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EXHIBIT 10.120
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SECURITY AGREEMENT
between
ONYX ACCEPTANCE RECEIVABLES CORPORATION
and
THE CHASE MANHATTAN BANK,
as Funding Agent
Dated as of August 9, 1999
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SECURITY AGREEMENT
SECURITY AGREEMENT, dated as of August 9, 1999 (as amended,
supplemented or otherwise modified and in effect from time to time, this
"Agreement"), is between ONYX ACCEPTANCE RECEIVABLES CORPORATION, a Delaware
corporation ("Recco"), and THE CHASE MANHATTAN BANK, a New York banking
corporation, as funding agent for the benefit of the Secured Parties (in such
capacity, the "Funding Agent").
W I T N E S S E T H :
WHEREAS, the Lenders will from time to time make Loans to Recco
for the purpose of purchasing Contracts; and
WHEREAS, it is a condition precedent to the Funding Agreement
that Recco execute and deliver this Security Agreement to the Funding Agent for
the benefit of the Secured Parties;
NOW, THEREFORE, for good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Recco hereby agrees with the
Funding Agent as follows:
SECTION 1. Defined Terms.
(1) As used in this Agreement or any certificate or other document
made or delivered pursuant hereto, the capitalized terms used
herein and therein shall, unless otherwise defined herein, have
the meanings assigned to them in the Definitions List dated as
of the date hereof that refers to this Agreement, which is
incorporated herein by reference (the "Definitions List").
(2) As used herein and in any certificate or other document made or
delivered pursuant hereto, accounting terms not defined in the
Definitions List and accounting terms partly defined in the
Definitions List to the extent not defined, shall have the
respective meanings given to them under GAAP.
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(3) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement, and paragraph references are to this Agreement unless
otherwise specified.
(4) Capitalized terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
(5) The following terms that are defined in the UCC are used herein
as so defined: Chattel Paper, Documents, Equipment, General
Intangibles, Instruments and Proceeds.
SECTION 2. Grant of Security Interest. As collateral security
for the prompt and complete payment and performance when due (whether at the
stated maturity, by acceleration or otherwise) of the Obligations, Recco hereby
assigns, pledges, grants, conveys, transfers, delivers and sets over to the
Funding Agent for its benefit and for the ratable benefit of the Secured Parties
a security interest in all Recco's right, title and interest in, to and under
the following, whether now owned or hereafter acquired, in each case (other than
clause (i)) only as related to the Purchased Contracts (collectively, the
"Collateral"). For further clarification, all Collateral as heretofore described
in this Section 2 (other than clause (i)) shall relate to and be in respect of
Purchased Contracts as defined herein, subject to any and all provisos, as
applicable, expressly included in the definition thereof.
(1) all chattel paper, including, without limitation, the Purchased
Contracts and other contracts related to the Purchased Contracts
(as the same may be amended, modified, supplemented, restated or
replaced from time to time) and amounts paid or payable with
respect thereto;
(2) all Files (including all Dealer Assignments) and Contract Lists,
and all right, title and interest of Recco in and to the
documents, agreements and instruments included in the Files,
including, without limitation, rights of recourse of Recco
against Vehicle Dealers;
(3) all Insurance Policies and all rights of Recco in all Insurance
Policies;
(4) all security interests, Liens, guaranties, mortgages and other
encumbrances in favor of or assigned or transferred to Recco in
and to Purchased Contracts and Vehicles, and all accessions
thereto and replacements thereof, and in any other property in
which a security interest is assigned or transferred to Recco;
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(5) all of Recco's Equipment and Inventory, General Intangibles,
Documents, Instruments, Accounts, general ledger sheets, files,
records, books of account, invoices, bills, certificates or
documents of ownership, bills of sale, business papers,
correspondence, tapes, cards, computer tapes and all other data
and data storage systems (whether in the possession of Recco or
any other Person) relating to any of the foregoing;
(6) all deposit accounts, moneys, deposits, funds, accounts and
instruments relating to the foregoing;
(7) the Collection Account (including, without limitation, all funds
at any time on deposit therein and all Permitted Investments in
which such funds may at any time be invested);
(8) the Sale Agreement and all other Operative Documents to which
Recco is a party, including, without limitation, all rights of
Recco to amounts due or to become due under or in connection
with such agreements;
(9) any Hedge Agreement and any guarantees or other credit
enhancement associated therewith; and
(10) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing.
SECTION 3. Bank Accounts; Possession of Contracts and Files.
(1) Subject to the Collection Account Agreement, the Funding Agent
shall have sole dominion and control over the Bank Accounts, and
no other Person shall have any right of withdrawal therefrom.
(2) The Controlling Party shall have the right to hold the Purchased
Contracts. The Controlling Party may in its sole discretion,
designate Recco or any other Person, as custodian and bailee of
the Funding Agent for the benefit of the Secured Parties, to
hold the Purchased Contracts. To the extent required to service
the Purchased Contracts in accordance with the Sale Agreement,
Recco may release the Purchased Contracts and Files to the
Servicer, to be held by the Servicer as custodian and bailee of
the Funding Agent during the Servicer's
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possession thereof. The Servicer shall promptly return all such
Purchased Contracts and Files to Recco or any such other Person
as the Controlling Party shall direct when possession thereof by
the Servicer is no longer required for servicing such Purchased
Contracts in accordance with the Sale Agreement. In addition,
the Servicer shall return the Purchased Contracts to Recco, the
Funding Agent, the Surety Provider or any such other Person as
the Funding Agent (at the direction of the Controlling Party)
shall direct at any time upon receipt of a request from the
Funding Agent to such effect.
SECTION 4. Daily Procedures and Distributions of Collections
Prior to the Termination Date. On each Business Day prior to the Termination
Date:
(1) Deposits.
