This is one of the certificates referred to in the within mentioned
Agreement.
----------------------------------
,
as Trustee
By:
-------------------------------
Authorized Signatory
or
----------------------------------
as Authenticating Agent
for the Trustee,
By:
-------------------------------
Authorized Signatory
SECTION 5.13 Actions of Certificateholders. Any request, demand,
authorization, direction, notice, consent, waiver or other action provided by
this Agreement to be given or taken by Certificateholders may be embodied in and
evidenced by one or more instruments of substantially similar tenor signed by
such Certificateholders in person or by an agent duly appointed in writing; and
except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Trustee on
behalf of the Trust and, when required, to the Seller or the Servicer. Proof of
execution of any such instrument or of a writing appointing any such agent shall
be sufficient for any purpose of this Agreement and conclusive in favor of the
Trustee, the Seller and the Servicer, if made in the manner provided in this
Section 5.13.
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ARTICLE VI
The Seller
SECTION 6.1 Liability of Seller; Indemnities. The Seller shall be liable
in accordance herewith only to the extent of the obligations specifically
undertaken by the Seller under this Agreement.
The Seller shall indemnify, defend, and hold harmless the Trustee and
its officers, directors, agents and employees and the Trust from and against any
taxes that may at any time be asserted against the Trustee or the Trust with
respect to, and as of the date of, the sale of the Contracts to the Trustee or
the issuance and original sale of the Certificates, including any sales, gross
receipts, general corporation, tangible personal property, privilege, or license
taxes (but not, in case of the Trust, including any taxes asserted with respect
to ownership of the Contracts or federal or other income taxes arising out of
the transactions contemplated by this Agreement) and costs and expenses in
defending against the same.
The Seller shall indemnify, defend, and hold harmless the Trustee and
its officers, directors, agents and employees from and against any loss,
liability or expense incurred by reason of the Seller's willful misfeasance, bad
faith, or negligence in the performance of its duties hereunder, or by reason of
reckless disregard of its obligations and duties hereunder.
The Seller shall indemnify, defend and hold harmless the Trustee and its
officers, directors, agents and employees and the Trust from and against all
costs, expenses, losses, claims, damages, and liabilities arising out of or
incurred in connection with the acceptance or performance of the trusts and
duties herein contained, except to the extent that such cost, expense, loss,
claim, damage or liability: (i) shall be due to the willful misfeasance, bad
faith, or negligence (except for errors in judgment) of the Trustee; (ii)
relates to any tax other than the taxes with respect to which either the Seller
or Servicer shall be required to indemnify the Trustee; (iii) shall arise from
the Trustee's breach of any of its representations or warranties set forth in
Section 9.14; or (iv) shall be one as to which the Servicer is required to
indemnify the Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
recipient thereafter shall collect any of such amounts from others, the
recipient shall promptly repay such amounts to the Seller, without interest.
SECTION 6.2 Merger or Consolidation of, or Assumption of the Obligations
of, Seller. The Seller shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person unless the corporation formed by such consolidation or
into which the Seller has merged or the Person which acquires by conveyance,
transfer or lease substantially all the assets of the Seller as an entirety, can
lawfully perform the obligations of the Seller hereunder and executes and
delivers to the Insurer and the Trustee an
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agreement in form and substance reasonably satisfactory to the Trustee and the
Insurer, which contains an assumption by such successor entity of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Seller under this Agreement.
SECTION 6.3 Limitation on Liability of Seller and Others. The Seller and
any director or officer or employee or agent of the Seller may rely in good
faith on any document of any kind, prima facie properly executed and submitted
by any Person respecting any matters arising hereunder. The Seller shall not be
under any obligation to appear in, prosecute, or defend any legal action that
shall not be incidental to its obligations under this Agreement, and that in its
opinion may involve it in any expense or liability.
SECTION 6.4 Seller Not to Resign. Subject to the provisions of Section
6.2, the Seller shall not resign from the obligations and duties hereby imposed
on it as Seller under this Agreement.
SECTION 6.5 Seller May Own Certificates. The Seller and any Person
controlling, controlled by, or under common control with the Seller may in its
individual or any other capacity become the owner or pledgee of Certificates
with the same rights as it would have if it were not the Seller or an affiliate
thereof, except as otherwise provided in the definition of "Certificateholder"
specified in Section 1.1. Certificates so owned by or pledged to the Seller or
such controlling or commonly controlled Person shall have an equal and
proportionate benefit under the provisions of this Agreement, without
preference, priority, or distinction as among all of the Certificates.
ARTICLE VII
The Servicer
SECTION 7.1 Liability of Servicer; Indemnities. The Servicer shall be
liable in accordance herewith only to the extent of the obligations specifically
undertaken by the Servicer under this Agreement.
Such obligations shall include the following:
(a) the Servicer shall defend, indemnify, and hold harmless the Trustee
and its officers, directors, agents and employees, the Trust, the Insurer and
the Certificateholders from and against any and all costs, expenses, losses,
damages, claims, and liabilities, arising out of or resulting from the use or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle;
(b) the Servicer shall indemnify, defend and hold harmless the Trustee
and its officers, directors, agents and employees, the Insurer and the Trust
from and against any taxes that may at any time be asserted against the Trustee
or the Trust with respect to the transactions contemplated herein, including,
without limitation, any sales, gross receipts, general corporation, tangible
personal property, privilege, or license taxes (but not including any taxes
asserted with respect to, and as of
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the date of, the sale of the Contracts to the Trustee or the issuance and
original sale of the Certificates, or asserted with respect to ownership of the
Contracts, or federal or other income taxes arising out of distributions on the
Certificates) and costs and expenses in defending against the same;
(c) the Servicer shall indemnify, defend and hold harmless the Trustee
and its officers, directors, agents and employees, the Trust, the Insurer and
the Certificateholders from and against any and all costs, expenses, losses,
claims, damages, and liabilities to the extent that such cost, expense, loss,
claim, damage, or liability arose out of, or was imposed upon the Trustee, the
Trust, or the Certificateholders through, the negligence, willful misfeasance,
or bad faith of the Servicer in the performance of its duties under this
Agreement; and
(d) the Servicer shall indemnify, defend, and hold harmless the Trustee
and the Insurer from and against all costs, expenses, losses, claims, damages,
and liabilities arising out of or incurred in connection with the acceptance or
performance of the trusts and duties herein contained, except to the extent that
such cost, expense, loss, claim, damage, or liability: (i) shall be due to the
willful misfeasance, bad faith, or negligence (except for errors in judgment) of
the Trustee or the Insurer; (ii) relates to any tax other than the taxes with
respect to which either the Seller or Servicer shall be required to indemnify
the Trustee; (iii) shall arise from the Trustee's breach of any of its
representations or warranties set forth in Section 9.14; or (iv) shall be one as
to which the Seller is required to indemnify the Trustee.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation. If the
Servicer shall have made any indemnity payments pursuant to this Section and the
recipient thereafter collects any of such amounts from others, the recipient
shall promptly repay such amounts to the Servicer, without interest.
SECTION 7.2 Corporate Existence; Status as Servicer; Merger.
(a) The Servicer shall keep in full effect its existence, rights and
franchises as a corporation incorporated under the laws of the State of
Delaware, and will obtain and preserve its qualification to do business as a
foreign corporation in each jurisdiction in which such qualification is or shall
be necessary to protect the validity and enforceability of the Contract
Documents and this Agreement.
(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease substantially all of its assets as an
entirety to any Person or engage in any corporate transaction pursuant to which
the surviving or successor entity is not Onyx Acceptance Corporation, unless (i)
such entity is at least rated investment grade by the Rating Agencies, (ii) the
Insurer shall have consented thereto in writing and (iii) such entity executes
and delivers to the Trustee and the Insurer an agreement in form and substance
reasonably satisfactory to the Trustee and the Insurer, which contains an
assumption by such successor entity of the due and punctual performance and
observance of each covenant and condition to be performed or observed by the
Servicer under this Agreement.
