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EXHIBIT 10.2
SALE AND SERVICING AGREEMENT
between
ONYX ACCEPTANCE OWNER TRUST 1998-B
as Issuer,
ONYX ACCEPTANCE FINANCIAL CORPORATION
as Seller,
ONYX ACCEPTANCE CORPORATION
as Servicer
and
THE CHASE MANHATTAN BANK
as Indenture Trustee and as Trust Agent
Dated as of September 1, 1998
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TABLE OF CONTENTS
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ARTICLE I - DEFINITIONS.......................................................1
SECTION 1.01. DEFINITIONS.................................................1
SECTION 1.02. USAGE OF TERMS.............................................19
SECTION 1.03. SECTION REFERENCES. ......................................19
SECTION 1.04. CALCULATIONS. ............................................19
SECTION 1.05. ACCOUNTING TERMS...........................................19
ARTICLE II - CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER..................19
SECTION 2.01. CONVEYANCE OF CONTRACTS....................................19
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER...............22
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS............................27
SECTION 2.04. CUSTODY OF CONTRACT FILES..................................28
SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS...............29
SECTION 2.06. INSTRUCTIONS; AUTHORITY TO ACT.............................31
SECTION 2.07. INDEMNIFICATION............................................31
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION...........................31
SECTION 2.09. NONPETITION COVENANT.......................................32
SECTION 2.10. COLLECTING TITLE DOCUMENTS NOT DELIVERED AT THE
CLOSING DATE. .............................................32
ARTICLE III - ADMINISTRATION AND SERVICING OF CONTRACTS......................32
SECTION 3.01. DUTIES OF SERVICER.........................................33
SECTION 3.02. COLLECTION OF CONTRACT PAYMENTS............................35
SECTION 3.03. REALIZATION UPON CONTRACTS.................................35
SECTION 3.04. INSURANCE..................................................36
SECTION 3.05. MAINTENANCE OF SECURITY INTERESTS IN FINANCED VEHICLES.....36
SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER......36
SECTION 3.07. PURCHASE OF CONTRACTS UPON BREACH OF COVENANT..............38
SECTION 3.08. SERVICING COMPENSATION.....................................39
SECTION 3.09. REPORTING BY THE SERVICER..................................39
SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE..........................41
SECTION 3.11. ANNUAL INDEPENDENT CERTIFIED PUBLIC ACCOUNTANT'S REPORT....42
SECTION 3.12. ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
CONTRACTS..................................................42
SECTION 3.13. FIDELITY BOND..............................................42
SECTION 3.14. INDEMNIFICATION; THIRD PARTY CLAIMS........................43
SECTION 3.15. REPORTS TO SECURITYHOLDERS AND THE RATING AGENCIES.........43
ARTICLE IV - DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS.................................43
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS............................43
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TABLE OF CONTENTS (CONT'D)
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SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION
UPON POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT....45
SECTION 4.03. DISTRIBUTIONS..............................................46
SECTION 4.04. SPREAD ACCOUNT.............................................49
SECTION 4.05. STATEMENTS TO SECURITYHOLDERS..............................50
ARTICLE V - THE SELLER.......................................................52
SECTION 5.01. LIABILITY OF SELLER; INDEMNITIES...........................52
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS................53
SECTION 5.03. LIMITATION ON LIABILITY OF SELLER AND OTHERS...............53
SECTION 5.04. SELLER NOT TO RESIGN.......................................53
SECTION 5.05. SELLER MAY OWN SECURITIES..................................53
ARTICLE VI - THE SERVICER....................................................53
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.........................53
SECTION 6.02. CORPORATE EXISTENCE; STATUS AS SERVICER; MERGER............55
SECTION 6.03. PERFORMANCE OF OBLIGATIONS.................................55
SECTION 6.04. SERVICER NOT TO RESIGN; ASSIGNMENT.........................55
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.............56
ARTICLE VII - DEFAULT........................................................57
SECTION 7.01. EVENTS OF DEFAULT..........................................57
SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR...................59
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS.........59
SECTION 7.04. WAIVER OF PAST DEFAULTS....................................60
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS................60
ARTICLE VIII - TERMINATION...................................................60
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND
DISCHARGE OF THE INDENTURE.................................61
SECTION 8.02. TRANSFER TO THE INSURER....................................61
ARTICLE IX - MISCELLANEOUS...................................................62
SECTION 9.01. AMENDMENT..................................................62
SECTION 9.02. PROTECTION OF TITLE TO TRUST...............................63
SECTION 9.03. GOVERNING LAW..............................................65
SECTION 9.04. NOTICES....................................................65
SECTION 9.05. SEVERABILITY OF PROVISIONS.................................66
SECTION 9.06. ASSIGNMENT.................................................66
SECTION 9.07. THIRD PARTY BENEFICIARIES..................................66
SECTION 9.08. CERTAIN MATTERS RELATING TO THE INSURER....................66
SECTION 9.09. HEADINGS...................................................67
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TABLE OF CONTENTS (CONT'D)
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SECTION 9.10. ASSIGNMENT BY ISSUER.......................................67
SECTION 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE...................67
EXHIBITS
Schedule I - Schedule of Contracts
Schedule II - Location and Account Numbers of Trust Accounts
Exhibit A - Form of Appointment of Custodian
Exhibit B - Form of Policy
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This SALE AND SERVICING AGREEMENT, dated as of September 1, 1998 (this
"AGREEMENT"), is between Onyx Acceptance Owner Trust 1998-B (the "ISSUER" or the
"TRUST"), Onyx Acceptance Financial Corporation (the "SELLER"), Onyx Acceptance
Corporation ("ONYX" or, in its capacity as servicer, the "SERVICER") and The
Chase Manhattan Bank, as the Indenture Trustee on behalf of the Noteholders (in
such capacity, the "INDENTURE TRUSTEE"), and as the Trust Agent on behalf of the
Owner Trustee (in such capacity, the "TRUST AGENT").
In consideration of the premises and the mutual covenants herein
contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINITIONS.
Whenever used in this Agreement, the following words and phrases, unless
the context otherwise requires, shall have the following meanings:
"ACCELERATED PRINCIPAL COMMENCEMENT DATE" means the first Distribution
Date on which the amount on deposit in the Spread Account is equal to or greater
than the Spread Account Maximum (after giving effect to the distribution
pursuant to Section 4.03(a)(x) of this Agreement on such Distribution Date).
"ACCELERATED PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date occurring on or after the Accelerated Principal Commencement
Date, an amount equal to the lesser of (i) one-twelfth of 2% of the Pool Balance
as of such Distribution Date, (ii) the amount, if any, by which (a) the
Accelerated Principal Target Level as of such Distribution Date (after giving
effect to the distribution of the Regular Principal Distributable Amount on such
Distribution Date) exceeds (b) the Pool Balance as of such Distribution Date,
and (iii) amounts which would remain on deposit in the Payment Account for such
Distribution Date after giving effect to distributions pursuant to Section
4.03(a)(i) through (x) of this Agreement without regard to the inclusion of such
amount as part of the Note Principal Distributable Amount. The Accelerated
Principal Distributable Amount shall only be included in the Note Principal
Distributable Amount until all of the Notes have been paid in full, and shall
not be included in the Certificate Principal Distributable Amount at any time.
"ACCELERATED PRINCIPAL TARGET LEVEL" means, with respect to any
Distribution Date, an amount equal to the product of (i) 102% multiplied by (ii)
the outstanding aggregate principal amount of the Notes and the Certificates as
of such Distribution Date (after giving effect to the distribution of the
Regular Principal Distributable Amount on such Distribution Date).
"AFFILIATE" of any specified Person means any other Person controlling
or controlled by or under common control with such specified Person. For the
purposes 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,
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by contract or otherwise; and the terms "controlling" or "controlled" have
meanings correlative to the foregoing.
"AMOUNT FINANCED" means, with respect to a Contract, the aggregate
amount advanced under such Contract toward the purchase price of the related
Financed Vehicle and related costs, including amounts advanced in respect of
accessories, insurance premiums, service, warranty contracts, other items
customarily financed as part of retail automobile installment sales contracts,
and related costs.
"APPOINTMENT OF CUSTODIAN" means the letter agreement between the
Indenture Trustee, the Insurer and the Servicer substantially in the form
attached hereto as Exhibit A.
"APR" of a Contract 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.
"BASIC DOCUMENTS" shall have the meaning specified in the Indenture.
"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 Seller's rights therein
with respect to the Contracts have been validly assigned to the Indenture
Trustee acting on behalf of the Trust.
"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.
"CALCULATION DAY" means the last day of each calendar month.
"CERTIFICATE" shall have the meaning specified in the Trust Agreement.
"CERTIFICATE BALANCE" will equal the Original Certificate Balance on the
Closing Date and on any date thereafter will equal the Original Certificate
Balance reduced by all distributions of principal previously made in respect of
the Certificates.
"CERTIFICATE DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of the Certificate Principal Distributable Amount and
the Certificate Interest Distributable Amount for such Distribution Date.
"CERTIFICATE DISTRIBUTION ACCOUNT" shall have the meaning specified in
the Trust Agreement.
"CERTIFICATE FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in March 2005.
"CERTIFICATEHOLDER" means any Holder of a Certificate.
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"CERTIFICATE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date, the excess of the Certificate Interest Distributable Amount
for the immediately preceding Distribution Date over the amount in respect of
interest on the Certificates that is actually deposited in the Certificate
Distribution Account on such preceding Distribution Date, plus interest on such
excess, to the extent permitted by law, at the Certificate Rate for the Interest
Accrual Period with respect to the Distribution Date for which such Certificate
Interest Carryover Shortfall is being calculated; provided, however, that the
Certificate Interest Carryover Shortfall for the first Distribution Date shall
be zero.
"CERTIFICATE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) an amount equal to the interest accrued during
the related Interest Accrual Period at the Certificate Rate on the Certificate
Balance on the immediately preceding Distribution Date, after giving effect to
all distributions of principal on or prior to such Distribution Date (or, in the
case of the first Distribution Date, the Original Certificate Balance) and (ii)
the Certificate Interest Carryover Shortfall for such Distribution Date.
"CERTIFICATE PERCENTAGE" means (i) for each Distribution Date prior to
the Distribution Date on which the principal amount of the Class A-2 Notes is
reduced to zero, 0%; (ii) on the Distribution Date on which the principal amount
of the Class A-2 Notes is reduced to zero, (a) 0% until the principal amount of
the Class A-2 Notes has been reduced to zero and (b) with respect to any
remaining portion of the Regular Principal Distributable Amount, 100%; and (iii)
for each Distribution Date after the Distribution Date on which the principal
amount of the Class A-2 Notes is reduced to zero, 100%.
"CERTIFICATE POOL FACTOR" means, as of any Distribution Date, a
six-digit decimal figure equal to the Certificate Balance (after giving effect
to any reductions therein to be made on such Distribution Date) divided by the
Original Certificate Balance.
"CERTIFICATE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close
business on of any Distribution Date, the excess of the Certificate Principal
Distributable Amount for such Distribution Date over the amount in respect of
principal that is actually deposited in the Certificate Distribution Account on
such Distribution Date.
"CERTIFICATE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Certificate Percentage of the Regular
Principal Distributable Amount for such Distribution Date and (ii) any
outstanding Certificate Principal Carryover Shortfall for the immediately
preceding Distribution Date; provided, however, that the Certificate Principal
Distributable Amount shall not exceed the Certificate Balance. Notwithstanding
the foregoing, the Certificate Principal Distributable Amount on the Certificate
Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the Certificates to
zero.
"CERTIFICATE RATE" means 6.07% per annum.
"CERTIFICATE REGISTER" shall have the meaning specified in the Trust
Agreement.
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"CERTIFICATEHOLDERS" shall have the meaning specified in the Trust
Agreement.
"CLASS" means all Notes whose form is identical except for variation in
denomination, principal amount or owner.
"CLASS A-1 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in March 2002.
"CLASS A-1 NOTE" means any Class A-1 Note in the form attached to the
Indenture as Exhibit C.
"CLASS A-1 RATE" means 5.60% per annum.
"CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE"means the Distribution Date
occurring in July 2003.
"CLASS A-2 NOTE" means any Class A-2 Note in the form attached to the
Indenture as Exhibit D.
"CLASS A-2 RATE" means 5.85% per annum.
"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 Exchange Act.
"CLOSING DATE" means September 11, 1998.
"COLLECTION ACCOUNT" means the account established and maintained as
such pursuant to Section 4.01.
"COLLECTION PERIOD" means, with respect to any Distribution Date, the
calendar month preceding the month in which such Distribution Date occurs;
provided that with respect to 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 Distribution Date. 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
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Financed Vehicle, and undertook to perform certain other obligations as
specified in such contract or agreement. Each Contract shall have been (i)
either (A) originated or purchased by a subsidiary of Onyx and subsequently
conveyed to Onyx and then conveyed by Onyx to the Seller pursuant to the
Purchase Agreement or (B) originated by a Dealer and assigned to Onyx in
accordance with the assignment provisions set forth therein and then conveyed by
Onyx to the Seller pursuant to the Purchase Agreement and (ii) in any case
subsequently conveyed by the Seller to the Issuer 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 certain of the
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; (c) any agreement(s) modifying the
Contract (including, without limitation, any extension agreement(s)); (d) any
signed agreement by an Obligor to provide insurance with Onyx listed as loss
payee and (e) any documents specifically relating to the Obligor or the Financed
Vehicle. The documents referred to above, other than the Contracts, to the
extent expressly permitted by the Insurer in writing, may be maintained in
microfiche or electronic form.
"CONTRACT FILES" means all papers and computerized records customarily
kept by the Servicer in 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 related Schedule of Contracts.
"CORPORATE TRUST OFFICE" means the principal office of the Indenture
Trustee at which at any particular time its corporate trust business shall be
administered, which office at the date of the execution of this Agreement is
located at 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention:
Structured Finance Services; or at such other address as the Indenture Trustee
may designate from time to time by notice to the Securityholders, the Insurer,
the Servicer and the Seller.