(1) the Servicer and Recco shall transfer or cause to be
transferred to the Clearing Account (A) all Collections
received on the previous Business Day in the Lock-Boxes
and (B) all Collections received by the Servicer or
Recco in any other manner on the previous Business Day;
(2) the Servicer shall transfer or cause to be transferred
to the Collection Account all Collections received in
the Clearing Account within one Business Day after such
Collections are received in the Clearing Account;
(3) if a payment of the principal of the Loans is required
on such Business Day pursuant to Section 2.4 of the
Funding Agreement, Recco shall deposit the amount
required into the Collection Account;
(4) the Servicer shall transfer from the Collection Account
to a sub-account of the Collection Account (the "Accrued
Costs and Interest Sub-Account") on such Business Day an
amount equal to the sum of the Accrued Facilities Costs
Amount and the Accrued Interest Amount for such day; and
(5) Recco shall deposit all amounts received in respect of
any Hedge Agreement into the Collection Account except,
so long as no Event of Default or Unmatured Event of
Default shall
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have occurred and be continuing, for amounts received
prior to the Hedge Effective Date.
Until the transfers set forth in Section 4(a)(i), (ii), (iii) and (v) are made,
Recco and the Servicer shall hold in trust for the benefit of the Funding Agent
for the benefit of the Secured Parties all such amounts and Collections and
shall not commingle such amounts and Collections with other funds of the
Servicer or Recco other than funds of the Servicer or Recco in the Lock-Boxes
and the Clearing Account.
(2) Distributions. The Servicer shall make distributions from
amounts on deposit in the Collection Account for the following
purposes in the following order of priority, in each case to the
extent such amounts are due and payable on such Business Day and
to the Person entitled thereto:
(1) an amount necessary to cure any Borrowing Base
Deficiency shall be applied to reduce the principal of
the Loan Note;
(2) if Onyx Acceptance Corporation or an Affiliate is not
the Servicer, an amount equal to the Servicing Fee (up
to an amount calculated on the basis of a Servicing Fee
Percentage equaling 1%);
(3) to the counterparty of each Hedge Agreement on or after
the Hedge Effective Date, the fixed rate payment payable
by Recco under each such Hedge Agreement;
(4) on each Determination Date, from the Accrued Costs and
Interest Sub-Account, an amount equal to interest on the
Loan Note in respect of interest accrued on the Loans
during the related Determination Period; provided that
the aggregate of the amounts paid pursuant to clauses
(iv) and (v) hereof on any Determination Date shall not
exceed the Capped Amount;
(5) on each Determination Date, from the Accrued Costs and
Interest Sub-Account, the Facilities Fees; provided that
the aggregate of the amounts paid pursuant to clauses
(iv) and (v) hereof on any Determination Date shall not
exceed the Capped Amount;
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(6) from the Accrued Costs and Interest Sub-Account, an
amount equal to the Facilities Costs;
(7) an amount equal to the principal of and unpaid interest
on the Loans prepaid or required to be prepaid on such
Business Day pursuant to Section 2.4(a) or (b) of the
Funding Agreement;
(8) either (A) an amount equal to the Servicing Fee (if Onyx
Acceptance Corporation or an Affiliate thereof is the
Servicer) or (B) an amount equal to the portion of the
Servicing Fee not paid pursuant to clause (ii) above (if
Onyx Acceptance Corporation or an Affiliate thereof is
not the Servicer);
(9) an amount equal to interest on all unreimbursed drawings
under the Policies;
(10) an amount equal to all unreimbursed drawings under the
Policies and all other amounts owing to the Surety
Provider under the Premium Side Letter Agreement and the
Insurance Agreement;
(11) on each Determination Date, in the following order of
priority, from the Accrued Costs and Interest
Sub-Account, (A) an amount equal to all interest accrued
on Loans during the related Determination Period in
excess of the Capped Amount not otherwise paid pursuant
to clause (iv) above and (B) an amount equal to all
Facilities Fees in excess of the Capped Amount not
otherwise paid pursuant to clause (v) above;
(12) an amount equal to the sum of the Recco Expenses and all
other Obligations;
(13) for the purchase of Contracts pursuant to the Sale
Agreement;
(14) an amount equal to interest and principal due on the
Subordinated Note; and
(15) an amount equal to all remaining amounts in the
Collection Account for other duly authorized corporate
purposes of Recco.
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provided, however, that, on any Business Day, no distribution shall be made
pursuant to (xiii) or (xiv) above if the conditions set forth in Section 3.2 of
the Sale Agreement have not been satisfied.
(3) Permitted Investments. Amounts on deposit in the Accrued Costs
and Interest Sub-Account and the Disbursement Sub-Account may be
invested in Permitted Investments, provided that such
Investments shall be selected so that the maturity dates thereof
correspond to the dates on which such amounts are required to be
distributed in accordance with the provisions of Section 4(b).
SECTION 5. Daily Procedures and Distributions of Collections on
each Liquidation Day. On each Liquidation Day:
(1) Deposits.
(1) the Servicer and Recco shall transfer or cause to be
transferred to the Clearing Account (A) all Collections
received on the previous Business Day in the Lock-Boxes
and (B) all Collections received by the Servicer or
Recco in any other manner on the previous Business Day;
(2) the Servicer shall transfer or cause to be transferred
to the Collection Account all Collections received in
the Clearing Account within one Business Day after such
Collections are received in the Clearing Account;
(3) Recco shall deposit all amounts received by Recco in
respect of any Hedge Agreement into the Collection
Account except, so long as no Event of Default or
Unmatured Event of Default shall have occurred and be
continuing, for amounts received prior to the Hedge
Effective Date. Until such transfers are made, Recco and
the Servicer shall hold in trust for the benefit of the
Funding Agent for the benefit of the Secured Parties all
such amounts and Collections and shall not commingle
such amounts and Collections with other funds of the
Servicer or Recco other than funds in the Lock-Boxes and
the Clearing Account.