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SECTION 7.3 Performance of Obligations.
(a) The Servicer shall punctually perform and observe all of its
obligations and agreements contained in this Agreement.
(b) The Servicer shall not take any action, or permit any action to be
taken by others, which would excuse any person from any of its covenants or
obligations under any of the Contract Documents or under any other instrument
included in the Trust Estate, or which would result in the amendment,
hypothecation, subordination, termination or discharge of, or impair the
validity or effectiveness of, any of the Contract Documents or any such
instrument, except as expressly provided herein and therein.
SECTION 7.4 The Servicer Not to Resign; Assignment.
(a) The Servicer shall not resign from the duties and obligations hereby
imposed on it except upon determination by its Board of Directors that by reason
of change in applicable legal requirements the continued performance by the
Servicer of its duties under this Agreement would cause it to be in violation of
such legal requirements in a manner which would result in a material adverse
effect on the Servicer or its financial condition, said determination to be
evidenced by a resolution of its Board of Directors to such effect accompanied
by an Opinion of Counsel, satisfactory to the Trustee, to such effect. No such
resignation shall become effective unless and until (i) the Trustee assumes all
of the Servicer's obligations under this Agreement or (ii) a new servicer
acceptable to the Trustee and the Insurer is willing to service the Contracts,
enters into a servicing agreement with the Trustee in form and substance
substantially similar to this Agreement and satisfactory to the Trustee and the
Insurer, and each Rating Agency confirms that the selection of such new servicer
will not result in the reduction or withdrawal of the rating of the Certificates
assigned to them by such Rating Agency. No such resignation by the Servicer
shall affect the obligation of the Servicer to repurchase any Contract pursuant
to Section 3.7.
(b) Except as specifically permitted hereunder, the Servicer may not
assign this Agreement or any of its rights, powers, duties or obligations
hereunder, provided that the Servicer may assign this Agreement in connection
with a consolidation, merger, conveyance, transfer or lease made in compliance
with Section 7.2(b).
(c) Except as provided in Sections 7.4(a) and (b), the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 10.1, and shall
survive the exercise by the Trustee or the Insurer of any right or remedy under
this Agreement, or the enforcement by the Trustee, any Certificateholder or the
Insurer of any provision of the Certificates, the Insurance Agreement or this
Agreement.
(d) The resignation of the Servicer in accordance with this Section 7.4
shall not affect the rights of the Seller hereunder.
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SECTION 7.5 Limitation on Liability of Servicer and Others. Neither the
Servicer nor any of the directors or officers or employees or agents of the
Servicer shall be under any liability to the Trust or the Certificateholders,
except as provided under this Agreement, for any action taken or for refraining
from the taking of any action pursuant to this Agreement or for errors in
judgment; provided, however, that this provision shall not protect the Servicer
or any such person against any liability that would otherwise be imposed by
reason of willful misfeasance, bad faith or negligence (except errors in
judgment) in the performance of duties or by reason of reckless disregard of
obligations and duties under this Agreement. The Servicer and any director or
officer or employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
respecting any matters arising under this Agreement.
Except as provided in this Agreement, the Servicer shall not be under
any obligation to appear in, prosecute, or defend any legal action that shall
not be incidental to its duties to service the Contracts in accordance with this
Agreement and that in its opinion may involve it in any expense or liability;
provided, however, that the Servicer may undertake any reasonable action that it
may deem necessary or desirable in respect of this Agreement and the rights and
duties of the parties to this Agreement and the interests of the
Certificateholders under this Agreement.
ARTICLE VIII
Default
SECTION 8.1 Events of Default. If any one of the following events
("Events of Default") shall occur and be continuing:
(a) any failure by the Servicer to deposit in or credit to the
Collection Account or the Payahead Account any amount required under this
Agreement to be so deposited or credited that shall continue unremedied for a
period of three Business Days after written notice from the Trustee or the
Insurer is received by the Servicer or discovery by an officer of the Servicer;
or
(b) the Insurer or the Trustee shall not have received a report in
accordance with Section 3.9 by the Servicer Report Date with respect to which
such report is due; or
(c) failure on the part of the Seller or the Servicer duly to observe or
to perform in any material respect any other covenants or agreements of the
Seller or the Servicer set forth in this Agreement, which failure shall (x)
materially and adversely affect the rights of Certificateholders, the Insurer or
the Trustee and (y) continue unremedied for a period of 30 days after the date
on which written notice of such failure, requiring the same to be remedied,
shall have been given (i) to the Seller or the Servicer, as the case may be, by
the Trustee or the Insurer, or (ii) to the Seller or the Servicer, as the case
may be, and to the Trustee by the Holders of Certificates evidencing in the
aggregate not less than 25% of the Pool Balance; or
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(d) the entry of a decree or order for relief by a court or regulatory
authority having jurisdiction in respect of the Servicer or the Seller in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal or state, bankruptcy, insolvency
or similar law, or appointing a receiver, liquidator, assignee, trustee,
custodian, sequestrator or other similar official of the Servicer or the Seller
or of any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Servicer or the Seller and the continuance of
any such decree or order unstayed and in effect for a period of 60 consecutive
days or the commencement of an involuntary case under the federal bankruptcy
laws, as now or hereinafter in effect, or another present or future federal or
state bankruptcy, insolvency or similar law and such case is not dismissed
within 60 days; or
(e) the commencement by the Servicer or the Seller of a voluntary case
under the federal bankruptcy laws, as now or hereafter in effect, or any other
present or future, federal or state, bankruptcy, insolvency or similar law, or
the consent by the Servicer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer or the Seller or of any substantial part of its
property or the making by the Servicer of an assignment for the benefit of
creditors or the failure by the Servicer or the Seller generally to pay its
debts as such debts become due or the taking of corporate action by the Servicer
or the Seller in furtherance of any of the foregoing;
(f) any change of control of the Servicer in violation of the covenant
set forth in Section 7.2 hereof;
(g) the Servicer shall have failed in the reasonable opinion of the
Insurer to service the Contracts in accordance with the Servicing Standards and
such failure shall have continued unremedied for 30 days after written notice of
such failure shall have been delivered to the Servicer by the Insurer; or
(h) any representation, warranty or statement of the Servicer or the
Seller made in this Agreement or any certificate, report or other writing
delivered pursuant hereto shall prove to be incorrect in any material respect as
of the time when the same shall have been made (excluding, however, any
representation or warranty to which Sections 2.2 or 3.6 shall be applicable so
long as the Servicer or the Seller shall be in compliance with Sections 2.3 or
3.7, as the case may be), and the incorrectness of such representation, warranty
or statement has a material adverse effect on the Trust or the Insurer and,
within 30 days after written notice thereof shall have been given to the
Servicer or the Seller by the Trustee or by the Holders of Certificates
evidencing in the aggregate at least 25% of the Pool Balance or by the Insurer,
the circumstance or condition in respect of which such representation, warranty
or statement was incorrect shall not have been eliminated or otherwise cured;
then and in each and every case, so long as an Event of Default shall not have
been remedied, either the Trustee, the Insurer or the Holders of Certificates
evidencing in the aggregate not less than 25% of the Pool Balance, by notice
then given in writing to the Servicer (and to the Trustee and the
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Insurer if given by the Certificateholders) may terminate all of the rights and
obligations of the Servicer under this Agreement. On or after the receipt by the
Servicer of such written notice, all authority and power of the Servicer under
this Agreement, whether with respect to the Certificates or the Contracts or
otherwise, shall pass to and be vested in the Trustee or, if a successor
servicer has been appointed pursuant to Section 8.2, such successor servicer;
and, without limitation, the Trustee is hereby authorized and empowered to
execute and deliver, on behalf of the Servicer, as attorney-in-fact or
otherwise, any and all documents and other instruments, and to do or accomplish
all other acts or things necessary or appropriate to effect the purposes of such
notice of termination, whether to complete the transfer and assignment of the
Contracts and related documents, to show the Trustee as a lienholder or secured
party on Title Documents or financing statements, or otherwise. The Servicer
shall cooperate with the Trustee in effecting the termination of the
responsibilities and rights of the Servicer under this Agreement, including the
transfer to the Trustee for administration by it of all cash amounts that (i)
shall at the time be held by the Servicer for deposit in, or shall have been
deposited by the Servicer in, the Collection Account or Payahead Account or (ii)
shall thereafter be received with respect to a Contract.