"CRAM DOWN LOSS" means, with respect to a Contract if a court of
appropriate jurisdiction in an insolvency proceeding shall have issued an order
reducing the amount owed on such Contract or otherwise modifying or
restructuring the scheduled payments to be made on such Contract, an amount
equal to (i) the excess of the Principal Balance of such Contract immediately
prior to such order over the Principal Balance of such Contract as so reduced
and/or (ii) if such court shall have issued an order reducing the effective rate
of interest on such Contract, the excess of the Principal Balance of such
Contract immediately prior to such order over the net present value (using as
the discount rate the higher of the annual percentage rate on such Contract or
the rate of interest, if any, specified by the court in such order) of the
scheduled payments as so modified or restructured. A Cram Down Loss shall be
deemed to have occurred on the date of issuance of such order.
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"CUSTODIAN" means Bankers Trust Company of California, N.A. until such
time, if any, a Successor Custodian is appointed and thereafter means such
Successor Custodian.
"CUT-OFF DATE" means September 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 a Servicer Default.
"DEFAULTED CONTRACT" means, with respect to any Collection Period, a
Contract (i) which is, at the end of such Collection Period, delinquent in the
amount of at least 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 AMOUNT" means as of any Distribution Date, the amount by
which (i) the sum of the amounts set forth in Section 4.03(a)(i) though (v) and
(vii) with respect to such Distribution Date exceeds (ii) the amount of Net
Collections available with respect to such Distribution Date and the amount on
deposit in the Spread Account as of such Distribution Date.
"DEFICIENCY NOTICE" means, with respect to any Distribution Date, the
notice delivered pursuant to Section 4.02(c) by the Servicer to the Indenture
Trustee, with a copy to the Insurer and the Trust Agent.
"DEFINITIVE SECURITIES" means Notes and/or Certificates issued in fully
registered, certificated form to Securityholders.
"DEPOSITOR" means the Seller in its capacity as Depositor under the
Trust Agreement, and its successors.
"DISTRIBUTION DATE" means the 15th day of each month or if such date
shall not be a Business Day, the following Business Day, commencing on October
15, 1998.
"DISTRIBUTION DATE STATEMENT" shall have the meaning specified in
Section 3.09(a).
"DUE DATE" means, as to any Contract, the date upon which an installment
of Monthly P&I is due.
"ELIGIBLE ACCOUNT" means (i) a trust account that is either (a)
maintained by the Indenture 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 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
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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 Notes 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 Indenture Trustee or the Owner 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 Indenture 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 Indenture Trustee and the Owner 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;
(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 Indenture Trustee, the
Owner Trustee or any of their respective Affiliates is investment manager or
advisor; and
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(g) such other obligations or securities acceptable to the Insurer, as
evidenced by a letter from the Insurer to the Indenture Trustee (which
acceptability may be revoked at any time by the Insurer).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FINAL SCHEDULED DISTRIBUTION DATE" means with respect to (i) the Notes,
the Class A-1 Final Scheduled Distribution Date or the Class A-2 Final Scheduled
Distribution Date, as the case may be, and (ii) the Certificates, the
Certificate Final Scheduled Distribution Date.
"FINANCED VEHICLE" means, as to any Contract, an automobile, light-duty
truck or van, together with all accessions thereto, securing the related
Obligor's indebtedness under such Contract.
"XXXXX" means Onyx Acceptance Financial Corporation, and its successors
in interest.
"FISCAL AGENT" shall have the meaning set forth in the Policy.
"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
Principal 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 Indenture Trustee of the Purchase
Amount of such Contract in connection with the purchase of such Contract
pursuant to Section 2.03, or payment by the Servicer of the Purchase Amount of
such Contract in connection with the purchase of such Contract pursuant to
Section 3.07 or the purchase of all Contracts pursuant to Section 8.01.
"HOLDER" means, with respect to a (i) Certificate, the Person in whose
name such Certificate is registered in the Certificate Register and (ii) Note,
the Person in whose name such Note is registered in the Note Register.
"INDEMNIFICATION AGREEMENT" shall have the meaning specified in the
Insurance Agreement.
"INDENTURE" means the Indenture, dated as of the date hereof, between
the Issuer and the Indenture Trustee.
"INDENTURE TRUSTEE" means The Chase Manhattan Bank, not in its
individual capacity but solely as the Indenture Trustee under the Indenture, its
successors in interest and any successor Indenture Trustee under the Indenture.
"INSOLVENCY PROCEEDING" shall have the meaning specified in Section
7.05.
"INSURANCE AGREEMENT" means the Insurance and Reimbursement Agreement,
to be dated as of the Closing Date, among the Insurer, the Seller, Onyx and the
Servicer, as amended, modified or restated from time to time.
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"INSURER" means MBIA Insurance Corporation or its successors in
interest.
"INSURER DEFAULT" means the occurrence and continuance of any of the
following:
(i) the Insurer shall have failed to make a payment required to
be made under the Policy in accordance with its terms;
(ii) the Insurer shall have (a) filed a petition or commenced
any case or proceeding under any provision or chapter of the United
States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization, (b) made a general assignment for the benefit of its
creditors or (c) had an order for relief entered against it under the
United States Bankruptcy Code or any other similar federal or state law
relating to insolvency, bankruptcy, rehabilitation, liquidation or
reorganization which is final and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered
a final and nonappealable order, judgment or decree (a) appointing a
custodian, trustee, agent or receiver for the Insurer or for all or any
material portion of its property or (b) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Insurer (or
the taking of possession of all or any material portion of the property
of the Insurer).
"INTEREST ACCRUAL PERIOD" means, with respect to any Distribution Date,
the period from and including the Distribution Date immediately preceding such
Distribution Date (or, in the case of the first Distribution Date, from and
including the Closing Date) to but excluding such Distribution Date.
"INTEREST RATE" means the Class A-1 Rate or the Class A-2 Rate, as the
case may be.
"ISSUER" means Onyx Acceptance Owner Trust 1998-B and its successors.
"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 respective Contract by operation of law.
"LIQUIDATED CONTRACT" means a Contract that (i) is the subject of a Full
Prepayment; (ii) is a Defaulted Contract with respect to which Liquidation
Proceeds constituting, in the Servicer's reasonable judgment, the final amounts
recoverable have been received and deposited in the Collection Account; (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 as 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.
"LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Servicer in connection
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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 proceeds paid
by any insurer under a comprehensive and collision insurance policy related to
the Contract. Liquidation Expenses shall not include any late fees or other
administrative fees and expenses or similar charges collected with respect to a
Contract.
"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 3.02.
"MONTHLY P&I" means, with respect to any Contract, the amount of each
monthly installment 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 COLLECTIONS" 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 4.02(a), (ii) amounts
withdrawn from the Payahead Account pursuant to Section 4.01(b) and deposited in
the Collection Account with respect to such Distribution Date, and (iii) the
aggregate Purchase Amount for Purchased Contracts deposited in or credited to
the Collection Account pursuant to Section 4.02(a) on the Business Day preceding
the Servicer Report Date next preceding such Distribution Date.
"NET INSURANCE PROCEEDS" means, with respect to any Contract, proceeds
paid by any insurer under a comprehensive and collision insurance policy related
to such Contract (other than funds used for the repair of the related Financed
Vehicle or otherwise released by Onyx to the related Obligor in accordance with
normal servicing procedures), after reimbursement to the Servicer of expenses
recoverable under such policy.
"NET LIQUIDATION PROCEEDS" means the amount derived by subtracting from
the Liquidation Proceeds of a Contract the related Liquidation Expenses.
"NET YIELD" means, on any day, the percentage equivalent of (a) four
multiplied by (b) a fraction the numerator of which is equal to (i) the
aggregate of all interest collected on Contracts during the three immediately
preceding Collection Periods minus (ii) the sum of (A) the aggregate outstanding
principal balances of Contracts which became Liquidated Contracts other than by
virtue
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of a Full Prepayment during such three Collection Periods (less any Net
Liquidation Proceeds received with respect to such Liquidated Contracts during
such three Collection Periods) and (B) interest paid to the Securityholders and
the Servicing Fees paid to the Servicer during such three Collection Periods,
and the denominator of which is equal to the average of the Pool Balances as of
the last day of each of such three immediately preceding Collection Periods.
"NOTE" means a Class A-1 Note or a Class A-2 Note.
"NOTE DISTRIBUTABLE AMOUNT" means, with respect to any Distribution
Date, the sum of the Note Principal Distributable Amount and the Note Interest
Distributable Amount for such Distribution Date.
"NOTE DISTRIBUTION ACCOUNT" means the account established and maintained
as such pursuant to Section 4.01.
"NOTE FINAL SCHEDULED DISTRIBUTION DATE" means the Class A-1 Final
Scheduled Distribution Date or the Class A-2 Final Scheduled Distribution Date,
as the case may be.
"NOTEHOLDER" shall mean any Holder of a Note.
"NOTE INTEREST CARRYOVER SHORTFALL" means, with respect to any
Distribution Date and a Class of Notes, the excess, if any, of the Note Interest
Distributable Amount for such Class for the immediately preceding Distribution
Date over the amount in respect of interest that is actually deposited in the
Note Distribution Account with respect to such Class on such preceding
Distribution Date, plus, to the extent permitted by applicable law, interest on
the amount of interest due but not paid to Noteholders of such Class on the
preceding Distribution Date at the related Interest Rate for the related
Interest Accrual Period; provided, however, that the Note Interest Carryover
Shortfall for the first Distribution Date shall be zero.
"NOTE INTEREST DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date and a Class of Notes, the sum of (i) an amount equal to the
interest accrued during the related Interest Accrual Period at the related
Interest Rate for such Class of Notes on the outstanding principal amount of
such Class of Notes on the immediately preceding Distribution Date, after giving
effect to all payments of principal to Noteholders of such Class on or prior to
such Distribution Date (or, in the case of the first Distribution Date, on the
original principal amount of such Class of Notes) and (ii) the Note Interest
Carryover Shortfall for such Class of Notes for such Distribution Date.
"NOTE PERCENTAGE" means (i) for each Distribution Date prior to the
Distribution Date on which the principal amount of all of the Notes is reduced
to zero, 100%; (ii) for the Distribution Date on which the principal amount of
all of the Notes is reduced to zero, (a) 100% until the principal amount of all
of the Notes has been reduced to zero and (b) with respect to any remaining
portion of the Regular Principal Distributable Amount, 0%; and (iii) for each
Distribution Date after the principal amount of all of the Notes has been
reduced to zero, 0%.
"NOTE POOL FACTOR" means, with respect to any Class of Notes as of any
Distribution Date, a six-digit decimal figure equal to the outstanding principal
amount of such Class of Notes (after
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giving effect to any reductions thereof to be made on such Distribution Date)
divided by the original outstanding principal amount of such Class of Notes.
"NOTE PRINCIPAL CARRYOVER SHORTFALL" means, as of the close of business
on any Distribution Date, the excess of the Note Principal Distributable Amount
for such Distribution Date over the amount in respect of principal that is
actually deposited in the Note Distribution Account on such Distribution Date.
"NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) the Note Percentage of the Regular Principal
Distributable Amount for such Distribution Date, (ii) the Accelerated Principal
Distributable Amount, if any, for such Distribution Date and (iii) any
outstanding Note Principal Carryover Shortfall for the immediately preceding
Distribution Date; provided, however, that the Note Principal Distributable
Amount shall not exceed the aggregate outstanding principal amount of the Notes.
Notwithstanding the foregoing, the Note Principal Distributable Amount on each
Note Final Scheduled Distribution Date shall not be less than the amount that is
necessary to reduce the outstanding principal amount of the related class of
Notes to zero.
"NOTE REGISTER" shall have the meaning specified in the Indenture.
"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
co-purchasers of the Financed Vehicle and 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 Indenture Trustee, the
Owner Trustee or the Trust Agent, as the case may be, and the Insurer.
"ORIGINAL CERTIFICATE BALANCE" means $12,500,285.
"ORIGINAL POOL BALANCE" means $250,000,285, which is the aggregate of
the Principal Balances of the Contracts as of the Cut-Off Date.
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"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 pursuant to Section 2.03, 3.07 or 8.01.
"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.
"OWNER TRUSTEE" means Bankers Trust (Delaware), not in its individual
capacity but solely as the Owner Trustee under the Trust Agreement acting on
behalf of the Certificateholders, its successors in interest and any successor
Owner Trustee under the Trust Agreement.
"OWNER TRUSTEE CORPORATE TRUST OFFICE" means the principal office of the
Owner Trustee at which at any particular time its corporate trust business shall
be administered, which office at the date of the execution of this Agreement is
located at E.A. Delle Donne Corporate Center, 0000 Xxxxxx Xxxx, Xxxxx 000,
Xxxxxxxxxx, Xxxxxxxx 00000-0000, Attention: Corporate Trust Administration; or
at such other address as the Owner Trustee may designate from time to time by
notice to the Securityholders, the Insurer, the Servicer and the Seller.
"PAYAHEAD ACCOUNT" means the account established and maintained as such
pursuant to Section 4.01.
"PAYMENT ACCOUNT" means the account established and maintained as such
pursuant to Section 4.01.
"PAYING AGENT" means (i) with respect to the Notes, the Person acting as
the "Paying Agent" under the Indenture and (ii) with respect to the
Certificates, the Person acting as the "Paying Agent" under the Trust Agreement,
the Trust Agent or any other Person that meets the eligibility standards for the
Paying Agent specified in the Trust Agreement and is authorized by the Issuer to
make the distributions from the Certificate Distribution Account, including
distributions of principal of or interest on the Certificates on behalf of the
Issuer.
"PERCENTAGE INTEREST" shall have the meaning specified in Section
4.04(d).
"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" means the financial guarantee insurance policy for the
Securities, number 27446 dated September 11, 1998 and issued by the Insurer to
the Indenture Trustee, guaranteeing payment of any Policy Claim Amount, the form
of which is attached hereto as Exhibit B.
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"POLICY AMOUNT" means, with respect to any Distribution Date, the sum of
(a) in the case of the first Distribution Date, the initial aggregate principal
amount of the Notes and the Certificates, or in the case of any Distribution
Date thereafter, the aggregate principal amount of the Notes and the
Certificates outstanding on the immediately preceding Distribution Date (after
giving effect to the payments and distributions of principal on the Notes and
the Certificates on such preceding Distribution Date), (b) the amount of
interest payable in respect of the Notes and the Certificates on such
Distribution Date and (c) the Servicing Fee payable on such Distribution Date.
"POLICY CLAIM AMOUNT" means, with respect to each Distribution Date, sum
of (i) the Deficiency Amount for such Distribution Date and (ii) the Preference
Amount for such Distribution Date.
"POOL BALANCE" as of the time of determination means the aggregate of
the Principal Balances of the Contracts, exclusive of the Principal Balances of
all Contracts that are not Outstanding at the end of the Collection Period
ending immediately prior to such time of determination.
"POTENTIAL PREFERENCE PARTIES" shall have the meaning specified in
Section 4.04(d).
"PREFERENCE AMOUNT" means any amount previously distributed to an Owner
in respect of the Securities that is recoverable and sought to be recovered as a
voidable preference by a trustee in bankruptcy pursuant to the United Stated
Bankruptcy Code (11 U.S.C.), as amended from time to time, in accordance with a
final nonappealable order of a court having competent jurisdiction.
"PREFERENCE CLAIM" shall have the meaning specified in Section 7.05.
"PREMIUM" shall have the meaning specified in the Insurance Agreement.
"PRINCIPAL BALANCE" means, with respect to a Contract, as of any date,
the Amount Financed under the terms of such Contract minus (i) that portion of
Monthly P&I in respect of such Contract received on or prior to the end of the
most recently ended Collection Period and allocable to principal as determined
by the Servicer and (ii) any Cram Down Loss incurred in respect of such Contract
on or prior to the end of the most recently ended Collection Period. For
purposes of this definition, allocations of Monthly P&I on each Contract by the
Servicer shall be made in accordance with the terms of such Contract, in the
case of a Simple Interest Contract, or in accordance with the Recomputed
Actuarial Method, in the case of a Rule of 78's Contract.
"PURCHASE AGREEMENT" means the Amended and Restated Sale and Servicing
Agreement dated as of September 4, 1998 between Onyx, as seller, and the Seller,
as purchaser, as such agreement may have been or may be modified, supplemented
or amended from time to time.
"PURCHASE AMOUNT" means, with respect to a Purchased Contract, the
Principal Balance of such Contract as of the date of purchase of such Contract
plus interest on such Contract through the date of such purchase, to the extent
not previously collected.
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"PURCHASED CONTRACT" means a Contract that (i) has been purchased by the
Servicer or the Seller because of certain material defects in documents related
to such Contract or certain breaches of representations and warranties regarding
such Contract made by the Seller in this Agreement that materially and adversely
affect the interests of the Securityholders or the Insurer, (ii) has been
purchased by the Servicer because of certain breaches of servicing covenants or
(iii) has been purchased by the Servicer in the event of an optional purchase of
all of the Contracts pursuant to Section 8.01
"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 Principal 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 a Class of Notes or the
Certificates and any Distribution Date, the Business Day immediately preceding
such Distribution Date or, if Definitive Securities are issued, 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.
"REGULAR PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the amount equal to the sum of the following amounts with
respect to the related Collection Period: (i) collections received on Contracts
(other than Liquidated Contracts and Purchased Contracts) allocable to principal
as determined by the Servicer, including full and partial principal prepayments
(other than partial prepayments on Rule of 78's Contracts representing principal
not due in such Collection Period which are deposited in the Payahead Account in
accordance with this Agreement), (ii) the Principal Balance of all Contracts
(other than Purchased Contracts) that became Liquidated Contracts during the
related Collection Period, (iii) the portion of the Purchase Amount allocable to
principal of all Contracts that became Purchased Contracts as of the immediately
preceding Record Date and (iv) the aggregate amount of Cram Down Losses incurred
during the related Collection Period.
"REPAYMENT AMOUNT" shall have the meaning specified in the Insurance
Agreement.
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"RESIDUAL INTEREST" means the residual interest in the Trust, which
represents the right to the amount remaining, if any, after all prior
distributions have been made under this Agreement, the Indenture and the Trust
Agreement on each Distribution Date and certain other rights to receive amounts
hereunder and under the Trust Agreement.
"RESPONSIBLE OFFICER" means any officer of the Indenture Trustee within
the Corporate Trust Office including any vice president, assistant vice
president, assistant treasurer, assistant secretary or any other officer of the
Indenture Trustee customarily performing functions similar to those performed by
any of the above designated officers with direct responsibility for the
administration of this Agreement.
"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 or lists of Contracts attached as
Schedule I to this Agreement, which Contracts are being transferred to the Trust
as part of the Trust Property, together with supplemental data regarding the
contracts calculated by Xxxxxxx Xxxxx Xxxxxx Inc. 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 Indenture Trustee not later than the 5th Business Day following the Closing
Date.
"SECURITIES" means the Notes and the Certificates.
"SECURITYHOLDERS" means the Holders of the Notes and the Certificates.
"SELLER" means Onyx Acceptance Financial Corporation, in its capacity as
the Seller of the Contracts under this Agreement, and each successor thereto (in
the same capacity) pursuant to Section 5.02.
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"SERVICER" means Onyx in its capacity as the servicer of the Contracts
under Section 3.01, and, in each case upon succession in accordance herewith,
each successor servicer in the same capacity pursuant to Section 3.01 and each
successor servicer pursuant to Section 7.02.
"SERVICER DEFAULT" means an event specified in Section 7.01.
"SERVICER REPORT DATE" means, with respect to any Distribution Date, the
fifth Business Day prior to such 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 be an amount equal to
the product of one-twelfth of 1% per annum multiplied by the Pool Balance as of
the end of the Collection Period preceding the related Collection Period.
"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 Indenture Trustee by
the Servicer pursuant to Section 3.01, 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 established and maintained as such
pursuant to Section 4.01.
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"SPREAD ACCOUNT MAXIMUM" means, on any day, an amount equal to 2% of the
outstanding principal amount of the Securities as of the Cut-Off Date; provided,
however, that if the Net Yield is less than 2.5%, the Spread Account Maximum
shall be the greater of (a) 5% of the current aggregate outstanding amount of
the Securities and (b) 2% of the outstanding principal amount of the Securities
as of the Cut-Off Date; and provided further, however, that (i) if a Trigger
Event (as defined in the Insurance Agreement) has occurred and is continuing,
the Spread Account Maximum shall equal the Policy Amount with respect to such
Distribution Date, or (ii) if the Net Yield is less than 2% and a Trigger Event
shall not have occurred and be continuing, the Spread Account Maximum shall
equal greater of (x) twelve percent (12%) of the current aggregate outstanding
amount of the Securities with respect to such Distribution Date and (y) an
amount equal to 2% of the outstanding principal amount of the Securities as of
the Cut-Off Date. The foregoing notwithstanding, the Spread Account Maximum may
be calculated pursuant to any other formula as the parties to the Insurance
Agreement and the Rating Agencies may agree, and may include any other
provisions or contain any additional requirements as the parties to the
Insurance Agreement may agree, which the Rating Agencies may require to maintain
the ratings of the Securities, and to maintain the rating of the transactions
contemplated in the Insurance Agreement and this Agreement, without
consideration of the Policy, at not less than investment grade, as defined by
the Rating Agencies.
"STANDARD & POOR'S" means Standard & Poor's Ratings Services, a division
of The XxXxxx-Xxxx Companies, Inc., and its successors in interest.
"SUCCESSOR CUSTODIAN" shall have the meaning set forth in Section
2.04(b).
"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, the Title Document may consist of electronic evidence of ownership
on the Electronic Lien and Title system of the California Department of Motor
Vehicles.
"TRUST" means the Issuer.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise) and all proceeds of the foregoing.
"TRUST ACCOUNTS" shall have the meaning specified in Section 4.01(a).
"TRUST AGENT" means The Chase Manhattan Bank, not in its individual
capacity but solely as the Trust Agent under the Trust Agreement and this
Agreement acting on behalf of the Owner Trustee, its successors in interest, and
any successor Trust Agent under such agreements.
"TRUST AGENT OFFICE" means the principal office of the Trust Agent,
which office at the date of the execution of this Agreement is located at 000 X.
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, Attention: Structured Finance
Services; or at such other address as the Trust Agent may designate from time to
time by notice to the Securityholders, the Insurer, the Servicer and the Seller
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"TRUST AGREEMENT" means the Trust Agreement, dated as of September 1,
1998, among the Depositor, the Owner Trustee and the Trust Agent.
"TRUST PROPERTY" has the meaning set forth in Section 2.01 hereof.
"UCC" means the Uniform Commercial Code as in effect in the applicable
jurisdiction.
SECTION 1.02. 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 1.03. SECTION REFERENCES.
All section references, unless otherwise indicated, shall be to Sections
in this Agreement.
SECTION 1.04. CALCULATIONS.
Interest on the Notes and the Certificates will be calculated on the
basis of a 360-day year of twelve 30-day months. 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 Principal Balances
thereof, and collections of interest on Simple Interest Contracts will be
calculated in accordance with the terms thereof.
SECTION 1.05. 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 of America.
ARTICLE II
CONVEYANCE OF CONTRACTS;
REPRESENTATIONS AND WARRANTIES OF THE SELLER
SECTION 2.01. CONVEYANCE OF CONTRACTS.
(a) In consideration of the Issuer's delivery of the authenticated Notes
and Certificates to or upon the order of the Seller, effective upon the Closing
Date, the Seller hereby sells, grants, transfers, conveys and assigns to the
Issuer, without recourse (except as expressly provided in Section 2.03 hereof),
all of the right, title and interest of the Seller in, to and under:
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(i) the Contracts listed in the Schedule of Contracts;
(ii) all monies received under the Contracts on or after the
Cut-Off Date;
(iii) 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;
(iv) 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);
(v) the Trust Accounts and all amounts, financial assets and
investment property held therein or credited thereto, including, if
applicable, all Eligible Investments credited thereto (but excluding the
Payahead Account and all amounts, financial assets and investment
property held therein or credited thereto, including all Eligible
Investments credited thereto);
(vi) 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;
(vii) any and all security interests 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;
(viii) the Seller's right to proceeds under the Blanket
Insurance Policy with respect to the Contracts; and
(ix) 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.
The foregoing items of property listed in this Section 2.01, together
with the rights of the Indenture Trustee and the Owner Trustee under the Policy,
are collectively referred to as the "TRUST PROPERTY".
It is the intention of the Seller and the Issuer 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 Property (other than the
Spread Account and the Policy), conveying good title thereto free and clear of
any liens and encumbrances, from the Seller to the Issuer. 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 Issuer, for the benefit of the Securityholders and
the Insurer, a first priority perfected security interest in all of the Seller's
right,
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title and interest in the Trust Property whether now existing or hereafter
created 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) As of the Closing Date, the Issuer acknowledges the conveyance to it
of the Trust Property from the Seller, including all right, title and interest
of the Seller in and to the Trust Property, receipt of which is hereby
acknowledged by the Issuer. Concurrently with such delivery and in exchange
therefor, the Issuer has pledged to the Indenture Trustee, for the benefit of
the Securityholders and the Insurer, the Trust Property and the Indenture
Trustee, pursuant to the written instructions of the Issuer, has executed and
caused to be authenticated and delivered the Notes to the Seller or its
designee, upon the order of the Issuer. In addition, concurrently with such
delivery and in exchange therefor, the Owner Trustee, pursuant to the
instructions of the Seller, has executed (not in its individual capacity, but
solely as Owner Trustee on behalf of the Issuer) and caused to be authenticated
and delivered the Certificates to the Seller or its designee, upon the order of
the Seller.
(c) 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 a UCC-1 financing statement naming Onyx as debtor,
naming the Seller as secured party and including the Contracts in the
description of the collateral. In connection with the sale of the Contracts
pursuant to this Agreement, the Seller has filed or caused to be filed with the
Secretary of State of the State of California a UCC-1 financing statement naming
the Seller as debtor, naming the Issuer as secured party, naming the Indenture
Trustee, on behalf of the Noteholders, as assignee, and including the Contracts
in the description of the collateral. In connection with the pledge of the
Contracts pursuant to the Indenture, the Trust has filed with the offices of the
Secretary of State of the State of Delaware UCC-1 financing statements naming
the Trust as debtor and the Indenture Trustee, on behalf of the Noteholders and
the Insurer, as secured party. The grant of a security interest to the Indenture
Trustee and the rights of the Indenture Trustee in the Contracts shall be
governed by the Indenture.
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.
(d) From time to time, the Servicer shall cause to be taken such actions
as are necessary to continue the perfection of the respective interests of the
Trust and the Indenture Trustee in the Contracts and to continue the first
priority security interest of the Indenture Trustee 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.
(e) If any change in the name, identity or corporate structure of the
Seller or Onyx or the relocation of the chief executive office of either of them
would make any financing or continuation statement or notice of lien filed under
this Agreement or the other Basic Documents 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
Trust, the Indenture Trustee, the
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Securityholders and the Insurer in the Contracts, the related Financed Vehicles
and the proceeds thereof. Promptly thereafter, the Servicer shall deliver to the
Trust, the Indenture Trustee and the Insurer an Opinion of Counsel stating that,
in the opinion of such counsel, all financing statements or amendments necessary
fully to preserve and protect the interests of the Trust, the Indenture Trustee,
the Securityholders and the Insurer in the Contracts, the related Financed
Vehicles and the proceeds thereof have been filed, and reciting the details of
such filings.
(f) 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.
(g) The Servicer shall pay all reasonable costs and disbursements in
connection with the perfection and the maintenance of perfection, as against all
third parties, of the Indenture Trustee's right, title and interest in and to
the Contracts and in connection with maintaining the first priority security
interest (subject to the security interest of the Insurer pursuant to the
Insurance Agreement) in the Financed Vehicles and the proceeds thereof.
SECTION 2.02. REPRESENTATIONS AND WARRANTIES OF THE SELLER.
The Seller hereby makes the following representations and warranties on
which (i) the Issuer is deemed to have relied in acquiring the Contracts and
(ii) the Insurer is deemed to have relied in issuing the Policy. Such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date, but shall survive the sale, transfer and
assignment of the Contracts to the Issuer and the pledge thereof to the
Indenture Trustee pursuant to the Indenture.
(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 Issuer and has duly authorized such
sale and assignment to the Issuer 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
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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.
(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
pursuant to the Basic Documents to which the Seller is a party); 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.
(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, the Notes or the
Certificates, (B) seeking to prevent the issuance of the Notes or 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,
the Notes or the Certificates, or (D) naming the Seller which might
adversely affect the federal income tax attributes of the Notes or 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 Principal
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
or a subsidiary 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 in accordance with the UCC); such security
interest had been assigned by Onyx to the Seller pursuant to the
Purchase
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Agreement, and, as of the Closing Date, has been assigned by the Seller
to the Issuer pursuant to Section 2.01(a) 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 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 Indenture Trustee on behalf of the Securityholders and
the Insurer 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 Issuer pursuant to Section 2.01 free of liens, claims, encumbrances
and rights of others and, upon transfer of such Contract to the Issuer
pursuant to Section 2.01, the Issuer 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.
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(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.
(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
Issuer and the receipt of interest by the Securityholders, 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 so long as such insurance policy is in effect.
(xiv) [RESERVED].
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(xv) 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) 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.
(xvi) 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.
(xvii) 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.
(xviii) There is only one original of such Contract and such
original, together with all other related Contract Documents, is being
held by the Custodian; provided, however, that upon the execution by the
Indenture Trustee and the Trust with the prior written consent of the
Insurer of a letter agreement revocably appointing the Servicer as
Successor Custodian in accordance with Section 2.04, such original
Contracts together with all other Contract Documents may be held by the
Servicer. (xix) As of the Closing Date, the Servicer has clearly marked
its electronic records to indicate that such Contract is owned by the
Issuer.
(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.
(xxii) 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;
(xxiii) The first payment under such Contract is due on or
before October 15, 1998.
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(xxiv) As of the Cut-Off Date, such Contract has a remaining
principal balance of at least $500.
(xxv) As of the Cut-Off Date, such Contract is secured by a
Financed Vehicle that has not been repossessed without reinstatement.
(xxvi) The related Obligor(s) were located in either Arizona,
California, Colorado, Connecticut, Florida, Georgia, Idaho, Illinois,
Indiana, Iowa, Kentucky, Maryland, Massachusetts, Michigan, Missouri,
Montana, Nevada, New Jersey, New York, Oklahoma, Oregon, Tennessee,
Texas, Utah, Virginia or Washington on the date of origination of such
Contract;
(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.
(ii) As of the Cut-Off Date, approximately 18.13% of the
Outstanding Principal Balance of all Contracts is attributable to loans
involving new Financed Vehicles, and approximately 81.87% of the
Outstanding Principal Balance of all Contracts is attributable to loans
involving 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 Property (other than the Policy and the Spread
Account) hereunder to the Issuer in any manner other than as a sale of the Trust
Property (other than the Policy and the Spread Account) by it to the Issuer, and
the Seller has not in any other non-income tax respect (including, but not
limited to, for accounting purposes) accounted for or treated the transfer of
the Trust Property (other than the Policy and the Spread Account ) hereunder in
any manner other than as a sale and absolute assignment to the Issuer of the
Seller's full right, title and ownership interest in the Trust Property (other
than the Policy and the Spread Account) to the Issuer.
SECTION 2.03. REPURCHASE OF CERTAIN CONTRACTS.
The representations and warranties of the Seller set forth in Section
2.02 shall survive the Closing Date and shall continue until the termination of
this Agreement. Upon discovery by the Seller, the Servicer, the Insurer or a
Responsible Officer of the Owner Trustee, the Indenture Trustee or the Trust
Agent that any of such representations and 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
Custodian, 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 Noteholders, the Certificateholders, the
Indenture Trustee, the Issuer or the Insurer,
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the Seller shall cure the defect or eliminate or otherwise cure the
circumstances or condition in respect of which such 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 Servicer, the
Insurer or the Indenture Trustee of such defect, incorrectness or omission, it
shall repurchase such Contract on the last day of the applicable Collection
Period from the Issuer at the Purchase Amount. Upon any such purchase, the
Issuer 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 Issuer, the Indenture
Trustee or the Securityholders with respect to a breach of the Seller's
representations and warranties pursuant to Section 2.02 shall be to require the
Seller to repurchase Contracts pursuant to this Section; provided, however, that
the Seller shall indemnify the Owner Trustee, the Trust Agent, the Indenture
Trustee, the Insurer, the Issuer and the Securityholders 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 2.04. CUSTODY OF CONTRACT FILES.
(a) Duties of Custodian. The Custodian shall:
(i) maintain continuous custody of the Contract Documents in
secure and fire resistant facilities in accordance with customary
standards for such custody. Such Contract Documents shall be segregated
to show the Issuer as owner thereof and the Indenture Trustee as the
pledgee thereof, unless the Insurer has waived the requirement for such
segregation by notice in writing to the Indenture Trustee, the Custodian
and the Servicer.
(ii) with respect to the Contract Documents, (A) act exclusively
as the Custodian for the benefit of the Indenture Trustee and (B) hold
all Contract Documents for the exclusive use (notwithstanding Sections
2.04(a)(iii) and 2.04(a)(iv) below) and for the benefit of the Indenture
Trustee.
(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. 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,
the Indenture Trustee and the Insurer to examine the Contract Documents
in the possession, or under the control, of the Custodian.
(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
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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, Bankers Trust
Company of California, N.A. shall be the Custodian of the Contract Documents;
provided, however, that upon the execution by the Indenture Trustee, the Issuer
(or, if the Notes have been paid in full and the Indenture has been satisfied
and discharged, the Issuer alone) and the Servicer 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 and bailee for the Indenture Trustee (or, if
applicable, the Trust) 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 and bailee for
the Indenture Trustee (or, if applicable, the Trust).
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 Issuer as the owner of, and
the Indenture Trustee as 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 Indenture Trustee, the Issuer and the
Servicer, such file area may contain contract documents for other installment
sales contracts serviced by the Servicer.
SECTION 2.05. DUTIES OF SERVICER RELATING TO THE CONTRACTS.
(a) Safekeeping. The Servicer, in its capacity as servicer, shall hold
the Contract Files and any Contract Documents held by it in accordance with this
Agreement on behalf of the Issuer, the Indenture Trustee and the Insurer for the
use and benefit of all present and future Securityholders, and maintain such
accurate and complete accounts, records and computer systems pertaining to each
Contract File as shall enable the Issuer 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 owns or services for itself or others. The Servicer shall (i) conduct,
or cause to be conducted, periodic physical inspections of the Contract Files
(and the Contract Documents, if the Servicer is acting as Custodian) held by it
under this Agreement and of the related accounts, records and computer systems;
(ii) maintain the Contract Files (and the Contract Documents, if the Servicer is
acting as Custodian) in such a manner as shall enable the Issuer, the Indenture
Trustee and the Insurer to verify the accuracy of the Servicer's record keeping;
(iii) promptly report to the Issuer, the Indenture Trustee and the Insurer any
failure on its part to hold the Contract Files (and the Contract Documents, if
the Servicer is acting as Custodian) and maintain its accounts, records and
computer systems as herein provided and (iv) promptly take appropriate action to
remedy any such failure.
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(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 9.04,
or at such other location as shall be specified to the Issuer, the Indenture
Trustee and the Insurer by 30 days' prior written notice. The Servicer shall
permit the Issuer, the Indenture Trustee and the Insurer or their respective
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 such Persons may request.
(c) Release of Documents. If the Servicer is acting as Custodian
pursuant to Section 2.04, upon instruction from the Indenture Trustee (a copy of
which shall be furnished to the Issuer and the Insurer), the Servicer shall
release any document in the Contract Files to the Indenture Trustee, the
Indenture Trustee's agent, or the Indenture Trustee's designee, as the case may
be, at such place or places as the Indenture Trustee may designate, as soon as
practicable.
(d) Monthly Reports. On the Servicer Report Date of each month,
commencing with the month next succeeding the month of the Closing Date, the
Servicer shall deliver to the Issuer, the Indenture Trustee and the 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 subsection (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 4.02; (iv) 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 Purchase Amount has been deposited in or credited to
the Collection Account in accordance with Section 2.03, 3.07 or 4.02; (v) 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 4.02; and (vi) that the Indenture 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
Indenture Trustee, the Issuer and the Insurer (i) within 60 days of the Closing
Date, a schedule of Title Documents for Financed Vehicles 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 for Financed Vehicles which, as of the date prior to such
delivery, do not show 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 Issuer 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 2.04 and 2.05
hereof and the Appointment of Custodian, the Custodian on behalf of the
Indenture Trustee and the Insurer shall
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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 2.06. INSTRUCTIONS; AUTHORITY TO ACT.
The Servicer shall be deemed to have received proper instructions (a
copy of which shall be furnished to the Issuer and the Insurer) with respect to
the Contract Files upon its receipt of written instructions signed by a
Responsible Officer of the Indenture Trustee.
SECTION 2.07. INDEMNIFICATION.
Subject to Section 7.02, the Servicer shall indemnify the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and the Securityholders 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 by or asserted against the Issuer, the Owner Trustee, the Trust Agent,
the Indenture Trustee, the Insurer, the Custodian or the Securityholders as the
result of any improper 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 to the Owner Trustee, the Trust Agent, the Indenture Trustee, the
Custodian or the Insurer for any portion of any such amount resulting from the
willful misfeasance, bad faith or negligence of the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Custodian or the Insurer, respectively. The
Servicer shall also indemnify and hold harmless the Issuer, the Trust Property,
the Securityholders, the Custodian and the Insurer 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 (i) immediately notify the
Issuer and the Indenture Trustee if a claim is made by a third party with
respect to the Contracts, (ii) assume, with the consent of the Issuer, the
Indenture Trustee and the Insurer, the defense of any such claim, (iii) pay all
expenses in connection therewith, including counsel fees, and (iv) promptly pay,
discharge and satisfy any judgment or decree which may be entered against the
Servicer, the Issuer, the Owner Trustee, the Trust Agent, the Indenture Trustee,
the Insurer, the Custodian or the Securityholders with respect to such
Contracts.
SECTION 2.08. EFFECTIVE PERIOD AND TERMINATION.
The appointment of Bankers Trust Company of California, N.A. 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 or (ii) the Certificate Final Scheduled Distribution Date. If Onyx
shall become the Custodian pursuant to the execution of an Appointment of
Custodian and shall subsequently resign as Servicer in accordance with the terms
of this Agreement or if all of the rights and obligations of the Servicer shall
have been terminated pursuant to Section 7.01, any appointment of the Servicer
as Custodian may be terminated by the Insurer, or if an Insurer Default has
occurred and is continuing, (i) if the Notes have not been paid in full, by the
holders of Notes evidencing not less than 25% of the outstanding principal
amount of the Notes, acting together as
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a single class, or by the Indenture Trustee or (ii) if the Notes have been paid
in full, by the holders of Certificates evidencing not less than 25% of the
outstanding principal amount of the Certificates. As soon as practicable after
any termination of such appointment, Onyx as Custodian and Onyx as Servicer
shall, at the Servicer's expense, deliver or cause the delivery of all Contract
Documents and all Contract Files (including those held in microfiche or
electronic form) to the Indenture Trustee or its agent (or, if the Indenture has
been satisfied and discharged, as directed by the Trust, with the consent of the
Issuer) at such place or places as the applicable party 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, deliver the Contract Documents to the Indenture
Trustee in the event that such delivery is required by any Rating Agency to
consider the Securities investment grade without consideration of the Policy.
SECTION 2.09. 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 Issuer 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
Issuer or any substantial part of its property, or ordering the winding up or
liquidation of the affairs of the Issuer.
(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 Custodian 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 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 2.02(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 2.03.
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ARTICLE III
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 3.01. 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 3.02 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 Indenture Trustee, the Issuer and the
Insurer with respect to distributions and the preparation of U.S. Partnership
Tax Returns (Form 1065) for the Owner Trustee to sign and file on an annual
basis, based on a tax year for the Issuer 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
when 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
Indenture Trustee and the Issuer to execute and deliver, on behalf of itself,
the Issuer, the Insurer, the Noteholders, the Certificateholders, the Indenture
Trustee, the Issuer 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
Issuer 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 Owner
Trustee, the Trust Agent, the Indenture Trustee and the Insurer 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 Owner Trustee, the Trust
Agent, the Indenture 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
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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.
Subject to Section 4.02(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 Property and the Servicer agrees to act as custodian and bailee of the
Indenture Trustee, the Issuer and the Insurer in holding such monies and
collections. The Servicer agrees, for the benefit of the Indenture Trustee, the
Issuer, the Securityholders 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 Indenture Trustee, the Issuer 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 9.04 or, upon 15 days' notice to the Issuer, the Indenture Trustee and
the Insurer, at such other place where the servicing offices of the Servicer are
located, and shall give the Issuer, the Indenture Trustee and the Insurer access
to all data (including, without limitation, computerized title records) at all
reasonable times, and, while a Servicer Default shall be continuing, the
Servicer shall, on demand of the Issuer, the Indenture Trustee or the Insurer
deliver or cause to be delivered to the Issuer, the Indenture Trustee or the
Insurer, as the case may be, 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
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required to be deposited in or credited to the Collection Account or
the Payahead Account, as the case may be.
All deposits made by the Servicer in any Trust Account shall be made in
immediately available funds.
The Servicer shall be responsible for the payment of the fees of the
Indenture Trustee, the Owner Trustee and the Trust Agent; provided that any such
fees not paid as of a Distribution Date shall be paid as provided in Section
4.03(a)(ii).
SECTION 3.02. 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 120 days past the
originally scheduled date of the last payment on such Contract and in no event
beyond the Certificate Final Scheduled 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 3.03. REALIZATION UPON CONTRACTS.
The Servicer shall use its best efforts, consistent with the servicing
standard specified in Section 3.01, 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
Issuer or the Indenture Trustee or on behalf of the Issuer or the Indenture
Trustee. 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 or under an insurance reserve established
by the Servicer. The Servicer shall be responsible for all other costs and
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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 4.02.
SECTION 3.04. INSURANCE.
The Servicer shall cause to be maintained the Blanket Insurance Policy,
and the Servicer shall cause the Indenture Trustee to be the named payee
thereunder with respect to the Contracts; provided, however, that this
obligation may be eliminated or modified in any manner (and this Agreement shall
be amended in accordance with any such elimination or modification as the
parties to the Insurance Agreement and the Rating Agencies may agree) with the
consent of the Insurer but without any requirement to obtain the consent of any
Noteholders or Certificateholders.
SECTION 3.05. 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 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 Issuer and the Indenture Trustee each hereby authorize
the Servicer to take such steps as are necessary to re-perfect such security
interest on behalf of the Issuer 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 Issuer and the subsequent pledge thereof by the Issuer to the Indenture
Trustee is insufficient, without a notation on the related Financed Vehicle's
certificate of title (or, if applicable, 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 Issuer a perfected security interest in the
related Financed Vehicle and to pledge such perfected security interest to the
Indenture Trustee, Onyx hereby agrees that the identification of Onyx or a
subsidiary of Onyx as the secured party on the certificate of title (or, if
applicable, in the case of the State of California, the electronic title record)
is deemed to be in its capacity as agent of the Indenture Trustee and further
agrees to hold such certificate of title (or, if applicable, in the case of the
State of California, the electronic title record) as the Indenture Trustee's
agent and custodian; provided that, except as provided in Section 7.01 and the
Insurance Agreement, neither the Servicer nor Onyx shall make, nor shall the
Issuer or Securityholders have the right to require that the Servicer or Onyx
make, any such notation on the related Financed Vehicles' certificate of title
(or, if applicable, 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.
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SECTION 3.06. COVENANTS, REPRESENTATIONS AND WARRANTIES OF SERVICER.
The Servicer hereby makes the following covenants, representations and
warranties on which (i) the Issuer is deemed to have relied in acquiring the
Contracts and (ii) the Insurer is deemed to have relied in issuing the Policy.
Such covenants, representations and warranties speak as of the execution and
delivery of this Agreement and as of the Closing Date, but shall survive the
sale, transfer and assignment of the Contracts to the Issuer and the pledge
thereof to the Indenture Trustee pursuant to the Indenture.
(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
Securityholders or the Insurer 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
3.02.
(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:
(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
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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
hereof by the Issuer, the Trust Agent and the Indenture 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.
(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 3.07. PURCHASE OF CONTRACTS UPON BREACH OF COVENANT.
The Servicer or the Issuer shall inform the other party and the
Indenture Trustee and the Insurer promptly, in writing, upon the discovery of
any breach of the representation and warranties set forth in Section 3.06 or of
the covenants set forth in Sections 3.02 or 3.05. 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 Issuer. As consideration for the Contract, the
Servicer shall remit the Purchase 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 4.02(a). The sole remedy of the Issuer, the
Indenture Trustee, or the Securityholders with respect to a breach of to Section
3.02, 3.05 or 3.06 shall be to require the Servicer to purchase Contracts
pursuant to this Section 3.07; provided, however, that the Servicer shall
indemnify the Owner Trustee, the Indenture Trustee, the Insurer, the Issuer, the
Custodian and the Securityholders against all costs, expenses, losses damages,
claims and liabilities,
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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 7.02 shall not be
obligated to purchase Contracts pursuant to this Section 3.07 with respect to
any breaches by any prior Servicer.
SECTION 3.08. SERVICING COMPENSATION.
As compensation for the performance of its obligations under this
Agreement and subject to the terms of this Section, 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 Principal 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 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 3.03.
SECTION 3.09. REPORTING BY THE SERVICER.
(a) No later than 3:00 p.m. New York City time on each Servicer Report
Date, the Servicer shall deliver (by telex, facsimile, electronic transmission,
first class mail, overnight courier or personal delivery) to the Issuer, the
Trust Agent, the Indenture Trustee and the Insurer a statement (the
"DISTRIBUTION DATE STATEMENT") setting forth with respect to the next succeeding
Distribution Date:
(i) the Certificate Interest Distributable Amount and the Note
Interest Distributable Amount for such Distribution Date;
(ii) the Certificate Principal Distributable Amount and the Note
Principal Distributable Amount for such Distribution Date and the
portion thereof constituting the Accelerated Principal Distributable
Amount;
(iii) the Certificate Distributable Amount and the Note
Distributable Amount for such Distribution Date;
(iv) the Premium payable to the Insurer;
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(v) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto
and withdrawals therefrom to be made in respect of such Distribution
Date;
(vi) the amount of the withdrawal, if any, required to be made
from the Spread Account by the Indenture Trustee pursuant to Section
4.04(b);
(vii) the aggregate Servicing Fee with respect to the Contracts
for the related Collection Period;
(viii) the amount of fees paid to the Owner Trustee, the
Indenture Trustee and Trust Agent with respect to the related Collection
Period;
(ix) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall
and Certificate Principal Carryover Shortfall on such Distribution Date
and the change in such amounts from those with respect to the
immediately preceding Distribution Date;
(x) 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;
(xi) the Net Collections and the Policy Claim Amount, if any,
for such Distribution Date;
(xii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiii) the net credit losses and Cram Down Losses for the
Collection Period;
(xiv) the number and net outstanding balance of Contracts for
which the Financed Vehicle has been repossessed; and
(xv) 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 deliver to the
Issuer, the Trust Agent, the Indenture 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 2.03 or 3.07;
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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 4.02) after giving effect to all permitted
deductions therefrom pursuant to Section 4.02;
(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 Principal Balance as of the close
of business on the last day of the preceding Collection Period
(or as of the Closing Date in the case of the first Distribution
Date); and
(D) if less than 100% of the outstanding principal balance
of and accrued and unpaid interest was recovered on such
Liquidated Contract, 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, Principal 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 Owner Trustee, the Trust Agent, the Indenture 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.
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SECTION 3.10. ANNUAL STATEMENT AS TO COMPLIANCE.
(a) The Servicer shall deliver to the Issuer, the Trust Agent, the
Indenture 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 Issuer, the Trust Agent, the
Indenture 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 a Servicer Default under
Section 7.01.
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 Issuer, the Trust Agent,
the Indenture 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 reviewed the reports delivered by the Servicer pursuant to
Section 3.09(b) and certain other documents and the records relating to the
servicing of the Contracts and the distributions on the Notes and Certificates
under this Agreement, (iii) their audit and review 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 and reviews 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 Notes and 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 Securityholders, the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee and the Insurer reasonable access to the Contract Files and
Contract Documents. 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
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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.
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.
Subject to Section 7.02, the Servicer agrees to indemnify and hold the
Issuer, the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer,
the Custodian and the Securityholders 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 Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian or Securityholders 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 (i) immediately notify the Issuer and the
Indenture Trustee if a claim is made by a third party with respect to the
Contracts, (ii) assume, with the consent of the Issuer, the Indenture Trustee
and the Insurer, the defense of any such claim, (iii) pay all expenses in
connection therewith, including counsel fees, and (iv) promptly pay, discharge
and satisfy any judgment or decree which may be entered with respect to such
claim against the Servicer, the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer, the Custodian or the Securityholders.
SECTION 3.15. REPORTS TO SECURITYHOLDERS AND THE RATING AGENCIES.
(a) The Indenture Trustee at its own expense shall provide to each
Securityholder a copy of each Distribution Date Statement described in Section
3.09(a) concurrently with the delivery of the statement described in Section
4.05 below.
(b) The Indenture Trustee shall provide to any Securityholder who so
requests in writing (addressed to the Corporate Trust Office of the Indenture
Trustee) a copy of the annual audit statement described in Section 3.10, or the
annual audit report described in Section 3.11. The Indenture Trustee may require
the Certificateholder to pay a reasonable sum to cover the cost of the Indenture
Trustee's complying with such request.
(c) The Indenture Trustee shall forward to the Rating Agencies and the
Insurer the statement to Securityholders described in Section 4.05 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
DISTRIBUTIONS; SPREAD ACCOUNT;
STATEMENTS TO SECURITYHOLDERS
SECTION 4.01. ESTABLISHMENT OF TRUST ACCOUNTS.
(a) Prior to the Closing Date, the Servicer shall open, at a depository
institution (which may be the same depository institution which is acting in the
capacity as Indenture Trustee), the following accounts:
(i) an account denominated "Collection Account - OT 1998-B, The
Chase Manhattan Bank, Indenture Trustee" (the "COLLECTION ACCOUNT");
(ii) an account denominated "Payahead Account - OT 1998-B, The
Chase Manhattan Bank, as agent" (the "PAYAHEAD ACCOUNT");
(iii) an account denominated "Spread Account - OT 1998-B, The
Chase Manhattan Bank, Indenture Trustee" (the "SPREAD ACCOUNT");
(iv) an account denominated "Note Distribution Account - OT
1998-B, The Chase Manhattan Bank, Indenture Trustee") (the "NOTE
DISTRIBUTION ACCOUNT"); and
(v) an account denominated "Certificate Distribution Account -
OT 1998-B, The Chase Manhattan Bank, Trust Agent" (the "CERTIFICATE
DISTRIBUTION ACCOUNT").
In addition, the Indenture Trustee shall establish a trust account to be
maintained in the Corporate Trust Office of the Indenture Trustee denominated
"Payment Account - OT 1998-B, The Chase Manhattan Bank, Indenture Trustee" (the
"PAYMENT ACCOUNT" and, together with the accounts described in clauses (i)
through (v) above, the "TRUST ACCOUNTS"). The Trust Accounts shall be Eligible
Accounts (subject to the requirement that the Payment Account must be maintained
as provided in the immediately preceding sentence) and relate solely to the
Securities and to the Contracts and, if applicable, the related Eligible
Investments. The location and account numbers of the Trust Accounts as of the
Closing Date are set forth on Schedule II. The Servicer shall give the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee and the Insurer at
least five Business Days' written notice of any change in the location of any
Trust Account and any related account identification information. All amounts,
financial assets and investment property held in, deposited in or credited to,
from time to time, the Trust Accounts (other than the Payahead Account) shall be
part of the Trust Property and all amounts, financial assets and investment
property held in, deposited in or credited to, from time to time, the Collection
Account and the Spread Account shall be invested by the Indenture Trustee in
Eligible Investments pursuant to Section 4.01(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
3.01 and 4.02(a), the Servicer shall withdraw from the Payahead
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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 Property.
(c) All funds in the Collection Account and the Spread Account shall be
invested by the Indenture Trustee (if the Indenture Trustee maintains the
applicable account), or on behalf of the Indenture Trustee by the depository
institution maintaining such account, in Eligible Investments only upon the
written direction from the Servicer or the Insurer, as described below. Subject
to the limitations set forth herein, the Servicer may direct the depository
institution maintaining the Collection Account and the Spread Account in writing
(with a copy of such direction to the Indenture Trustee, if the Indenture
Trustee is not the applicable depository institution) to invest funds in the
Collection Account and the Spread Account in Eligible Investments; provided that
(i) in the absence of such directions from the Servicer, the Insurer may so
direct, and (ii) at any time during the continuance of a Servicer Default, only
the Insurer, or for so long as an Insurer Default shall have occurred and be
continuing, only the Issuer, may give such investment directions. All such
investments shall be in the name of the Indenture Trustee for the benefit of the
Noteholders and the Certificateholders, as applicable. All income or other gain
from investment of monies deposited in or credited to the Collection Account
shall be paid by the depository institution maintaining the Collection Account
to the Servicer monthly. All income or other gain from investment of monies
deposited in or credited to the Spread Account shall be deposited in or credited
to the Spread Account immediately upon receipt, and any loss resulting from such
investment shall be charged to the Spread Account. The maximum permissible
maturities of any investments of funds in the Collection Account and the Spread
Account on any date shall not be later than the Servicer Report Date immediately
preceding the Distribution Date next succeeding the date of such investment;
provided, however, that if the Indenture Trustee is maintaining the applicable
account, such funds may be invested by the Indenture Trustee in Eligible
Investments of the entity that is serving as Indenture 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 investment in Eligible Investments may be sold prior to its maturity.
The funds on deposit in the Payment Account, the Note Distribution and the
Certificate Distribution Account shall remain uninvested.
(d) In the absence of written direction as provided above, all funds
held in the Spread Account and the Collection Account shall remain uninvested.
In addition, if the applicable depository institution receives what it perceives
to be conflicting directions regarding the investment of funds in the Collection
Account or the Spread Account, the directions of the Insurer shall control
unless an Insurer Default shall have occurred and be continuing, in which case
the directions of the Servicer shall control unless a Servicer Default shall
have occurred and be continuing, in which case the directions of the Issuer
shall control. In addition, the Indenture Trustee shall not in any way be
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held liable by reason of any insufficiency in any of the foregoing Trust
Accounts held by or on behalf of the Indenture Trustee resulting from any
investment loss on any Eligible Investments.
SECTION 4.02. COLLECTIONS; TRANSFERS TO PAYAHEAD ACCOUNT; REALIZATION
UPON POLICY; NET DEPOSITS; TRANSFERS TO PAYMENT ACCOUNT.
(a) Subject to the last sentence of this Section 4.02(a), the Servicer
shall remit or credit all payments on a daily basis, within two Business Days of
receipt, by or on behalf of Obligors on the Contracts, and all Net Liquidation
Proceeds and Net Insurance Proceeds and other monies as required to the
Collection Account. Prior to the Servicer Report Date, amounts with respect to
Rule of 78's Contracts which are otherwise required to be deposited in or
credited to the Collection Account pursuant to the immediately preceding
sentence shall instead be deposited in or credited to the Payahead Account 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 the date of receipt. The Servicer or the Seller, as
the case may be, each shall remit or credit to the Collection Account each
Purchase Amount to be remitted by it with respect to Purchased 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 2.03, in the case of the Seller or (ii) the last day
of the related cure period specified in Section 3.07, in the case of the
Servicer.
(b) On the Servicer Report Date, the Servicer shall determine the Policy
Claim Amount, if any, which exists with respect to the related Distribution
Date.
(c) The Indenture Trustee or the Trust Agent shall, no later than 12:00
p.m., New York City time, on the third Business Day prior to each Distribution
Date, make a claim under the Policy for the Policy Claim Amount, if any, for
such Distribution Date by delivering to the Fiscal Agent, with a copy to the
Insurer, the Trust Agent and the Servicer, by hand delivery, telex or facsimile
transmission, a written notice (a "DEFICIENCY NOTICE") specifying the Policy
Claim Amount, if any, for such Distribution Date, separately identifying the
amount of the Policy Claim Amount payable in respect of each Class of Notes and
the Certificates. In addition, the Indenture Trustee shall make claims under the
Policy for Preference Amounts as provided in the Policy. Each Deficiency Notice
shall direct the Insurer to remit such Policy Claim Amount to the Indenture
Trustee for deposit in the Payment Account. In making any such claim, the
Indenture Trustee or the Trust Agent, as applicable, shall comply with all the
terms and conditions of the Policy. Upon receipt of the Policy Claim Amount, the
Indenture Trustee shall apply the portion thereof, if any, representing the
Deficiency Amount with respect to a Distribution Date as provided in Section
4.03(a). Any amounts received by the Indenture Trustee under the Policy that
represent Preference Amounts shall be paid, in accordance with the Policy, to
the applicable Noteholder(s) and Certificateholder(s).
(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.
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(e) On the Business Day immediately preceding each Distribution Date,
based solely on the Distribution Date Statement, the Servicer shall cause funds
equal to the amount of Net Collections available with respect to such
Distribution Date on deposit in the Collection Account to be withdrawn from the
Collection Account and deposited into the Payment Account to be distributed
pursuant to Section 4.03(a).
SECTION 4.03. DISTRIBUTIONS.
(a) On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee will apply the Net Collections available from
the Payment Account with respect to such Distribution Date to make the following
deposits and distributions in the following amounts and order of priority:
(i) to the Servicer, from Net Collections, the Servicing Fee,
including any unpaid Servicing Fees with respect to one or more prior
Collection Periods;
(ii) to the Indenture Trustee, the Owner Trustee and the Trust
Agent, from Net Collections (after giving effect to the reduction in Net
Collections described in clause (i) above), any accrued and unpaid fees
of the Indenture Trustee, the Owner Trustee and the Trust Agent, in each
case to the extent such fees have not been previously paid by the
Servicer;
(iii) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) and (ii) above), the Note Interest Distributable Amount to
be paid to the holders of the Notes at their respective Interest Rates;
(iv) to the Note Distribution Account, if such Distribution Date
is a Note Final Scheduled Distribution Date for any Cass of Notes, the
Note Principal Distributable Amount to the extent of the remaining
principal amount of such Class of Notes, from Net Collections (after
giving effect to the reduction in Net Collections described in clauses
(i) through (iii) above), to be paid to the holders of such Class of
Notes;
(v) to the Certificate Distribution Account, from Net
Collections (after giving effect to the reduction in Net Collections
described in clauses (i) through (iv) above), the Certificate Interest
Distributable Amount, to be distributed to the holders of the
Certificates;
(vi) to the Note Distribution Account, from Net Collections
(after giving effect to the reduction in Net Collections described in
clauses (i) through (v) above), the remaining Note Principal
Distributable Amount (after giving effect to the payment, if any,
described in clause (iv) above), to be paid first to the holders of the
Class A-1 Notes until the principal amount of the Class A-1 Notes has
been reduced to zero and second to the holders of the Class A-2 Notes
until the principal amount of the Class A-2 Notes has been reduced to
zero;
(vii) to the Certificate Distribution Account, if such
Distribution Date is the Certificate Final Scheduled Distribution Date,
from Net Collections (after giving effect to the reduction in Net
Collections described in clauses (i) through (vi) above), the
Certificate
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Principal Distributable Amount to the extent of the
Certificate Balance, to be distributed to the holders of the
Certificates;
(viii) to the Certificate Distribution Account, if such
Distribution Date is not the Certificate Final Scheduled Distribution
Date, from Net Collections (after giving effect to the reduction in Net
Collections described in clauses (i) through (vi) above), the remaining
Certificate Principal Distributable Amount to the extent of the
Certificate Balance, to be distributed to the holders of the
Certificates;
(ix) to the Insurer, from Net Collections (after giving effect
to the reduction in Net Collections described in clauses (i) through
(viii) above), any amounts, including the Premium, owing to the Insurer
under the Insurance Agreement;
(x) to the Spread Account, from Net Collections (after giving
effect to the reduction in Net Collections described in clauses (i)
through (ix) above), the amount, if any, required to increase the amount
therein to the Spread Account Maximum; and
(xi) any Net Collections remaining after distribution of the
Accelerated Principal Distributable Amount as part of the Note Principal
Distributable Amount shall be deposited into the Spread Account.
Any amounts deposited in the Payment Account pursuant to 4.04(b) with respect to
a Distribution Date and any amounts received by the Indenture Trustee as a
result of a claim under the Policy that represent the Deficiency Amount with
respect to such Distribution Date shall be applied by the Indenture Trustee
solely to make the deposits and distributions referred to in clauses (i) through
(v) and (vii) above, in that order of priority, but only to the extent that the
Net Collections with respect to such Distribution Date, after application as
provided above, were insufficient to make such deposit or distribution. In
addition, if the Insurer pays any amounts to the Indenture Trustee with respect
to a Distribution Date in connection with the Insurer's election to pay, as
provided in the Policy, all or a portion of any shortfalls in the amount of Net
Collections with respect to such Distribution Date available to distribute the
amounts referred to in clauses (vi) and (viii) above, the Indenture Trustee
shall distribute the amounts so received from the Insurer as provided in such
clauses.
(b) On each Distribution Date, based solely on the Distribution Date
Statement, the Trust Agent shall distribute all amounts on deposit in the
Certificate Distribution Account to Certificateholders in respect of the
Certificates to the extent of amounts due and unpaid on the Certificates for
principal and interest in the following amounts and order of priority:
(i) the Certificate Interest Distributable Amount;
(ii) if such Distribution Date is the Certificate Final
Scheduled Distribution Date, after giving effect to the reduction in the
Certificate Distribution Account described in clauses (i) above, the
Certificate Principal Distributable Amount to the extent of the
Certificate Balance;
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(iii) after giving effect to the reduction in Net Collections
described in clauses (i) and (ii) above, the remaining Certificate
Principal Distributable Amount to the extent of the Certificate Balance;
In addition, any amounts deposited in the Certificate Distribution Account on a
Distribution Date for distribution to holders of the Residual Interests as
provided in Section 4.04(b) shall be so distributed on such Distribution Date by
the Trust Agent. All distributions to Certificateholders or holders of the
Residual Interests 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.
(c) Interest accrued but not paid on any Distribution Date shall be due
and payable on the immediately succeeding Distribution Date, together with, to
the extent permitted by applicable law, interest on such amount at the
Certificate Rate.
SECTION 4.04. SPREAD ACCOUNT.
(a) The Spread Account will be held for the benefit of the
Securityholders and the Insurer in order to effectuate the subordination of the
rights of the Securityholders to the extent described above.
(b) On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee shall withdraw funds from the Spread Account,
to the extent funds are on deposit therein, equal to the amount by which the sum
of the amounts set forth in Section 4.03(a), clauses (i) though (v) and (vii)
with respect to such Distribution Date exceeds the amount of Net Collections
available with respect to such Distribution Date. The Indenture Trustee shall
deposit any such funds withdrawn from the Spread Account into the Payment
Account to be distributed pursuant to Section 4.03(a). Funds shall also be
withdrawn from the Spread Account by the Indenture Trustee, as directed by the
Insurer to reimburse the Insurer for draws with respect to any Preference
Amount. If the amount on deposit in the Spread Account on any Distribution Date
(after giving effect to all deposits thereto or withdrawals therefrom on such
Distribution Date) is greater than the Spread Account Maximum, the Indenture
Trustee shall, based solely on the Distribution Date Statement, distribute any
excess first, to the Insurer, to the extent of any amounts owing to the Insurer
pursuant to the Insurance Agreement, and second, to the Certificate Distribution
Account for distribution to holders of the Residual Interests. Upon any such
distributions to the Insurer or the holders of the Residual Interests, the
Securityholders will have no further rights in, or claims to, such amounts.
(c) Amounts held in the Spread Account shall be invested in the manner
specified in Section 4.01(c), and such investments shall be made in accordance
with written instructions from the Servicer; provided that, if the Indenture
Trustee does not receive any such written instructions prior to any date on
which an investment decision must be made, the funds held in the Spread Account
will remain uninvested. All such investments shall be made in the name of the
Indenture Trustee or its nominee and such investments shall not be sold or
disposed of prior to their maturity.
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(d) Ninety-one (91) days following the termination of the Trust pursuant
to Section 9.01 of the Trust Agreement, any amounts on deposit in the Spread
Account, after payments of amounts due to the Securityholders or the Insurer
pursuant to the Insurance Agreement, shall be paid to the holders of the
Residual Interests; provided, however, that if an insolvency event of the type
described in Section 7.01(d) or (e) with respect to any of the Seller, the
Servicer, the Indenture Trustee or the Securityholders (collectively, the
"POTENTIAL PREFERENCE PARTIES") shall have occurred during the period ending
ninety-one (91) days after payment in full to the Securityholders of all amounts
payable with respect to the Securities and the payment in full of the Repayment
Amount then the funds on deposit in the Spread Account shall be retained until
the date all applicable statute of limitation periods with respect to all
applicable preference actions and periods have expired and during which time no
preference action or similar proceeding at law or in equity is commenced, at
which time, the Insurer shall direct the Indenture Trustee in writing to release
all amounts in the Spread Account to the holders of the Residual Interests, pro
rata in proportion to percentage portion of the Residual Interest (the
"PERCENTAGE INTEREST") of each such holder of the Residual Interests. In the
event that any preference action referred to above is commenced during any
applicable statute of limitations period, funds deposited in the Spread Account
shall be retained until the date on which there is a final determination by a
court of competent jurisdiction as to whether any payment or payments made
pursuant to this Agreement, the Indenture, the Indemnification Agreement or the
Insurance Agreement is recoverable from either the Insurer, the Noteholders or
the Certificateholders. If it is so determined that a payment is so recoverable,
funds deposited in the Spread Account shall be applied by the Indenture Trustee
at the written direction of the Insurer first to pay any and all such claims
with respect to such preference actions as the Securityholders and the Insurer
may be required to pay and then to the holders of the Residual Interests, pro
rata in proportion to their Percentage Interests. If it is determined that any
such payment is not recoverable, the Insurer shall direct the Indenture Trustee
in writing to release all amounts on deposit in the Spread Account to the
holders of the Residual Interests, pro rata in proportion to their Percentage
Interests, upon receipt by the Insurer of both a final order determining that
such payments are not recoverable and an opinion of nationally recognized
bankruptcy counsel to the effect that such appeal is final and not subject to
appeal. For purposes of compliance with this Section 4.04(d), the Indenture
Trustee shall be entitled to rely on written instructions from the Insurer.
(e) In the event any of the holders of the Residual Interests seek to
have the amounts remaining on deposit in the Spread Account released to holders
of the Residual Interests prior to the expiration of the ninety-one (91) day
period specified in Section 4.04(d) above, then, if (i) amounts payable with
respect to the Notes and the Certificates have been fully paid to the
Noteholders and the Certificateholders, respectively, (ii) the Repayment Amount
and all other amounts owing to the Insurer pursuant to the Insurance Agreement
have been paid in full, (iii) no case or proceeding described in Sections
7.01(d) or (e) has occurred with respect to the Potential Preference Parties,
and (iv) either (A) the long term unsecured debt of the Seller and the Servicer
is rated BBB- or better by Standard & Poor's and Baa3 or better by Moody's, (B)
the Insurer shall have received a favorable opinion or opinions, satisfactory in
form and substance to the Insurer, from counsel to Onyx, the Seller and the
Servicer, to the effect that in the event a case or proceeding described in
Sections 7.01(d) or (e) were to occur with respect to the Potential Preference
Parties, no payment pursuant to this Agreement or the Insurance Agreement would
be recoverable from either the Insurer or the Securityholders, and such other
matters as the Insurer may reasonably request, or (C) the Insurer, in its sole
discretion, elects to have the remaining amounts on deposit in the Spread
Account paid
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to the holders of the Residual Interests, then, in any such event,
all remaining amounts on deposit in the Spread Account shall be paid to the
holders of the Residual Interests, pro rata in proportion to their Percentage
Interests.
SECTION 4.05. STATEMENTS TO SECURITYHOLDERS.
(a) On each Distribution Date, (i) the Indenture Trustee shall include
with each distribution to each Noteholder of record as of the related Record
Date, and (ii) the Trust Agent shall include with each distribution to each
Certificateholder of record as of the related Record Date, a statement, prepared
by the Servicer, based on the information in the Distribution Date Statement
furnished pursuant to Section 3.09, setting forth for such Distribution Date the
following information as of the related Record Date or such Distribution Date,
as the case may be:
(i) the amount of such distribution allocable to principal
(stated separately for each Class of Notes and the Certificates),
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;
(ii) the amount of such distribution allocable to interest
(stated separately for each Class of Notes and the Certificates);
(iii) the Note Percentage and the Certificate Percentage as of
the close of business on the last day of such Collection Period;
(iv) the Certificate Distributable Amount and the Note
Distributable Amount for such Distribution Date;
(v) the Premium payable to the Insurer;
(vi) the amount to be on deposit in the Spread Account on such
Distribution Date, before and after giving effect to deposits thereto
and withdrawals therefrom to be made in respect of such Distribution
Date;
(vii) the amount of the withdrawal, if any, required to be made
from the Spread Account by the Indenture Trustee pursuant to Section
4.04(b);
(viii) the aggregate Servicing Fee with respect to the Contracts
for the related Collection Period;
(ix) the amount of fees paid to the Owner Trustee, the Trust
Agent and the Indenture Trustee, with respect to the related Collection
Period;
(x) the amount of any Note Interest Carryover Shortfall, Note
Principal Carryover Shortfall, Certificate Interest Carryover Shortfall
and Certificate Principal Carryover Shortfall on such Distribution Date
and the change in such amounts from those with respect to the
immediately preceding Distribution Date;
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(xi) 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;
(xii) the Net Collections and the Policy Claim Amount, if any,
for such Distribution Date;
(xiii) the aggregate amount of Liquidation Proceeds received for
Defaulted Contracts;
(xiv) the net credit losses and Cram Down Losses for the
Collection Period;
(xv) the number and net outstanding balance of Contracts for
which the Financed Vehicle has been repossessed; and
(xvi) the Pool Balance, the Note Pool Factor for each Class of
Notes and the Certificate Pool Factor as of such Distribution Date after
giving effect to the distribution made on such Distribution Date.
Each amount set forth pursuant to subclauses (i), (ii) or (v) above shall be
expressed as a dollar amount per $1,000.00 of original principal amount of a
Note or original Certificate Balance, as the case may be.
(b) 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 Issuer, the Indenture Trustee and each Paying Agent,
and the Paying Agent for the Notes and the Paying Agent for the Certificates
shall furnish to each Person who on any Record Date during such calendar year
shall have been a Holder of a Note or a Certificate, respectively, a statement
or statements containing the sum of the amounts set forth in clauses (i), (ii)
and (v) above for such calendar year and such other information as is reasonably
necessary for the preparation of such Person's federal income tax return in
respect of the Notes or Certificates or, in the event such Person shall have
been a Holder of a Note or a Certificate during a portion of such calendar year,
for the applicable portion of such year, for the purposes of such Noteholder's
or Certificateholder's preparation of federal income tax returns.
ARTICLE V
THE SELLER
SECTION 5.01. 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.
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The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Servicer, the Custodian and their respective officers, directors, agents and
employees from and against any taxes that may at any time be asserted against
any such Person with respect to the transactions contemplated herein and in the
other Basic Documents, including any sales, gross receipts, general corporation,
tangible personal property, privilege or license taxes (but, in the case of the
Issuer, not including any taxes asserted with respect to, and as of the date of,
the sale of the Contracts to the Issuer or the issuance and original sale of the
Securities, or asserted with respect to ownership of the Contracts, or federal
or other income taxes arising out of distributions on the Certificates or the
Notes) and costs and expenses in defending against the same.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian their respective officers, directors, agents and employees and the
Securityholders from and against any loss, liability or expense incurred by
reason of the Seller's willful misfeasance, bad faith or negligence (other than
errors in judgment) in the performance of its duties under this Agreement, or by
reason of reckless disregard of its obligations and duties under this Agreement.
The Seller shall indemnify, defend and hold harmless the Issuer, the
Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees 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 and, in the case of the Owner Trustee and the Trust
Agent, in the Trust Agreement and, in the case of the Indenture Trustee, in the
Indenture, except to the extent that such cost, expense, loss, claim, damage or
liability, in the case of (i) the Owner Trustee, shall be due to the willful
misfeasance, bad faith or negligence of the Owner Trustee or shall arise from
the breach by the Owner Trustee of any of its representations or warranties set
forth in the Trust Agreement, (ii) the Trust Agent, shall be due to the willful
misfeasance, bad faith or negligence of the Trust Agent or shall arise from the
breach by the Trust Agent of any of its representations or warranties set forth
in the Trust Agreement or (iii) the Indenture Trustee, shall be due to the
willful misfeasance, bad faith or negligence of the Indenture 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
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to the Seller, without interest.
SECTION 5.02. MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF THE
OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS.
(a) 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 Issuer, the Trust
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Agent, the Indenture Trustee and the Insurer an agreement in form and substance
reasonably satisfactory to the Issuer, the Trust Agent, the Indenture 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 5.03. 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 5.04. SELLER NOT TO RESIGN.
Subject to the provisions of Section 5.02, the Seller shall not resign
from the obligations and duties hereby imposed on it as Seller under this
Agreement.
SECTION 5.05. SELLER MAY OWN SECURITIES.
The Seller and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Securities with the same rights as it
would have if it were not the Seller or an Affiliate thereof, except as
expressly provided herein or in any Basic Document. Securities so owned by or
pledged to the Seller or such Affiliate shall have an equal and proportionate
benefit under the provisions of this Agreement, without preference, priority or
distinction as among all of the Notes or Certificates, as the case may be.
ARTICLE VI
THE SERVICER
SECTION 6.01. LIABILITY OF SERVICER; INDEMNITIES.
Subject to Section 7.02, 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 Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian, their respective officers, directors, agents and employees, and the
Securityholders from and against any and all costs, expenses, losses, damages,
claims and liabilities, arising out of or resulting from the use, ownership or
operation by the Servicer or any Affiliate thereof of a Financed Vehicle.
(b) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees from
and against any taxes that may at any time be asserted
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against the Issuer, the Owner Trustee, the Trust Agent, the Indenture Trustee or
the Insurer 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 the date of, the sale of the Contracts to
the Issuer or the issuance and original sale of the Securities, or asserted with
respect to ownership of the Contracts, or federal or other income taxes arising
out of distributions on the Securities) and costs and expenses in defending
against the same.
(c) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian, their respective officers, directors, agents and employees and the
Securityholders 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 any such Person through,
the negligence, willful misfeasance or bad faith of the Servicer in the
performance of its duties under this Agreement.
(d) The Servicer shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Trust Agent, the Indenture Trustee, the Insurer, the
Custodian and their respective officers, directors, agents and employees from
and against any and 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 of the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer or the Custodian, as the case may be; (ii)
relates to any tax other than the taxes with respect to which either the
Servicer shall be required to indemnify the Issuer, the Owner Trustee, the Trust
Agent, the Indenture Trustee, the Insurer or the Custodian; (iii) shall arise
from the Trust Agent's, the Owner Trustee's or the Indenture Trustee's breach of
any of their respective representations or warranties set forth herein, in the
Trust Agreement or in the Indenture; or (iv) shall be one as to which the Seller
is required to indemnify the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer or the Custodian, as the case may be.
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
Person shall promptly repay such amounts to the Servicer, without interest.
This Section 6.01 shall survive the resignation or removal of the Owner
Trustee, the Trust Agent, the Custodian and the Indenture Trustee and the
termination of this Agreement.
SECTION 6.02. 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.
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(b) The Servicer shall not consolidate with or merge into any other
corporation or convey, transfer or lease all or 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 Issuer, the Indenture Trustee and the
Insurer an agreement in form and substance reasonably satisfactory to the
Issuer, the Indenture 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.
SECTION 6.03. 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 Property, 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 6.04. 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 hereunder 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 Issuer, the Insurer and the Indenture Trustee, to
such effect. No such resignation shall become effective unless and until (i) the
Indenture Trustee assumes all of the Servicer's obligations under this Agreement
or (ii) a new servicer acceptable to the Issuer, the Indenture Trustee and the
Insurer is willing to service the Contracts and enters into a servicing
agreement with the Issuer, the Indenture Trustee and the Insurer in form and
substance substantially similar to this Agreement and satisfactory to the
Issuer, the Indenture Trustee and the Insurer, and each Rating Agency confirms
that the selection of such new servicer will not result in the qualification,
reduction or withdrawal of its then-current rating of each Class of Notes and
the Certificates assigned by such Rating Agency. No such resignation by the
Servicer shall affect the obligation of the Servicer to repurchase Contracts
pursuant to Section 3.07.
(b) Except as specifically permitted in this Agreement, the Servicer may
not assign this Agreement or any of its rights, powers, duties or obligations
hereunder; provided that (i) the Servicer may assign this Agreement in
connection with a consolidation, merger, conveyance, transfer or lease made in
compliance with Section 6.02(b).
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(c) Except as provided in Sections 6.04(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 8.01 or the Trust
shall have been terminated as provided by the terms of the Trust Agreement, and
shall survive the exercise by the Issuer, the Indenture Trustee or the Insurer
of any right or remedy under this Agreement, or the enforcement by the Issuer,
the Indenture Trustee, any Certificateholder or Noteholder, or the Insurer of
any provision of the Notes, the Certificates, the Insurance Agreement or this
Agreement.
(d) The resignation of the Servicer in accordance with this Section
shall not affect the rights of the Seller hereunder. If the Servicer resigns
pursuant to this Section, its appointment as custodian may be terminated
pursuant to Section 2.08.
SECTION 6.05. LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither the Servicer nor any of the directors, officers, employees or
agents of the Servicer shall be under any liability to the Issuer, the
Noteholders 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, officer, 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 other Basic
Documents and the rights and duties of the parties to this Agreement and the
other Basic Documents and the interests of the Securityholders under this
Agreement and the other Basic Documents.
ARTICLE VII
DEFAULT
SECTION 7.01. EVENTS OF DEFAULT.
If any one of the following events (each, a "SERVICER DEFAULT") shall
occur and be continuing:
(a) any failure by the Servicer to deposit 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 of such failure is
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received by the Servicer from the Issuer, the Indenture Trustee or the Insurer
or after discovery of such failure by an officer of the Servicer;
(b) the Insurer, the Indenture Trustee, the Issuer or the Trust Agent
shall not have received a report in accordance with Section 3.09 by the Servicer
Report Date with respect to which such report is due;
(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 or any other Basic Document,
which failure shall (i) materially and adversely affect the rights of the
Securityholders, the Insurer, the Issuer or the Indenture Trustee and (ii)
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
(A) to the Seller or the Servicer, as the case may be, by the Insurer, the
Issuer or the Indenture Trustee or (B) to the Seller or the Servicer, as the
case may be, and to the Issuer and the Indenture Trustee by the Holders of
Notes, acting together as a single class, evidencing in the aggregate not less
than 25% of the outstanding amount of the Notes or, if the Notes have been paid
in full, by Certificateholders evidencing not less than 25% of the Certificate
Balance, or, so long as no Insurer Default has occurred and is continuing, by
the Insurer;
(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;
(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 or the Seller 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 or the Seller 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 7.02 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;
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(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 as to which Section 2.03 or 3.06 shall be applicable
so long as the Servicer or the Seller shall be in compliance with Section 2.03
or 3.07, as the case may be), and the incorrectness of such representation,
warranty or statement has a material adverse effect on the Securityholders or
the Insurer and, within 30 days after written notice thereof shall have been
given to the Servicer or the Seller by the Indenture Trustee or the Issuer or by
the Holders of Notes, acting together as a single class, evidencing in the
aggregate not less than 25% of the outstanding amount of the Notes, or
Certificateholders evidencing in the aggregate not less than 25% of the
Certificate Balance or, so long as no Insurer Default has occurred, 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 such Servicer Default shall not have
been remedied, either (i) the Insurer, provided no Insurer Default has occurred
and is continuing or (ii) if an Insurer Default has occurred and is continuing
(a) if the Notes have not been paid in full, the holders of Notes evidencing not
less than 25% of the outstanding amount of the Notes, acting together as a
single Class or the Indenture Trustee acting on behalf of the Noteholders, and
not the Seller or the Certificateholders or (b) if the Notes have been paid in
full and the Indenture has been discharged in accordance with its terms, the
Holders of Certificates evidencing not less than 25% of the outstanding
principal amount of the Certificates, by notice then given in writing to the
Servicer (and to the Insurer, the Indenture Trustee and the Issuer if given by
the Noteholders or the Certificateholders) may terminate all the rights and
obligations of the Servicer under this Agreement. Upon such termination,
termination of the Servicer as custodian, if the Servicer is acting as such, can
be made pursuant to Section 2.08. 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 Notes, the Certificates, the Contracts or
otherwise, shall, without further action, pass to and be vested in the Indenture
Trustee or such successor Servicer as may be appointed under Section 7.02; and,
without limitation, the Indenture Trustee and the Issuer are 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
endorsement of the Contracts and related documents, or otherwise. The Servicer
shall cooperate with the Indenture Trustee and the Issuer in effecting the
termination of the responsibilities and rights of the Servicer under this
Agreement, including the transfer to the Indenture 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 by it with
respect to any Contract.
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SECTION 7.02. TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.
Upon the termination of the Servicer by the Insurer pursuant to Section
7.01 or resignation of the Servicer pursuant to Section 6.04, the Insurer shall
appoint a successor servicer ("Successor Servicer"). Upon the termination of the
Servicer by the Indenture Trustee,, the Noteholders or the Certificateholders
pursuant to Section 7.01, or upon the resignation of the Servicer pursuant to
Section 6.04 in the event that the Insurer is not entitled to appoint a
successor servicer by operation of Section 9.08, (i) if the Notes have not been
paid in full, the Indenture Trustee shall be the Successor Servicer, and (ii) if
the Notes have been paid in full, the Owner Trustee, acting at the direction of
the Holders of Certificates evidencing not less than 51% of the outstanding
principal amount of the Certificates, shall appoint a Successor Servicer. The
Successor Servicer shall succeed to all the responsibilities, duties and
liabilities of the Servicer under this Agreement, except that such Successor
Servicer shall not be obligated to purchase Contracts pursuant to Section 3.07.
If the Indenture Trustee acts as Successor Servicer, the Indenture 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
foregoing, if the Notes have not been paid in full, the Indenture Trustee may,
if it shall be unwilling to act, or shall, if it shall be legally unable to so
act, appoint, or petition a court of competent jurisdiction to appoint, any
established financial institution, having a net worth of 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 Indenture
Trustee shall act in such capacity as provided above. In connection with such
appointment, the Indenture Trustee or any other Successor Servicer may make such
arrangements for the compensation of such successor out of payments on Contracts
as it, the Insurer and such successor shall agree; provided, however, (i) that
such amount shall equal the product of a fixed percentage rate and the Principal
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 Indenture Trustee and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
SECTION 7.03. NOTIFICATION TO NOTEHOLDERS AND CERTIFICATEHOLDERS.
Upon any termination of, or appointment of a successor to, the Servicer
pursuant to this Article, the Trust Agent shall give prompt written notice
thereof to Certificateholders at their respective addresses appearing in the
Certificate Register, and the Indenture Trustee shall give prompt written notice
thereof to Noteholders at their respective addresses appearing in the Note
Register.
SECTION 7.04. WAIVER OF PAST DEFAULTS.
Upon the occurrence of a Servicer Default, unless an Insurer Default
shall have occurred and be continuing, the Insurer, and only the Insurer, may
waive any default by the Servicer in the performance of its obligations under
this Agreement except a Servicer Default in making any required deposits to or
payment from the Trust Accounts in accordance with this Agreement. Upon the
occurrence of a Servicer Default, if an Insurer Default has occurred and is
continuing, (i) the
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Holders of Notes evidencing not less than 51% of the outstanding principal
amount of the Notes, on behalf of all Securityholders, or (ii) if all the Notes
have been paid in full and the Indenture has been discharged in accordance with
its terms, Holders of Certificates evidencing not less than 25% of the
outstanding principal amount of the Certificates, on behalf of all of the
Certificateholders, shall have the right to waive any default by the Servicer in
the performance of its obligations under this Agreement except a Servicer
Default in making any required deposits to or payment from the Trust Accounts in
accordance with this Agreement, which may only be waived if provided in clauses
(i) and (ii) above by Holders evidencing 100% of the outstanding principal
amount of the Notes or Certificates, as applicable. No such waiver shall impair
the Insurer's or the Securityholders' rights with respect to subsequent
defaults.
SECTION 7.05. INSURER DIRECTION OF INSOLVENCY PROCEEDINGS.
The Indenture Trustee, upon the actual knowledge of a Responsible
Officer of the Indenture Trustee, shall promptly notify the Insurer of (i) the
commencement of any of the events or proceedings (individually, an "INSOLVENCY
PROCEEDING") described in the Section 7.01(d) or 7.01(e) hereof 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 Notes or Certificates. Any Preference Amounts
paid by the Insurer shall be reimbursed to the Insurer as provided in Section
4.03(a) and 4.04(b). Each Noteholder, by its purchase of Notes, each
Certificateholder, by its purchase of Certificates, the Owner Trustee, the Trust
Agent and the Indenture Trustee hereby agree that, so long as no Insurer Default
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
Indenture Trustee, the Owner Trustee, the Trust Agent and each Securityholder 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 VIII
TERMINATION
SECTION 8.01. OPTIONAL PURCHASE OF ALL CONTRACTS; SATISFACTION AND
DISCHARGE OF THE INDENTURE.
(a) On each Distribution Date as of which the Pool Balance is 10% or
less of the Original Pool Balance, the Servicer shall have the option to
purchase the remaining Contracts from the Trust. Notice of the exercise of such
option shall be given by the Servicer to the Issuer, the Trust Agent, the
Indenture Trustee and the Insurer 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. To exercise such option, the
Servicer shall pay to the Indenture Trustee for the benefit of the
Securityholders, by deposit in the Collection Account on the Business Day
immediately preceding the related Distribution Date, the greater of (i) the sum
of (x) the Pool Balance on the date of
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repurchase plus (y) accrued and unpaid interest on the Contracts and (ii) the
sum of (x) the aggregate unpaid principal amount of the Securities plus (y)
accrued and unpaid interest thereon plus (z) all amounts due to the Insurer
under the Insurance Agreement. Such purchase shall be deemed to have occurred on
the last day of the related Collection Period.
(b) Notice of any termination of the Trust shall be given by the
Servicer to the Owner Trustee and the Trust Agent, the Insurer and the Indenture
Trustee as soon as practicable after the Servicer has received notice thereof.
Such notice shall conform to the notice described in Section 9.01(c) of the
Trust Agreement.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholders will succeed to the rights of the Noteholders hereunder and
the Owner Trustee and, on its behalf, the Trust Agent, will succeed to the
rights of, and assume the obligations of, the Indenture Trustee pursuant to this
Agreement; provided, however, that the Indenture Trustee shall continue to make
claims under the Policy as provided herein.
SECTION 8.02. TRANSFER TO THE INSURER.
If (i) there is one or more Outstanding Contracts at the end of the
Collection Period ending immediately prior to the Certificate Final Scheduled
Distribution Date and (ii) an amount sufficient to pay the Certificate
Distributable Amount on the Certificate Final Scheduled Distribution Date has
been deposited with the Indenture Trustee by the Insurer for the benefit of the
Certificateholders, then on the Certificate Final Scheduled Distribution Date
the Certificates shall be deemed to be transferred by the Certificateholders to
the Insurer or its designee as purchaser thereof at the opening of business on
the Certificate Final Scheduled Distribution Date and the Owner Trustee, on
behalf of the Trust, shall execute, and the Trust Agent shall authenticate and
deliver to the Insurer or its designee, in the name of the Insurer or its
designee, as the case may be, a new Certificate evidencing the entire
Certificate Balance. Such new Certificate shall have the same terms as the
Certificates deemed transferred by the Certificateholders. No service charge
shall be made for the issuance of such Certificate to the Insurer or its
designee, but the Owner Trustee or Trust Agent may require payment of a sum
sufficient to cover any tax or other governmental charge imposed in connection
therewith. Such transfer shall not diminish or restrict the Insurer's rights
hereunder or under the Insurance Agreement.
ARTICLE IX
MISCELLANEOUS
SECTION 9.01. AMENDMENT.
(a) This Agreement may be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, collectively, with the
prior written consent of the Insurer, but without the consent of any
Securityholders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement which are inconsistent with the provisions herein, or to make
any other provisions with respect to matters or questions arising under this
Agreement which are not inconsistent with
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the provisions of this Agreement; provided, however, that any such action shall
not materially and adversely affect the interests of any Securityholder; and
provided, further, that any such amendment shall be deemed not to materially and
adversely affect the interests of any Securityholder if the Person requesting
the amendment obtains a letter from each Rating Agency to the effect that such
amendment would not result in a downgrading or withdrawal of the ratings then
assigned to the applicable Securities by such Rating Agency.
(b) This Agreement may also be amended by the Issuer, the Seller, the
Servicer, the Indenture Trustee and the Trust Agent, with the consent of the
Insurer and the Holders of Notes evidencing in the aggregate not less than 51%
of the principal amount of the Notes then outstanding, acting together as a
single Class, 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 Noteholders or the Certificateholders; 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 the
Contracts or distributions that shall be required to be made for the benefit of
the Noteholders or Certificateholders or (ii) reduce the aforesaid percentage of
the outstanding amount of the Notes the Holders of which are required to consent
to any such amendment, without the consent of the Holders of all Notes.
(c) Promptly after the execution of any such amendment or consent, the
Trust Agent and the Indenture Trustee, as the case may be, shall furnish the
written notification of the substance of such amendment or consent to each
Certificateholder and Noteholder, respectively.
(d) It shall not be necessary for the consent of Noteholders and
Certificateholders pursuant to Section 9.01(b) 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 by Noteholders and Certificateholders of the
execution thereof shall be subject to such reasonable requirements as the Trust
Agent or the Indenture Trustee may prescribe. Any consent by a Securityholder to
an amendment of the Agreement shall be conclusive and binding on such
Securityholder and upon all future Securityholders of such Security and of any
Security issued upon the transfer thereof or in exchange thereof or in lieu
thereof whether or not notation of such consent is made upon such Security.
(e) The Trust Agent and the Indenture Trustee may, but shall not be
obligated to, enter into any such amendment which affects the Trust Agent's or
the Indenture 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 Trust Agent and the Indenture Trustee.
SECTION 9.02. 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 Issuer, the Securityholders, the Indenture Trustee,
the Trust Agent and the Insurer in the Contracts and in the proceeds thereof.
The Servicer shall deliver (or cause to be delivered) to the Trust Agent and the
Indenture Trustee
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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 in accordance with Section
9.02(a) seriously misleading within the meaning of Section 9-402(7) of the UCC,
unless it shall have given the Insurer, the Trust Agent and the Indenture
Trustee at least 60 days' prior written notice thereof.
(c) The Seller and the Servicer shall give the Insurer, the Trust Agent
and the Indenture Trustee 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.
(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
Collection Account and the 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 Issuer, the Servicer's master computer records (including any
backup archives) that shall refer to a Contract indicate clearly the interest of
the Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee.
(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 Issuer and has been pledged to the Indenture
Trustee.
(g) The Servicer shall permit the Owner Trustee, the Trust Agent, the
Indenture Trustee and 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.
(h) Upon request, the Servicer shall furnish to the Owner Trustee, the
Trust Agent, the Indenture Trustee and the Insurer, within five Business Days, a
list of all Contracts then held as part of the Trust Property, together with a
reconciliation of such list to the Schedule of Contracts and to each of the
Distribution Date Statements furnished before such request indicating removal of
Contracts from the Trust.
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(i) The Servicer shall deliver to the Trust Agent, the Indenture Trustee
and the Insurer:
(i) promptly after the execution and delivery of this Agreement
and of each amendment hereto, an Opinion of Counsel 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 Issuer and the Indenture
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; 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 Issuer and the Indenture 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 and the Notes 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 9.03. 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 THE AGREEMENT SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, EXCEPT
THAT THE DUTIES OF THE TRUST AGENT AND THE INDENTURE TRUSTEE SHALL BE GOVERNED
BY THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.04. 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 in the case
of
(i) the Seller, at 0000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx, Xxxxxx,
XX 00000, Attention: President, facsimile (000) 000-0000;
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(ii) the Servicer, at 0000 Xxxxxx Xxxxxx Xxxxx, 0xx Xxxxx,
Xxxxxx, XX 00000, Attention: Xxxxx X. Xxxxx, Executive Vice president,
facsimile (000) 000-0000;
(iii) the Insurer, at 000 Xxxx Xxxxxx, Xxxxxx, Xxx Xxxx 00000,
Attention: Insured Portfolio Management, Structured Finance, facsimile
(000) 000-0000;
(iv) the Issuer or the Owner Trustee, at the Owner Trustee
Corporate Trust Office (with, in the case of the Issuer, a copy to the
Seller);
(v) the Trust Agent, at the Trust Agent Office;
(vi) the Indenture Trustee, at the Corporate Trust Office;
(vii) Moody's, to Xxxxx'x Investors Service, Inc., ABS
Monitoring Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; and
(viii) Standard & Poor's, to Standard & Poor's Ratings Services,
00 Xxxxxxxx (00xx Xxxxx), Xxx Xxxx, Xxx Xxxx 00000, Attention: Asset
Backed Surveillance Department;
(ix) the Custodian, to Bankers Trust Company of California,
N.A., 0 Xxxx Xxxxx, 00xx Xxxxx, Xxxxxx, Xxxxxxxxxx 00000, Attention:
Mortgage Custody - ONYX 98-A, facsimile (000) 000-0000.
or, as to each of the foregoing, at such other address as shall be designated by
written notice to the other parties. Any notice required or permitted to be to
be mailed to a Securityholder shall be given by first class mail, postage
prepaid, at the address of such Holder as shown in the Note Register or the
Certificate Register, as the case may be. Any notice so mailed within the time
prescribed herein shall be conclusively presumed to have been duly given,
whether or not such Securityholder shall receive such notice.
SECTION 9.05. SEVERABILITY OF PROVISIONS.
If 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
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 Notes or Certificates or the rights of the Holders thereof.
SECTION 9.06. ASSIGNMENT.
Notwithstanding anything to the contrary contained herein, except as
provided in Sections 5.02 and 6.02, 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 or the Notes and (B) the Issuer, the Indenture Trustee
and the Insurer have consented to
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such transfer or assignment, or (ii) the Insurer, the Issuer, the Indenture
Trustee and Holders of Notes of each Class evidencing not less than 51% of the
outstanding amount of Notes of such Class and Certificateholders evidencing not
less than 51% of the Certificate 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 9.07. THIRD PARTY BENEFICIARIES.
Except as otherwise specifically provided herein, 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 9.08. CERTAIN MATTERS RELATING TO THE INSURER.
So long as an Insurer Default shall not have occurred and be continuing,
the Insurer shall have the right to exercise all rights, including voting
rights, which the Noteholders or Certificateholders are entitled to exercise
pursuant to this Agreement, without any consent of such Noteholders or
Certificateholders; provided, however, that without the consent of each
Noteholder, Certificateholder or Residual Interestholder affected thereby, the
Insurer shall not exercise such rights to amend this Agreement in any manner
that would (i) reduce the amount of, or delay the timing of, collections of
payments on the Contracts or distributions which are required to be made on any
Note, Certificate or Residual Interest Instrument, (ii) adversely affect in any
material respect the interests of the Holders of any Notes, Certificates or
Residual Interest Instruments or (iii) alter the rights of any such Holder to
consent to such amendment.
Notwithstanding any provision in this Agreement to the contrary, for so
long as an Insurer Default shall have occurred and be continuing, the Insurer
shall not have the right to take any action under this Agreement or to control
or direct the actions of the Trust, the Depositor, the Owner Trustee or the
Trust Agent pursuant to the terms of this Agreement, nor shall the consent of
the Insurer be required with respect to any action (or waiver of a right to take
action) to be taken by the Trust, the Depositor, the Owner Trustee, the Trust
Agent or the Holders of the Notes or the Certificates; provided, that the
consent of the Insurer shall be required at all times with respect to any
amendment of this Agreement.
SECTION 9.09. HEADINGS.
The headings of the various Articles and Sections herein are for
convenience of reference only and shall not define or limit any of the terms or
provisions hereof.
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SECTION 9.10. ASSIGNMENT BY ISSUER.
The Seller hereby acknowledges and consents to any mortgage, pledge,
assignment and grant of a security interest by the Issuer to the Indenture
Trustee pursuant to the Indenture for the benefit of the Noteholders and the
Insurer of all right, title and interest of the Issuer in, to and under the
Contracts and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.
SECTION 9.11. LIMITATION OF LIABILITY OF OWNER TRUSTEE.
Notwithstanding anything contained herein to the contrary, this
instrument has been executed by Bankers Trust (Delaware) not in its individual
capacity but in its capacity as Owner Trustee of the Issuer and by The Chase
Manhattan Bank not in its individual capacity but in its capacity as Indenture
Trustee and Trust Agent, and in no event shall Bankers Trust (Delaware) in its
individual capacity, The Chase Manhattan Bank in its individual capacity or any
beneficial owner of the Issuer have any liability for the representations,
warranties, covenants, agreements or other obligations of the Issuer hereunder,
as to all of which recourse shall be had solely to the assets of the Issuer.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
ONYX ACCEPTANCE OWNER TRUST 1998-B
as Issuer
By: Bankers Trust (Delaware), not in
its individual capacity but
solely as Owner Trustee
By: /s/ XXXXX XXXXXX
----------------------------------
Name: Xxxxx Xxxxxx
Title: Attorney-in-Fact
ONYX ACCEPTANCE FINANCIAL CORPORATION,
as Seller
By: /s/ XXX X. XXXXX
----------------------------------
Name: Xxx X. Xxxxx
Title: Chief Financial Officer
ONYX ACCEPTANCE CORPORATION, as
Servicer
By: /s/ XXXXX X. XXXXX
----------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
THE CHASE MANHATTAN BANK, not in its
individual capacity but solely as
Indenture Trustee and as Trust Agent
By: /s/ XXXX XXXXXX
----------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
74
ACKNOWLEDGED AND AGREED TO
solely with respect to the rights and duties
of the Custodian
BANKERS TRUST COMPANY OF CALIFORNIA, N.A.,
as Custodian
By: /s/ Xxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Assistant Vice President