(2) Distributions. The Servicer shall make distributions from
amounts on deposit in the Collection Account for the following
purposes in the
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following order of priority, in each case to the extent such
amounts are due and payable on such day and to the Person
entitled thereto:
first, if Onyx Acceptance Corporation or an Affiliate is
not the Servicer, an amount equal to the Servicing Fee (up to an
amount calculated on the basis of a Servicing Fee Percentage
equaling 1%);
second, to the counterparty of each Hedge Agreement, the
fixed rate payment payable by Recco under each such Hedge
Agreement;
third, on each Determination Date, an amount equal to
interest on the Loan Note in respect of interest accrued on the
Loans during the related Determination Period; provided that the
aggregate of the amounts paid pursuant to clauses third and
fourth hereof on any Determination Date shall not exceed the
Capped Amount;
fourth, on each Determination Date, an amount equal to
the Facilities Fees; provided that the aggregate of the amounts
paid pursuant to clauses third and fourth hereof for any
Determination Date shall not exceed the Capped Amount;
fifth, an amount equal to the Facilities Costs;
sixth, an amount equal to the principal of and unpaid
interest on the Loans required to be prepaid pursuant to Section
2.4(c) of the Funding Agreement;
seventh, an amount equal to interest on all unreimbursed
drawings under the Policies;
eighth, an amount equal to all unreimbursed drawings
under the Policies and all other amounts owing to the Surety
Provider under the Premium Side Letter Agreement and the
Insurance Agreement;
ninth, in the following order of priority, (A) an amount
equal to all interest accrued on Loans during the related
Determination Period in excess of the Capped Amount not
otherwise paid pursuant to clause third above and (B) an amount
equal to all Facilities Fees in excess of the Capped Amount not
otherwise paid pursuant to clause fourth above;
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tenth, an amount equal to the sum of all Recco Expenses
and all other Obligations;
eleventh, an amount equal to the principal of and
interest due on the Subordinated Note;
twelfth, either (A) an amount equal to the Servicing Fee
(if Onyx Acceptance Corporation or an Affiliate thereof is the
Servicer) or (B) an amount equal to the portion of the Servicing
Fee not otherwise paid pursuant to clause first above (if Onyx
Acceptance Corporation or an Affiliate thereof is not the
Servicer); and
thirteenth, all remaining amounts to Recco, or to such
Persons and in such amounts as a court of competent jurisdiction
may direct.
(3) Permitted Investments. Amounts on deposit in the Accrued Costs
and Interest Sub-Account and the Disbursement Sub-Account may be
invested in Permitted Investments, provided that such Permitted
Investments shall be selected so that the maturity dates thereof
correspond to the dates on which such amounts are required to be
distributed in accordance with the provisions of Section 5(b).
(4) Clearing Account. The Clearing Account is a general clearing
account held by and in the name of Onyx Acceptance Financial
Corporation into which Collections as well as collections on
other assets are deposited. The parties hereto agree and
acknowledge that (i) any Collections transferred to the Clearing
Account prior to the transfer of such Collections to the
Collection Account will be subject at all times to the terms of
the Intercreditor Agreement and (ii) the balance in the Clearing
Account may not at any time fall below the amount deposited
representing Collections which have not been transferred to the
Collection Account.
(5) Optional Deposits by Surety Provider. The Surety Provider shall
at any time, and from time to time, have the option (but shall
not be required, except in accordance with the terms of the Note
Policy) to deliver amounts to the Funding Agent for deposit into
the Collection Account to provide funds in respect of the
payment of fees or expenses of any provider of services to Recco
or to any other Person or in respect of any amounts payable
pursuant to Section 4(b) or 5(b)
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hereof. Any payment under this Section 5(e) shall constitute an
amount paid under the Note Policy.
SECTION 6. Rights of Funding Agent; Limitations on Funding
Agent's Obligations.
(1) Funding Agent Not Liable under Contracts. The Funding Agent
shall not have any obligation or liability under any Contract by
reason of or arising out of this Agreement or the receipt by the
Funding Agent of any payment relating to such Contract, nor
shall the Funding Agent be obligated in any manner to perform
any such obligations under or pursuant to any Contract, to make
any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the
sufficiency of any performance by any party under any Contract,
to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may
have been assigned to it or to which it may be entitled at any
time or times.
(2) Notice to Obligors. At any time upon the request of the Funding
Agent (acting at the direction of the Controlling Party), Recco
shall notify the Obligors that the Contracts have been assigned
to the Funding Agent and that payments in respect thereof shall
be made directly to the Funding Agent. The Funding Agent (acting
at the direction of the Controlling Party) may in its own name
or in the name of others communicate with the Obligors to verify
with them to its satisfaction the existence, amount and terms of
any Purchased Contracts.
(3) Analysis of Contracts. The Funding Agent and the Surety Provider
shall have the right to make test verifications of the Purchased
Contracts in any manner and through any medium that it considers
advisable, and Recco shall furnish all such assistance and
information as the Funding Agent and the Surety Provider may
require in connection therewith. In addition, at any time and
from time to time, upon the Funding Agent's or Surety Provider's
request and at the expense of Recco, Recco shall cause
independent public accountants or others satisfactory to the
Funding Agent and the Surety Provider to furnish to the Funding
Agent and the Surety Provider reports showing reconciliations,
aging and test verifications of, and trial balances for, the
Purchased Contracts.
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(4) Proceeds. Subject to the provisions of Section 4(a) and 5(a),
any Proceeds, when collected by Recco, shall be forthwith
deposited by Recco in the exact form received, duly endorsed by
Recco to the Funding Agent if required, in the Collection
Account, subject to withdrawal by the Funding Agent only, and,
until so turned over, shall be held by Recco in trust for the
Funding Agent. Such Proceeds shall continue to be collateral
security for all of the Obligations and shall not constitute
payment thereof until applied as hereinafter provided. The
Funding Agent shall apply all or any part of the funds on
deposit in the Collection Account in accordance with Sections 4
and 5 hereof. Upon the request of the Funding Agent or the
Surety Provider, Recco shall deliver or cause to be delivered to
the Funding Agent all Files relating to the Purchased Contracts,
including original and other documents evidencing, and relating
to, the transactions which created the Purchased Contracts,
including, without limitation, all original orders, invoices,
receipts and similar documents.