SECTION 8.2 Trustee to Act; Appointment of Successor. Upon the
Servicer's receipt of notice of termination pursuant to Section 8.1, or upon
resignation of the Servicer pursuant to Section 7.4, the Trustee shall be the
successor in all respects to the Servicer in its capacity as servicer under this
Agreement, and shall be subject to all the responsibilities, duties and
liabilities relating thereto placed on the Servicer by the terms and provisions
of this Agreement, except that the Trustee shall not be obligated to purchase
Contracts pursuant to Section 3.7. As compensation therefor, the Trustee shall
be entitled to such compensation (whether payable out of the Collection Account
or otherwise) as the Servicer would have been entitled to under this Agreement
if no such notice of termination shall have been given. Notwithstanding the
above, the Trustee may, if it shall be unwilling to act, or shall, if it shall
be legally unable so to act, appoint, or petition a court of competent
jurisdiction to appoint, any established financial institution acceptable to the
Insurer, having a net worth or not less than $50,000,000 and whose regular
business shall include the servicing of automotive retail installment sales
contracts, as the successor to the Servicer under this Agreement. Pending
appointment of any such successor Servicer, the Trustee shall act in such
capacity as provided above. In connection with such appointment, the Trustee may
make such arrangements for the compensation of the successor out of payments on
Contracts as it and such successor shall agree; provided, however, (i) that such
amount shall equal the product of a fixed percentage rate and the Scheduled
Balance, as of the commencement of each Collection Period, of each Contract and
(ii) that no such compensation shall be in excess of that previously permitted
the Servicer under this Agreement. The Trustee and such successor shall take
such action, consistent with this Agreement, as shall be necessary to effectuate
any such succession.
SECTION 8.3 Notification to Certificateholders. Upon any termination of,
or appointment of a successor to, the Servicer pursuant to this Article VIII,
the Trustee shall give prompt written notice thereof to Certificateholders at
their respective addresses appearing in the Certificate Register.
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SECTION 8.4 Waiver of Past Defaults. The Holders of Certificates
evidencing not less than 51% of the Pool Balance (not including Certificates
held by the Seller, the Servicer or any of their respective Affiliates), with
the written consent of the Insurer, may, on behalf of all Certificateholders,
waive any default by the Servicer in the performance of its obligations
hereunder and its consequences, except a default in the failure to make any
required deposits to or payments from the Collection Account in accordance with
this Agreement. Upon any such waiver of a past default, such default shall cease
to exist, and any Event of Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon except
to the extent expressly so waived. The Servicer shall give prompt written notice
of any waiver to each Rating Agency and the Trustee.
SECTION 8.5 Insurer Direction of Insolvency Proceedings. The Trustee,
upon the actual knowledge of a Responsible Officer of the Trustee, shall
promptly notify the Insurer of (i) the commencement of any of the events or
proceedings (individually, an "Insolvency Proceeding") described in Sections
8.1(d) or 8.1(e) hereof or any such event or proceeding applicable to an Obligor
under a Contract and (ii) the making of any claim in connection with any
Insolvency Proceeding seeking the avoidance as a preferential transfer (a
"Preference Claim") of any payment of principal of, or interest on, any Contract
or any Certificate. Each Certificateholder, by its purchase of Certificates, and
the Trustee hereby agree that, so long as neither a default under the Financial
Guarantee Insurance Policy nor an Insurer Insolvency has occurred and is
continuing, the Insurer may at any time during the continuation of an Insolvency
Proceeding direct all matters relating to such Insolvency Proceeding, including,
without limitation, (i) all matters relating to any Preference Claim, (ii) the
direction of any appeal of any order relating to any Preference Claim and (iii)
the posting of any surety or performance bond pending any such appeal. The
Insurer shall be subrogated to the rights of the Trustee and each
Certificateholder in the conduct of any Insolvency Proceeding, including,
without limitation, all rights of any party to an adversary proceeding action
with respect to any court order issued in connection with any such Insolvency
Proceeding.
ARTICLE IX
The Trustee
SECTION 9.1 No Power to Engage in Business or to Vary Investments.
Notwithstanding any provision or agreement to the contrary in this Agreement or
in any other agreement, the Trustee, acting on behalf of the Trust (but not
individually), shall not have any power to engage in any business, commercial or
other activity for profit, and, subject to Section 3.2, the Trustee and the
Servicer shall not have any power to vary the Trust Estate, whether consisting
of a Contract, an Eligible Investment or any other amount (other than cash
payments received with respect to Contracts) in any account maintained for the
benefit of the Trust or the Certificateholders or Certificate Owners, by
disposition of said property, investment or amount and the reinvestment of the
proceeds realized or by any other action calculated to take advantage of any
variation or change
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in the market or in market conditions, for the purpose of improving the
investment or return of the Certificateholders or Certificate Owners.
SECTION 9.2 Duties of Trustee. The Trustee, both prior to and after the
occurrence of an Event of Default, of which a Responsible Officer of the Trustee
has actual knowledge, shall undertake to perform such duties and only such
duties as are specifically set forth in this Agreement. If an Event of Default
shall have occurred and shall not have been cured, the Trustee shall exercise
such of the rights and powers vested in it by this Agreement, and shall use the
same degree of care and skill in its exercise as a prudent person would exercise
or use under the circumstance in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee that shall be specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they comply
as to form to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act
(other than errors in judgment), or its own willful misconduct; provided,
however, that:
(a) prior to the occurrence of an Event of Default, and after the curing
of all such Events of Default that may have occurred, the duties and obligations
of the Trustee shall be terminated solely by the express provisions of this
Agreement, the Trustee shall not be liable except for the performance of such
duties and obligations as shall be specifically set forth in this Agreement, no
implied covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee, the Trustee
may conclusively rely on the truth of the statements and the correctness of the
opinions expressed upon any certificates or opinions furnished to the Trustee
and conforming to the requirements of this Agreement;
(b) the Trustee shall not be liable for an error of judgment made in
good faith by a Responsible Officer or Responsible Officers of the Trustee,
unless it shall be proved that the Trustee shall have been negligent in
performing its duties in accordance with the terms of this Agreement; and
(c) the Trustee shall not be liable with respect to any action taken,
suffered, or omitted to be taken by it in good faith in accordance with the
written direction of the Insurer or Holders of Certificates evidencing in the
aggregate not less than 25% of the Pool Balance relating to the time, method,
and place of conducting any proceeding for any remedy available to the Trustee,
or exercising any trust or power conferred upon the Trustee, under this
Agreement.
The Trustee shall not be required to expend or risk its own funds or
otherwise incur financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if there shall be
reasonable ground for believing that the repayment of such funds or
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adequate indemnity against such risk or liability is not reasonably assured to
it, and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of performance
of, any of the obligations of the Servicer under this Agreement unless the
Trustee is then acting as Servicer.
The Trustee shall not be charged with knowledge of an Event of Default
or a failure by the Servicer to comply with any of its obligations unless and
until such time as a Responsible Officer shall have actual knowledge or have
received written notice thereof from the Servicer, the Insurer or the Holders of
Certificates evidencing in the aggregate not less than 10% of the Pool Balance.
In the event the Trustee hereunder is also acting as successor Servicer,
the rights and protections afforded to the Trustee pursuant to this Article IX
shall also be afforded to such successor Servicer.