(5) Document Delivery. In connection with the security interest
granted herein, on or prior to each date on which a Loan is
disbursed from the Disbursement Sub-Account, Recco shall have
received from the Seller the original Purchased Contract and
complete Files relating to each Purchased Contract for which
such Loan was made on such date. Recco shall hold such Purchased
Contracts and Files for the benefit of the Funding Agent, and,
upon request of the Funding Agent or the Surety Provider, Recco
shall deliver such Contracts and Files to the Funding Agent or
to such Person as the Funding Agent or the Surety Provider may
designate. In addition, Recco shall xxxx the following notation
on the computer tape for such Purchased Contract and File: "The
Purchased Contracts herein have been pledged to secure the debt
of Recco to the Secured Parties, and their successors and
assigns pursuant to that certain Security Agreement dated as of
August 9, 1999 between Recco and The Chase Manhattan Bank, as
Funding Agent for the benefit of the Secured Parties".
SECTION 7. Representations and Warranties. Recco hereby
represents and warrants that:
(1) Title; No Other Liens. Except for the Lien granted to the
Funding Agent pursuant to this Agreement and the other Liens
permitted pursuant to any of the other Operative Documents,
Recco owns each
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item of the Collateral free and clear of any and all Liens or
claims of others. No security agreement, financing statement or
other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except
such as may have been filed in favor of the Funding Agent
pursuant to this Agreement or as may be permitted pursuant to
the Funding Agreement.
(2) Perfected First Priority Liens. The Liens granted pursuant to
this Agreement constitute perfected first priority Liens on the
Collateral in favor of the Funding Agent and are enforceable as
such against all creditors of and purchasers from Recco and, in
the case of any Collateral constituting fixtures, against any
owner or purchaser of the real property where any of the
Equipment is located and any present or future creditor
obtaining a Lien on such real property.
(3) Chief Executive Office. Recco's chief executive office and chief
place of business is located at 00000 Xxxxx Xxxxxx Xxxxx, Xxxxx
000 Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000.
(4) Locations. All Collateral is located at the addresses listed on
Schedule 7(d) hereto.
SECTION 8. Covenants. Recco covenants and agrees with the
Funding Agent for the benefit of the Secured Parties that until the Obligations
are paid in full:
(1) Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of the Funding Agent
or the Surety Provider, and at the sole expense of Recco, Recco
will promptly and duly execute and deliver such further
instruments and documents and take such further action as the
Funding Agent may request for the purpose of obtaining or
preserving the full benefits of this Agreement and of the rights
and powers herein granted, including, without limitation, the
filing of any financing or continuation statements under the UCC
with respect to the Liens created hereby, including all steps
necessary to maintain perfection of the security interest of
Recco in each Vehicle. Recco also hereby authorizes the Funding
Agent and the Surety Provider to file any such financing or
continuation statement without the signature of Recco to the
extent permitted by applicable law. If any amount payable under
or in connection with any of the Collateral shall be or become
evidenced by any
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additional promissory note, other Instrument or Chattel Paper,
such note, Instrument or Chattel Paper shall be immediately
delivered to the Funding Agent or such other person as the
Funding Agent may designate, duly endorsed in a manner
satisfactory to the Funding Agent, to be held as Collateral
pursuant to this Agreement.
(2) Indemnification. Recco will pay, and save the Funding Agent and
the Surety Provider harmless from, any and all liabilities,
costs and expenses (including, without limitation, legal fees
and expenses) (i) with respect to, or resulting from, any delay
in paying, any and all excise, sales or other taxes (excluding
income and franchise taxes) which may be payable or determined
to be payable with respect to any of the Collateral, (ii) with
respect to, or resulting from, any delay in complying with any
Requirement of Law applicable to any of the Collateral or (iii)
in connection with any of the transactions contemplated by this
Agreement. In any suit, proceeding or action brought by the
Funding Agent or the Surety Provider in respect of any Purchased
Contract for any sum owing thereunder, or to enforce any
provisions of any Purchased Contract, Recco will save, indemnify
and keep the Funding Agent and the Surety Provider harmless from
and against all expense, loss or damage suffered by reason of
any defense, setoff, counterclaim, recoupment or reduction or
liability whatsoever of the account debtor or obligor
thereunder, arising out of a breach by Recco of any obligation
thereunder or arising out of any other agreement, indebtedness
or liability at any time owing to or in favor of such account
debtor or obligor or its successors from Recco. Notwithstanding
the foregoing, the parties hereto hereby agree that under no
circumstances shall Recco be liable for, or required to pay any
amount pursuant to this paragraph (b), resulting from gross
negligence or willful misconduct on the part of the Funding
Agent or the Surety Provider.
(3) Maintenance of Records. Recco will keep and maintain, or cause
to be maintained by the Servicer, at its own cost and expense
satisfactory and complete records of the Collateral, including,
without limitation, a record of all payments received and all
credits granted with respect to the Purchased Contracts. Recco
will xxxx its books and records pertaining to the Collateral to
evidence this Agreement and the security interests granted
hereby. At any time upon the request of the Funding Agent or
Surety Provider, Recco shall, during normal business hours, turn
over any books and records to the Funding Agent or
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the Surety Provider or to its representatives that the Funding
Agent or the Surety Provider shall so request.
(4) Right of Inspection. The Funding Agent and the Surety Provider
shall at all times have full and free access during normal
business hours to all the books, correspondence and records of
Recco and to all Purchased Contracts and Files held by Recco,
and the Funding Agent and the Surety Provider or their
respective representatives may examine the same, take extracts
therefrom and make photocopies thereof, and Recco agrees to
render to the Funding Agent and the Surety Provider, at Recco's
cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto.
(5) Compliance with Laws, etc. Recco will comply with all
Requirements of Law applicable to the Collateral or any part
thereof or to the operation of Recco's business; provided,
however, that Recco may contest any Requirement of Law in any
reasonable manner which shall not, in the reasonable opinion of
the Funding Agent or the Surety Provider, adversely affect the
rights of the Funding Agent or the Secured Parties or the
priority of the Lien of the Funding Agent on the Collateral.
(6) Compliance with Terms of Contracts, etc. Recco will perform and
comply with all its obligations under the Purchased Contracts
and all its other Contractual Obligations relating to the
Collateral.
(7) Payment of Obligations. Recco will pay promptly when due all
taxes, assessments and governmental charges or levies imposed
upon the Collateral or in respect of its income or profits
therefrom, as well as all claims of any kind (including, without
limitation, claims for labor, materials and supplies) against or
with respect to the Collateral, except that no such charge need
be paid if (i) the validity thereof is being contested in good
faith by appropriate proceedings, (ii) such proceedings do not
involve any danger of the sale, forfeiture or loss of any of the
Collateral or any interest therein and (iii) such charge is
adequately reserved against on Recco's books in accordance with
GAAP.
(8) Limitation on Liens on Collateral. Recco will not create, incur
or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any Lien or
claim on or to the
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Collateral, other than the Liens created hereby and other than
as permitted pursuant to the Funding Agreement, and will defend
the right, title and interest of the Funding Agent in and to any
of the Collateral against the claims and demands of all Persons
whomsoever.
(9) Limitations on Dispositions of Collateral. Recco will not sell,
transfer, lease or otherwise dispose of any of the Collateral,
or attempt, offer or contract to do so, except as provided for
in this Agreement.
(10) Limitations on Modifications, Waivers, Extensions of Contracts.
Recco will not, and will not permit any other Person to, (i)
amend, modify, terminate or waive any provision of any Purchased
Contract in any manner which could have an adverse effect on the
value of such Purchased Contract as Collateral except in
accordance with clause (k) of this Section 8, (ii) fail to
exercise promptly and diligently each and every right which it
may have under each Purchased Contract, (iii) fail to deliver to
the Funding Agent and the Surety Provider, upon the request of
the Funding Agent and the Surety Provider, a copy of each
demand, notice or document received by it relating in any way to
any Purchased Contract, (iv) fail to deliver to the Funding
Agent and the Surety Provider a copy of each demand, notice or
document sent to each Obligor at the request of the Funding
Agent or the Surety Provider; and (v) act otherwise than in
accordance with the Credit and Collection Policy.
(11) Limitations on Discounts, Compromises, Extensions of Contracts.
Other than pursuant to the Credit and Collection Policy, Recco
will not, and will not permit any other Person to, grant any
extension of the time of payment of any of the Purchased
Contracts, compromise, compound or settle the same for less than
the full amount thereof, release, wholly or partially, any
Person liable for the payment thereof, or allow any credit or
discount whatsoever thereon.
(12) Maintenance of Equipment. Recco will maintain each item of
Equipment in good operating condition, ordinary wear and tear
and immaterial impairments of value and damage by the elements
excepted, and will provide all maintenance, service and repairs
necessary for such purpose.
(13) Further Identification of Collateral. Recco will furnish to the
Funding Agent from time to time statements and schedules further
identifying
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and describing the Collateral and such other reports in
connection with the Collateral as the Funding Agent may
reasonably request, all in reasonable detail.
(14) Notices. Recco will advise the Funding Agent and the Surety
Provider promptly, in detail, at its address set forth in the
Funding Agreement, (i) of any Lien (other than Liens created or
permitted hereby) on, or claim asserted against, any of the
Collateral and (ii) of the occurrence of any other event which
could have in the reasonable exercise of the judgment of the
Funding Agent or the Surety Provider a material adverse effect
on the Collateral or on the Liens created hereunder. Recco will
promptly notify S&P and Xxxxx'x of any amendment to any Interest
Rate Hedge Mechanism.
A copy of any notice delivered to or required to be sent by Recco hereunder
shall be sent by Recco to the holder of the Subordinated Note.
(15) Changes in Locations, Name, etc. Recco will not, without
providing 30 days prior written notice to the Funding Agent and
the Surety Provider (and, in the case of clause (iv), without
the prior written consent of the Funding Agent and the Surety
Provider), and without filing any UCC financing statements
necessary or desirable (in the opinion of the Funding Agent and
the Surety Provider) to maintain the perfection and priority of
the Funding Agent's security interest in the Collateral as
provided for herein, (i) change the location of its chief
executive office/chief place of business from that specified in
Section 7(c) or remove its books and records from such location,
(ii) permit any Equipment that it may acquire to be kept at a
location other than that specified in Section 7(d), (iii) change
its name, identity or corporate structure to such an extent that
any financing statement filed by the Funding Agent in connection
with this Agreement would become misleading or (iv) change the
location where the Purchased Contracts and the Files are
maintained.
SECTION 9. Funding Agent's Appointment as Attorney-in-Fact.