Except for actions expressly authorized by this Agreement or, based upon
an Opinion of Counsel, in the best interests of Certificateholders, the Trustee
shall take no action reasonably likely to impair the security interest of the
Trust in any Contract or to impair the value of any Contract.
The Trustee shall not be liable for the selection of Eligible
Investments or for any investment losses resulting from Eligible Investments,
nor shall the Trustee be liable for the actions or omissions of any depository
institution maintaining the Accounts.
The Trustee shall have no duty to monitor the performance of the
Servicer, nor shall it have any liability in connection with the malfeasance or
nonfeasance by the Servicer. The Trustee shall have no liability in connection
with compliance of the Servicer or the Seller with statutory or regulatory
requirements related to the Contracts. The Trustee shall not make or be deemed
to have made any representations or warranties with respect to the Contracts or
the validity or sufficiency of any assignment of the Contracts to the Trust or
the Trustee.
All information obtained by the Trustee regarding the Obligors and the
Contracts, whether upon the exercise of its rights under this Agreement or
otherwise, shall be maintained by the Trustee in confidence, provided, however,
that the foregoing shall not be construed to prohibit (i) disclosure of any and
all information that is or becomes publicly known, or information obtained by
the Trustee from sources other than the Seller, Insurer, any Obligor or the
Servicer, (ii) disclosure of any and all information (A) if required to do so by
any applicable statute, law, rule or regulation, (B) to any government agency or
regulatory or self-regulatory body having or claiming authority to regulate or
oversee any aspects of the Trustee's business or that of its Affiliates, (C)
pursuant to any subpoena, civil investigative demand or similar demand or
request of any court, regulatory authority, arbitrator or arbitration to which
the Trustee or an Affiliate or an officer, director, employer or shareholder
thereof is a party, (D) in any preliminary or final offering circular,
registration statement or contract or other document pertaining to the
transactions contemplated by this Agreement approved in advance by the Seller or
(E) to any Affiliate, independent or internal auditor, agent, employee or
attorney of the Trustee having a need to know the same, provided that the
Trustee advises such
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recipient of the confidential nature of the information being disclosed, (iii)
any other disclosure authorized by the Seller or the Servicer or (iv) disclosure
to the other parties to the transactions contemplated by this Agreement.
In the event that the Paying Agent or the Transfer Agent and Certificate
Registrar shall fail to perform any obligation, duty or agreement in the manner
or on the day required to be performed by the Paying Agent or the Transfer Agent
and Certificate Registrar, as the case may be, under this Agreement, the Trustee
shall be obligated promptly upon a Responsible Officer obtaining actual
knowledge thereof to perform such obligation, duty or agreement in the manner so
required to the extent the information necessary to such performance is
reasonably available to the Trustee after the Trustee has made a reasonable
effort to obtain such information. The Trustee shall not be liable for the acts
or omissions of any Paying Agent, any Authenticating Agent or the Transfer Agent
and Certificate Registrar appointed hereunder with due care by the Trustee
hereunder.
SECTION 9.3 Trustee's Assignment of Purchased Contracts. With respect to
all Contracts repurchased by the Seller pursuant to Section 2.3 or purchased by
the Servicer pursuant to Sections 3.7 or 10.2, the Trustee on behalf of the
Trust shall assign, without recourse, representation, or warranty to the Seller
or the Servicer, as the case may be, all the Trust's right, title, and interest
in and to such Contract, and all security and documents relating thereto. The
preparation of documents necessary to consummate such an assignment shall be the
responsibility of the Seller or the Servicer, as the case may be, and not the
responsibility of the Trustee. If in any enforcement suit or legal proceeding it
shall be held that the Servicer may not enforce a Contract on the ground that it
shall not be a real party in interest or a holder entitled to enforce the
Contract, the Trustee shall, at the Servicer's expense, take such steps as
directed in writing by the Servicer to enforce the Contract, including bringing
suit in the Trustee's name or the names of the Certificateholders, provided that
nothing in this Section 9.3 shall require the Trustee to qualify to do business
in a state in which it is not so qualified on the date of this Agreement.
SECTION 9.4 Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 9.1:
(a) the Trustee may conclusively rely and shall be fully protected in
acting or refraining from acting upon any resolution, Officer's Certificate,
certificate of auditors or any other certificate, statement, instrument,
opinion, report, notice, request, consent, order, appraisal, bond, note or other
paper or document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) the Trustee may consult with counsel and any Opinion of Counsel or
any advice of counsel shall be full and complete authorization and protection in
respect of any action taken or suffered or omitted by it under this Agreement in
good faith and in accordance with such Opinion of Counsel or advice. A copy of
any such Opinion of Counsel shall be provided to the Seller, the Servicer and
the Insurer;
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(c) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Agreement, or to institute, conduct or
defend any litigation under this Agreement or in relation to this Agreement, at
the request, order or direction of any of the Certificateholders pursuant to the
provisions of this Agreement, unless such Certificateholders shall have offered
to the Trustee reasonable security or indemnity against the cost, expenses, and
liabilities that may be incurred therein or thereby. Nothing contained in this
Agreement, however, shall relieve the Trustee of the obligations, upon the
occurrence of an Event of Default (that shall not have been cured), to exercise
such of the rights and powers vested in it by this Agreement, and to use the
same degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs;
provided that the Trustee shall not be deemed to have knowledge of the
occurrence of an Event of Default unless and until such knowledge shall be (i)
actual knowledge of a Responsible Officer or (ii) received in writing by a
Responsible Officer;
(d) the Trustee shall not be personally liable for any action taken,
suffered or omitted by it in good faith and believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Agreement;
(e) prior to the occurrence of an Event of Default and after the curing
of all Events of Default that may have occurred, the Trustee shall not be bound
to make any investigation into the facts of matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request, consent,
direction, order, approval, bond, note or other paper or document, unless
requested in writing to do so by the Insurer or Holders of Certificates
evidencing in the aggregate not less than 25% of the Pool Balance; provided,
however, that if the payment within a reasonable time to the Trustee of the
costs, expenses, or liabilities likely to be incurred by it in the making of
such investigation shall be, in the opinion of the Trustee, not reasonably
assured to the Trustee by the security afforded to it by the terms of this
Agreement, the Trustee may require reasonable indemnity against such cost,
expense, or liability as a condition to so proceeding. The reasonable expense of
any and every such examination shall be paid by the Seller or, if paid by the
Trustee, shall be reimbursed by the Seller upon demand. Nothing in this clause
(e) shall affect the obligation of the Seller to observe any applicable law
prohibiting disclosure of information regarding the Obligors; provided the
Trustee shall be entitled to make such further inquiry or investigation into
such facts or matters as it may reasonably see fit, and if the Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books and records of the Seller, personally or by agent or attorney,
at the sole cost and expense of the Seller;
(f) the Trustee may execute any of the trust powers hereunder or perform
any duties under this Agreement either directly or by or through agents or
attorneys or a custodian or nominee and the Trustee shall not be responsible for
any misconduct or negligence on the part of, or for the supervision of any such
agent, attorney, custodian or nominee appointed with due care by it hereunder;
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(g) except as set forth herein, the Trustee shall not be required to
make any initial or periodic examination of any documents or records related to
the Contracts for the purpose of establishing the presence or absence of
defects, the compliance by the Seller with its representations and warranties or
for any other purpose; and
(h) in the event that the Trustee is also acting as Custodian, Paying
Agent or Transfer Agent and Certificate Registrar hereunder, the rights and
protections afforded to the Trustee pursuant to this Article IX shall also be
afforded to such Custodian, Paying Agent, Transfer Agent and Certificate
Registrar.
SECTION 9.5 Trustee Not Liable for Certificates or Contracts. The
Trustee shall make no representations as to the validity or sufficiency of this
Agreement or of the Certificates (other than its execution of Certificates on
behalf of the Trust and the certificate of authentication on the Certificates)
or of any Contract or related document. The Trustee shall at no time have any
responsibility or liability for or with respect to the legality, validity, and
enforceability of any security interest in any Financed Vehicle or any Contract,
or the perfection and priority of such a security interest or the maintenance of
any such perfection and priority, or for or with respect to the efficacy of the
Trust or its ability to generate the payments to be distributed to
Certificateholders under this Agreement, including: the existence, condition,
location, and ownership of any Financed Vehicle; the existence and
enforceability of any insurance policy thereon; the existence and contents of
any Contract or any computer or other record thereof; the validity of the
assignment of any Contract to the Trust or of any intervening assignment; the
completeness of any Contract; the performance or enforcement of any Contract;
the compliance by the Seller with any warranty or representation made under this
Agreement or in any related document and the accuracy of any such warranty or
representation prior to the Trustee's receipt of written notice of any
noncompliance therewith or any breach thereof; any investment of monies by the
Servicer or any loss resulting therefrom (it being understood that the Trustee
shall remain responsible for any Trust property that it may hold); the acts or
omissions of the Seller or any Obligor; an action of the Servicer taken in the
name of the Trustee; or any action by the Trustee taken at the instruction of
the Servicer; provided, however, that the foregoing shall not relieve the
Trustee of its obligation to perform its duties under this Agreement. Except
with respect to a claim based on the failure of the Trustee to perform its
duties under this Agreement or based on the Trustee's negligence or willful
misconduct in the performance of its duties hereunder, no recourse shall be had
for any claim based on any provision of this Agreement, the Certificates, or any
Contract or assignment thereof against the Trustee in its individual capacity.
The Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Certificateholder or any other Person with respect to any such
claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity as provided in this Agreement. The
Trustee shall not be accountable for the use or application by the Seller of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid to the Seller in respect of the Contracts.
SECTION 9.6 Trustee May Own Certificates. The Trustee in its individual
or any other capacity, and any of its Affiliates, may become the owner or
pledgee of Certificates with the same
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rights as it would have if it were not Trustee, subject to the definition of the
term "Certificateholder" in Section 1.1.
SECTION 9.7 Trustee's Fees and Expenses. The Servicer shall covenant and
agree to pay to the Trustee, and the Trustee shall be entitled to, reasonable
compensation (which shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust) for all services rendered by
it in the execution of the trusts created by this Agreement and in the exercise
and performance of any of the powers and duties under this Agreement of the
Trustee. Other than as included in the Trustee's compensation, the Servicer
shall pay or reimburse the Trustee upon its request for all reasonable expenses
(including, without limitation, expenses incurred in connection with notices or
other communications to Certificateholders), disbursements, and advances
(including the reasonable compensation and the expenses and disbursements of its
counsel and of all persons not regularly in its employ) incurred or made by the
Trustee in accordance with this Agreement or in defense of any action brought
against it in connection with this Agreement except any such expense,
disbursement, or advance as may arise from its negligence (other than errors in
judgment) or bad faith or that is the responsibility of Certificateholders under
this Agreement. Additionally, the Seller, pursuant to Section 6.1, and the
Servicer, pursuant to Section 7.1, respectively, shall have agreed to indemnify
the Trustee with respect to certain matters, and certain Certificateholders,
pursuant to Section 9.4, shall have agreed to indemnify the Trustee under
certain circumstances. Notwithstanding the failure of the Servicer to perform
any of its obligations under this Section, the Trustee shall continue to perform
its obligations under this Agreement. The Servicer's covenant to pay the
expenses, disbursements and advances provided for above shall survive the
termination of this Agreement.
SECTION 9.8 Indemnity of Trustee. The Trustee and its officers,
directors, agents and employees, shall be indemnified by the Servicer and held
harmless against any loss, liability, or expense (other than any amount owing
pursuant to Section 9.7) arising out of or incurred in connection with the
acceptance or performance of the trusts and duties contained in this Agreement
including the costs and expenses of defending against any claim or liability in
connection with the exercise or performance of any of its powers and duties
hereunder to the extent that (i) the Trustee shall not have been indemnified for
such loss, liability, or expense by the Seller pursuant to Section 6.1, the
Servicer pursuant to Section 7.1, or the Certificateholders pursuant to Section
9.4; (ii) such loss, liability, or expense shall not have been incurred by
reason of the Trustee's willful misfeasance, bad faith, or negligence (except
for errors in judgment); and (iii) such loss, liability, or expense shall not
have been incurred by reason of the Trustee's breach of its representations and
warranties pursuant to Section 9.14.
SECTION 9.9 Eligibility Requirements for Trustee. The Trustee under this
Agreement shall at all times be a depository institution or trust company
organized and doing business under the laws of any state or the United States of
America; authorized under such laws to exercise corporate trust powers; and
having a combined capital and surplus of at least $50,000,000 and subject to
supervision or examination by federal or state authorities. If such depository
institution or trust company shall publish reports of condition at least
annually, pursuant to law or to the requirements of the aforesaid
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supervising or examining authority, then for the purpose of this Section 9.9,
the combined capital and surplus of such depository institution or trust company
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. In case at any time the Trustee shall
cease to be eligible in accordance with the provisions of this Section 9.9, the
Trustee shall resign immediately in the manner and with the effect specified in
Section 9.10.
SECTION 9.10 Resignation or Removal of Trustee. The Trustee may at any
time resign and be discharged from the trusts hereby created by giving written
notice thereof to the Servicer. Upon receiving such notice of resignation, the
Servicer shall promptly appoint a successor Trustee acceptable to the Insurer by
written instrument, in duplicate, one copy of which instrument shall be
delivered to the resigning Trustee and one copy to the successor Trustee. If no
successor Trustee shall have been so appointed and have accepted appointment
within 30 days after the giving of such notice of resignation, the resigning
Trustee may petition any court of competent jurisdiction for the appointment of
a successor Trustee.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 9.9 and shall fail to resign after written request
therefor by the Servicer with the written consent of the Insurer, or if at any
time the Trustee shall be legally unable to act, or shall be adjudged a bankrupt
or insolvent, or a receiver of the Trustee or of its property shall be
appointed, or any public officer shall take charge or control of the Trustee or
of its property or affairs for the purpose of rehabilitation, conservation, or
liquidation, then the Servicer may, with the written consent of the Insurer,
remove the Trustee. If it shall remove the Trustee under the authority of the
immediately preceding sentence, the Servicer shall promptly appoint a successor
Trustee acceptable to the Insurer by written instrument, in duplicate, one copy
of which instrument shall be delivered to the Trustee so removed and one copy to
the successor Trustee.
If the Trustee is acting as Custodian, any resignation or removal of the
Trustee will result in the automatic termination of the Trustee's duties as
Custodian effective concurrently with such resignation or removal. Upon such
termination or removal, the Trustee shall, upon the request of the Servicer,
deliver the Contract Documents to the facilities of the successor Trustee.
Any resignation or removal of the Trustee and appointment of a successor
Trustee pursuant to any of the provisions of this Section 9.10 shall not become
effective until acceptance of appointment by the successor Trustee pursuant to
Section 9.11.
SECTION 9.11 Successor Trustee. Any successor Trustee appointed pursuant
to Section 9.10 shall execute, acknowledge, and deliver to the Servicer and to
its predecessor Trustee an instrument accepting such appointment under this
Agreement, and thereupon the resignation or removal of the predecessor Trustee
shall become effective and such successor Trustee, without any further act, deed
or conveyance, shall become fully vested with all the rights, powers, duties,
and obligations of its predecessor under this Agreement, with like effect as if
originally named as Trustee. The predecessor Trustee shall deliver to the
successor Trustee all documents and statements held by it under this Agreement,
or copies thereof, at the expense of the Servicer; and the Servicer
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and the predecessor Trustee shall execute and deliver such instruments and do
such other things as may reasonably be required for fully and certainly vesting
and confirming in the successor Trustee all such rights, powers, duties and
obligations.
No successor Trustee shall accept appointment as provided in this
Section 9.11 unless at the time of such acceptance such successor Trustee shall
be eligible pursuant to Section 9.9.
Upon acceptance of appointment by a successor Trustee pursuant to this
Section 9.11, the Servicer shall mail notice of the successor of such Trustee
under this Agreement to all Holders of Certificates at their addresses as shown
in the Certificate Register. If the Servicer shall fail to mail such notice
within 10 days after acceptance of appointment by the successor Trustee, the
successor Trustee shall cause such notice to be mailed at the expense of the
Servicer.
The respective obligations of the Seller and the Servicer described in
Sections 2.7, 3.14, 6.1, 7.1, 9.5, 9.7 and 9.8 shall survive the removal or
resignation of the Trustee as provided in this Agreement or the termination of
the Trust as provided in Section 10.1.
No Trustee under this Agreement shall be liable for any action or
omission of any successor Trustee.
SECTION 9.12 Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
resulting from any merger, conversion or consolidation to which the Trustee
shall be a party, or any corporation succeeding to the business of the Trustee,
shall be the successor of the Trustee hereunder, provided such corporation shall
be eligible pursuant to Section 9.9, without the execution or filing of any
instrument or any further act on the part of any of the parties hereto, anything
herein to the contrary notwithstanding.
SECTION 9.13 Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions of this Agreement, at any time, for the
purpose of meeting any legal requirements of any jurisdiction in which any part
of the Trust or any Financed Vehicle may at the time be located, the Servicer
and the Trustee acting jointly shall have the power and shall execute and
deliver all instruments to appoint one or more Persons approved by the Trustee
to act as co-trustee, jointly with the Trustee, or separate trustee or separate
trustees, of all or any part of the Trust, and to vest in such Person, in such
capacity and for the benefit of the Certificateholders, such title to the Trust,
or any part thereof, and, subject to the other provisions of this Section 9.13,
such powers, duties, obligations, rights, and trusts as the Servicer and the
Trustee may consider necessary or desirable. If the Servicer shall not have
joined in such appointment within 15 days after the receipt by it of a written
request so to do, or in case an Event of Default shall have occurred and be
continuing, the Trustee alone shall have the power to make such appointment. No
co-trustee or separate trustee under this Agreement shall be required to meet
the terms of eligibility as a successor trustee pursuant
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to Section 9.9 and no notice to Certificateholders of the appointment of any
co-trustee or separate trustee shall be required pursuant to Section 9.11.
Each and every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions and
conditions:
(i) all rights, powers, duties and obligations conferred or
imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or
co-trustee jointly (it being understood that such separate trustee or
co-trustee is not authorized to act separately without the Trustee in
joining in such act), except to the extent that under any law of any
jurisdiction in which any particular act or acts are to be performed
(whether as Trustee under this Agreement or as successor to the Servicer
under this Agreement), the Trustee shall be incompetent or unqualified
to perform such act or acts, in which event such rights, powers, duties,
and obligations (including the holding of title to the Trust or any
portion thereof in any such jurisdiction) shall be exercised and
performed singly by such separate trustee or co-trustee, but solely at
the direction of the Trustee;
(ii) no trustee under this Agreement shall be personally liable
by reason of any act or omission of any other trustee under this
Agreement; and
(iii) the Servicer and the Trustee acting jointly, or the Trustee
acting alone may at any time accept the resignation of or remove any
separate trustee or co-trustee.
Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and co-trustees,
as effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article IX. Each separate trustee and co-trustee, upon its acceptance of
the trusts conferred, shall be vested with the estates or property specified in
its instrument of appointment, either jointly with the Trustee or separately, as
may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision of this Agreement relating to the conduct
of, affecting the liability of, or affording protection to, the Trustee. Each
such instrument shall be filed with the Trustee and a copy thereof given to the
Servicer.
Any separate trustee or co-trustee may at any time appoint the Trustee,
its agent or attorney-in-fact with full power and authority, to the extent not
prohibited by law, to do any lawful act under or in respect of this Agreement on
its behalf and in its name. No such appointment shall affect the obligations of
the Trustee hereunder. If any separate trustee or co-trustee shall die, become
incapable of acting, resign or be removed, all of its estates, properties,
rights, remedies and trusts shall vest in and be exercised by the Trustee, to
the extent permitted by law, without the appointment of a new or successor
trustee.
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SECTION 9.14 Representations and Warranties of Trustee. The Trustee
hereby makes the following representations and warranties on which the Seller
and Certificateholders shall rely:
(a) the Trustee is a New York banking corporation duly organized,
validly existing, and in good standing under the laws of New York;
(b) the Trustee has full power, authority and legal right to execute,
deliver, and perform this Agreement, and has taken all necessary action to
authorize the execution, delivery, and performance by it of this Agreement;
(c) the execution and delivery of this Agreement and the performance by
the Trustee of its obligations under this Agreement does not violate any
provision of the Articles of Association or Bylaws of the Trustee; and
(d) this Agreement has been duly authorized, executed and delivered by
the Trustee and shall constitute the legal, valid, and binding agreement of the
Trustee, enforceable in accordance with its terms except that (i) such
enforcement may be subject to bankruptcy, insolvency, reorganization, moratorium
or similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) the remedy of specific performance and injunctive and other
forms of equitable relief may be subject to certain equitable defenses and to
the discretion of the court before which any proceeding thereof may be brought.
SECTION 9.15 Tax Returns. The Servicer shall prepare or shall cause to
be prepared any tax returns required to be filed by the Trust and furnish to
Certificateholders all information required by the Code or the regulations
thereunder and shall remit such returns to the Trustee for signature at least
five days before such returns are due to be filed. The Trustee, upon request,
will furnish the Servicer with all such information known to the Trustee as may
be reasonably required in connection with the preparation of all tax returns of
the Trust, and shall, upon request, execute such returns. In no event shall the
Trustee in its individual capacity be liable for any liabilities, costs or
expenses of the Trust, the Certificateholders, the Seller or the Servicer
arising under any tax law or regulation, including, without limitation, federal,
state or local income or excise taxes or any other tax imposed on or measured by
income (or any interest or penalty with respect thereto or arising from any
failure to comply therewith).
SECTION 9.16 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceeding instituted by the Trustee
shall be brought in its own name or in its capacity as Trustee. Any recovery of
judgment shall, after provision for the payment of the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents and counsel, be
for the ratable benefit of the Certificateholders in respect of which such
judgment has been recovered.
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SECTION 9.17 Suits for Enforcement. In case an Event of Default or other
default by the Servicer or the Seller hereunder shall occur and be continuing,
the Trustee, in its discretion, may proceed to protect and enforce its rights
and the rights of the Certificateholders under this Agreement by a suit, action
or proceeding in equity or at law or otherwise whether for the specific
performance of any covenant or agreement contained in this Agreement or in aid
of the execution of any power granted in this Agreement or the enforcement of
any other legal, equitable or other remedy, as the Trustee, being advised by
counsel, shall deem most effectual to protect and enforce any of the rights of
the Trustee or the Certificateholders.
SECTION 9.18 Maintenance of Office or Agency. The Trustee shall maintain
at its expense in New York, New York, an office or offices or agency or agencies
where notices and demands to or upon the Trustee in respect of the Certificates
and this Agreement may be served. The Trustee initially designates the Corporate
Trust Office as its office for such purposes. The Trustee will give prompt
written notice to the Servicer, the Paying Agent, the Transfer Agent and
Certificate Registrar, the Insurer and to Certificateholders of any change in
the location of such office or agency.
ARTICLE X
Termination
SECTION 10.1 Termination of the Trust. The respective obligations and
responsibilities of the Seller, the Servicer and the Trustee created hereby and
the Trust created by this Agreement shall terminate upon the earlier of (i) the
maturity or other liquidation of the last Contract and the disposition of any
amounts received upon liquidation of any remaining Contracts in the Trust
(including the purchase of the Contracts by the Servicer pursuant to Section
10.2) and (ii) (a) the payment to Certificateholders of all amounts required to
be paid to them pursuant to this Agreement and the disposition of all property
held as part of the Trust, (b) termination of the Financial Guarantee Insurance
Policy in accordance with its terms and surrender of the Financial Guarantee
Insurance Policy to the Insurer for cancellation, (c) the payment of all amounts
owed to the Trustee under this Agreement and (d) the payment of all amounts owed
to the Insurer under the Insurance Agreement; provided, however, that in no
event shall the trust created by this Agreement continue beyond the expiration
of 21 years from the death of the survivor of the descendants, living on the
date of this Agreement, of Xxxxxx X. Xxxxxxx, formerly United States
representative at the Court of St. Xxxxx. The Servicer shall promptly notify the
Trustee and the Insurer of any prospective termination pursuant to this Section
10.1.
Notice of any termination, specifying the Distribution Date upon which
the Certificateholders may surrender their Certificates to the Trustee for
payment of the final distribution and cancellation, shall be given promptly by
the Trustee by letter to Certificateholders mailed not later than the 10th day
prior to the specified Distribution Date and not earlier than the 15th day of
the month prior to the month of the specified Distribution Date stating the
amount of any such final payment, and that
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the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Certificate Registrar at the time such
notice is given to Certificateholders. Upon presentation and surrender of the
Certificates, the Trustee shall cause to be distributed to Certificateholders
amounts distributable on such Distribution Date pursuant to Section 4.3.
In the event that all of the Certificateholders shall not surrender
their Certificates for cancellation within six months after the date specified
in the above-mentioned written notice, the Servicer shall give a second written
notice to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Servicer may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets that shall remain
subject to this Agreement. Any funds remaining in the Trust after exhaustion of
such remedies and after all payments to be made to the Trustee and the Insurer
shall be distributed by the Trustee to a charity designated by the Servicer.
Notwithstanding any provision to the contrary, the Trustee shall retain
all of its rights and powers and obligations and duties under Section 8.5 in the
event of any Insolvency Proceeding and the Trustee shall be entitled to all the
protections, rights and immunities provided in Article IX in connection with any
such Insolvency Proceeding.
SECTION 10.2 Optional Purchase of All Contracts. On each Distribution
Date as of which the Pool Factor (after giving effect to the Principal
Distribution otherwise to be made on such Distribution Date) shall be less than
.100000, the Servicer shall have the option to purchase the corpus of the Trust
at a price equal to the Repurchase Amount plus all amounts due and owing to the
Insurer under the Insurance Agreement. To exercise such option, the Servicer
shall pay to the Trustee by deposit into the Collection Account: (1) for the
benefit of the Certificateholders, the Repurchase Amount of all Contracts that
were Outstanding at the beginning of the Collection Period ending immediately
prior to such Distribution Date, and (2) for the benefit of the Insurer, all
amounts due and owing to the Insurer pursuant to the Insurance Agreement. Such
purchase shall be deemed to have occurred on the last day of such Collection
Period.
ARTICLE XI
Miscellaneous Provisions
SECTION 11.1 Amendment. This Agreement may be amended by the Seller, the
Servicer and the Trustee, collectively with the prior written consent of the
Insurer, but without the consent of any of the Certificateholders, to cure any
ambiguity, to correct or supplement any provisions in this Agreement, or to add
any other provisions with respect to matters or questions arising under this
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Agreement that shall not be inconsistent with the provisions of this Agreement;
provided, however, that such action shall not materially and adversely affect
the interests of any Certificateholder; provided further, however, that any such
amendment shall not be deemed to materially and adversely affect the interests
of any Certificateholder if the Person requesting the amendment obtains a letter
from each Rating Agency to the effect that the amendment would not result in a
downgrading or withdrawal of the ratings then assigned to the Certificates by
such Rating Agency without regard to the Financial Guarantee Insurance Policy.
This Agreement may also be amended from time to time by the Seller, the
Servicer and the Trustee with the consent of the Holders of Certificates
evidencing in the aggregate not less than 51% of the Pool Balance, and the
Insurer, for the purpose of adding any provisions to or changing in any manner
or eliminating any of the provisions of this Agreement, or of modifying in any
manner the rights of the Holders of Certificates; provided, however, that no
such amendment shall (i) increase or reduce in any manner the amount of, or
accelerate or delay the timing of, collections of payments on Contracts or
distributions that shall be required to be made on any Certificate or (ii)
reduce the aforesaid percentage required to consent to any such amendment,
without the consent of the Holders of all Certificates then outstanding.
Promptly after the execution of any such amendment or consent pursuant
to the next preceding paragraph, the Trustee shall furnish written notification
of the substance of such amendment or consent to each Certificateholder.
It shall not be necessary for the consent of Certificateholders pursuant
to this Section 11.1 to approve the particular form of any proposed amendment or
consent, but it shall be sufficient if such consent shall approve the substance
thereof. The manner of obtaining such consents and of evidencing the
authorization of the execution thereof by Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe. Any consent by the
Holder of a Certificate to an amendment of the Agreement shall be conclusive and
binding on such Holder and upon all future Holders of such Certificate and of
any Certificate issued upon the transfer thereof or in exchange thereof or in
lieu thereof whether or not notation of such consent is made upon such
Certificate.
The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this Agreement or otherwise and any such amendment shall be unenforceable in its
entirety absent the execution of such amendment by the Trustee.
SECTION 11.2 Protection of Title to Trust.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain, and
protect the interest of the Certificateholders, the Insurer and the Trustee
under this Agreement in the Contracts and in the proceeds thereof. The
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Servicer shall deliver (or cause to be delivered) to the Trustee file-stamped
copies of, or filing receipts for, any document filed as provided above, as soon
as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name, identity,
or corporate structure in any manner that would, could or might make any
financing statement or continuation statement filed by the Servicer in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee and the
Insurer at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Trustee and the Insurer
at least 60 days' prior written notice of any relocation of the principal
executive office of the Seller and the Servicer if, as a result of such
relocation, the applicable provisions of the UCC would require the filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement. The Servicer shall at all times maintain each office
from which it shall service Contracts, and its principal executive office,
within the United States of America.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Certificate Account and Payahead Account in respect of such Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts to the Trust, the Servicer's master computer records (including any
back-up archives) that shall refer to a Contract indicate clearly that such
Contract is owned by the Trustee as trustee of the Trust. Indication of the
Trustee's ownership of a Contract shall be deleted from or modified on the
Servicer's computer systems when, and only when, the Contract shall have been
paid in full or repurchased or shall have become a Liquidated Contract.
(f) If at any time the Seller or the Servicer shall propose to sell,
grant a security interest in, or otherwise transfer any interest in automotive
retail installment sales contracts to any prospective purchaser, lender, or
other transferee, the Servicer shall give or cause to be given to such
prospective purchaser, lender, or other transferee computer tapes, records or
print-outs (including any restored from back-up archives) that, if they shall
refer in any manner whatsoever to any Contract, shall indicate clearly that such
Contract has been sold and is owned by the Trust.
(g) The Servicer shall permit the Trustee, the Insurer and their
respective agents at any time during normal business hours to inspect, audit,
and make copies of and abstracts from the Servicer's records regarding any
Contract.
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(h) Upon request, the Servicer shall furnish to the Trustee and the
Insurer, within five Business Days, a list of all Contracts then held as part of
the Trust, together with a reconciliation of such list to the Schedule of
Contracts and to each of the Servicer's Certificates furnished before such
request indicating removal of Contracts from the Trust.
(i) The Servicer shall deliver to the Trustee and the Insurer:
(i) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such Counsel, all financing statements and
continuation statements have been executed and filed that are necessary
fully to preserve and protect the interest of the Trustee and the
Insurer in the Contracts, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given
or (B) stating that, in the opinion of such Counsel, no such action
shall be necessary to preserve and protect such interest; and
(ii) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-Off Date an Opinion of Counsel, dated as of a date during
such 90-day period, either (A) stating that, in the opinion of such
counsel, all financing statements and continuation statements have been
executed and filed that are necessary fully to preserve and protect the
interest of the Trustee in the Contracts, and reciting the details of
such filings or referring to prior Opinions of Counsel in which such
details are given or (B) stating that, in the opinion of such counsel,
no such action shall be necessary to preserve and protect such interest.
(j) The Seller shall, to the extent required by applicable law, cause
the Certificates to be registered with the Securities and Exchange Commission
pursuant to Section 12(b) or Section 12(g) of the Securities Exchange Act of
1934, as amended, within the time periods specified in such sections.
(k) For the purpose of facilitating the execution of this Agreement and
for other purposes, this Agreement may be executed simultaneously in any number
of counterparts, each of which counterpart shall be deemed to be an original,
and all of which counterparts shall constitute but one and the same instrument.
SECTION 11.3 Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
commence any proceeding in any court for a partition or winding up of the Trust,
nor otherwise affect the rights, obligations, and liabilities of the parties to
this Agreement or any of them.
Except as expressly provided herein, no Certificateholder shall have any
right to vote or in any manner otherwise control the operation and management of
the Trust, or the obligations of the parties to this Agreement, nor shall
anything in this Agreement set forth, or contained in the terms
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of the Certificates, be construed so as to constitute the Certificateholders
from time to time as partners or members of an association; nor shall any
Certificateholder be under any liability to any third person by reason of any
action taken pursuant to any provision of this Agreement.
No Certificateholder shall have any right by virtue or by availing
itself of any provisions of this Agreement to institute any suit, action, or
proceeding in equity or at law upon or under or with respect to this Agreement,
unless such Holder previously shall have given to the Trustee a written notice
of default and of the continuance thereof, as hereinbefore provided, and unless
also the Holders of Certificates evidencing in the aggregate not less than 25%
of the Pool Balance with the consent of the Insurer shall have made written
request upon the Trustee to institute such action, suit or proceeding in its own
name as Trustee under this Agreement and shall have offered to the Trustee such
reasonable indemnity as it may require against the costs, expenses, and
liabilities to be incurred therein or thereby, and the Trustee, for 30 days
after its receipt of such notice, request, and offer of indemnity, shall have
neglected or refused to institute any such action, suit or proceeding; no one or
more Holders of Certificates shall have any right in any manner whatever by
virtue or by availing itself or themselves of any provisions of this Agreement
to affect, disturb, or prejudice the rights of the Holders of any other of the
Certificates, or to obtain or seek to obtain priority over or preference to any
other such Holders, or to enforce any right, under this Agreement, except in the
manner provided in this Agreement and for the equal, ratable, and common benefit
of all Certificateholders. For the protection and enforcement of the provisions
of this Section 11.3, each Certificateholder and the Trustee shall be entitled
to such relief as can be given either at law or in equity.
SECTION 11.4 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA AND THE OBLIGATIONS, RIGHTS,
AND REMEDIES OF THE PARTIES UNDER THIS AGREEMENT SHALL BE DETERMINED IN
ACCORDANCE WITH SUCH LAWS EXCEPT THAT THE DUTIES OF THE TRUSTEE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 11.5 Notices. All demands, notices, and communications under
this Agreement shall be in writing, personally delivered or mailed by certified
mail, return receipt requested, and shall be deemed to have been duly given upon
receipt (i) in the case of the Seller, at 0000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx,
Xxxxxx, XX 00000, Attention: President, facsimile 000-000-0000, (ii) in the case
of the Servicer, at 0000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxx
00000, Attention: Xxxxx X. Xxxxx, Executive Vice President, facsimile
000-000-0000, (iii) in the case of the Insurer, at 000 Xxxxx Xxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, Attention: Managing Director, Credit Enhancement, facsimile
(000) 000-0000, and (iv) in the case of the Trustee, at the Corporate Trust
Office. Any notice required or permitted to be mailed to a Certificateholder
shall be given by first class mail, postage prepaid, at the address of such
Holder as shown in the Certificate Registrar. Any notice so mailed within the
time prescribed in this Agreement shall be conclusively presumed to have been
duly given, whether or not the Certificateholder shall receive such notice.
SECTION 11.6 Severability of Provisions. If any one or more of the
covenants, agreements, provisions, or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions, or
terms shall be deemed severable from the remaining
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covenants, agreements, provisions, or terms of this Agreement and shall in no
way affect the validity or enforceability of the other provisions of this
Agreement or of the Certificates or the rights of the Holders thereof.
SECTION 11.7 Assignment. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 6.2 and 7.2, neither the Seller
nor the Servicer may transfer or assign all, or a portion of, its rights,
obligations and duties under this Agreement unless such transfer or assignment
(i) (A) will not result in a reduction or withdrawal by any Rating Agency of the
rating then assigned by it to the Certificates and (B) the Trustee and the
Insurer have consented to such transfer or assignment, or (ii) the Insurer, the
Trustee and Holders of Certificates evidencing not less than 51% of the Pool
Balance consent thereto. Any transfer or assignment with respect to the Servicer
of all of its rights, obligations and duties will not become effective until a
successor Servicer has assumed the Servicer's rights, duties and obligations
under this Agreement. In the event of a transfer or assignment pursuant to
clause (ii) above, each Rating Agency shall be provided with notice of such
transfer or assignment.
SECTION 11.8 Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust.
The interests represented by the Certificates shall be nonassessable for any
losses or expenses of the Trust or for any reason whatsoever, and, upon
authentication thereof by the Trustee pursuant to Section 5.2, Certificates
shall be deemed fully paid.
SECTION 11.9 Third Party Beneficiaries. Except as otherwise specifically
provided herein with respect to the Certificateholders, the parties to this
Agreement hereby manifest their intent that no third party other than the
Insurer shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement.
SECTION 11.10 Insurer Default or Insolvency. If a default under the
Financial Guarantee Insurance Policy has occurred and is continuing or an
Insurer Insolvency has occurred, any provision giving the Insurer the right to
direct, appoint or consent to, approve of, or take or cause to be taken any
action (or waive any right to take action) under this Agreement, including but
not limited to the right to terminate or cause the termination of the Servicer
as provided in Section 8.1, shall be inoperative during the period of such
default or the period from and after such Insurer Insolvency and such consent or
approval shall be deemed to have been given for the purpose of such provisions;
provided that the consent of the Insurer shall be required at all times with
respect to any amendment of this Agreement pursuant to Section 11.1.
SECTION 11.11 Tax Matters. The parties hereto intend that the Trust
shall be a grantor trust for federal and state income tax purposes and not an
association taxable as a corporation. All provisions of this Agreement shall be
construed so as to effectuate such intent. For income tax purposes, the Seller,
the Certificateholders, and each Certificate Owner, by accepting a beneficial
interest in a Certificate agree to treat the Certificates as ownership interests
in the Contracts (other than the Retained Strip, which the Seller shall treat as
its property), and any other Trust Property.
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For purposes of this Agreement, "Retained Strip" shall mean the portion of the
interest due on each Contract which has a yield in excess of -%.
This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers thereunto duly authorized as of the
day and year first above written.
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Seller
By:
-------------------------------------
Name:
Title:
ONYX ACCEPTANCE CORPORATION,
as Servicer
By:
-------------------------------------
Name:
Title:
BANKERS TRUST COMPANY,
not in its individual capacity but solely
as Trustee
By:
-------------------------------------
Name:
Title:
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