(1) Powers. Recco hereby irrevocably constitutes and appoints the
Funding Agent and any officer or agent thereof, with full power
of substitution, as its true and lawful attorney-in-fact with
full irrevocable power and authority in the place and stead of
Recco and in the name of Recco or in its own name, from time to
time in the Funding
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Agent's discretion, for the purpose of carrying out the terms of
this Agreement, to take any and all lawful and appropriate
action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the
foregoing, Recco hereby gives the Funding Agent the power and
right, on behalf of Recco, without notice to or assent by Recco,
to do the following:
(1) at the direction of the Controlling Party, upon the
occurrence and during the continuance of any Unmatured
Event of Default or Event of Default, in the name of
Recco or its own name, or otherwise, to take possession
of and endorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of
moneys due under any Instrument, General Intangible or
Contract and to file any claim or to take any other
action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Funding Agent for
the purpose of collecting any and all such moneys due
under any Instrument, General Intangible or Contract
whenever payable;
(2) to pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral; and
(3) at the direction of the Controlling Party, upon the
occurrence and during the continuance of any Unmatured
Event of Default or Event of Default, (A) to direct any
party liable for any payment under any of the Collateral
to make payment of any and all moneys due or to become
due thereunder directly to the Funding Agent or as the
Controlling Party shall direct; (B) to ask or demand
for, collect, receive payment of and receipt for, any
and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of
any Collateral; (C) to sign and endorse any invoices,
freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection
with any of the Collateral; (D) to commence and
prosecute any suits, actions or proceedings at law or in
equity in any court of competent jurisdiction to collect
the Collateral or any proceeds thereof and to enforce
any other right in respect of any Collateral; (E) to
defend any suit, action or proceeding brought against
Recco with respect
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to any Collateral; (F) to settle, compromise or adjust
any suit, action or proceeding described in clause (E)
above and, in connection therewith, to give such
discharges or releases as the Funding Agent may deem
appropriate; (G) generally, to sell, transfer, pledge
and make any agreement with respect to or otherwise deal
with any of the Collateral pursuant to Section 11 hereof
as fully and completely as though the Funding Agent were
the absolute owner thereof for all purposes, and to do,
at the Funding Agent's option and Recco's expense, at
any time, or from time to time, all lawful acts and
things which the Funding Agent deems necessary to
protect, preserve or realize upon the Collateral and the
Funding Agent's Liens thereon and to effect the intent
of this Agreement, all as fully and effectively as Recco
might do; and (H) implement the Alternate Servicing
Plan.
Recco hereby ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof.
(2) Other Powers. Recco also authorizes the Funding Agent, at any
time and from time to time, to execute, in connection with the
sale provided for in Section 11 hereof, any endorsements,
assignments or other instruments of conveyance or transfer with
respect to the Collateral.
(3) No Duty on Funding Agent's Part. The powers conferred on the
Funding Agent hereunder are solely to protect the Funding
Agent's interests in the Collateral and shall not impose any
duty upon it to exercise any such powers. The Funding Agent
shall be accountable only for amounts that it actually receives
as a result of the exercise of such powers, and neither it nor
any of its officers, directors, employees or agents shall be
responsible to Recco for any act or failure to act hereunder,
except for its own gross negligence or willful misconduct.
SECTION 10. Performance by Funding Agent of Recco's Obligations.
If Recco fails to perform or comply with any of its agreements contained herein
and the Funding Agent, as provided for by the terms of this Agreement, shall
itself perform or comply, or otherwise cause performance or compliance, with
such agreement, the expenses of the Funding Agent incurred in connection with
such performance or compliance, together with interest thereon until
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paid in full at a rate per annum equal to the Default Rate, shall be payable by
Recco to the Funding Agent on demand and shall constitute Obligations secured
hereby.
SECTION 11. Remedies. If an Event of Default shall occur and be
continuing, the Funding Agent may with the consent of, and shall at the
direction of, the Controlling Party, exercise in addition to all other rights
and remedies granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Obligations, all rights and
remedies of a secured party under the UCC. Without limiting the generality of
the foregoing, the Funding Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except the notice
specified below of time and place of public or private sale) to or upon Recco or
any other Person (all and each of which demands, defenses, advertisements and
notices are hereby waived), may in such circumstances forthwith collect,
receive, appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give an option or options to purchase,
or otherwise dispose of and deliver said Collateral or any part thereof (or
contract to do any of the foregoing), in one or more parcels at public or
private sale or sales, at any exchange, broker's board or office of the Funding
Agent or elsewhere upon such terms and conditions as it may deem advisable and
at such prices as it may deem best, for cash or on credit or for future delivery
without assumption of any credit risk. The Funding Agent shall have the right
upon any such public sale or sales, and, to the extent permitted by law, upon
any such private sale or sales, to purchase the whole or any part of said
Collateral so sold, free of any right or equity of redemption in Recco, which
right or equity is hereby waived or released. Recco further agrees, at the
Funding Agent's request, to assemble the Collateral and the Files and make them
available to the Funding Agent at places which the Funding Agent shall select,
whether at Recco's premises or elsewhere. The Funding Agent shall apply the net
proceeds of any such collection, recovery, receipt, appropriation, realization
or sale, after deducting all costs and expenses of every kind incurred therein
or incidental to the care or safekeeping of any of the Collateral or in any way
relating to the Collateral or the rights of the Funding Agent hereunder,
including, without limitation, attorneys' fees and disbursements, to the payment
in whole or in part of the Obligations, in such order as the Funding Agent may
elect, and only after such application and after the payment by the Funding
Agent of any other amount required by any provision of law, including, without
limitation, Section 9-504(1)(c) of the UCC, need the Funding Agent account for
the surplus, if any, to Recco. To the extent permitted by applicable law, Recco
waives all claims, damages, and demands against the Funding Agent arising out of
the repossession, retention or sale of the Collateral. If any notice of a
proposed sale or disposition of Collateral shall be required by law, such notice
shall be deemed reasonably and properly given if given (effective upon
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dispatch) in any manner provided in the Funding Agreement at least 10 days
before such sale or disposition. Recco shall remain liable for any deficiency if
the proceeds of any sale or other disposition of the Collateral are insufficient
to pay the Obligations and the fees and disbursements of any attorneys employed
by the Funding Agent to collect such deficiency.
Upon the occurrence of an Event of Default, and upon the written
instructions of the Controlling Party, Recco shall take such action or shall
cause such action to be taken pursuant to any and all Interest Rate Hedge
Mechanisms and/or enter into any Hedge Agreement at the sole expense of Recco
promptly upon the request of the Controlling Party.
SECTION 12. Limitation on Funding Agent's Duties in Respect of
Collateral. The Funding Agent's sole duty with respect to the custody,
safekeeping and physical preservation of the Collateral in its possession, under
Section 9-207 of the UCC or otherwise, shall be to deal with it in the same
manner as the Funding Agent deals with similar property for its own account.
Neither the Funding Agent nor any of its directors, officers, employees or
agents shall be liable for failure to demand, collect or realize upon all or any
part of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
Recco or otherwise.
SECTION 13. Powers Coupled with an Interest. All powers of
attorney, authorizations and agencies herein contained with respect to the
Collateral are irrevocable and are powers coupled with an interest.
SECTION 14. Severability. Any provision of this Agreement which
is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 15. Section and Paragraph Headings. The section and
paragraph headings used in this Agreement are for convenience of reference only
and are not to affect the construction hereof or be taken into consideration in
the interpretation hereof.
SECTION 16. No Waiver; Cumulative Remedies. The Funding Agent
shall not by any act (except pursuant to the execution of a written instrument
pursuant to Section 17 hereof), delay, indulgence, omission or otherwise
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be deemed to have waived any right or remedy hereunder or to have acquiesced in
any Unmatured Event of Default or Event of Default or in any breach of any of
the terms and conditions hereof. No failure to exercise, nor any delay in
exercising, on the part of the Funding Agent, any right, power or privilege
hereunder shall operate as a waiver thereof. No single or partial exercise of
any right, power or privilege hereunder shall preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. A
waiver by the Funding Agent of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Funding Agent
would otherwise have on any future occasion. The rights and remedies herein
provided are cumulative, may be exercised singly or concurrently and are not
exclusive of any rights or remedies provided by law.
SECTION 17. Waivers and Amendments; Successors and Assigns. None
of the terms or provisions of this Agreement may be waived, amended,
supplemented or otherwise modified except by a written instrument executed by
Recco, the Funding Agent and the Surety Provider and with prior written notice
thereof to S&P and Xxxxx'x. This Agreement shall be binding upon the successors
and assigns of Recco and shall inure to the benefit of the Funding Agent and its
successors and assigns.
SECTION 18. Integration. This Agreement represents the agreement
of Recco with respect to the subject matter hereof, and there are no promises,
undertakings, representations or warranties by the Funding Agent relative to
subject matter hereof not expressly set forth or referred to herein or in the
other Operative Documents.
SECTION 19. Counterparts. This Agreement may be executed by one
or more of the parties to this Agreement on any number of separate counterparts,
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
SECTION 20. Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of New York.
SECTION 21. Termination and Release.
(1) This Agreement and the security interests created or granted
hereby shall remain in full force and effect until the
indefeasible payment in full in cash of all of the Obligations,
at which time, following the receipt by the Funding Agent of
written notice from the Lenders and the Surety Provider that
such Obligations have been so paid, the
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security interest created or granted hereby shall terminate and
the Funding Agent shall, at the sole expense of Recco, execute
and deliver such documents and instruments (including without
limitation UCC termination statements) necessary to evidence the
termination of such security interest, as Recco may reasonably
request.
(2) (i) Recco Request for Release. Recco intends from time to time
to sell Purchased Contracts and other related Collateral to (x)
entities which will then privately or publicly sell securities
backed by such Purchased Contracts and Collateral, (y) in whole
loan bulk sales to unaffiliated third parties or (z) in whole
loan bulk sales to Onyx Acceptance Corporation, in each case,
for a cash purchase price of not less than the aggregate
Outstanding Balance of such Purchased Contracts plus accrued and
unpaid interest thereon; provided that, at least once per annum,
Recco shall conduct a sale such that, after giving effect to
such sale, the Outstanding Balances of all Purchased Contracts
owned by Recco is equal to or less than 25% of the Outstanding
Balances of all Purchased Contracts immediately prior to such
sale. Notwithstanding anything to the contrary in Sections 6.4,
6.5, and 6.16 of the Funding Agreement, Recco shall be permitted
to sell Purchased Contracts pursuant to the foregoing provisions
only upon satisfaction of the following conditions precedent:
(1) sales pursuant to clause (x) shall occur no more
frequently than once each calendar quarter;
(2) sales pursuant to clauses (x) and (y) shall not
be to any entity which is a direct competitor of the Surety
Provider, including, without limitation, Ambac Assurance
Corporation, Financial Security Assurance Corporation, Financial
Guaranty Insurance Corporation or any affiliate thereof;
(3) each of the Seller and Recco shall be in
compliance with all of its covenants in the Operative Documents
and no adverse selection procedures shall have been used by
Recco or the Servicer in selecting Purchased Contracts for such
sales; and
(4) The Funding Agent and the Surety Provider shall
have received copies of all documents executed in connection
with such sale.
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The proceeds of all sales by Recco pursuant to clauses (x), (y)
and (z) above shall be applied to prepay the Loan Note and the
Subordinated Note. Upon not less than 5 Business Days' prior
written notice to the Funding Agent and the Surety Provider,
Recco may request that specified Purchased Contracts and other
related Collateral be released in connection with such sales and
the prepayment of the Loan Note as provided in Section 2.4(b) of
the Funding Agreement. In connection with such request, Recco
shall execute and deliver to the Funding Agent and the Surety
Provider a Lien Release Request Certificate in the form attached
hereto as Exhibit A. In selecting the Purchased Contracts
enumerated in its Lien Release Request Certificate delivered to
the Funding Agent and the Surety Provider pursuant hereto, Recco
shall employ selection procedures which are not adverse to the
interests of the Funding Agent, the Lenders or the Surety
Provider. Recco shall deliver to the Funding Agent and the
Surety Provider (i) monthly servicer reports for all Contracts
serviced but not owned by Onyx aggregated by portfolio and owner
and (ii) copies of all material amendments, waivers or
modifications to any documents executed in connection with the
sale of Purchased Contracts by Recco.
(ii) Funding Agent Release. Upon receipt of an amount in
immediately available funds equal to the sum of the principal
amount of such prepayment, all interest accrued and to accrue
thereon and unpaid and all other costs and Obligations of Recco
and the Seller associated with such prepayment and unpaid under
any Operative Document (including, without limitation, amounts
payable pursuant to Section 2.4(b) of the Funding Agreement), to
be paid by Recco from the Collection Account pursuant to Section
4(b) hereof, the Funding Agent shall, with the consent of the
Surety Provider at the sole expense of Recco, execute and
deliver a Funding Agent Lien Release Certificate in the form
attached hereto as Exhibit B which shall evidence the release of
its security interest in Purchased Contracts having an
Outstanding Balance equal to the principal amount of the Loan
Note being prepaid divided by the Net Advance Rate on such day.
(iii) Documents and Filings. In connection with any such release
pursuant to this Section 21, Recco and the Funding Agent shall,
at the sole expense of Recco, execute and deliver any documents
and instruments necessary to evidence the release of the Funding
Agent's security interest in such Purchased Contracts and other
Collateral,
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including without limitation, forms UCC-2 prepared for filing in
all appropriate jurisdictions.
SECTION 22. Funding Agent Direction; Replacement Policy. (a)
Except as otherwise specifically provided otherwise herein and in the other
Operative Documents, the Funding Agent shall obtain the consent of the
Controlling Party when taking action or refraining from taking action in
connection with any amendment, waiver, consent (or consent to departure from)
this Agreement or any of the other Operative Documents.
(b) Recco further agrees that, after the occurrence of a
Replacement Event and upon the request of the Funding Agent (acting at the
direction of the Required APA Banks), Recco will obtain a Replacement Policy
acceptable to the Funding Agent and the Required APA Banks within thirty (30)
days of such request, and Recco shall pay or cause to be paid all amounts due
and payable to the current Surety Provider pursuant to the terms of the
Operative Documents. In furtherance of the foregoing, following the occurrence
of a Replacement Event, the Funding Agent hereby acknowledges and agrees that,
notwithstanding anything to the contrary contained herein or in any other
Operative Document, upon the direction of the Required APA Banks, the Funding
Agent shall release the Note Policy to the Surety Provider, provided that (i) a
Replacement Policy acceptable to (and issued by an entity acceptable to) the
Funding Agent, the Required APA Banks, Xxxxx'x and S&P has been previously or
simultaneously delivered to the Funding Agent and (ii) all amounts due and
payable to the current Surety Provider pursuant to the terms of this Agreement
and the other Operative Documents have been paid in full.
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IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement to be duly executed and delivered as of the date first above written.
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
THE CHASE MANHATTAN BANK, as Funding
Agent for the benefit of
the Secured Parties
By:
-------------------------------------
Name:
Title:
Accepted and agreed as of the date first above written:
MBIA INSURANCE CORPORATION,
as Surety Provider
By:
-----------------------------------
Name:
Title:
ONYX ACCEPTANCE CORPORATION,
as Servicer
By:
-----------------------------------
Name:
Title:
27
SCHEDULE 7(d)
Locations of Collateral
The Collateral is located at:
Onyx Acceptance Receivables Corporation
00000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxx Data Bank
00000 Xxxxx Xxxxxxx
Xxxx Xxxxxx, Xxxxxxxxxx
28
EXHIBIT A
LIEN RELEASE REQUEST CERTIFICATE
from Recco to the Funding Agent, the Surety Provider and Seller
pursuant to Section 21 of the Security Agreement
and Section 19 of Subordinated Security Agreement
[ date ]
The Chase Manhattan Bank,
as Funding Agent
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Services, PARCO Manager
Onyx Acceptance Corporation
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxx Xxxxx
MBIA Insurance Corporation
000 Xxxx Xxxxxx
Xxxxxx, Xxx Xxxx 00000
Attention: Insured Portfolio Management, Structured Finance
Re: Onyx Acceptance Receivables Corporation/Commercial Paper Program--
Request for Release of Lien
Ladies and Gentlemen:
Onyx Acceptance Receivables Corporation ("Recco") refers to (i)
the Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Security Agreement"), and (ii) the Subordinated
Security Agreement dated as of August 9, 1999 (as amended, supplemented or
otherwise modified, the "Subordinated Security Agreement"). Terms not otherwise
defined herein are used herein as defined in the Definitions List dated August
9, 1999, which is incorporated herein by reference.
Recco submits this Lien Release Request Certificate pursuant to
Section 21 of the Security Agreement and Section 19 of the Subordinated Security
29
Agreement and requests that The Chase Manhattan Bank, in its capacity as Funding
Agent for the benefit of the Secured Parties under the Security Agreement, and
Onyx Acceptance Corporation, in its capacity as Seller under the Subordinated
Security Agreement ("Onyx"), each release (and Onyx cause its assignee to
release) all of their liens on and security interests in the assets described on
Schedule 1 attached hereto (and all proceeds thereof, all books, records and
computer records pertaining thereto and all other assets that constitute
Collateral which are specifically related to the assets described in Schedule
1).
ONYX ACCEPTANCE RECEIVABLES
CORPORATION
By:
-------------------------------------
Name:
Title:
30
EXHIBIT B
FUNDING AGENT LIEN RELEASE CERTIFICATE
pursuant to Section 21 of the Security Agreement
[Date]
Onyx Acceptance Receivables Corporation
00000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxx Xxxxx, Xxxxxxxxxx 00000
Re: Partial Collateral Release
Ladies and Gentlemen:
We hereby refer to the Lien Release Request Certificate
submitted by Onyx Acceptance Receivables Corporation ("Recco") dated
_______________, a copy of which is attached hereto (the "Request Certificate").
Pursuant to the Request Certificate, The Chase Manhattan Bank, acting in its
capacity as the Funding Agent under the Security Agreement, hereby releases its
liens on and security interests in the assets identified in Schedule 1 attached
to the Request Certificate (and all proceeds thereof, all books, records and
computer records pertaining thereto and all other assets that constitute
Collateral which are specifically related to the assets described in that
Schedule 1).
This Lien Release Certificate may be executed in any number of
counterparts.
THE CHASE MANHATTAN BANK, as
Funding Agent for the benefit of
the Secured Parties
By:
-------------------------------------
Name:
Title:
31
Consented to and agreed
as of the date first above written:
MBIA INSURANCE CORPORATION
By:
----------------------------------
Name:
Title:
