Document:

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                                                                    EXHIBIT 10.2

                          SALE AND SERVICING AGREEMENT

                                     between

                       ONYX ACCEPTANCE OWNER TRUST 2003-C
                                   as Issuer,

                      ONYX ACCEPTANCE FINANCIAL CORPORATION
                                   as Seller,

                           ONYX ACCEPTANCE CORPORATION
                                   as Servicer

                               JPMORGAN CHASE BANK
                     as Indenture Trustee and as Trust Agent

                            Dated as of July 1, 2003

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                                TABLE OF CONTENTS
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<S>                                                                                                              <C>
ARTICLE I DEFINITIONS......................................................................................       1

   SECTION 1.01    Definitions.............................................................................       1
   SECTION 1.02    Usage of Terms..........................................................................      20
   SECTION 1.03    Section References......................................................................      21
   SECTION 1.04    Calculations............................................................................      21
   SECTION 1.05    Accounting Terms........................................................................      21

ARTICLE II CONVEYANCE OF CONTRACTS; REPRESENTATIONS AND WARRANTIES OF THE SELLER...........................      21

   SECTION 2.01    Conveyance of Contracts.................................................................      21
   SECTION 2.02    Representations and Warranties of the Seller............................................      27
   SECTION 2.03    Repurchase of Certain Contracts.........................................................      38
   SECTION 2.04    Custody of Contract Files...............................................................      39
   SECTION 2.05    Duties of Servicer Relating to the Contracts............................................      40
   SECTION 2.06    Instructions; Authority to Act..........................................................      42
   SECTION 2.07    Indemnification.........................................................................      42
   SECTION 2.08    Effective Period and Termination........................................................      42
   SECTION 2.09    Nonpetition Covenant....................................................................      43
   SECTION 2.10    Collecting Title Documents Not Delivered at the Closing Date............................      43

ARTICLE III ADMINISTRATION AND SERVICING OF CONTRACTS......................................................      44

   SECTION 3.01    Duties of Servicer......................................................................      44
   SECTION 3.02    Collection of Contract Payments.........................................................      46
   SECTION 3.03    Realization Upon Contracts..............................................................      47
   SECTION 3.04    Insurance...............................................................................      47
   SECTION 3.05    Maintenance of Security Interests in Financed Vehicles..................................      47
   SECTION 3.06    Covenants, Representations and Warranties of Servicer...................................      48
   SECTION 3.07    Purchase of Contracts Upon Breach By Servicer...........................................      50
   SECTION 3.08    Servicing Compensation..................................................................      50
   SECTION 3.09    Reporting by the Servicer...............................................................      51
   SECTION 3.10    Annual Statement as to Compliance.......................................................      54
   SECTION 3.11    Annual Independent Certified Public Accountant's Report.................................      54
   SECTION 3.12    Access to Certain Documentation and Information Regarding Contracts.....................      55
   SECTION 3.13    Fidelity Bond...........................................................................      55
   SECTION 3.14    Indemnification; Third Party Claims.....................................................      55
   SECTION 3.15    Reports to Noteholders and the Rating Agencies..........................................      55
   SECTION 3.16    Access to List of Noteholders' Names and Addresses......................................      56

ARTICLE IV DISTRIBUTIONS; SPREAD ACCOUNT; STATEMENTS TO NOTEHOLDERS........................................      56
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<S>                                                                                                              <C>

   SECTION 4.01    Establishment of Trust Accounts.........................................................      56
   SECTION 4.02    Collections; Transfers to Payahead Account; Realization Upon Policy; Net Deposits;
   Transfers to Payment Account............................................................................      59
   SECTION 4.03    Distributions...........................................................................      60
   SECTION 4.04    Spread Account..........................................................................      62
   SECTION 4.05    Statements to Noteholders...............................................................      64
   SECTION 4.06    Capitalized Interest Account............................................................      66
   SECTION 4.07    Prefunding Account......................................................................      66
   SECTION 4.08    Requirements Relating to Prefunding Account.............................................      67

ARTICLE V THE SELLER.......................................................................................      68

   SECTION 5.01    Liability of Seller.....................................................................      68
   SECTION 5.02    Merger or Consolidation of, or Assumption of the Obligations of, Seller; Certain
   Limitations.............................................................................................      68
   SECTION 5.03    Limitation on Liability of Seller and Others............................................      68
   SECTION 5.04    Seller Not to Resign....................................................................      68
   SECTION 5.05    Seller May Own Notes and Residual Interest Instruments..................................      68

ARTICLE VI THE SERVICER....................................................................................      69

   SECTION 6.01    Liability of Servicer; Indemnities......................................................      69
   SECTION 6.02    Corporate Existence; Status as Servicer; Merger.........................................      70
   SECTION 6.03    Performance of Obligations..............................................................      71
   SECTION 6.04    Servicer Not to Resign; Assignment......................................................      71
   SECTION 6.05    Limitation on Liability of Servicer and Others..........................................      72

ARTICLE VII DEFAULT........................................................................................      72

   SECTION 7.01    Events of Default.......................................................................      72
   SECTION 7.02    Trustee to Act; Appointment of Successor................................................      74
   SECTION 7.03    Notification to Noteholders and Residual Interestholders................................      75
   SECTION 7.04    Waiver of Past Defaults.................................................................      75
   SECTION 7.05    Insurer Direction of Insolvency Proceedings.............................................      76

ARTICLE VIII TERMINATION...................................................................................      76

   SECTION 8.01    Optional Purchase of All Trust Property; Satisfaction and Discharge of the Indenture....      76
   SECTION 8.02    Transfer to the Insurer.................................................................      77

ARTICLE IX MISCELLANEOUS...................................................................................      77

   SECTION 9.01    Amendment...............................................................................      77
   SECTION 9.02    Protection of Title to Trust Property...................................................      78
   SECTION 9.03    Governing Law...........................................................................      80
   SECTION 9.04    Notices.................................................................................      80
   SECTION 9.05    Severability of Provisions..............................................................      81
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<S>                                                                                                              <C>
   SECTION 9.06    Assignment..............................................................................      81
   SECTION 9.07    Third Party Beneficiaries...............................................................      82
   SECTION 9.08    Certain Matters Relating to the Insurer.................................................      82
   SECTION 9.09    Headings................................................................................      82
   SECTION 9.10    Assignment by Issuer....................................................................      82
   SECTION 9.11    Limitation of Liability of Owner Trustee and Indenture Trustee..........................      83
   SECTION 9.12    Acknowledgment of Parties; Insurer Defense Costs........................................      83
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                                    EXHIBITS

Schedule I-A    -   Schedule of Initial Contracts
Schedule I-B    -   Schedule of Subsequent Contracts
Schedule II     -   Location and Account Numbers of Trust Accounts
Exhibit A       -   Form of Appointment of Custodian
Exhibit B       -   Form of Policy
Exhibit C-1     -   Form of Transfer Certificate
Exhibit C-2     -   Form of Prefunding Closing Date Certificate

                                      -iv-

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         This SALE AND SERVICING AGREEMENT, dated as of July 1, 2003 (this
"AGREEMENT"), is between Onyx Acceptance Owner Trust 2003-C (the "ISSUER" or the
"TRUST"), Onyx Acceptance Financial Corporation (the "SELLER"), Onyx Acceptance
Corporation ("ONYX" or, in its capacity as servicer, the "SERVICER" or, in its
capacity as custodian, the "CUSTODIAN") and JPMorgan Chase 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 (i) the Pool Balance as of such Distribution Date is equal to or
less than 15% of the Original Pool Balance and (ii) the amount of cash on
deposit in the Spread Account together with the other components of the Spread
Account is equal to or greater than the Spread Account Maximum (after giving
effect to the distribution pursuant to Section 4.03(viii) 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, the amount which would remain on deposit in the Payment Account for such
Distribution Date after giving effect to distributions pursuant to Section
4.03(i) through (viii) 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 be included in the Note Principal
Distributable Amount until all of the Notes have been paid in full.

         "ACTUARIAL CONTRACT" means a Contract pursuant to which the allocation
of each payment between interest and principal is calculated using the Actuarial
Method.

         "ACTUARIAL METHOD" means the method of allocating principal and
interest payments on a Contract whereby amortization of the Contract is
determined over a series of fixed level payment monthly installments, and each
monthly installment, including the monthly installment representing the final
payment on the Contract, consists of an amount of interest equal to 1/12 of the
APR of the Contract multiplied by the unpaid principal balance of the Contract,
and an amount of principal equal to the remainder of the monthly payment.

         "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

<PAGE>

of voting securities, 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, extended service or warranty contracts and
other items customarily financed as part of retail automobile installment sales
contracts.

         "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.

         "AVOIDED PAYMENT AMOUNT" means any portion of a Scheduled Payment
Amount previously distributed to a Holder in respect of the Notes which is
voided as the result of an Insolvency Proceeding and which, as a result of such
proceeding, such Holder is required to return.

         "BACKUP SERVICER" means that Person acceptable to the Rating Agencies
and the Insurer and appointed as "Backup Servicer" pursuant to the Backup
Servicing Agreement and its successors in interest and any successor Backup
Servicer under the Backup Servicing Agreement.

         "BACKUP SERVICING AGREEMENT" means that Backup Servicing Agreement to
be entered into on or before August 14, 2003 upon such terms and conditions as
are acceptable to the Rating Agencies and the Insurer by the Indenture Trustee,
the Issuer, the Insurer, the Servicer and the Backup Servicer pursuant to which
the Backup Servicer will agree to become Successor Servicer as described
hereunder and to perform on a periodic basis certain other duties described
therein.

         "BASIC DOCUMENTS" shall have the meaning specified in the Indenture.

         "BLANKET INSURANCE POLICY" means the Creditors Comprehensive Single
Interest Insurance Policy covering losses with respect to the Contracts, which
policy has been issued by Great American Insurance Company and the Seller's
rights in which, 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; Wilmington, Delaware; 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.

         "CAPITALIZED INTEREST ACCOuNT" means the account designated as such and
established pursuant to Section 4.01 and maintained pursuant to Section 4.06.

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         "CAPITALIZED INTEREST AMOUNT" means, with respect to each Distribution
Date following a Collection Period during which amounts are on deposit in the
Prefunding Account, an amount equal to the greater of:

                  (a)      the sum of the Note Interest Distributable Amount for
         such Distribution Date, plus the sum of the fees payable to the Owner
         Trustee, the Indenture Trustee and the Trust Agent and the premium
         payable to the Insurer for such Distribution Date, in each case,
         allocable to the balance in the Prefunding Account at the beginning of
         the related Collection Period, on a pro rata basis, minus the earnings
         received by the Indenture Trustee on behalf of the Trust during the
         related Collection Period from investment of the funds on deposit in
         the Prefunding Account; and

                  (b)      the amount, if any, by which (i) the sum of the
         Servicing Fees, the Note Interest Distributable Amount, the fees
         payable to the Owner Trustee, the Indenture Trustee and the Trust Agent
         and the premium payable to the Insurer for such Distribution Date
         exceeds (ii) Net Collections plus the earnings received by the
         Indenture Trustee on behalf of the Trust during the related Collection
         Period from investment of the funds on deposit in the Prefunding
         Account.

         "CERTIFICATE REGISTER" 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 August 2004.

         "CLASS A-1 NOTE" means any Class A-1 Note in the form attached to the
Indenture as Exhibit B.

         "CLASS A-1 RATE" means 1.08% per annum.

         "CLASS A-2 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in May 2006.

         "CLASS A-2 NOTE" means any Class A-2 Note in the form attached to the
Indenture as Exhibit C.

         "CLASS A-2 RATE" means 1.34% per annum.

         "CLASS A-3 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in August 2007.

         "CLASS A-3 NOTE" means any Class A-3 Note in the form attached to the
Indenture as Exhibit D.

         "CLASS A-3 RATE" means 1.87% per annum.

                                       -3-

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         "CLASS A-4 FINAL SCHEDULED DISTRIBUTION DATE" means the Distribution
Date occurring in May 2010.

         "CLASS A-4 NOTE" means any Class A-4 Note in the form attached to the
Indenture as Exhibit E.

         "CLASS A-4 RATE" means 2.66% per annum.

         "CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes, the
Class A-3 Notes and the Class A-4 Notes.

         "CLEARING ACCOUNT" means Account No. 4159359173 in the name of the
Seller maintained at Wells Fargo Bank, N.A.

         "CLOSING DATE" means July 30, 2003.

         "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 related Cut-Off Date to and including the sixth Business Day
preceding such first Distribution Date.

         "CONTRACT" means each retail installment sales contract and security
agreement or installment loan agreement and security agreement and all proceeds
thereof and payments thereunder, which contract or agreement has been executed
by an Obligor and pursuant to which such Obligor purchased or financed the
Financed Vehicle described therein, agreed to pay the deferred purchase price
(i.e., the purchase price net of any down payment) or amount borrowed, together
with interest, as therein provided in connection with such purchase or loan,
granted a security interest in such Financed Vehicle, and undertook to perform
certain other obligations as specified in such contract or agreement. Each
Contract shall have been (i) originated by a Dealer and assigned to Onyx in
accordance with the assignment provisions set forth therein, (ii) subsequently
conveyed by Onyx to the Seller pursuant to the Purchase Agreement and (iii)
subsequently conveyed by the Seller to the Issuer pursuant to this Agreement. As
used herein, "Contracts" means the Initial Contracts, the Subsequent Contracts
and the Prefunded Contracts.

         "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, 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

                                       -4-

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Financed Vehicle showing Onyx as first lienholder has been applied for; (c) any
agreement(s) modifying the Contract (including, without limitation, any
extension agreement(s)); (d) any documents evidencing or related to any
insurance policy with respect to a Financed Vehicle 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 4 New York Plaza, 6th Floor, New York, New York 10004, Attention:
Institutional Trust Services/Structured Finance Services - Onyx Acceptance Owner
Trust 2003-C; or at such other address as the Indenture Trustee may designate
from time to time by notice to the Noteholders, 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.

         "CUSTODIAN" means Onyx until such time, if any, a Successor Custodian
is appointed and thereafter means such Successor Custodian.

         "CUT-OFF DATE" means, as applicable, (i) the Initial Cut-Off Date, with
respect to the Initial Contracts, (ii) the Subsequent Cut-Off Date, with respect
to the Subsequent Contracts or (iii) the Prefunding Cut-Off Date with respect to
the Prefunded Contracts.

         "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

                                       -5-

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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, that portion of
the Scheduled Payment Amount for such Distribution Date which is due for payment
but unpaid because of a failure by the Indenture Trustee to receive in full, in
accordance with the terms of the Indenture, such Scheduled Payment Amount.

         "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 NOTES" means Notes issued in fully registered, certificated
form to Noteholders.

         "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 August
15, 2003.

         "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 and the Indenture
Trustee, as evidenced by letters from the Insurer and the Indenture Trustee to
that effect or (ii) a general ledger account or deposit account at a depository
institution acceptable to the Insurer, as evidenced by a letter from the Insurer
to that effect.

         "ELIGIBLE INVESTMENTS" means any one or more of the following
obligations or securities, all of which shall be denominated in United States
dollars:

                  (a)      direct obligations of, and obligations fully
         guaranteed as to timely payment of principal and interest by, the
         United States of America or any agency or instrumentality of the United
         States of America the obligations of which are backed by the full faith
         and credit of the United States of America and, to the extent, at the
         time of investment, acceptable to the Insurer and each Rating Agency
         for securities having a rating equivalent to the rating of the 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;

                                       -6-

<PAGE>

                  (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, in each case
         with a maturity not in excess of 365 days, so long as at the time of
         such investment or contractual commitment providing for such investment
         the short-term unsecured debt obligations of such depository
         institution or trust company have credit ratings from Standard & Poor's
         at least equal to "A-1+" and 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)      commercial paper having the highest rating by
         Standard & Poor's and Moody's at the time of such investment with a
         maturity not in excess of 365 days;

                  (e)      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

                  (f)      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), a copy of which shall be provided by the Indenture Trustee to
         the Rating Agencies or such other obligations or securities that
         satisfy the Rating Agency Condition.

         "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.

         "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.

         "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

                                      -7-

<PAGE>

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.

         "FUNDED CONTRACTS" means all Initial Contracts and Subsequent
Contracts.

         "FUNDING PERIOD" shall have the meaning specified in Section 4.08(a).

         "HOLDER" or "NOTEHOLDER" means, with respect to a 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 EVENT OF DEFAULT" means an Event of Default as set forth in
Section 5.01 of the Indenture.

         "INDENTURE TRUSTEE" means JPMorgan Chase 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.

         "INITIAL CAPITALIZED INTEREST AMOUNT" means $506,335.14.

         "INITIAL CONTRACTS" means the Contracts designated as such in Schedule
I-A attached hereto.

         "INITIAL CUT-OFF DATE" means July 1, 2003.

         "INSOLVENCY PROCEEDING" shall have the meaning specified in Section
7.05.

         "INSURANCE AGREEMENT" means the Insurance and Indemnity Agreement, to
be dated as of the Closing Date, among the Insurer, the Seller, and Onyx in its
individual capacity and as Servicer, as amended, modified or restated from time
to time.

         "INSURED AMOUNT" means, with respect to each Distribution Date, the sum
of (i) the Deficiency Amount for such Distribution Date and (ii) the Avoided
Payment Amount for such Distribution Date.

         "INSURER" means XL Capital Assurance Inc. 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;

                                      -8-

<PAGE>

                  (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).

         "INSURER DEFENSE COSTS" means, all costs and expenses of the Insurer
(including costs and expenses of the Trust Agent, the Indenture Trustee or the
Owner Trustee that the Insurer may have paid) in connection with any action,
proceeding or investigation that could adversely affect the Trust or the Trust
Estate or the rights or obligations of the Insurer under any of the
Indemnification Agreement (as defined in the Insurance Agreement), the Basic
Documents or any other document delivered with respect thereto, including
(without limitation) any judgment or settlement entered into affecting the
Insurer or the Insurer's interests, together with interest thereon at a rate
equal to the Base Rate (as defined in the Insurance Agreement) from time to time
in effect plus 1% from the date such expenses are incurred up to but not
including the date such expenses are paid.

         "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; in the case
of the first Distribution Date, the Interest Accrual Period for the Class A-1
Notes will constitute 16 days.

         "INTEREST RATE" means the Class A-1 Rate, the Class A-2 Rate, the Class
A-3 Rate or the Class A-4 Rate, as the case may be.

         "ISSUER" means Onyx Acceptance Owner Trust 2003-C 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

                                       -9-

<PAGE>

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 shall be deemed to be a Liquidated Contract and shall be
deemed to have a Principal Balance of zero.

         "LIQUIDATION EXPENSES" means reasonable out-of-pocket expenses (not to
exceed Liquidation Proceeds), other than any overhead expenses, incurred by the
Servicer in connection with the realization of the full amounts due under any
Defaulted Contract (including the attempted liquidation of a Contract which is
brought current and is no longer in default during such attempted liquidation)
and the sale of any property acquired in respect thereof which are not
recoverable as 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.

         "MANDATORY PARTIAL REDEMPTION AMOUNT" means the balance (excluding
investment earnings) remaining on deposit in the Prefunding Account on the
Mandatory Partial Redemption Date after giving effect to the sale to the Trust
of all Prefunded Contracts sold to the Trust during the Funding Period,
including any such acquisition and conveyance on the date on which the Funding
Period ends.

         "MANDATORY PARTIAL REDEMPTION DATE" means the Distribution Date on
which the Notes are partially prepaid pursuant to Section 4.07, which
Distribution Date shall be the Distribution Date immediately succeeding the date
on which the Funding Period ends in the event that any amount remains on deposit
in the Prefunding Account after giving effect to the sale to the Trust of all
Prefunded Contracts sold to the Trust during the Funding Period, including any
acquisition and conveyance on the date on which the Funding Period ends.

         "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.

         "MAXIMUM CAPITALIZED INTEREST AMOUNT" means, with respect to each
Distribution Date following a Collection Period during which amounts are on
deposit in the Prefunding Account, an amount equal to the sum of the Note
Interest Distributable Amount (assuming no further reductions in principal on
the Notes) for each remaining Distribution Date during the Funding Period and
for the Distribution Date immediately following the Funding Period, plus the sum
of the fees payable to the Owner Trustee, the Indenture Trustee and the Trust
Agent and the premium payable to the Insurer for each such Distribution Date, in
each case, allocable to the balance in the Prefunding Account on the opening of
business on the first day of the beginning of

                                      -10-

<PAGE>

the month in which the Maximum Capitalized Interest Amount is being calculated
for the Distribution Date in that same month, on a pro rata basis, minus the
earnings to be received by the Indenture Trustee on behalf of the Trust through
October 28, 2003 from investment of the funds on deposit in the Prefunding
Account, assuming that no additional Prefunded Contracts are conveyed to the
Trust and that interest at a rate of 0.75% per annum is earned on amounts on
deposit in the Prefunding Account.

         "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 Moody's 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 Precomputed 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 sum of
(x) the aggregate of all interest collected on Contracts during the three
immediately preceding Collection Periods, (y) the investment earnings on amounts
deposited in the Prefunding Account transferred to the Payment Account with
respect to the three immediately preceding Distribution Dates and (z) the
amounts transferred from the Capitalized Interest Account to the Payment Account
with respect to the three immediately preceding Distribution Dates, minus (ii)
the sum of (A) the aggregate outstanding principal balances of Contracts which
became Liquidated Contracts other than by virtue 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 Noteholders and the Servicing Fees paid to the Servicer
and, if applicable, the Backup Servicer, during such three Collection Periods,
and the denominator of

                                      -11-

<PAGE>

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, a Class A-2 Note, a Class A-3 Note or a
Class A-4 Note, as applicable.

         "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, the Class A-2 Final Scheduled Distribution Date,
the Class A-3 Final Scheduled Distribution Date or the Class A-4 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 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 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.

                                      -12-

<PAGE>

         "NOTE PRINCIPAL DISTRIBUTABLE AMOUNT" means, with respect to any
Distribution Date, the sum of (i) 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 the Note Final Scheduled
Distribution Date for each Class of Notes 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 POOL BALANCE" means $400,000,000, which is the sum of (i) the
Principal Balances of the Initial Contracts as of the Initial Cut-Off Date, (ii)
the Principal Balances of the Subsequent Contracts as of the Subsequent Cut-Off
Date, and (iii) the initial deposit in the Prefunding Account.

         "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 applicable Cut-Off
Date, (i) with respect to any Precomputed 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
applicable Cut-Off Date computed in accordance with the Rule of 78's Method or
the Actuarial Method, as applicable, 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

                                      -13-

<PAGE>

Contracts, such amount being the total of all principal payments due on or after
the applicable Cut-Off Date.

         "OWNER TRUSTEE" means The Bank of New York (Delaware), not in its
individual capacity but solely as the Owner Trustee under the Trust Agreement,
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 502 White Clay Center, P.O. Box 6973, Newark, Delaware
19714, Attention: Corporate Trust Department; or at such other address as the
Owner Trustee may designate from time to time by notice to the Noteholders, 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 Residual
Interest Instruments, 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 Payment Account,
including distributions in respect of the Residual Interest Instruments 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 Notes,
number CA00647A, dated July 30, 2003 and issued by the Insurer to the Indenture
Trustee, guaranteeing payment of any Insured Amount, the form of which is
attached hereto as Exhibit B.

         "POOL BALANCE" as of the time of determination means the sum of (i) 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 and (ii) the
amounts on deposit in the Prefunding Account (exclusive of any investment
earnings), if any.

         "POTENTIAL PREFERENCE PARTIES" shall have the meaning specified in
Section 4.04(d).

         "PRECOMPUTED CONTRACT" means a Contract as to which, pursuant to the
terms of such Contract, the portion of payments allocable to earned interest and
principal thereunder is determined according to the "Rule of 78's Method" or the
"Actuarial Method".

                                      -14-

<PAGE>

         "PREFERENCE CLAIM" shall have the meaning specified in Section 7.05.

         "PREFUNDED AMOUNT" means $167,518,886.96, the initial deposit into the
Prefunding Account.

         "PREFUNDED CONTRACTS" means the Contracts which are transferred by the
Seller to the Issuer on each Prefunding Transfer Date pursuant to this Agreement
and are identified on the schedule attached to the Transfer Certificate
delivered to the Trust, the Indenture Trustee and the Insurer on the Business
Day immediately preceding the related Prefunding Transfer Date.

         "PREFUNDING ACCOUNT" means the account established as such pursuant to
Section 4.01 and maintained pursuant to Section 4.07.

         "PREFUNDING CLOSING DATE" means the last day of the Funding Period, or
if such day is not a Business Day, the following Business Day.

         "PREFUNDING CLOSING DATE CERTIFICATE" means the certificate of an
officer of the Seller delivered in connection with the Prefunding Closing Date,
substantially in the form attached hereto as Exhibit C-2.

         "PREFUNDING CUT-OFF DATE" means the cut-off date specified in the
Transfer Certificate with respect to the Prefunded Contracts transferred on the
related Prefunding Transfer Date.

         "PREFUNDING TRANSFER DATE" means each day on which the Seller conveys
Prefunded Contracts to the Trust.

         "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 an Actuarial Contract, or in accordance
with the Recomputed Actuarial Method, in the case of a Rule of 78's Contract.

         "PURCHASE AGREEMENT" means the Second Amended and Restated Sale and
Servicing Agreement dated as of November 30, 2001 between Onyx, as seller and
servicer, 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.

                                      -15-

<PAGE>

         "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 Noteholders 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.

         "RATING AGENCY CONDITION" shall have the meaning set forth in the
Indenture.

         "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 related 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 related 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 related Cut-Off Date, will equal the
Outstanding Principal Balance.

         "RECORD DATE" means, with respect to a Class of Notes and any
Distribution Date, the Business Day immediately preceding such Distribution Date
or, if Definitive Notes 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 Precomputed Contracts representing amounts
not due in such Collection Period which will be deposited into the Payahead
Account in accordance with this Agreement), (ii) the Principal Balance
(immediately prior to the reduction thereof to zero as provided in the
definition of "Liquidated Contract") of all Contracts (other than Purchased
Contracts) that became Liquidated Contracts during the related Collection
Period, (iii) the Principal Balance 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.

                                      -16-

<PAGE>

         "RESIDUAL DISTRIBUTION ACCOUNT" has the meaning set forth in the Trust
Agreement.

         "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.

         "RESIDUAL INTEREST INSTRUMENT" shall have the meaning specified in the
Trust Agreement.

         "RESIDUAL INTERESTHOLDER" means each Person in whose name a Residual
Interest Instrument is registered in the Certificate Register.

         "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 pursuant to which the
allocation between interest and principal is calculated using the Rule of 78's
Method.

         "RULE OF 78'S METHOD" means the method of allocating principal and
interest payments on a Contract whereby 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 Funded Contracts
attached as Schedule I-A and Schedule I-B to this Agreement and each list of
Prefunded Contracts delivered to the Indenture Trustee, the Issuer and the
Insurer on each Prefunding Transfer Date and identified on Schedule I to the
related Transfer Certificate, which Contracts are being transferred to the Trust
as part of the Trust Property, together with supplemental data regarding the
contracts verified by the Servicer. The Schedule of Contracts attached hereto as
Schedules I-A and I-B, together with the initial deposit into the Prefunding
Account, comprises the Original Pool Balance. The following information with
respect to each Funded Contract is set forth on Schedule I-A and Schedule I-B in
columns, and any supplement to the Schedule of Contracts for Prefunded Contracts
will present the information in the same format:

                  Contract Number ("Account")
                  Date of Origination ("Discount Date")
                  Maturity Date ("Maturity")
                  Monthly P&I ("Payment")
                  Original Principal Balance ("Amount Financed")
                  Outstanding Principal Balance ("Net Balance")
                  Annual Percentage Rate ("APR")

                                      -17-

<PAGE>

In addition, the information contained in the Schedule of Contracts shall also
be contained on a computer disk or tape that shall be delivered by the Servicer
to the Indenture Trustee not later than (i) the 5th Business Day following the
Closing Date, with respect to the Funded Contracts and (ii) the 5th Business Day
following the related Prefunding Transfer Date, with respect to the Prefunded
Contracts.

         "SCHEDULED PAYMENT AMOUNT" means (a) as of any Distribution Date, the
sum of (i) the Servicing Fee for such Distribution Date (including any accrued
and unpaid Servicing Fees with respect to one or more prior Collection Periods),
(ii) any accrued and unpaid fees of the Indenture Trustee, the Owner Trustee and
the Trust Agent for such Distribution Date, in each case to the extent such fees
have not been previously paid by the Servicer or the Administrator, (iii) the
Note Interest Distributable Amount for each Class of Notes for such Distribution
Date, and (iv) if such Distribution Date is the Note Final Scheduled
Distribution Date for a Class of Notes, the Note Principal Distributable Amount
for such Class of Notes, to the extent of the outstanding principal amount of
such Class of Notes immediately prior to such Distribution Date; provided,
however, that, in each case, the Scheduled Payment Amount shall be determined in
accordance with the original terms of the Notes when issued and without regard
to any subsequent amendment or modification of the Notes that has not been
consented to in writing by the Insurer.

         "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.

         "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 pursuant to (i) below and, if applicable, the Backup Servicer
pursuant to (ii) below for services rendered during the Collection Period ending
immediately prior to such Distribution Date, which shall be an amount equal to
sum of (i) the product of one-twelfth of 1% per annum multiplied by the Pool
Balance (excluding amounts on deposit in the Prefunding Account) as of the end
of the Collection Period preceding the related Collection Period and (ii) the
fees then due and owing to the Backup Servicer pursuant to the Backup Servicing
Agreement that have not been paid to the Backup Servicer, if any.

         "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

                                      -18-

<PAGE>

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.

         "SPREAD ACCOUNT MAXIMUM" shall have the meaning set forth in the
Insurance Agreement.

         "STANDARD & POOR'S" means Standard & Poor's Ratings Services, a
division of The McGraw-Hill Companies, Inc., and its successors in interest.

         "SUBSEQUENT CONTRACTS" means the Contracts designated as such in
Schedule I-B attached hereto, which have an aggregate Outstanding Principal
Balance of $97,483,148.86.

         "SUBSEQUENT CUT-OFF DATE" means as of the close of business on July 29,
2003.

         "SUCCESSOR CUSTODIAN" shall have the meaning set forth in Section
2.04(b).

         "SUCCESSOR SERVICER" shall have the meaning set forth in Section 7.02.

                                      -19-

<PAGE>

         "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 certain
states, the Title Document may consist of electronic evidence of ownership on
the electronic lien and title systems of such states.

         "TRANSFER CERTIFICATE" means the certificate of an officer of the
Seller delivered in connection with the delivery of any Prefunded Contracts on
the Business Day immediately preceding a Prefunding Transfer Date, substantially
in the form attached hereto as Exhibit C-1.

         "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 JPMorgan Chase 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 4 New
York Plaza, 6th Floor, New York, New York 10004, Attention: Institutional Trust
Services/Structured Finance Services - Onyx Acceptance Owner Trust 2003-C; or at
such other address as the Trust Agent may designate from time to time by notice
to the Noteholders, the Insurer, the Servicer and the Seller.

         "TRUST AGREEMENT" means the Trust Agreement, dated as of July 1, 2003,
among the Depositor, the Owner Trustee and the Trust Agent.

         "TRUST PROPERTY" has the meaning set forth in Section 2.01(b) 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."

                                      -20-

<PAGE>

                  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 will be calculated on the basis of a 360-day year
of twelve 30-day months, except that interest on the Class A-1 Notes will be
calculated on the basis of a 360-day year and the actual number of days in the
related Interest Accrual Period. 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 and Actuarial 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
         authenticated Notes, in an aggregate amount equal to $400,000,000, 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:

                  (i)      the Funded Contracts listed in the Schedule of
                           Contracts;

                  (ii)     all monies received under the Funded Contracts on or
                           after the related Cut-Off Date;

                  (iii)    all Net Liquidation Proceeds and Net Insurance
                           Proceeds with respect to any Financed Vehicle to
                           which a Funded Contract relates received on or after
                           the related Cut-Off Date;

                  (iv)     the Contract Documents and Contract Files relating to
                           the Funded Contracts (except the Contract Documents
                           and Contract Files for Funded Contracts which have
                           been the subject of a Full Prepayment received on or
                           after the related 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

                                      -21-

<PAGE>

                           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 (A) the
                           Payahead Account and all amounts, financial assets
                           and investment property held therein or credited
                           thereto, including all Eligible Investments credited
                           thereto and (B) investment income credited to the
                           Collection Account);

                  (vi)     the right of the Seller, as purchaser under the
                           Purchase Agreement, to cause Onyx as seller
                           thereunder to repurchase Funded Contracts listed in
                           the Schedule of Contracts under certain circumstances
                           (such right may be enforced by the Issuer or the
                           Indenture Trustee at the direction of the Insurer);

                  (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 Funded Contract;

                  (viii)   the Seller's right to proceeds under the Blanket
                           Insurance Policy with respect to the Funded
                           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.

                  (b)      Subject to the conditions set forth in Section
         2.01(c), in consideration of the Issuer's delivery of authenticated
         Notes, in an aggregate amount equal to $400,000,000, 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)
         effective upon delivery to the Issuer on the related Prefunding
         Transfer Date against payment therefor from the Prefunding Account in
         accordance Section 4.07(b), all of the right, title and interest of the
         Seller in, to and under:

                  (i)      all Prefunded Contracts listed on each Transfer
                           Certificate;

                  (ii)     all monies received under the Prefunded Contracts on
                           or after the related Prefunding Cut-Off Date;

                  (iii)    all Net Liquidation Proceeds and Net Insurance
                           Proceeds with respect to any Financed Vehicle to
                           which a Prefunded Contract relates received on or
                           after the related Prefunding Cut-Off Date;

                                      -22-

<PAGE>

                  (iv)     the Contract Documents and Contract Files relating to
                           the Prefunded Contracts;

                  (v)      the right of the Seller, as purchaser under the
                           Purchase Agreement, to cause Onyx as seller
                           thereunder to repurchase Prefunded Contracts listed
                           on any Transfer Certificate under certain
                           circumstances;

                  (vi)     any and all security interests of the Seller in the
                           related Financed Vehicles and the rights to receive
                           proceeds from claims on certain insurance policies
                           covering such Financed Vehicles or the individual
                           Obligors under each related Prefunded Contract;

                  (vii)    the Seller's right to proceeds under the Blanket
                           Insurance Policy with respect to the Prefunded
                           Contracts; and

                  (viii)   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 Sections 2.01(a) and (b),
together with the rights of the Indenture Trustee under the Policy, are
collectively referred to as the "TRUST PROPERTY". In addition, on or prior to
the Closing Date, the Seller shall cause the Insurer to deliver the Policy to
the Indenture Trustee for the benefit of the Noteholders.

         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
Noteholders and the Insurer, a first priority perfected security interest in all
of the Seller's right, 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.

              (c)      The sale and assignment of the Prefunded Contracts and
         the other property and rights related thereto described in Section
         2.01(b) shall be subject to the satisfaction of each of the following
         conditions, as well as the conditions set forth in Section 4.08, as of
         the related Prefunding Transfer Date, as applicable:

                  (i)      the Seller shall have delivered to the Custodian, on
                           behalf of the Issuer, the Prefunded Contracts, and
                           the Seller shall have delivered to the Issuer, the
                           Indenture Trustee and the Insurer, on the Business
                           Day immediately preceding the related Prefunding
                           Transfer Date, a

                                      -23-

<PAGE>

                           duly executed Transfer Certificate, substantially in
                           the form of Exhibit C-1;

                  (ii)     the Servicer and the Seller shall certify to the
                           Indenture Trustee and the Insurer that, as of the
                           Prefunding Transfer Date, the Servicer and the
                           Seller, respectively, were not insolvent nor were
                           they made insolvent by such transfer nor were they
                           aware of any such pending insolvency;

                  (iii)    the Seller shall certify to the Indenture Trustee and
                           the Insurer that the addition of such Prefunded
                           Contracts will not result in a material adverse tax
                           consequence to the Issuer or the Noteholders;

                  (iv)     the Funding Period shall not have terminated;

                  (v)      the Seller and the Servicer shall certify to the
                           Indenture Trustee and the Insurer that no selection
                           procedures believed by the Seller or the Servicer to
                           be adverse to the interests of the Noteholders or the
                           Insurer shall have been utilized in selecting the
                           Prefunded Contracts;

                  (vi)     the Seller and the Insurer shall not have been
                           advised by either Rating Agency on or before the
                           Business Day immediately preceding such Prefunding
                           Transfer Date that the conveyance of the Prefunded
                           Contracts would result in a qualification,
                           modification or withdrawal of its then current rating
                           of the Notes without regard to the Policy;

                  (vii)    the weighted average APR (using the Recomputed Yield
                           for the Rule of 78's Contracts) of the Contracts
                           (after giving effect to the purchase of the related
                           Prefunded Contracts) shall not be less than 8.45%;

                  (viii)   less than 30% of the Prefunded Contracts transferred
                           by the Seller to the Issuer since the Closing Date,
                           including all Prefunded Contracts being transferred
                           on such Prefunding Transfer Date, shall have an
                           original term to maturity of more than 60 months and
                           the weighted average remaining term of all Contracts
                           (including the Prefunded Contracts) as of such
                           Prefunding Transfer Date shall not be greater than 63
                           months;

                  (ix)     if the balance in the Prefunding Account prior to
                           such Prefunding Transfer Date exceeds $30,000,000,
                           the aggregate Outstanding Principal Balance, as of
                           the related Prefunding Cut-Off Date, of the Prefunded
                           Contracts to be conveyed by the Seller to the Issuer
                           on such Prefunding Transfer Date shall equal or
                           exceed $10,000,000 and the Insurer shall have
                           consented to such transfer;

                                      -24-

<PAGE>

                  (x)      at least three Business Days prior to each Prefunding
                           Transfer Date, the Seller shall have delivered to the
                           Rating Agencies and the Insurer pool stratification
                           data (including data with respect to when the first
                           scheduled payment is due under each such Prefunded
                           Contract) relating to the Prefunded Contracts to be
                           conveyed by the Seller to the Issuer on such
                           Prefunding Transfer Date, in the form of
                           stratification data delivered to the Rating Agencies
                           and the Insurer with respect to the Funded Contracts,
                           and, as of the related Prefunding Cut-Off Date, shall
                           have certified that the information contained therein
                           is true and correct; and

                  (xi)     The first scheduled monthly payment for at least 50%
                           of the Prefunded Contracts (by Outstanding Principal
                           Balance as of the related Prefunding Cut-Off Date)
                           shall be due on or before October 30, 2003.

                  (d)   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 Noteholders 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.

                  (e)   In connection with the sale of the Contracts pursuant to
         the Purchase Agreement, Onyx filed with the office of the Secretary of
         State of the State of Delaware 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, such filing made in
         order to continue the effectiveness of a financing statement naming
         Onyx as debtor and the Seller as secured party filed with the office of
         the Secretary of State of the State of California prior to July 1,
         2001. 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 Delaware 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-3 partial releases to have been filed
with the office of Secretary of State of the State of Delaware with respect to
any outstanding security interests in the Contracts.

                                      -25-

<PAGE>

                  (f)      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.

                  (g)      If any change in the name, identity or corporate
         structure of the Seller or Onyx or the relocation of the state of
         organization 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 Insurer must have been provided
         prior written consent to such change and 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 Noteholders 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 Noteholders and the Insurer in the Contracts,
         the related Financed Vehicles and the proceeds thereof have been filed,
         and reciting the details of such filings.

                  (h)      During the term of this Agreement, the Seller and
         Onyx shall each continue to be an organization organized under the laws
         of one of the states of the United States.

                  (i)      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.

                  (j)      On the Prefunding Closing Date, the Seller shall:

                  (i)               deliver a certificate from each secured
                                    creditor of the Seller confirming that such
                                    creditor has no claim of any security
                                    interest in any of the Prefunded Contracts
                                    transferred during the Funding Period;

                  (ii)              deliver to each Rating Agency, the Insurer
                                    and the Indenture Trustee a Prefunding
                                    Closing Date Certificate;

                  (iii)             deliver to each Rating Agency, the Insurer
                                    and the Indenture Trustee an Opinion of
                                    Counsel with respect to the absence of

                                      -26-

<PAGE>

                                    negative tax consequences to the Trust, the
                                    characterization of the transfer of the
                                    Prefunded Contracts and the perfection of
                                    the Indenture Trustee's interest on behalf
                                    of the Noteholders;

                  (iv)              deliver to each Rating Agency, the Insurer
                                    and the Indenture Trustee with respect to
                                    any state (other than California) in which
                                    10% or more of the Contracts (including the
                                    Prefunded Contracts), by Outstanding
                                    Principal Balance, were originated, an
                                    opinion with respect to the perfection of
                                    the security interest of the Indenture
                                    Trustee in the Financed Vehicles securing
                                    the Contracts originated in such state; and

                  (v)               deliver to the Insurer an Opinion of Counsel
                                    to the effect that Onyx is duly qualified as
                                    a foreign corporation to do business, and is
                                    in good standing, in each of the states in
                                    which Prefunded Contracts have been
                                    originated.

         Failure to comply with any of the conditions set forth in this Section
2.01(j) on the Prefunding Closing Date shall be deemed to be a breach of a
representation and warranty with respect to each of the Prefunded Contracts to
which such failed conditions relate as of the Prefunding Closing Date.

                  SECTION 2.02      REPRESENTATIONS AND WARRANTIES OF THE
                                    SELLER.

         The Seller 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; provided such
representations and warranties speak as of the execution and delivery of this
Agreement and as of the Closing Date with respect to Sections 2.02(a), (b) and
(c), and as of each Prefunding Transfer Date (with respect to the Prefunded
Contracts conveyed to the Trust on such date) with respect to Sections 2.02(a)
and (d), 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.

                                      -27-

<PAGE>

                  (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 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, (B) seeking to prevent the
                           issuance of the Notes 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
                           (D) naming the Seller which might adversely affect
                           the federal income tax attributes of the Notes.

                                      -28-

<PAGE>

                  (b)      As to each Funded Contract (except as noted below as
         being applicable only to either Precomputed 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.

                  (ii)              As of the Closing Date, such Contract was
                                    secured by a valid and enforceable first
                                    priority security interest in favor of Onyx
                                    in the related Financed Vehicle, and such
                                    security interest has been duly perfected
                                    and is prior to all other liens upon and
                                    security interests in such Financed Vehicle
                                    which now exist or may hereafter arise or be
                                    created (except, as to priority, for any
                                    lien for unpaid taxes or unpaid storage or
                                    repair charges which may arise after the
                                    Closing Date in accordance with the UCC);
                                    such security interest is assignable, had
                                    been assigned by Onyx to the Seller pursuant
                                    to the Purchase Agreement, and, as of the
                                    Closing Date, has been assigned by the
                                    Seller to the Issuer pursuant to Section
                                    2.01(a) hereof.

                  (iii)             (A) If the related Contract was originated
                                    in a state in which notation of a security
                                    interest on the Title Document (or in the
                                    electronic title records) is required or
                                    permitted to perfect the security interest
                                    in the related Financed Vehicle, 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 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
                                    Contract 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
                                    named as the original secured party under
                                    the related Contract, and in either case,
                                    the Indenture Trustee on behalf of the
                                    Noteholders 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),
                                    Onyx has written evidence that such Title
                                    Documents showing 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 such Contract to be
                                    transferred to

                                      -29-

<PAGE>

                           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 related Cut-Off Date, the most recent
                           scheduled payment due on each such Contract had been
                           made or was not delinquent more than 30 days and, to
                           the best of the Seller's knowledge, all payments on
                           the Contract were made by the related Obligors.

                  (vi)     As of the Closing Date, there is no lien against the
                           related Financed Vehicle for delinquent taxes.

                  (vii)    As of the Closing Date, there is no right of
                           rescission, offset, defense or counterclaim to the
                           obligation of the related Obligor(s) to pay the
                           unpaid principal or interest due under such Contract;
                           the operation of the terms of such Contract or the
                           exercise of any right thereunder will not render such
                           Contract unenforceable in whole or in part or subject
                           such Contract to any right of rescission, offset,
                           defense or counterclaim, and the Seller has no
                           knowledge that such right of rescission, offset,
                           defense or counterclaim has been asserted or
                           threatened.

                  (viii)   As of the Closing Date, to the best of the Seller's
                           knowledge, there are no liens or claims which have
                           been filed, including liens for work, labor,
                           material, storage or unpaid taxes affecting the
                           related Financed Vehicle which are or may become a
                           lien prior to, or equal or coordinate 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, the Fair Debt Collection Practices Act, the Fair
                           Credit Billing Act, the Magnuson-Moss Warranty Act,
                           the Federal Reserve Board's Regulations B and Z, the
                           Soldiers' and Sailors' Civil Relief Act of 1940,
                           state adoptions of the National Consumer Act and the
                           Uniform Consumer Credit Code, and other 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

                                      -30-

<PAGE>

                                    ownership of such Contracts to the Issuer
                                    and the receipt of interest by the
                                    Noteholders, 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, (a) there was no
                                    default, breach, violation or event
                                    permitting acceleration existing under such
                                    Contract (except payment delinquencies
                                    permitted by subparagraph (v) above), (b)
                                    there does not exist any continuing
                                    condition that with notice or lapse of time
                                    would constitute a default, breach,
                                    violation or event permitting acceleration
                                    existing under such Contract, and (c) the
                                    Seller has not waived any such default,
                                    breach, violation or event permitting
                                    acceleration except payment delinquencies
                                    permitted by subparagraph (v) above.

                  (xiii)            As of 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)             As of 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 as a loss
                                    payee

                                      -31-
<PAGE>

                                    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 at all
                                    times comply with all of the provisions of
                                    such insurance policies applicable to it.

                  (xv)              Such Contract was 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 subsidiary.

                  (xvi)             Payments under such Contract have been
                                    applied in accordance with the Rule of 78's
                                    Method, the Actuarial Method or the Simple
                                    Interest Method, as provided in the
                                    applicable Contract, and are due monthly in
                                    substantially equal amounts through its
                                    Maturity Date sufficient to fully amortize
                                    the principal balance of such Contract by
                                    its Maturity Date.

                  (xvii)            There is only one original of such Contract
                                    and such original, together with all other
                                    related Contract Documents, is being held by
                                    the Custodian.

                  (xviii)           As of the Closing Date, the Servicer has
                                    clearly marked its electronic records to
                                    indicate that such Contract is owned by the
                                    Issuer.

                  (xix)             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.

                  (xx)              As of the related Cut-Off Date, the Seller
                                    has not received notice that any Obligor
                                    under such Contract has filed for
                                    bankruptcy.

                  (xxi)             Such Contract had an original maturity of
                                    not more than 72 months and as of the
                                    related Cut-Off Date, such Contract has a
                                    remaining maturity of 72 months or less;

                  (xxii)            The first scheduled monthly payment for at
                                    least 80% of the Initial Contracts (by
                                    Outstanding Principal Balance) is due on or
                                    before July 31, 2003, and the first
                                    scheduled monthly payment for at least 80%
                                    of the Subsequent Contracts (by Outstanding
                                    Principal Balance) is due on or before
                                    August 31, 2003.

                                      -32-
<PAGE>

                  (xxiii)           As of the related Cut-Off Date, such
                                    Contract has a remaining principal balance
                                    of at least $500.

                  (xxiv)            As of the related Cut-Off Date, such
                                    Contract is secured by a Financed Vehicle
                                    that has not been repossessed without
                                    reinstatement.

                  (xxv)             The related Obligor(s) were located in
                                    Alabama, Arizona, California, Colorado,
                                    Connecticut, Delaware, Florida, Georgia,
                                    Idaho, Illinois, Indiana, Iowa, Kansas,
                                    Kentucky, Maryland, Massachusetts, Michigan,
                                    Minnesota, Missouri, Montana, Nebraska,
                                    Nevada, New Hampshire, New Jersey, North
                                    Carolina, Ohio, Oklahoma, Oregon,
                                    Pennsylvania, South Carolina, Tennessee,
                                    Texas, Utah, Virginia, Washington or West
                                    Virginia on the date of origination of such
                                    Contract.

                  (xxvi)            The Obligor on such Contract is either (a) a
                                    natural person residing in any state or (b)
                                    another entity, provided that a natural
                                    person is a joint and several Obligor with
                                    respect to such Contract.

                  (c)      As to all of the Funded Contracts:

                  (i)               The aggregate Outstanding Principal Balance
                                    payable by Obligors of the Funded Contracts
                                    as of the related Cut-Off Date plus the
                                    initial deposit into the Prefunding Account
                                    equals the Original Pool Balance.

                  (ii)              As of the related Cut-Off Date,
                                    approximately 27.43% of the Outstanding
                                    Principal Balance of all Funded Contracts is
                                    attributable to loans involving new Financed
                                    Vehicles, and approximately 72.57% of the
                                    Outstanding Principal Balance of all Funded
                                    Contracts is attributable to loans involving
                                    used Financed Vehicles.

                  (iii)             As of the related Cut-Off Date, the
                                    aggregate Outstanding Principal Balance of
                                    all Funded Contracts originated in any
                                    single state, other than California, did not
                                    equal or exceed 10%.

                  (d)      As to each Prefunded Contract (except as noted below
         as being applicable only to either Precomputed Contracts or Simple
         Interest Contracts), as of the related Prefunding Transfer Date (except
         as otherwise noted):

                  (i)               The information pertaining to such Contract
                                    set forth in the related Transfer
                                    Certificate is true and correct in all
                                    material respects as of the related
                                    Prefunding Transfer Date.

                  (ii)              As of the related Prefunding Transfer Date,
                                    such Contract was secured by a valid and
                                    enforceable first priority security interest
                                    in

                                      -33-
<PAGE>

                                    favor of Onyx in the related Financed
                                    Vehicle, and such security interest is duly
                                    perfected and is prior to all other liens
                                    upon and security interests in such Financed
                                    Vehicle which 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
                                    Prefunding Transfer Date in accordance with
                                    the UCC); such security interest is
                                    assignable, has been assigned by Onyx to the
                                    Seller pursuant to the Purchase Agreement
                                    and, as of the Prefunding Transfer Date, has
                                    been assigned by the Seller to the Issuer
                                    pursuant to Section 2.01(b) hereof.

                  (iii)             (A) If the related Contract is originated in
                                    a state in which notation of a security
                                    interest on the Title Document (or in the
                                    electronic title records) is required or
                                    permitted to perfect the security interest
                                    in the related Financed Vehicle, the Title
                                    Document or the electronic title records for
                                    such Financed Vehicle show, 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 related Prefunding Transfer
                                    Date and will show, 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 Contract is
                                    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 named as
                                    the original secured party under the related
                                    Contract as of the related Prefunding
                                    Transfer Date, and in either case, the
                                    Indenture Trustee on behalf of the
                                    Noteholders and the Insurer has the same
                                    rights as such secured party has or would
                                    have (if such secured party were still the
                                    owner of the 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),
                                    Onyx has received written evidence that such
                                    Title Documents showing Onyx as first
                                    lienholder have been applied for as of the
                                    related Prefunding Transfer Date.

                  (iv)              As of the related Prefunding Transfer 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(b) free of liens, claims,
                                    encumbrances and rights of others and, upon
                                    transfer of such Contract to the Issuer
                                    pursuant to Section 2.01(b), the Issuer will
                                    have good and marketable title to, will have
                                    a first perfected security interest in and
                                    will be the sole owner of such Contract free
                                    of liens, encumbrances and rights of others.

                                      -34-
<PAGE>

                  (v)               As of the related Prefunding Cut-Off Date,
                                    the most recent scheduled payment due on
                                    each such Contract has 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 related Prefunding Transfer Date,
                                    there is no lien against the related
                                    Financed Vehicle for delinquent taxes.

                  (vii)             As of the related Prefunding Transfer Date,
                                    there is no right of rescission, offset,
                                    defense or counterclaim to the obligation of
                                    the Obligor(s) to pay the unpaid principal
                                    or interest due under such Contract; the
                                    operation of the terms of such Contract or
                                    the exercise of any right thereunder will
                                    not render such Contract unenforceable in
                                    whole or in part or subject such Contract to
                                    any right of rescission, offset, defense or
                                    counterclaim, and the Seller has no
                                    knowledge that such right of rescission,
                                    offset, defense or counterclaim has been
                                    asserted or threatened.

                  (viii)            As of the related Prefunding Transfer 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, storage or unpaid taxes affecting
                                    the related Financed Vehicle which are or
                                    may become a lien prior to, or equal or
                                    coordinate with, the security interest
                                    granted by such Contract.

                  (ix)              Such Contract, and the sale of the related
                                    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, the Fair Debt
                                    Collection Practices Act, the Fair Credit
                                    Billing Act, the Magnuson-Moss Warranty Act,
                                    the Federal Reserve Bond's Regulations B and
                                    Z and, the Soldiers' and Sailors' Civil
                                    Relief Act of 1940, state adoptions of the
                                    National Consumer Act and the Uniform
                                    Consumer Credit Code, and other 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 such Contract
                                    to the Issuer and the receipt of interest by
                                    the Noteholders, 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

                                      -35-
<PAGE>

                                    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 related Prefunding Transfer Date,
                                    (a) there is no default, breach, violation
                                    or event permitting acceleration existing
                                    under such Contract (except payment
                                    delinquencies permitted by subparagraph (v)
                                    above), (b) there does not exist any
                                    continuing condition that with notice or
                                    lapse of time would constitute a default,
                                    breach, violation or event permitting
                                    acceleration existing under such Contract,
                                    and (c) the Seller has not waived any such
                                    default, breach, violation or event
                                    permitting acceleration except payment
                                    delinquencies permitted by subparagraph (v)
                                    above.

                  (xiii)            As of the related Prefunding Transfer 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)             As of the related Prefunding Transfer 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 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

                                      -36-
<PAGE>

                                    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 at all
                                    times comply with all of the provisions of
                                    such insurance policies applicable to it.

                  (xv)              Such Contract was 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 subsidiary.

                  (xvi)             Payments under such Contract have been
                                    applied in accordance with Rule of 78's
                                    Method, the Actuarial Method or the Simple
                                    Interest Method, as provided in the
                                    applicable Contract, and are due monthly in
                                    substantially equal amounts through its
                                    Maturity Date sufficient to fully amortize
                                    the principal balance of such Contract by
                                    its Maturity Date.

                  (xvii)            There is only one original of such Contract
                                    and such original, together with all other
                                    related Contract Documents, is being held by
                                    the Custodian.

                  (xviii)           As of the related Prefunding Transfer Date,
                                    the Servicer has clearly marked its
                                    electronic records to indicate that such
                                    Contract is then owned by the Issuer.

                  (xix)             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.

                  (xx)              As of the related Prefunding Cut-Off Date,
                                    the Seller has not received notice that any
                                    Obligor under such Contract has filed for
                                    bankruptcy.

                  (xxi)             Such Contract has an original maturity of
                                    not more than 72 months, and as of the
                                    related Prefunding Cut-Off Date, such
                                    Contract has a remaining maturity of 72
                                    months or less.

                  (xxii)            As of the related Prefunding Cut-Off Date,
                                    such Contract has a remaining principal
                                    balance of at least $500.

                  (xxiii)           As of the related Prefunding Cut-Off Date,
                                    such Contract is secured by a Financed
                                    Vehicle that has not been repossessed
                                    without reinstatement.

                  (xxiv)            The Obligor on such Contract is either (a) a
                                    natural person residing in any state or (b)
                                    another entity, provided that a natural
                                    person is a joint and several Obligor with
                                    respect to such Contract.

                                      -37-
<PAGE>

                  (xxv)             No more than 50% of the Prefunded Contracts
                                    transferred to the Issuer as of any
                                    Prefunding Transfer Date shall be originated
                                    in any one state.

                  (e)      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.

                  (f)      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 with respect to each Contract and each of the conditions set forth in
Section 2.01(c) with respect to each transfer of Prefunded Contracts and Section
2.01(j) with respect to the Prefunding Closing Date and sale of Prefunded
Contracts shall survive delivery of the Contract Documents 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 Indenture Trustee, the Issuer or the Insurer, 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 repurchase, 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
Noteholders 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 Noteholders against all costs, expenses, losses,
damages, claims and liabilities, including

                                      -38-
<PAGE>

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 not be segregated to show
                                    the Issuer as owner thereof and the
                                    Indenture Trustee as the pledgee thereof,
                                    unless the Insurer requires such
                                    segregation.

                  (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)             in the event that the Servicer is not the
                                    Custodian, 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 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,
         Onyx shall be the Custodian of the Contract Documents; provided,
         however, that (i) the Indenture Trustee (if the Notes have not been
         paid in full and the Indenture has not been satisfied and discharged)
         and the Issuer, with the consent of the Insurer, or (ii) the Insurer,
         may

                                      -39-
<PAGE>

         terminate such appointment at any time, with or without cause by
         written notice to the Custodian, and upon the execution by the
         Indenture Trustee at the direction of the Insurer (or, if the Notes
         have been paid in full and the Indenture has been satisfied and
         discharged, the Issuer at the direction of the Insurer) of a letter
         agreement substantially in the form of Exhibit A attached hereto (the
         "Appointment of Custodian"), revocably appointing 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).

         For so long as the Servicer is the Custodian of the Contract Documents,
the Servicer need not maintain the Contract Documents held by it in a file area
physically separate from the other installment sales contracts or loans owned or
serviced by it or any of its Affiliates, unless the Insurer requires such
segregation.

                  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 Noteholders, 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.

                  (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, upon the prior written consent
         of the Insurer, at such other location as shall be specified to the
         Issuer and the Indenture Trustee by 30 days' prior written notice. The
         Servicer shall permit the

                                      -40-
<PAGE>

         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 and prior written consent of the Insurer (a copy of which shall
         be furnished to the Issuer), 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; (iii) that,
         if such Contract has been the subject of a Full Prepayment pursuant to
         clause (b) of the definition of the term "Full Prepayment," the correct
         Purchase Amount has been deposited in or credited to the Collection
         Account in accordance with Section 2.03, 3.07 or 4.02; (iv) that, if
         such Contract is a Liquidated Contract pursuant to clause (ii) of the
         definition of the term "Liquidated Contract," there have been deposited
         in or credited to the Collection Account the related Net Liquidation
         Proceeds in accordance with Section 4.02; and (v) 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 with respect to the Funded Contracts and
         within 60 days of the Prefunding Closing Date with respect to the
         Prefunded Contracts, a schedule of Title Documents for Financed
         Vehicles which, as of the Closing Date or the Prefunding Closing Date,
         as applicable, did not show Onyx as first lienholder and (ii) within
         180 days of the Closing Date with respect to the Funded Contracts and
         within 180 days of the Prefunding Closing Date with respect to the
         Prefunded Contracts, a schedule of Title Documents for Financed
         Vehicles which, as of the date prior to such delivery, do not show 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

                                      -41-
<PAGE>

         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 have possession of the Contract Documents for purposes of
         Section 9-313 of the UCC of the state in which the Contract Documents
         are located.

                  SECTION 2.06      INSTRUCTIONS; AUTHORITY TO ACT.

         With respect to any servicing and administration matter not otherwise
addressed in this Agreement, the Servicer shall be deemed to have received
proper instructions (a copy of which shall be furnished to the Issuer) with
respect to the Contract Files upon its receipt of written instructions signed by
a Responsible Officer of the Indenture Trustee and the written consent of the
Insurer.

                  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 Noteholders 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 Noteholders 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 Noteholders, the Custodian, the Indenture Trustee, the Trust Agent, the
Owner Trustee 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, the Indenture Trustee and the
Insurer 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 Noteholders with respect to such Contracts.

                  SECTION 2.08      EFFECTIVE PERIOD AND TERMINATION.

         The appointment of Onyx 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 Class A-4 Final
Scheduled Distribution Date. If Onyx shall subsequently resign as Servicer in
accordance with the terms of this Agreement or if all of the rights and

                                      -42-
<PAGE>

obligations of the Servicer shall have been terminated pursuant to Section 7.01,
the appointment of the Servicer as Custodian may be terminated by the Insurer,
or if an Insurer Default has occurred and is continuing, by Holders evidencing
not less than 25% of the outstanding principal amount of the Notes, acting
together as a single Class, or by the Indenture Trustee. 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
Insurer) 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 Notes 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 Funded Contract or Prefunded Contract in respect of
which, in place of a Title Document, the Custodian received on the Closing Date
or the Prefunding Closing Date, as applicable, written evidence from the Dealer
selling the related Financed Vehicle that, or otherwise in respect of which, the
Title Document for such Financed Vehicle showing Onyx as first lienholder has
been applied for from the Registrar of Titles, the Servicer shall use its best
efforts to collect (or 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 as first lienholder is not received by the
Servicer (or verified by the Servicer in the electronic title records) within
180 days after the Closing Date with respect to the Funded Contracts or within
180 days after the Prefunding Closing Date with respect to the Prefunded
Contracts, then the representation and warranty in Section 2.02(b)(iii) as to
any such Funded Contracts or the representation and warranty in Section
2.02(d)(iii) as to any such Prefunded Contracts in respect of such Contract
shall be deemed to have been incorrect in a manner that materially and

                                      -43-
<PAGE>

adversely affects the Noteholders, and the Seller shall be obligated to
repurchase such Contract in accordance with Section 2.03.

                                  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 Indenture Trustee or any of them,
any and all instruments of satisfaction or cancellation, or partial or full
release or discharge, and all other comparable instruments, with respect to the
Contracts or to the Financed Vehicles. The 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 Initial 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

                                      -44-
<PAGE>

of any Contract and all partial prepayments on Simple Interest Contracts
received by the Servicer on or after the Initial Cut-Off Date and at least two
Business Days prior to the Closing Date; and (iii) all Net Liquidation Proceeds
and Net Insurance Proceeds received with respect to a Financed Vehicle to which
an Initial Contract relates received on or after the Initial Cut-Off Date and at
least two Business Days prior to the Closing Date.

         On each Prefunding Transfer Date, the Servicer shall deposit in the
Collection Account (i) all installments of Monthly P&I due on or after the
related Prefunding Cut-Off Date and received by the Servicer at least two
Business Days prior to such Prefunding Transfer Date; (ii) the proceeds of each
Full Prepayment of any Prefunded Contract and all partial prepayments on Simple
Interest Contracts received by the Servicer on or after the related Prefunding
Cut-Off Date and at least two Business Days prior to such Prefunding Transfer
Date; and (iii) all Net Liquidation Proceeds and Net Insurance Proceeds received
with respect to a Financed Vehicle to which a Prefunded Contract being
transferred on such date relates, received on or after the related Prefunding
Cut-Off Date and at least two Business Days prior to such Prefunding Transfer
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
related 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 Precomputed 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 Noteholders and the Insurer, to act as such

                                      -45-
<PAGE>

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 and the Indenture Trustee
and the prior written consent of 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 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
Backup Servicer, 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(i) or (ii), as applicable.

                  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 six 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 180 days past the
originally scheduled date of the last payment on such Contract and in no event
beyond the Class A-4 Final Scheduled Distribution Date; provided, further, that
no more than two such extensions can be granted consecutively, no more than
three such extensions can be granted during any 12 month period and at least
three payments must be made between non-consecutive extensions. 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.

                                      -46-
<PAGE>

                  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. 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
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.

                  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

                                      -47-
<PAGE>

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, 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 as the
secured party on the certificate of title (or, if applicable, 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, 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 Noteholders
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, the
electronic title record) or fulfill any such additional administrative
requirement of the laws of the state in which a Financed Vehicle is located.

                  SECTION 3.06      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 or the related Prefunding
Transfer Date, as applicable, 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 Noteholders 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.

                                      -48-
<PAGE>

                  (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 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

                                      -49-
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                                    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 materially and 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 BY
SERVICER.

         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 covenants, representations 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 Noteholders with respect to a breach of
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 Noteholders against all costs, expenses, losses
damages, claims and liabilities, including reasonable fees and expenses of
counsel, which may be asserted against or incurred by any of them as a result of
third-party claims arising out of the events or facts giving rise to such
breach.

         Any Successor Servicer appointed pursuant to Section 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 Initial Contract as of the
Initial Cut-Off Date; provided further, that the

                                      -50-
<PAGE>

Servicer shall not be entitled to that portion of the Servicing Fee, if any,
then due and owing to the Backup Servicer, as described in clause (ii) of the
definition of "Servicing Fee" in Section 1.01. 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, under
the circumstances and in the manner set forth in the 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, the Backup Servicer and the Insurer a statement (the
         "Distribution Date Statement") setting forth with respect to the next
         succeeding Distribution Date:

                  (i)               the Note Interest Distributable Amount for
                                    such Distribution Date;

                  (ii)              the Note Principal Distributable Amount for
                                    such Distribution Date and the portion of
                                    the Note Principal Distributable Amount, if
                                    any, constituting the Accelerated Principal
                                    Distributable Amount;

                  (iii)             the Note Distributable Amount for such
                                    Distribution Date;

                  (iv)              the Premium payable to the Insurer;

                  (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;

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<PAGE>

                  (ix)              the amount of any Note Interest Carryover
                                    Shortfall and Note 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 Insured 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;

                  (xv)              the Pool Balance;

                  (xvi)             for each Distribution Date occurring during
                                    and immediately following the end of the
                                    Funding Period, the amount on deposit in
                                    each of the Prefunding Account and the
                                    Capitalized Interest Account on such
                                    Distribution Date, before and after giving
                                    effect to withdrawals therefrom to be made
                                    in respect of such Distribution Date;

                  (xvii)            for the Mandatory Partial Redemption Date,
                                    the Mandatory Partial Redemption Amount, if
                                    any; and

                  (xviii)           a limited cash reconciliation of the
                                    Collection Account.

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, the
         Backup Servicer 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;

                                      -52-
<PAGE>

                  (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;

                  (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;

                                      -53-
<PAGE>

                  (viii)            with respect to each Distribution Date
                                    during and immediately following the end of
                                    the Funding Period, the Capitalized Interest
                                    Amount, if any, with respect to the related
                                    Collection Period and the amount, if any,
                                    withdrawn from the Capitalized Interest
                                    Account pursuant to this Agreement;

                  (ix)              during the Funding Period, the remaining
                                    balance in the Prefunding Account; and

                  (x)               for the Mandatory Partial Redemption Date,
                                    the Mandatory Partial Redemption Amount, if
                                    any.

                  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 31,
         2004 and on or before March 31 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 31, 2004 and on or before March 31 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 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,

                                      -54-
<PAGE>

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 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 Noteholders, 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 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 Noteholders 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 Noteholders 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, the
Insurer and the Indenture Trustee in writing if a claim is made by a third party
with respect to the Contracts, (ii) assume, with the consent of 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 Noteholders.

                  SECTION 3.15      REPORTS TO NOTEHOLDERS AND THE RATING
AGENCIES.

                  (a)      The Indenture Trustee at its own expense shall
         provide to each Noteholder 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 Noteholder
         who so requests in writing (addressed to the Corporate Trust Office of
         the Indenture Trustee) a copy of the

                                      -55-
<PAGE>

         annual audit statement described in Section 3.10, or the annual audit
         report described in Section 3.11. The Indenture Trustee may require the
         Noteholder 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 Noteholders 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, 55 Water Street, New York, New York 10041, (ii)
         Moody's Investors Service, Inc., ABS Monitoring Dept., 99 Church
         Street, 4th Floor, New York, New York 10007, and (iii) the address of
         the Insurer at the address set forth in the Insurance Agreement.

                  SECTION 3.16      ACCESS TO LIST OF NOTEHOLDERS' NAMES AND
ADDRESSES.

         The Indenture Trustee shall furnish or cause to be furnished to the
Servicer, the Insurer and the Seller, within 15 days after receipt by the
Indenture Trustee of a written request therefor from the Servicer, the Insurer
or the Seller, a list, in such form as the Servicer, the Insurer or the Seller
may reasonably require, of the names and addresses of the Noteholders as of the
most recent Record Date. If three or more Noteholders, or one or more
Noteholders evidencing not less than 25% of the aggregate outstanding principal
balance of the Notes (hereinafter referred to as "Applicants"), apply in writing
to the Indenture Trustee, and such application states that the Applicants desire
to communicate with other Noteholders with respect to their rights hereunder or
under the Notes and such application is accompanied by a copy of the
communication that such Applicants propose to transmit, then the Indenture
Trustee shall, within five Business Days after the receipt of such application,
afford such Applicants access, during normal business hours, to the current list
of Noteholders. Each Noteholder, by receiving and holding a Note, agrees with
the Servicer, the Seller and the Indenture Trustee that none of the Servicer,
the Seller or the Indenture Trustee shall be held accountable by reason of the
disclosure of any such information as to its name and address hereunder,
regardless of the source from which such information was derived.

                                   ARTICLE IV

                         DISTRIBUTIONS; SPREAD ACCOUNT;
                            STATEMENTS TO NOTEHOLDERS

                  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 2003-C, JPMorgan Chase Bank, Indenture
                                    Trustee" (the "COLLECTION ACCOUNT");

                                      -56-
<PAGE>

                  (ii)              an account denominated "Payahead Account -
                                    OT 2003-C, JPMorgan Chase Bank, as agent"
                                    (the "PAYAHEAD ACCOUNT");

                  (iii)             an account denominated "Spread Account - OT
                                    2003-C, JPMorgan Chase Bank, Indenture
                                    Trustee" (the "SPREAD ACCOUNT");

                  (iv)              an account denominated "Note Distribution
                                    Account - OT 2003-C, JPMorgan Chase Bank,
                                    Indenture Trustee" (the "NOTE DISTRIBUTION
                                    ACCOUNT");

                  (v)               an account denominated "Prefunding Account -
                                    OT 2003-C, JPMorgan Chase Bank, Indenture
                                    Trustee" (the "PREFUNDING ACCOUNT"); and

                  (vi)              an account denominated "Capitalized Interest
                                    Account - OT 2003-C, JPMorgan Chase Bank,
                                    Indenture Trustee" (the "CAPITALIZED
                                    INTEREST 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 2003-C, JPMorgan Chase Bank, Indenture Trustee" (the
"PAYMENT ACCOUNT" and, together with the accounts described in clauses (i)
through (vi) 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
Notes 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 and the Indenture Trustee at least five Business Days'
written notice of any change in the location of any Trust Account and any
related account identification information, provided any such change may be made
only with the prior written consent of the Insurer. 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 and investment
income credited to the Collection Account and the Capitalized Interest 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, the Spread Account, the Prefunding Account and the
Capitalized Interest 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 Precomputed 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 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

                                      -57-
<PAGE>

         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, the Spread
         Account, the Prefunding Account and the Capitalized Interest 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, the Spread Account, the Prefunding
         Account and the Capitalized Interest 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, the Spread Account, the Prefunding Account and the
         Capitalized Interest 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. 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, the Prefunding Account and the Capitalized Interest
         Account shall be deposited in or credited to such account immediately
         upon receipt, and any loss resulting from such investment shall be
         charged to such account. The maximum permissible maturities of any
         investments of funds in the Collection Account, the Spread Account and
         the Capitalized Interest 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. The maximum permissible maturity of any investments of funds in
         the Prefunding Account on any date shall not be later than the next
         Business Day. No investment in Eligible Investments may be sold prior
         to its maturity. The funds on deposit in the Payment Account and the
         Note Distribution Account shall remain uninvested.

                  (d)      In the absence of written direction as provided
         above, all funds held in the Spread Account, the Collection Account,
         the Prefunding Account and the Capitalized Interest 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, the Spread
         Account, the Prefunding Account or the

                                      -58-
<PAGE>

         Capitalized Interest 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 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 Precomputed 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 Insured Amount, if any, which exists with respect to the
         related Distribution Date and submit a Distribution Date Statement
         pursuant to Section 3.09.

                  (c)      The Indenture Trustee shall, no later than 10:00
         a.m., New York City time, on the third Business Day prior to each
         Distribution Date (based solely on the information contained in the
         Distribution Date Statement, delivered on the applicable Servicer
         Report Date), make a claim under the Policy for the Insured Amount, if
         any, for such Distribution Date by delivering to the Insurer, with a
         copy to the Trust Agent and the Servicer, by hand delivery, telex or
         facsimile transmission, a written notice (a "Deficiency Notice")
         specifying the Insured Amount, if any, for such Distribution Date,
         separately identifying the amount of the Insured Amount payable in
         respect of each Class of Notes. Each Deficiency Notice shall direct the
         Insurer to remit such Insured Amount to the Indenture Trustee for
         deposit in the Payment Account. In making any such claim, the Indenture
         Trustee shall comply with all the terms and conditions of the Policy.
         Upon receipt of the Insured 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. Any amounts
         received by the Indenture Trustee under the Policy that

                                      -59-
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         represent Avoided Payment Amounts shall be paid, in accordance with the
         Policy, to the applicable Noteholder(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.

                  (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.

                  SECTION 4.03      DISTRIBUTIONS.

         On each Distribution Date, based solely on the Distribution Date
Statement, the Indenture Trustee will apply the Net Collections available from
the Payment Account, along with any amounts deposited into the Payment Account
from the Prefunding Account and the Capitalized Interest 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 and, if applicable, the
                                    Backup Servicer, the Servicing Fee,
                                    including any accrued and unpaid Servicing
                                    Fees with respect to one or more prior
                                    Collection Periods;

                  (ii)              to the Indenture Trustee, the Owner Trustee
                                    and the Trust Agent, any accrued and unpaid
                                    fees (which amounts do not include any
                                    expenses) 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 or the
                                    Administrator;

                  (iii)             to the Note Distribution Account, the Note
                                    Interest Distributable Amount to be paid to
                                    the Holders of the Class A 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 Class of Notes,
                                    the Note Principal Distributable Amount to
                                    the extent of the remaining principal amount
                                    of such Class of Notes, to be paid to the
                                    Holders of such Class of Notes;

                  (v)               if such Distribution Date is the Mandatory
                                    Partial Redemption Date, to the Note
                                    Distribution Account, the Mandatory Partial
                                    Redemption Amount, to be distributed to the
                                    Holders of the Class A-1 Notes if such
                                    amount is less than or equal to $50,000, and
                                    to be distributed to the Holders of all
                                    Notes, pro rata based on the

                                      -60-
<PAGE>

                                    then outstanding principal balance of the
                                    Notes, if such amount exceeds $50,000;

                  (vi)              to the Note Distribution Account, solely
                                    from Net Collections (plus amounts
                                    transferred from the Prefunding Account
                                    representing earnings from investments
                                    therein and amounts transferred from the
                                    Capitalized Interest Account, if any)
                                    remaining after giving effect to the
                                    distributions described in clauses (i)
                                    through (v) above, the remaining Note
                                    Principal Distributable Amount (after giving
                                    effect to the payment, if any, described in
                                    clauses (iv) and (v) 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, 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, third, to the Holders
                                    of the Class A-3 Notes until the principal
                                    amount of the Class A-3 Notes has been
                                    reduced to zero, and fourth, to the Holders
                                    of the Class A-4 Notes until the principal
                                    amount of the Class A-4 Notes has been
                                    reduced to zero;

                  (vii)             to the Insurer, after giving effect to the
                                    distributions described in clauses (i)
                                    through (vi) above, (A) any amounts,
                                    including the Premium, owing to the Insurer
                                    under the Insurance Agreement and (B) any
                                    unreimbursed Insurer Defense Costs;

                  (viii)            to the Spread Account, after giving effect
                                    to the distributions described in clauses
                                    (i) through (vii) above, the amount, if any,
                                    required to increase the amount therein to
                                    the Spread Account Maximum for such
                                    Distribution Date; and

                  (ix)              any amounts remaining after distribution of
                                    the Accelerated Principal Distributable
                                    Amount as part of the Note Principal
                                    Distributable Amount, if applicable, 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
(iv) above, in that order of priority, but only to the extent that the Net
Collections (plus amounts transferred to the Payment Account from the Prefunding
Account, representing earnings from investments therein, and amounts transferred
to the Payment Account from the Capitalized Interest Account, if any) 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 (plus amounts
transferred to the Payment Account from the Prefunding Account, representing
earnings from investments therein, and

                                      -61-
<PAGE>

amounts transferred to the Payment Account from the Capitalized Interest
Account, if any) with respect to such Distribution Date available to distribute
the amounts referred to in clause (vi) above, the Indenture Trustee shall
distribute the amounts so received from the Insurer as provided in such clause.

                  SECTION 4.04      SPREAD ACCOUNT.

                  (a)      The Spread Account will be held for the benefit of
         the Noteholders and the Insurer.

                  (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, clauses (i) though (iv) with respect to such Distribution
         Date exceeds the amount of Net Collections (plus amounts transferred to
         the Payment Account from the Prefunding Account, representing earnings
         from investments therein, and amounts transferred to the Payment
         Account from the Capitalized Interest Account, if any) 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. 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
         Avoided Payment Amount. If the amount of cash on deposit in the Spread
         Account on any Distribution Date (after giving effect to all deposits
         thereto or withdrawals therefrom on such Distribution Date other than
         withdrawals relating to distributions to be made pursuant to this
         sentence) exceeds the maximum amount of the cash component of the
         Spread Account, as specified in the definition of "Spread Account
         Maximum" set forth in the Insurance Agreement, 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 any unreimbursed
         Insurer Defense Costs, and second, to the Residual Distribution Account
         for distribution to holders of the Residual Interests pursuant to the
         Trust Agreement. Upon any such distributions to the Insurer or the
         holders of the Residual Interests, the Noteholders 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.

                  (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
         Noteholders or the Insurer pursuant to the Insurance Agreement, and any
         unreimbursed Insurer Defense Costs, shall be paid to the holders of the
         Residual Interests; provided, however, that if an insolvency event of
         the type

                                      -62-
<PAGE>

         described in Section 7.01(d) or (e) with respect to any of the Seller,
         the Servicer, the Indenture Trustee or the Noteholders (collectively,
         the "POTENTIAL PREFERENCE PARTIES") shall have occurred during the
         period ending ninety-one (91) days after payment in full to the
         Noteholders of all amounts payable with respect to the Notes 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 any of the
         Insurer or the Noteholders. 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 Noteholders 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
         have been fully paid to the Noteholders, (ii) the Repayment Amount and
         all other amounts owing to the Insurer pursuant to the Insurance
         Agreement, and any unreimbursed Insurer Defense Costs 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 Noteholders, 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 to the holders of the

                                      -63-
<PAGE>

         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 NOTEHOLDERS.

                  (a)      On each Distribution Date, the Indenture Trustee
         shall make available on its website at www.jpmorgan.com/absmbs to each
         Noteholder of record as of the related Record Date, and to each other
         party to this Agreement, 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), separately identifying the
                                    aggregate amount included therein of any (i)
                                    Full Prepayments of principal on Precomputed
                                    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);

                  (iii)             the Note Distributable Amount for such
                                    Distribution Date;

                  (iv)              the Premium payable to the Insurer;

                  (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, specifying as to
                                    whether such amount is to be (A) deposited
                                    into the Payment Account, (B) paid to the
                                    Insurer or (C) deposited into the Note
                                    Distribution Account for distribution to the
                                    holders of the Residual Interests pursuant
                                    to Section 4.04;

                  (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 Trust Agent and the Indenture
                                    Trustee, with respect to the related
                                    Collection Period;

                  (ix)              the amount of any Note Interest Carryover
                                    Shortfall and Note Principal Carryover
                                    Shortfall on such Distribution Date and the
                                    change in such amounts from those with
                                    respect to the immediately preceding
                                    Distribution Date;

                                      -64-
<PAGE>

                  (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 Insured 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;

                  (xv)              the Pool Balance and the Note Pool Factor
                                    for each Class of Notes as of such
                                    Distribution Date after giving effect to the
                                    distribution made on such Distribution Date;

                  (xvi)             on each Distribution Date occurring during
                                    and immediately following the end of the
                                    Funding Period, the amount on deposit in
                                    each of the Prefunding Account and the
                                    Capitalized Interest Account on such
                                    Distribution Date, before and after giving
                                    effect to withdrawals therefrom to be made
                                    in respect of such Distribution Date;

                  (xvii)            on each Distribution Date occurring during
                                    and immediately following the end of the
                                    Funding Period, the amounts of investment
                                    earnings and other amounts transferred from
                                    the Prefunding Account and the amounts
                                    transferred from the Capitalized Interest
                                    Account to the Payment Account; and

                  (xviii)           on the Distribution Date immediately
                                    following the end of the Funding Period, the
                                    Mandatory Partial Redemption Amount.

Each amount set forth pursuant to subclauses (i) or (ii) above shall be
expressed as a dollar amount per $1,000.00 of original principal amount of a
Note. Assistance in using the website can be obtained by calling the Indenture
Trustee at 1-877-722-1095. Parties that are unable to use the above distribution
option are entitled to have a paper copy mailed to them via first class mail by
calling 1-877-722-1095. The Indenture Trustee shall have the right to change the
way the statements to Noteholders are distributed in order to make such
distribution more convenient, and the Indenture Trustee shall provide timely and
adequate notification to all above parties regarding such changes.

                  (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

                                      -65-

<PAGE>

Indenture Trustee and each Paying Agent, and the Paying Agent for the Notes and
the Paying Agent for the Residual Interest Instruments shall furnish to each
Person who on any Record Date during such calendar year shall have been a Holder
of a Note or a Residual Interest Instrument, respectively, a statement or
statements containing the sum of the amounts set forth in clauses (i) and (ii)
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 Residual Interest Instruments or, in the event such
Person shall have been a Holder of a Note or a Residual Interest Instrument
during a portion of such calendar year, for the applicable portion of such year,
for the purposes of such Noteholder's or Residual Interestholder's preparation
of federal income tax returns.

                  SECTION 4.06      CAPITALIZED INTEREST ACCOUNT.

         (a)      Pursuant to Section 4.01, the Servicer shall establish the
Capitalized Interest Account in the name of the Indenture Trustee for the
benefit of the Noteholders and the Insurer.

         (b)      On the Closing Date, the Seller shall deposit the Initial
Capitalized Interest Amount into the Capitalized Interest Account.

         (c)      On the Business Day immediately preceding each Distribution
Date, based solely on the Distribution Date Statement, the Indenture Trustee
shall withdraw or cause to be withdrawn funds equal to the Capitalized Interest
Amount with respect to such Distribution Date from amounts on deposit in the
Capitalized Interest Account and deposit or cause to be deposited such funds
into the Payment Account, to be distributed pursuant to Section 4.03.

         (d)      On each Distribution Date during and immediately following the
Funding Period, based on the written instructions of the Servicer, the Indenture
Trustee shall release to the Seller from the Capitalized Interest Account an
amount such that the balance remaining in the Capitalized Interest Account after
such release and after any transfer of the Capitalized Interest Amount to the
Payment Account pursuant to Section 4.06(c) will equal the Maximum Capitalized
Interest Amount. On the Distribution Date following the Mandatory Partial
Redemption Date, the Indenture Trustee shall release to the Seller any amounts
remaining on deposit in the Capitalized Interest Account after giving effect to
the required distribution to Noteholders on such date.

                  SECTION 4.07      PREFUNDING ACCOUNT.

         (a)      Pursuant to Section 4.01, the Servicer shall establish the
Prefunding Account in the name of the Indenture Trustee for the benefit of the
Noteholders and the Insurer.

         (b)      On the Closing Date, the Seller shall deposit into the
Prefunding Account an amount equal to the Prefunded Amount from the proceeds of
the sale of the Notes. Provided the Indenture Trustee has received the related
Transfer Certificate on the Business Day immediately preceding the Prefunding
Transfer Date, the Indenture Trustee shall withdraw from the Prefunding Account
an amount equal to the Outstanding Principal Balance of the Prefunded Contracts
(as indicated in the Transfer Certificate and determined as of the related
Prefunding Cut-Off Date) that have been delivered to the Custodian, on behalf of
the Indenture Trustee, and wire such amount by federal funds to the Seller's
account listed in the Transfer Certificate

                                      -66-

<PAGE>

relating to such Prefunding Transfer Date by 1:00 p.m. California time on such
Prefunding Transfer Date.

         (c)      If any amount remains on deposit in the Prefunding Account on
the last day of the Funding Period, such amount shall be invested at the written
instruction of the Servicer in a single Eligible Investment which matures on the
Business Day preceding the Mandatory Partial Redemption Date; provided, that in
the event no such Eligible Investment is available, such amount shall not be
invested but shall be held in the Prefunding Account uninvested.

         (d)      On the Business Day preceding the Mandatory Partial Redemption
Date, the Servicer shall instruct the Indenture Trustee in writing to withdraw
the Mandatory Partial Redemption Amount from the Prefunding Account and deposit
such amount in the Payment Account on such Business Day.

         (e)      On the Business Day immediately preceding each Distribution
Date following a Collection Period during which amounts are on deposit in the
Prefunding Account, the Indenture Trustee shall withdraw the earnings on all
investments in the Prefunding Account and deposit such amount in the Payment
Account on such Business Day.

                  SECTION 4.08      REQUIREMENTS RELATING TO PREFUNDING ACCOUNT.

         The transfer of Prefunded Contracts to the Trust shall be subject to
each of, and Prefunded Contracts shall not be transferred to the Trust to the
extent such transfer would result in the violation of any of, the following
restrictions and limitations, as well as the conditions set forth in Section
2.01(c):

         (a)      The period during which Prefunded Contracts may be transferred
to the Trust (the "FUNDING PERIOD") shall begin on the Closing Date and end no
later than the earliest to occur of: (i) the date on which the balance in the
Prefunding Account is less than $2,500.00; (ii) the date on which a Servicer
Default or an Indenture Event of Default occurs; or (iii) the close of business
on October 28, 2003.

         (b)      [Reserved].

         (c)      Each of the Prefunded Contracts shall meet the same terms and
conditions for eligibility as those of the Funded Contracts; provided, that the
terms and conditions for determining the eligibility of a Prefunded Contract may
be changed if such changes receive prior approval by the Insurer, with notice
given to each Rating Agency.

         (d)      The transfer of Prefunded Contracts shall not result in any
Note receiving a lower credit rating from a Rating Agency upon termination of
the Funding Period than the rating obtained as of the time of the initial
issuance of the Notes by the Trust without regard to the Policy.

                                      -67-

<PAGE>

                                    ARTICLE V

                                   THE SELLER

                  SECTION 5.01      LIABILITY OF SELLER.

         The Seller shall be liable in accordance herewith only to the extent of
the obligations specifically undertaken by the Seller under this Agreement.

                  SECTION 5.02      MERGER OR CONSOLIDATION OF, OR ASSUMPTION OF
THE OBLIGATIONS OF, SELLER; CERTAIN LIMITATIONS.

         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 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 NOTES AND RESIDUAL INTEREST
INSTRUMENTS.

         The Seller and any Affiliate thereof may in its individual or any other
capacity become the owner or pledgee of Notes or Residual Interest Instruments
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. Notes or
Residual Interest Instruments 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 Classes
of the Notes or Residual Interest Instruments, as the case may be.

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<PAGE>

                                   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 Noteholders 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 (if the Custodian is not the Servicer) and their respective
officers, directors, agents and employees from and against any taxes that may at
any time be asserted against the Issuer, the Owner Trustee, the Trust Agent, the
Indenture Trustee, the Insurer or the Custodian with respect to the transactions
contemplated herein and in the other Basic Documents, including, without
limitation, any sales, gross receipts, general corporation, tangible personal
property, privilege or license taxes (but, not including (i) in the case of the
Issuer, 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 Notes, or
(ii) any taxes asserted with respect to ownership of the Contracts, or (iii) any
federal or other income taxes arising out of distributions on the Notes) 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 (if the Custodian is not the Servicer), their respective officers,
directors, agents and employees and the Noteholders 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 (other than errors in judgment),
willful misfeasance or bad faith of the Servicer or the Seller in the
performance of their respective 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 (if the Custodian is not the Servicer) 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
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 (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

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<PAGE>

to indemnify the Issuer, the Owner Trustee, the Trust Agent, the Indenture
Trustee, the Insurer or the Custodian; or (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.

         (e)      In addition to the indemnification obligations set forth
above, and without duplication, the Servicer shall indemnify the Owner Trustee,
the Trust Agent, the Indenture Trustee, each co-trustee and their respective
officers, directors, employees, successors, assigns, agents and servants from
and against any and all liabilities, obligations, losses, damages, taxes,
claims, actions and suits, and any and all reasonable costs, expenses and
disbursements (including reasonable legal fees and expenses) of any kind and
nature whatsoever in any way relating to or arising out of the Trust Agreement,
the other Basic Documents, the Trust Estate (as defined in the Trust Agreement),
the administration of the Trust Estate or the action or inaction of the Owner
Trustee, Trust Agent, the Indenture Trustee, or any co-trustee under the Trust
Agreement, except to the extent that such liabilities, obligations, losses,
damages, taxes, claims, actions, suits, costs, expenses and disbursements (i)
shall be due to the willful misconduct or negligence of the Owner Trustee, the
Trust Agent, the Indenture Trustee, a co-trustee or such other party seeking
indemnification, as the case may be, (ii) shall arise from the inaccuracy of any
representation or warranty contained in Section 7.03 of the Trust Agreement
expressly made by the Owner Trustee or the Trust Agent, as the case may be or
(iii) shall arise from the inaccuracy of any representation or warranty
contained in Section 6.13 of the Indenture expressly made by the Indenture
Trustee. In the event of any claim, action or proceeding for which indemnity
will be sought pursuant to this Section 6.01(e), the choice of legal counsel by
the Owner Trustee, the Trust Agent or the Indenture Trustee, as applicable,
shall be subject to the approval of the Servicer, which approval shall not be
unreasonably withheld.

         (f)      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.

         (g)      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, the Trust Agreement and the Indenture.

                  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.

         (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

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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 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).

         (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

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<PAGE>

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 or any Noteholder, or the
Insurer of any provision of the Notes, 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 or the
Noteholders, 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 Noteholders 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 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;

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<PAGE>

         (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)      any 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 Noteholders, the Insurer, the Issuer, the Owner Trustee, the Backup Servicer
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, the Owner Trustee, the Backup Servicer 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 (2) 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 6.02 hereof;

         (g)      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 3.07 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 Noteholders 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

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<PAGE>

Holders evidencing in the aggregate not less than 25% of the outstanding amount
of the Notes, acting together as a single Class, or, so long as no Insurer
Default has occurred and is continuing, 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;

         (h)      a Trigger Event (as defined in the Insurance Agreement) shall
have occurred;

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
Holders evidencing not less than 25% of the outstanding principal amount of the
Notes, acting together as a single Class, or the Indenture Trustee acting on
behalf of the Noteholders, and not the Seller, by notice then given in writing
to the Servicer (and to the Insurer, the Indenture Trustee and the Issuer if
given by the Noteholders) 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 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.

         Notwithstanding the foregoing, in the event that Onyx is not the
Servicer, then all references to the Seller in this Section 7.01 shall be of no
force and effect, and no act of Seller shall constitute a Servicer Default
hereunder.

                  SECTION 7.02      TRUSTEE TO ACT; APPOINTMENT OF SUCCESSOR.

         Except as otherwise provided in this Section 7.02, upon the termination
or resignation of the Servicer, the Insurer shall appoint a successor servicer
(the "Successor Servicer"), which Successor Servicer shall succeed to all the
responsibilities, duties and liabilities of the Servicer hereunder other than
the obligation of the Servicer to purchase Contracts pursuant to Section 3.07 of
this Agreement. If the Insurer fails to appoint a Successor Servicer, the Backup
Servicer, if any, shall become the Successor Servicer pursuant to the terms of
the Backup Servicing Agreement. In such case, the Backup Servicer shall assume
the servicing obligations and duties of the Servicer in accordance with the
terms of the Backup Servicing Agreement and shall not be obligated to purchase
Contracts pursuant to Section 3.07 of this Agreement. Upon its appointment as
Successor Servicer, the Backup Servicer or any other Successor Servicer
appointed pursuant to the provisions of this Section 7.02 shall be entitled to
that portion of the

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<PAGE>

Servicing Fee payable to the Servicer and such other compensation (whether
payable out of the Collection Account or otherwise) as the Servicer would be
entitled to under this Agreement.

         If (a) upon the termination or resignation of the Servicer, a Back-up
Servicer has not been appointed, (b) the Backup Servicer on the date of its
appointment as Successor Servicer or at any time following such appointment
fails or is legally unable to perform its duties as set forth in the Backup
Servicing Agreement or has previously resigned or otherwise been terminated as
Backup Servicer or (c) any other Person designated Successor Servicer in
accordance herewith, fails or is legally unable to perform its duties as
Successor Servicer hereunder following its appointment as Successor Servicer,
then the Insurer may appoint or, if the Insurer is not entitled to appoint a
Successor Servicer by operation of Section 9.08 of this Agreement, the Indenture
Trustee may 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 Servicer hereunder. Until
such time as the Person so appointed becomes obligated to begin acting as
Successor Servicer, the then current Servicer will continue to perform all
servicing functions hereunder or, if the then current Servicer was terminated or
is legally unable to continue acting in such capacity, the Indenture Trustee
shall act as Successor Servicer. The Indenture Trustee and such Successor
Servicer shall take such action, consistent with this Agreement, as shall be
necessary to effectuate any such succession. Notwithstanding the foregoing, if
the Servicer is terminated pursuant to Section 7.01 or resigns pursuant to
Section 6.04, the Insurer may appoint a Successor Servicer other than the Backup
Servicer, unless the Insurer is not entitled to appoint a Successor Servicer by
operation of Section 9.08.

                  SECTION 7.03      NOTIFICATION TO NOTEHOLDERS AND RESIDUAL
INTERESTHOLDERS.

         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 Residual Interestholders 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 or the Seller, as the case may be, in the
performance of its obligations under this Agreement. Upon the occurrence of a
Servicer Default, if an Insurer Default has occurred and is continuing, Holders
evidencing not less than 51% of the outstanding principal amount of the Notes,
acting together as a single Class, on behalf of all Noteholders, shall have the
right to waive any default by the Servicer or the Seller, as the case may be, 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. A Servicer Default in making any required
deposits to or payment from the Trust Accounts in accordance with this Agreement
may only be waived with the consent of the Insurer (if no Insurer Default shall
have occurred and be continuing) or, if an Insurer Default shall have occurred
and is continuing, by Holders

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<PAGE>

sevidencing 100% of the outstanding principal amount of the Notes. No such
waiver shall impair the Insurer's or the Noteholders' 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 or otherwise
defined as an "Insolvency Proceeding" in the Policy 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. Any Avoided Payment Amounts paid by the Insurer shall be
reimbursed to the Insurer as provided in Section 4.03 and 4.04(b). Each
Noteholder, by its purchase of Notes, 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 Noteholder 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 TRUST PROPERTY;
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 Trust Property 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 Noteholders,
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 repurchase plus (y) accrued and unpaid interest on the
Contracts and (ii) the sum of (x) the aggregate unpaid principal amount of the
Notes plus (y) accrued and unpaid interest thereon plus (z) all amounts due to
the Insurer under the Insurance Agreement, and any unreimbursed Insurer Defense
Costs. 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, the Trust Agent, the Insurer and the Indenture
Trustee as soon as practicable after the

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<PAGE>

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 Residual
Interestholders 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.

                  SECTION 8.02      TRANSFER TO THE INSURER.

         If (i) there are one or more Outstanding Contracts at the end of the
Collection Period ending immediately prior to the Class A-4 Final Scheduled
Distribution Date and (ii) an amount sufficient to pay the Note Distributable
Amount on the Class A-4 Final Scheduled Distribution Date has been deposited
with the Indenture Trustee by the Insurer for the benefit of the Noteholders,
then on the Class A-4 Final Scheduled Distribution Date, the Class A-4 Notes
shall be deemed to be transferred by the Class A-4 Noteholders to the Insurer or
its designee as purchaser thereof at the opening of business on the Class A-4
Final Scheduled Distribution Date and the Indenture Trustee 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 Class A-4
Note evidencing the entire outstanding principal amount of the Class A-4 Notes.
Such new Class A-4 Note shall have the same terms as the Class A-4 Notes deemed
transferred by the Class A-4 Noteholders. No service charge shall be made for
the issuance of such Class A-4 Note to the Insurer or its designee, but the
Indenture 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
Noteholders, provided the Rating Agency Condition is satisfied, 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 the provisions of this Agreement or to modify, delete or add
any provision hereof relating to the rights and obligations of the Back-up
Servicer; provided, however, that any such action shall not materially and
adversely affect the interests of any Noteholder; and provided, further, that
any such amendment shall be deemed not to materially and adversely affect the
interests of any Noteholder if the Rating Agency Condition is satisfied.

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<PAGE>

         (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, provided the Rating Agency Condition has been satisfied, 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; 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 (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 all affected
Noteholders.

         (c)      Promptly after the execution of any such amendment or consent,
the Indenture Trustee shall furnish the written notification of the substance of
such amendment or consent to each Noteholder, respectively.

         (d)      It shall not be necessary for the consent of Noteholders
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 of the execution thereof shall be subject to
such reasonable requirements as the Indenture Trustee may prescribe. Any consent
by a Noteholder to an amendment of the Agreement shall be conclusive and binding
on such Noteholder and upon all future Noteholders of such Note and of any Note
issued upon the transfer thereof or in exchange thereof or in lieu thereof
whether or not notation of such consent is made upon such Note.

         (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 PROPERTY.

         (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 Noteholders, 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 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 9-508(b) 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.

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<PAGE>

         (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 state of organization 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 or installment loan agreements 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 backup
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.

         (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 authorized and filed that are necessary
                                    fully

                                      -79-

<PAGE>

                                    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 Closing 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 authorized 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 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 (I) THE DUTIES OF THE TRUST AGENT AND THE INDENTURE TRUSTEE SHALL BE
GOVERNED BY THE LAWS OF THE STATE OF NEW YORK AND (II) THE PARTIES HERETO AGREE
THAT TO EFFECTUATE THEIR INTENT THAT THIS AGREEMENT EVIDENCES A SALE, THE
DETERMINATION OF WHETHER THE TRANSFER BY THE SELLER OF THE CONTRACTS CONSTITUTES
A SALE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
STATE OF DELAWARE.

                  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 27051 Towne Centre Drive,
                                    Suite 200, Foothill Ranch, CA 92610,
                                    Attention: John W. Hall, President,
                                    facsimile (949) 465-3530;

                                      -80-

<PAGE>

                  (ii)              the Servicer, at 27051 Towne Centre Drive,
                                    Suite 100, Foothill Ranch, CA 92610,
                                    Attention: Don P. Duffy, Executive Vice
                                    President, facsimile (949) 465-3992;

                  (iii)             the Insurer, at 1221 Avenue of the Americas,
                                    New York, NY 10020, Attention: Surveillance,
                                    facsimile (212) 478-3587, confirmation (212)
                                    478-3400;

                  (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 Moody's Investors Service, Inc.,
                                    ABS Monitoring Department, 99 Church Street,
                                    New York, New York 10007;

                  (viii)            Standard & Poor's, to Standard & Poor's
                                    Ratings Services, 55 Water Street, New York,
                                    New York 10041, Attention: Asset Backed
                                    Surveillance Department; and

                  (ix)              the Custodian, to Onyx Acceptance
                                    Corporation, 27051 Towne Centre Drive, Suite
                                    100, Foothill Ranch, CA 92610, Attention:
                                    Don P. Duffy, Executive Vice President,
                                    facsimile (949) 465-3992.

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 Noteholder shall be given by first class mail, postage prepaid,
at the address of such Holder as shown in the Note Register. Any notice so
mailed within the time prescribed herein shall be conclusively presumed to have
been duly given, whether or not such Noteholder 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 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 Notes and (B) the Issuer, the Indenture Trustee and the Insurer have
consented to such transfer or assignment, or (ii) the Insurer, the Issuer, the
Indenture Trustee and Holders of

                                      -81-

<PAGE>

Notes of each Class evidencing not less than 51% of the outstanding amount of
Notes of such Class 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 parties other than the
Insurer and, solely for the purposes of Section 6.01, the Owner Trustee and the
Trust Agent, 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 are entitled to exercise pursuant to this
Agreement, without any consent of such Noteholders; provided, however, that
without the consent of each Noteholder 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 or Residual Interest Instrument, (ii) adversely affect in
any material respect the interests of the Holders of any Notes 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 Seller, the Indenture Trustee, the
Servicer 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 Seller, the Indenture
Trustee, the Servicer, the Trust Agent or the Holders of the Notes pursuant to
the terms of this Agreement; 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.

                  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
Trust Property and/or the assignment of any or all of the Issuer's rights and
obligations hereunder to the Indenture Trustee.

                                      -82-

<PAGE>

                  SECTION 9.11      LIMITATION OF LIABILITY OF OWNER TRUSTEE AND
INDENTURE TRUSTEE.

         Notwithstanding anything contained herein to the contrary, this
instrument has been executed by The Bank of New York (Delaware) not in its
individual capacity but in its capacity as Owner Trustee of the Issuer and by
JPMorgan Chase Bank not in its individual capacity but in its capacity as
Indenture Trustee and Trust Agent, and in no event shall The Bank of New York
(Delaware) in its individual capacity, JPMorgan Chase 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.

                  SECTION 9.12      ACKNOWLEDGMENT OF PARTIES; INSURER DEFENSE
COSTS.

         Each of the Seller, the Servicer, the Issuer and the Indenture Trustee
acknowledge Section 4.06 of the Trust Agreement, and agree that the Trust shall
reimburse the Insurer for all Insurer Defense Costs pursuant to the applicable
provisions of the Indenture and the Sale and Servicing Agreement.

                                      -83-

<PAGE>

         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 2003-C
                                    as Issuer

                                    By: The Bank of New York (Delaware), not
                                        in its individual capacity but solely as
                                        Owner Trustee

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

                                    ONYX ACCEPTANCE FINANCIAL
                                    CORPORATION, as Seller

                                        By:_____________________________________
                                           Michael A. Krahelski
                                           Senior Vice President

                                    ONYX ACCEPTANCE CORPORATION, as
                                    Servicer and Custodian

                                        By:_____________________________________
                                           Don P. Duffy
                                           Executive Vice President and
                                           Chief Financial Officer

                                    JPMORGAN CHASE BANK, not in its individual
                                    capacity but solely as Indenture Trustee and
                                    as Trust Agent

                                        By:_____________________________________
                                        Name:___________________________________
                                        Title:__________________________________

Sale and Servicing Agreement - Signature Page

<PAGE>

                                  SCHEDULE I-A

                          SCHEDULE OF INITIAL CONTRACTS

                           [On file with the Servicer]

<PAGE>

                                  SCHEDULE I-B

                        SCHEDULE OF SUBSEQUENT CONTRACTS

                           [On file with the Servicer]

<PAGE>

                                   SCHEDULE II

                 LOCATION AND ACCOUNT NUMBERS OF TRUST ACCOUNTS

Location:                           The Bank of New York
Account Number:                     8900118377
SubAccount:                         49591
Name of Account Holder:             Collection Account - OT 2003-C,
                                    JPMorgan Chase Bank, Indenture Trustee

Location:                           Wells Fargo Bank
Account Number:                     4010011401
Name of Account Holder:             Payahead Account - OT 2003-C,
                                    JPMorgan Chase Bank, as agent

Location:                           JPMorgan Chase Bank
Account Number:                     507947541
Sub Account:                        10205868.3
Name of Account Holder:             Spread Account - OT 2003-C,
                                    JPMorgan Chase Bank, Indenture Trustee

Location:                           JPMorgan Chase Bank
Account Number:                     507947541
Sub Account:                        10205868.2
Name of Account Holder:             Note Distribution Account - OT 2003-C,
                                    JPMorgan Chase Bank, Indenture Trustee

Location:                           JPMorgan Chase Bank
Account Number:                     507947541
Sub Account:                        10205868.6
Name of Account Holder:             Payment Account - OT 2003-C,
                                    JPMorgan Chase Bank

Location:                           JPMorgan Chase Bank
Account Number:                     507947541
Sub Account:                        10205868.5
Name of Account Holder:             Prefunding Account - OT 2003-C
                                    JPMorgan Chase Bank

Location:                           JPMorgan Chase Bank
Account Number:                     507947541
Sub Account:                        10205868.4
Name of Account Holder:             Capitalized Interest Account - OT 2003-C
                                    JPMorgan Chase Bank

<PAGE>

                                    EXHIBIT A

                        FORM OF APPOINTMENT OF CUSTODIAN

[Name and address of Custodian]

Re:      Onyx Acceptance Owner Trust 2003-C
         Auto Loan Backed Notes, Series 2003-C

Dear Sirs:

         Reference is hereby made to the Sale and Servicing Agreement (the "Sale
and Servicing Agreement") dated as of July 1, 2003 by and among Onyx Acceptance
Owner Trust 2003-C, as Issuer (the "Issuer"), Onyx Acceptance Corporation, Onyx
Acceptance Financial Corporation and JPMorgan Chase Bank, as Indenture Trustee
(the "Indenture Trustee") and Trust Agent ("Trust Agent"). Terms used herein
which are defined in the Sale and Servicing Agreement have the respective
meanings set forth in the Sale and Servicing Agreement.

         You are revocably appointed as the agent of and bailee for the
Indenture Trustee to act as custodian, in accordance with the terms and
provisions of the Sale and Servicing Agreement, of the Contract Documents
relating to each Contract and the related Obligor and Financed Vehicle. Please
acknowledge your acceptance of such appointment and your agreement to act as
custodian in accordance with the terms and provisions of the Sale and Servicing
Agreement by signing below in the space indicated therefor.

         By accepting such appointment you acknowledge that (i) the Indenture
Trustee (if the Notes have not been paid in full and the Indenture has not been
satisfied and discharged) and the Issuer or (ii) the Insurer, may terminate such
appointment at any time, with or without cause, by written notice to you.

                                    Very truly yours,

                                    JPMORGAN CHASE BANK,
                                    not in its individual capacity, but solely
                                    as Indenture Trustee

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________

<PAGE>

                                    ONYX ACCEPTANCE OWNER TRUST 2003-C

                                    By:_________________________________________
                                       The Bank of New York (Delaware),
                                       not in its individual capacity, but
                                       solely as Owner Trustee

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Title:______________________________________

ACCEPTED AND AGREED:

[Name of Custodian]

By:________________________
Name:______________________
Title:_____________________

XL Capital Assurance Inc.

By:________________________
Name:______________________
Title:_____________________

<PAGE>

                                    EXHIBIT B

                                 FORM OF POLICY

                              [Begins on Next Page]

<PAGE>

                                   EXHIBIT C-1

                          FORM OF TRANSFER CERTIFICATE

         The Transfer Certificate, dated as of _________, 2003, is delivered
pursuant to Section 2.01(c) of the Sale and Servicing Agreement dated as of July
1, 2003 (the "AGREEMENT") between Onyx Acceptance Owner Trust 2003-C, as Issuer
(the "ISSUER"), Onyx Acceptance Financial Corporation, as Seller (the "SELLER"),
Onyx Acceptance Corporation, as Servicer and Custodian, and JPMorgan Chase Bank,
as Indenture Trustee and as Trust Agent (the "Indenture Trustee"). Terms used in
this Transfer Certificate which are not defined herein have meanings assigned to
such terms in the Agreement.

         I, __________________, the ____________ of the Seller, do hereby
certify:

         1.       Attached hereto as Schedule I is a list of Prefunded Contracts
setting forth the Contract Number, Date of Origination, Maturity Date, Monthly
P&I, Original Principal Balance, Outstanding Principal Balance and APR for each
such Prefunded Contract. Such Schedule I is a list of Prefunded Contracts
referred to in the definition of "Schedule of Contracts" in the Agreement, and
is deemed incorporated into and made a part thereof. Such Prefunded Contracts
have an aggregate Outstanding Principal Balance of $________________, and all
Contract Documents relating thereto have been delivered to the Custodian as of
the date hereof. The Prefunding Cut-Off Date with respect to the Prefunded
Contracts transferred on the date hereof is _____________, 2003.

         2.       The aggregate Outstanding Principal Balance of all Prefunded
Contracts as of their respective Prefunding Cut-Off Dates delivered to the
Custodian, on behalf of the Indenture Trustee, pursuant to this Transfer
Certificate and each Transfer Certificate delivered up to the date hereof and
after the Closing Date is $_________, which amount is less than or equal to the
Prefunded Amount.

         3.       Each of the conditions set forth in Sections 2.01(c) and 4.08
of the Agreement has been met as of this Prefunding Transfer Date.

         4.       The representations and warranties as set forth in Section
2.02(a) and (d) of the Agreement with respect to the Seller and the Prefunded
Contracts delivered hereunder are true and correct as of this Prefunding
Transfer Date.

         Please transfer immediately available funds by 4:00 New York time today
in the amount of $___________________ to Seller in accordance with the wire
instructions below.

<PAGE>

         IN WITNESS WHEREOF, the undersigned has caused this Transfer
Certificate to be delivered to the Issuer, the Indenture Trustee and the Insurer
as of the date first above written.

                                    ONYX ACCEPTANCE FINANCIAL CORPORATION

                                    By:_________________________________________
                                       Name:
                                       Title:

Wiring Instructions:

         Beneficiary:

____________:     __________________________
                  __________________________
                  __________________________

         ABA:                       __________________________
         Bank Acct. #               __________________________
         $ Amount:                  __________________________
         Notation:                  Proceeds from 2003-C Owner Trust Prefunding
                                    Account

Consented to and agreed to (if the balance in the Prefunding Account prior to
the Prefunding Transfer Date to which this certificate relates exceeds
$30,000,000).

XL Capital Assurance Inc.

By:________________________
Name:______________________
Title:_____________________

<PAGE>

                                   EXHIBIT C-2

                   FORM OF PREFUNDING CLOSING DATE CERTIFICATE

         This Prefunding Closing Date Certificate, dated as of _________, 2003,
is delivered pursuant to Section 2.01(j) of the Sale and Servicing Agreement
dated as of July 1, 2003 (the "AGREEMENT") between Onyx Acceptance Owner Trust
2003-C, as Issuer, Onyx Acceptance Financial Corporation, as Seller (the
"SELLER"), Onyx Acceptance Corporation, as Servicer and Custodian, and JPMorgan
Chase Bank, as Indenture Trustee and as Trust Agent (the "INDENTURE TRUSTEE").
Terms used in this Prefunding Closing Date Certificate which are not defined
herein have meanings assigned to such terms in the Agreement.

         I, __________________, the ____________ of the Seller, do hereby
certify:

         1.       All Contract Documents relating to the Prefunded Contracts
have been delivered to the Custodian, on behalf of the Indenture Trustee, on or
before the date hereof.

         2.       The aggregate Outstanding Principal Balance of all Prefunded
Contracts as of their respective Prefunding Transfer Dates conveyed to the
Issuer and pledged to the Indenture Trustee, as described in the Prefunding
Transfer Certificates delivered on and after the Closing Date up to the date
hereof, is $_________, which amount is less than or equal to the original
Prefunded Amount.

         3.       Each of the conditions set forth in Section 2.01(j) of the
Agreement has been met as of the Prefunding Closing Date and each of the
conditions set forth in Sections 2.01(c) and 4.08 of the Agreement was met as of
each Prefunding Transfer Date.

         IN WITNESS WHEREOF, the undersigned has caused this Prefunding Closing
Date Certificate to be delivered to each Rating Agency, the Insurer and the
Indenture Trustee as of the date first above written.

                                    ONYX ACCEPTANCE FINANCIAL CORPORATION

                                    By:_________________________________________
                                    Name:_______________________________________
                                    Office:_____________________________________<PAGE>

                                                                   EXHIBIT 10.40

                           PURCHASE AND SALE AGREEMENT

                                  by and among

          CANDLEWOOD HOTEL COMPANY, INC. AND CERTAIN OF ITS AFFILIATES,
                                   as Sellers,

                                       and

                          HOSPITALITY PROPERTIES TRUST,
                                  as Purchaser

                           ---------------------------

                                  July 21, 2003

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                       Page
                                                                                                                       ----
<S>                                                                                                                    <C>
SECTION 1. DEFINITIONS............................................................................................       1

         1.1      "Agreement".....................................................................................       1
         1.2      "Agreement to Lease"............................................................................       1
         1.3      "Allocable Purchase Price"......................................................................       2
         1.4      "Assets"........................................................................................       2
         1.5      "Business Day"..................................................................................       2
         1.6      "Candlewood"....................................................................................       2
         1.7      "Candlewood Fund I".............................................................................       2
         1.8      "Candlewood Parties"............................................................................       2
         1.9      "Closing".......................................................................................       2
         1.10         "Closing Date"..............................................................................       2
         1.11         "Contracts".................................................................................       2
         1.12         "Defective Property"........................................................................       3
         1.13         "Documents".................................................................................       3
         1.14         "FF&E"......................................................................................       3
         1.15         "Hotel".....................................................................................       3
         1.16         "Improvements"..............................................................................       3
         1.17         "Intangible Property".......................................................................       3
         1.18         "Non-Liable Parties"........................................................................       3
         1.19         "Opening Date"..............................................................................       3
         1.20         "Permitted Encumbrances"....................................................................       3
         1.21         "Plans and Specifications"..................................................................       4
         1.22         "Properties"................................................................................       4
         1.23         "Purchase Price"............................................................................       4
         1.24         "Purchaser".................................................................................       4
         1.25         "Real Property".............................................................................       4
         1.26         "Retained Funds"............................................................................       4
         1.27         "Review Period".............................................................................       4
         1.28         "Second Amended Lease"......................................................................       4
         1.29         "Sellers"...................................................................................       5
         1.30         "Surveys"...................................................................................       5
         1.31         "Tenant"....................................................................................       5
         1.32         "Tenant Leases".............................................................................       5
         1.33         "Title Commitments".........................................................................       5
         1.34         "Title Company".............................................................................       5

SECTION 2. PURCHASE AND SALE; DILIGENCE...........................................................................       5

         2.1      Purchase and Sale...............................................................................       5
         2.2      Diligence Inspections...........................................................................       5
         2.3      Defective Properties............................................................................       6
         2.4      Title Matters...................................................................................       7
         2.5      Survey Matters..................................................................................       8
</TABLE>

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                        Page
                                                                                                                        ----
<S>                                                                                                                     <C>
SECTION 3. PURCHASE AND SALE.....................................................................................         9

         3.1      Closing........................................................................................         9
         3.2      Purchase Price.................................................................................         9

SECTION 4. CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE.........................................................        10

         4.1      Closing Documents..............................................................................        10
         4.2      Condition of Properties........................................................................        11
         4.3      Title Policies and Surveys.....................................................................        11
         4.4      Opinions of Counsel............................................................................        12

SECTION 5. CONDITIONS TO CANDLEWOOD PARTIES' OBLIGATION TO CLOSE.................................................        12

         5.1      Purchase Price.................................................................................        12
         5.2      Closing Documents..............................................................................        12
         5.3      Opinion of Counsel.............................................................................        12

SECTION 6. REPRESENTATIONS AND WARRANTIES OF CANDLEWOOD PARTIES..................................................        13

         6.1      Status and Authority of the Candlewood Parties.................................................        13
         6.2      Action of the Candlewood Parties...............................................................        13
         6.3      No Violations of Agreements....................................................................        13
         6.4      Litigation.....................................................................................        13
         6.5      Existing Leases, Agreements, Etc...............................................................        14
         6.6      Disclosure.....................................................................................        14
         6.7      Utilities, Etc.................................................................................        14
         6.8      Compliance With Law............................................................................        14
         6.9      Taxes..........................................................................................        15
         6.10         Not A Foreign Person.......................................................................        15
         6.11         Hazardous Substances.......................................................................        15
         6.12         Insurance..................................................................................        15
         6.13         Ownership of Sellers.......................................................................        15
         6.14         Substantial Completion.....................................................................        16
         6.15         Condition of Properties....................................................................        16

SECTION 7. REPRESENTATIONS AND WARRANTIES OF PURCHASER...........................................................        17

         7.1      Status and Authority of the Purchaser..........................................................        17
         7.2      Action of the Purchaser........................................................................        17
         7.3      No Violations of Agreements....................................................................        18
         7.4      Litigation.....................................................................................        18

SECTION 8. COVENANTS OF THE CANDLEWOOD PARTIES...................................................................        18
</TABLE>

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                                                        Page
                                                                                                                        ----
<S>                                                                                                                     <C>
         8.1      Compliance with Laws, Etc......................................................................        18
         8.2      Approval of Agreements.........................................................................        18
         8.3      Notice of Material Changes or Untrue Representations...........................................        19
         8.4      Financial Information..........................................................................        19

SECTION 9. APPORTIONMENTS........................................................................................        19

         9.1      Real Property Apportionments...................................................................        19
         9.2      Closing Costs..................................................................................        20

SECTION 10. DEFAULT..............................................................................................        20

         10.1         Default by the Candlewood Parties..........................................................        20
         10.2         Default by the Purchaser...................................................................        20
         10.3         Limitation of Remedies.....................................................................        21

SECTION 11. MISCELLANEOUS........................................................................................        21

         11.1         Agreement to Indemnify.....................................................................        21
         11.2         Brokerage Commissions......................................................................        22
         11.3         Publicity..................................................................................        23
         11.4         Notices....................................................................................        23
         11.5         Waivers, Etc...............................................................................        24
         11.6         Assignment; Successors and Assigns.........................................................        25
         11.7         Severability...............................................................................        25
         11.8         Counterparts, Etc..........................................................................        26
         11.9         Governing Law..............................................................................        26
         11.10        Performance on Business Days...............................................................        26
         11.11        Attorneys' Fees............................................................................        27
         11.12        Section and Other Headings.................................................................        27
         11.13        Nonliability of Trustees...................................................................        27
         11.14        Single Agreement...........................................................................        27
</TABLE>

<PAGE>

                                TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                        Page
                                                                                        ----
<S>                                    <C>                                              <C>
Schedule A                             The Properties; Allocable Purchase Prices
Schedules B-1 - B-7                    Legal Descriptions
Schedule C                             List of Plans and Specifications
Schedule D                             Form of Surveyor's Certificate
Schedule E                             Form of Seller's Certificate
Schedule F                             Form of Architect's Certificate
</TABLE>

                                     - i -

<PAGE>

                           PURCHASE AND SALE AGREEMENT

         THIS PURCHASE AND SALE AGREEMENT is made as of July 21, 2003 by and
among (i) CANDLEWOOD HOTEL COMPANY, INC., a Delaware corporation ("Candlewood"),
(ii) the entities listed as "sellers" on the signature pages of this Agreement
(each, individually, a "Seller" and collectively, the "Sellers") and (iii)
HOSPITALITY PROPERTIES TRUST, a Maryland real estate investment trust
("Purchaser").

                                   WITNESSETH:

         WHEREAS, the Sellers are the owners of all the Properties (all
capitalized terms used and not otherwise defined herein having the meanings
ascribed to such terms in Section 1); and

         WHEREAS, the Purchaser desires to purchase the Properties, as more
fully set forth below; and

         WHEREAS, the Sellers are willing to sell all of the Properties to the
Purchaser, subject to and upon the terms and conditions hereinafter set forth;
and

         WHEREAS, Candlewood owns, directly or indirectly, a financial interest
in all of the Sellers and the transactions contemplated by this Agreement are of
direct and material benefit to Candlewood;

         NOW, THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the mutual receipt and
legal sufficiency of which are hereby acknowledged, the Candlewood Parties and
the Purchaser hereby agree as follows:

SECTION 1.        DEFINITIONS

         Capitalized terms used in this Agreement shall have the meanings set
forth below or in the Section of this Agreement referred to below:

         1.1  "AGREEMENT" shall mean this Purchase and Sale Agreement, together
with the Schedules attached hereto, as it and they may be amended from time to
time as herein provided.

         1.2  "AGREEMENT TO LEASE" shall mean that certain Agreement to Lease,
dated as of November 19, 1997, by and

<PAGE>

between the Purchaser and Candlewood, as it may be amended, restated,
supplemented or otherwise modified from time to time.

         1.3  "ALLOCABLE PURCHASE PRICE" shall mean, with respect to each
Property, the amount set forth in Schedule A opposite the name of such Property,
it being understood and agreed that the aggregate amount of the Allocable
Purchase Prices of the Properties shall be Sixty-Five Million Dollars
($65,000,000).

         1.4  "ASSETS" shall mean, with respect to any Hotel, collectively, all
of the Real Property, the FF&E, the Contracts, the Documents, the Improvements,
the Intangible Property and the Tenant Leases owned by any of the Sellers in
connection with or relating to such Hotel.

         1.5  "BUSINESS DAY" shall mean any day other than a Saturday, Sunday or
any other day on which banking institutions in The Commonwealth of Massachusetts
or the State of New York are authorized by law or executive action to close.

         1.6  "CANDLEWOOD" shall have the meaning given such term in the first
paragraph of this Agreement.

         1.7  "CANDLEWOOD FUND I" shall have the meaning given such term in
Section 10.3.

         1.8  "CANDLEWOOD PARTIES" shall mean, collectively, Candlewood and the
Sellers.

         1.9  "CLOSING" shall have the meaning given such term in Section 3.1.

         1.10 "CLOSING DATE" shall have the meaning given such term in Section
3.1.

         1.11 "CONTRACTS" shall mean, with respect to any Property, all hotel
licensing agreements and other service contracts, equipment leases, booking
agreements and other arrangements or agreements to which any of the Sellers is a
party affecting the ownership, repair, maintenance, management, leasing or
operation of such Property, to the extent the Sellers' interest therein is
assignable or transferable; provided, however, that the term "Contracts" shall
not include those certain management agreements, dated as of various dates,
between any Seller and Candlewood with respect to such Seller's respective
Properties, which management agreements shall be terminated with respect to such
affected Properties on or prior to the Closing Date.

                                     - 2 -

<PAGE>

         1.12 "DEFECTIVE PROPERTY" shall have the meaning given such term in
Section 2.3(a).

         1.13 "DOCUMENTS" shall mean, with respect to any Property, all books,
records and files relating to the leasing, maintenance, management or operation
of such Property.

         1.14 "FF&E" shall mean, with respect to any Property, all appliances,
machinery, devices, fixtures, appurtenances, equipment, furniture, furnishings
and articles of tangible personal property of every kind and nature whatsoever
(other than motor vehicles) owned by any of the Sellers and located in or at, or
used in connection with the ownership, operation or maintenance of such
Property.

         1.15 "HOTEL" shall mean each hotel located at the properties identified
on Schedule A, the legal descriptions of which are set forth on Schedules B-1
through B-7.

         1.16 "IMPROVEMENTS" shall mean, with respect to any Property, all
buildings, fixtures, walls, fences, landscaping and other structures and
improvements situated on, affixed or appurtenant to the Real Property with
respect to such Property.

         1.17 "INTANGIBLE PROPERTY" shall mean, with respect to any Property,
all transferable or assignable permits, certificates of occupancy, operating
permits, sign permits, development rights and approvals, certificates, licenses,
warranties and guarantees, the Contracts, telephone exchange numbers identified
with such Property held by any of the Sellers and all other transferable
intangible property, miscellaneous rights, benefits and privileges of any kind
or character with respect to such Property held by any of the Sellers.

         1.18 "NON-LIABLE PARTIES" shall have the meaning given such term in
Section 10.3.

         1.19 "OPENING DATE" shall mean, with respect to any Property, the date
as of which all Improvements located at such Property, including, without
limitation, all guest rooms and/or suites, shall be open for business to the
public as a Candlewood hotel, in accordance with applicable brand standards.

         1.20 "PERMITTED ENCUMBRANCES" shall mean, with respect to any Property,
(a) liens for taxes, assessments and governmental charges with respect to such
Property not yet due and payable or due and payable but not yet delinquent; (b)
applicable zoning regulations and ordinances provided the same do not prohibit
or

                                     - 3 -

<PAGE>

impair in any material respect use of such Property as an extended stay hotel as
currently operated and constructed; (c) such other nonmonetary encumbrances as
do not, in the Purchaser's reasonable opinion, impair marketability and do not
materially interfere with the use of such Property as a fully functioning
Candlewood hotel; (d) UCC Financing Statements which would be permitted pursuant
to the terms of Section 21.9 of the Second Amended Lease; and (e) such other
nonmonetary encumbrances with respect to such Property which are not objected to
by the Purchaser in accordance with Sections 2.4 and 2.5.

         1.21 "PLANS AND SPECIFICATIONS" shall mean, with respect to each
Property, the plans and specifications identified on Schedule C with respect to
such Property.

         1.22 "PROPERTIES" shall mean, collectively, all of the Assets relating
to the properties identified on Schedule A, the legal descriptions of which are
set forth in Schedules B-1 through B-7.

         1.23 "PURCHASE PRICE" shall mean the sum of the Allocable Purchase
Prices, but in no event more than Sixty-Five Million Dollars ($65,000,000).

         1.24 "PURCHASER" shall have the meaning given such term in the first
paragraph of this Agreement.

         1.25 "REAL PROPERTY" shall mean, with respect to any Property, the real
property described in the applicable Schedule B-1 through B-7, together with all
easements, rights of way, privileges, licenses and appurtenances which the
Sellers may own with respect thereto.

         1.26 "RETAINED FUNDS" shall mean the sum of Zero Dollars ($0).

         1.27 "REVIEW PERIOD" shall mean the period commencing on the date of
this Agreement and expiring on the first to occur of the date thirty (30) days
after the date of this Agreement and the Closing Date.

         1.28 "SECOND AMENDED LEASE" shall mean that certain Second Amended and
Restated Lease Agreement between the Purchaser or its subsidiaries, as landlord,
and the Tenant, as tenant, with respect to the Properties and the other
properties described in the Agreement to Lease, as amended, modified or
supplemented from time to time.

                                     - 4 -

<PAGE>

         1.29 "SELLERS" shall have the meaning given such term in the first
paragraph of this Agreement.

         1.30 "SURVEYS" shall have the meaning given such term in Section 2.5.

         1.31 "TENANT" shall have the meaning given such term in the Agreement
to Lease.

         1.32 "TENANT LEASES" shall mean, with respect to any Property, all
leases, rental agreements or other agreements (other than agreements for letting
of rooms or other facilities to hotel guests), including all amendments or
modifications thereto), which entitle any person to have rights with respect to
the use or occupancy of any portion of such Property.

         1.33 "TITLE COMMITMENTS" shall have the meaning given such term in
Section 2.4.

         1.34 "TITLE COMPANY" shall mean Chicago Title Insurance Company, or
such other title insurance company as shall have been selected by the Purchaser
and approved by the Sellers, which approval shall not be unreasonably withheld,
delayed or conditioned.

SECTION 2.        PURCHASE AND SALE; DILIGENCE

         2.1  PURCHASE AND SALE. In consideration of the mutual covenants herein
contained, the Purchaser hereby agrees to purchase from the Sellers and
Candlewood hereby agrees to cause the Sellers to sell and the Sellers hereby
agree to sell to the Purchaser, all of the Sellers' right, title and interest in
and to the Properties for the Purchase Price, subject to and in accordance with
the terms and conditions of this Agreement.

         2.2  DILIGENCE INSPECTIONS. For the Review Period and, thereafter,
until Closing, the Sellers shall permit the Purchaser and its representatives to
inspect the Properties and the Improvements (including, without limitation, all
roofs, electric, mechanical and structural elements, and HVAC systems therein),
to perform due diligence, soil analysis and environmental investigations, to
examine the books of account and records of the Sellers with respect to the
Properties, including, without limitation, all leases and agreements affecting
the Properties, and make copies thereof, at such reasonable times as the
Purchaser or its representatives may request by notice to the Sellers (which
notice may be oral). To the extent that, in connection with such investigations,
the

                                     - 5 -

<PAGE>

Purchaser, its agents, representatives or contractors, damages or disturbs any
of the Real Property, the Improvements or FF&E located thereon, the Purchaser
shall, at its expense, return the same to substantially the same condition which
existed immediately prior to such damage or disturbance. Neither the Purchaser
nor any of its agents, representatives or contractors shall have any right
whatsoever to alter the condition of any Property, or portion thereof, without
the prior written consent of the Sellers, which consent shall not be
unreasonably withheld, delayed or conditioned. The Purchaser shall indemnify,
defend and hold harmless the Sellers from and against any and all expense, loss
or damage which the Sellers may incur as a result of any act or omission of the
Purchaser or its representatives, agents or contractors in connection with such
examinations and inspections, other than to the extent that any expense, loss or
damage arises from any negligence or misconduct of the Sellers. The provisions
of this Section 2.2 shall survive the termination of this Agreement and the
Closing.

         2.3  DEFECTIVE PROPERTIES. (a) In the event that (i) the Purchaser
reasonably determines that a Property has structural, environmental or other
structural defects or conditions such that (x) expenditures equal to or greater
than three percent (3%) of the Allocable Purchase Price of such Property are
required in order to bring such Property into a reasonably satisfactory
condition in accordance with prevailing standards, as the case may be, for like
hotels, or (y) the calculation with respect to such Property of net operating
income varies by three percent (3%) or more of that set forth in the financial
data provided by the Candlewood Parties to the Purchaser prior to the date
hereof (any such Property being hereinafter referred to as a "Defective
Property"), and (ii) the Purchaser gives written notice thereof to the
Candlewood Parties no later than the expiration of the Review Period (time being
of the essence with respect to the giving of such notice), identifying the
Defective Property or Defective Properties and the specific defects with respect
thereto, the Candlewood Parties shall, subject to paragraph (c) below, be
required to permit the Purchaser to acquire all of the Properties other than
such Defective Property or Defective Properties.

         (b)  If, prior to the Closing, (i) any Property suffers a casualty or
condemnation which would cause such Property to become a Defective Property,
(ii) such Property is not, prior to the Closing, restored to a condition
substantially the same as the condition thereof immediately prior to such
casualty or condemnation, and (iii) the Purchaser provides written notice of

                                     - 6 -

<PAGE>

same to the Candlewood Parties no later than the Closing Date, time being of the
essence, the Candlewood Parties shall, subject to paragraph (c) below, be
required to permit the Purchaser to acquire all of the Properties other than
such Defective Property. Promptly upon learning of the same, the Candlewood
Parties covenant and agree to provide the Purchaser with prompt written notice
of any casualty or condemnation affecting any Property.

         (c)  If the Purchaser timely identifies any Defective Property and the
Purchaser and the Candlewood Parties shall, acting reasonably and in good faith,
be unable or unwilling to agree that (x) the Candlewood Parties shall, at their
sole cost, remedy the applicable defect prior to the Closing (in which event the
Candlewood Parties shall have the right to adjourn the Closing Date for up to
ninety (90) days for such purpose), (y) the Purchaser shall, notwithstanding
such defect, acquire the Defective Property subject to a reduction in the
Allocable Purchase Price of the Defective Property sufficient to compensate the
Purchaser for such defect (in which event the Seller shall retain all available
insurance or condemnation proceeds) or (z) on the substitution of another
property owned by the Candlewood Parties for such Defective Property, this
Agreement shall, at the Purchaser's option, terminate with respect to such
Defective Property and the Purchase Price shall be reduced by the Allocable
Purchase Price of such Defective Property.

         2.4  TITLE MATTERS. Prior to the execution of this Agreement, the
Candlewood Parties have ordered from the Title Company and directed the Title
Company promptly to deliver to the Purchaser a preliminary title commitment, for
an ALTA extended owner's policy of title insurance with respect to each of the
Properties, together with complete and legible copies of all instruments and
documents referred to as exceptions to title (collectively, the "Title
Commitments").

         Prior to the expiration of the Review Period, the Purchaser shall give
the Candlewood Parties notice of any title exceptions (other than Permitted
Encumbrances) which adversely affect any Property in any material respect and as
to which the Purchaser reasonably objects. If, for any reason, the Candlewood
Parties are unable or unwilling to take such actions as may be required to cause
such exceptions to be removed from the Title Commitments, the Candlewood Parties
shall give the Purchaser notice thereof; it being understood and agreed that the
failure of the Candlewood Parties to give such notice within ten (10)

                                     - 7 -

<PAGE>

Business Days after the Purchaser's notice of objection shall be deemed an
election by the Candlewood Parties not to remedy such matters. If the Candlewood
Parties shall be unable or unwilling to remove any title defects to which the
Purchaser has reasonably objected, the Purchaser may elect (i) to terminate this
Agreement with respect to the affected Property, in which event the Purchase
Price shall be reduced by the Allocable Purchase Price of the affected
Properties and this Agreement shall be of no further force and effect with
respect to the affected Properties or (ii) to consummate the transactions
contemplated hereby, notwithstanding such title defect, without any abatement or
reduction in the Purchase Price on account thereof. The Purchaser shall make any
such election by written notice to the Candlewood Parties given on or prior to
the fifth Business Day after the Candlewood Parties' notice of their
unwillingness or inability to cure such defect. Failure of the Purchaser to give
such notice shall be deemed an election by the Purchaser to proceed in
accordance with clause (ii) above and such exception shall be deemed a Permitted
Encumbrance.

         2.5  SURVEY MATTERS. Prior to the execution of this Agreement, the
Candlewood Parties have arranged for the preparation of an ALTA survey with
respect to each of the Properties (the "Surveys") by a licensed surveyor in the
jurisdiction in which each such Property is located, which (i) contains an
accurate legal description of the applicable Property, (ii) shows the exact
location, dimension and description (including applicable recording information)
of all utilities, easements, encroachments and other physical matters affecting
such Property, the number of striped parking spaces located thereon and all
applicable building set-back lines, (iii) states whether the applicable Property
is located within a 100-year flood plain and (iv) includes a certification in
the form set forth in Schedule D, or such other form as may be acceptable to the
Purchaser, addressed to the Purchaser, the Title Company and any other persons
requested by the Purchaser or designated by the Candlewood Parties.

         Within ten (10) Business Days after receipt of the Surveys, the
Purchaser shall give the Candlewood Parties notice of any matters shown thereon
(other than Permitted Encumbrances) which adversely affect any Property in any
material respect and as to which the Purchaser reasonably objects. If, for any
reason, the Candlewood Parties are unwilling or unable to take such actions as
may be required to remedy the objectionable matters, the Candlewood Parties
shall give the Purchaser prompt notice thereof; it being understood and agreed
that the failure of the

                                     - 8 -

<PAGE>

Candlewood Parties to give such notice within ten (10) Business Days after the
Purchaser's notice of objection shall be deemed an election by the Candlewood
Parties not to remedy such matters. If the Candlewood Parties shall be unwilling
or unable to remove any survey defect to which the Purchaser has reasonably
objected, the Purchaser may elect (i) to terminate this Agreement with respect
to the affected Property, in which event the Purchase Price shall be reduced by
the Allocable Purchase Price of the affected Properties and this Agreement shall
terminate and be of no further force or effect with respect to the affected
Properties or (ii) to consummate the transactions contemplated hereby
notwithstanding such defect, without any abatement or reduction in the Purchase
Price on account thereof. The Purchaser shall make any such election by written
notice to the Candlewood Parties given on or prior to the fifth (5th) Business
Day after the Candlewood Parties' notice of their inability to cure such defect
and time shall be of the essence with respect to the giving of such notice.
Failure of the Purchaser to give such notice shall be deemed an election by the
Purchaser to proceed in accordance with clause (ii) above and such matter shall
be deemed a Permitted Encumbrance.

SECTION 3.        PURCHASE AND SALE

         3.1  CLOSING. The purchase and sale of the Properties shall be
consummated at a closing (the "Closing") to be held at the offices of Sullivan &
Worcester LLP, One Post Office Square, Boston, Massachusetts, or at such other
location as the Sellers and the Purchaser may agree, at 10:00 a.m. local time,
on a date (the "Closing Date") which is the later to occur of (i) July 21, 2003,
and (ii) the date as of which all conditions precedent to the Closing herein set
forth have either been satisfied or waived by the party in whose favor such
conditions run. In the event that the Closing shall not have occurred on or
before July 21, 2003, provided that no action for specific performance shall
have been commenced by the Purchaser to enforce this Agreement, any party shall,
provided such party shall not be in default hereunder, have the right, by the
giving of written notice, to terminate this Agreement.

         3.2  PURCHASE PRICE. The Purchase Price shall be payable as follows:

         (a)  At the Closing, the Purchase Price, less the amount of the
Retained Funds, shall be payable by wire transfer of immediately available funds
on the Closing Date to an account or accounts to be designated by the Sellers
prior to the Closing; and

                                     - 9 -

<PAGE>

         (b)  Except as otherwise provided in the Second Amended Lease, the
Retained Funds with respect to each Property shall be payable by wire transfer
of immediately available funds upon the expiration or sooner termination of the
Second Amended Lease, in accordance with the terms of the Second Amended Lease,
to an account or accounts to be designated by the Sellers prior to such date.

SECTION 4.        CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSE

         The obligation of the Purchaser to acquire each of the Properties on
the Closing Date shall be subject to the satisfaction of the following
conditions precedent on and as of such Closing Date:

         4.1  CLOSING DOCUMENTS. The Candlewood Parties shall have delivered to
the Purchaser:

         (a)  A good and sufficient warranty deed with covenants against
grantor's acts, or its local equivalent, in proper statutory form for recording,
duly executed and acknowledged by the applicable Seller(s), conveying good and
marketable title to each of the Properties, free from all liens and encumbrances
other than the Permitted Encumbrances;

         (b)  A bill of sale and assignment agreement, in form and substance
reasonably satisfactory to the Sellers and the Purchaser, duly executed and
acknowledged by the applicable Seller(s), with respect to all of the Sellers'
right, title and interest in, to and under the FF&E, the Contracts, the
Documents, the Intangible Property and the Tenant Leases with respect to each of
the Properties and the Sellers' rights under all builder's warranties with
respect to each of the Properties;

         (c)  A copy of the final duly issued certificate of occupancy for each
Property;

         (d)  A Sellers' closing certificate in the form attached hereto as
Schedule E;

         (e)  An architect's certificate in the form attached hereto as Schedule
F;

         (f)  A duly executed copy of the Second Amended Lease, or the
applicable amendment thereto, all of the Incidental Documents (as such term is
defined in the Second Amended Lease), or applicable confirmations thereof, and
all other documents and

                                     - 10 -

<PAGE>

sums required to be delivered by the Candlewood Parties and/or the Tenant
pursuant to the Agreement to Lease;

         (g)  Certified copies of all charter documents, applicable corporate
resolutions and certificates of incumbency with respect to the applicable
Candlewood Parties and the Tenant; and

         (h)  Such other conveyance documents, certificates, deeds, affidavits
and other instruments as the Purchaser or the Title Company may reasonably
require to effectuate the transactions contemplated by this Agreement.

         4.2  CONDITION OF PROPERTIES.

         (a)  No material default or event which with the giving of notice
and/or lapse of time could constitute a material default shall have occurred and
be continuing under any material agreement benefiting or affecting any of the
Properties in any respect;

         (b)  No action shall be pending or threatened for the condemnation or
taking by power of eminent domain of all or any material portion of any of the
Properties which would render such Property a Defective Property;

         (c)  All material licenses, permits and other authorizations necessary
for the current use, occupancy and operation of each of the Properties shall be
in full force and effect;

         (d)  The Purchaser shall have received an engineer's report with
respect to each Property, in form and substance reasonably satisfactory to the
Purchaser; and

         (e)  No Default or Event of Default (as defined therein) shall have
occurred and be continuing under the Second Amended Lease.

         4.3  TITLE POLICIES AND SURVEYS. (a) The Title Company shall be
prepared, subject only to payment of the applicable premium and endorsement fees
and delivery of all conveyance documents in recordable form, to issue title
insurance policies to the Purchaser with respect to each of the Properties, in
form and substance reasonably satisfactory to the Purchaser in accordance with
Section 2.4, together with such affirmative coverages as the Purchaser may
reasonably require and shall have been determined by the Title Company as
available prior to the expiration of the Review Period.

                                     - 11 -

<PAGE>

         (b)  The Purchaser shall have received an as-built survey with respect
to each of the Properties, such survey to be consistent with the requirements of
Section 2.5.

         4.4  OPINIONS OF COUNSEL. (a) The Purchaser shall have received a
written opinion from counsel to the Candlewood Parties, which counsel shall be
reasonably acceptable to the Purchaser, in form and substance reasonably
satisfactory to the Purchaser, regarding the organization and authority of the
Candlewood Parties and the Tenant, the enforceability of this Agreement, the
Second Amended Lease and the Incidental Documents (as defined in the Second
Amended Lease) and such other matters with respect to the transactions
contemplated by this Agreement as the Purchaser may reasonably require.

         (b)  The Purchaser shall have received a zoning report from Planning
and Zoning Resource Corporation, in form and substance reasonably satisfactory
to the Purchaser, for each Property regarding the compliance of such Property
with respect to zoning, licensing and such other matters as the Purchaser may
reasonably require.

SECTION 5.        CONDITIONS TO CANDLEWOOD PARTIES' OBLIGATION TO CLOSE

         The obligation of the Candlewood Parties to convey the Properties on
the Closing Date to the Purchaser is subject to the satisfaction of the
following conditions precedent on and as of the Closing Date:

         5.1  PURCHASE PRICE. The Purchaser shall deliver to the Candlewood
Parties the Purchase Price as provided in Section 3.2.

         5.2  CLOSING DOCUMENTS. The Purchaser shall have delivered to the
Sellers:

         (a)  Duly executed and acknowledged counterparts of the documents
described in Section 4.1, where applicable; and

         (b)  Certified copies of all charter documents, applicable resolutions
and certificates of incumbency with respect to the Purchaser.

         5.3  OPINION OF COUNSEL. The Candlewood Parties shall have received a
written opinion from Sullivan & Worcester LLP, counsel to the Purchaser, in form
and substance reasonably satisfactory to the Candlewood Parties, regarding the

                                     - 12 -

<PAGE>

organization and authority of the Purchaser and such other matters with respect
to the transactions contemplated by this Agreement as the Candlewood Parties may
reasonably require.

SECTION 6.        REPRESENTATIONS AND WARRANTIES OF CANDLEWOOD PARTIES

         To induce the Purchaser to enter into this Agreement, each of
Candlewood, with respect to all Properties, and each Seller, with respect to its
Property, represent and warrant to the Purchaser as follows:

         6.1  STATUS AND AUTHORITY OF THE CANDLEWOOD PARTIES. It is a
corporation or limited liability company duly organized, validly existing and in
good standing under the laws of its state of incorporation or formation, and has
all requisite power and authority under the laws of such state and its
respective charter documents to enter into and perform its obligations under
this Agreement and to consummate the transactions contemplated hereby. It has
duly qualified to transact business in each jurisdiction in which the nature of
the business conducted by it requires such qualification, except where failure
to do so could not reasonably be expected to have a material adverse effect.

         6.2  ACTION OF THE CANDLEWOOD PARTIES. It has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by it on or
prior to the Closing Date, such document shall constitute its valid and binding
obligation and agreement, enforceable against such Candlewood Party in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws of general
application affecting the rights and remedies of creditors.

         6.3  NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or
performance of this Agreement, nor compliance with the terms and provisions
hereof, will result in any breach of the terms, conditions or provisions of, or
conflict with or constitute a default under, or result in the creation of any
lien, charge or encumbrance upon any of the Properties pursuant to the terms of
any indenture, mortgage, deed of trust, note, evidence of indebtedness or any
other agreement or instrument by which it is bound.

         6.4  LITIGATION. It has received no written notice of and, to its
knowledge, no action or proceeding is pending or

                                     - 13 -

<PAGE>

threatened and no investigation looking toward such an action or proceeding has
begun, which (a) questions the validity of this Agreement or any action taken or
to be taken pursuant hereto, (b) will result in any material adverse change in
the business, operation, affairs or condition of any of the Properties, (c) will
result in or subject any of the Properties to a material liability, or (d)
involves condemnation or eminent domain proceedings against any material part of
any of the Properties.

         6.5  EXISTING LEASES, AGREEMENTS, ETC. Other than any agreements
provided to the Purchaser not less than ten (10) days prior to the expiration of
the Review Period, there are no other material agreements affecting any of the
Properties which will be binding on the Purchaser subsequent to the Closing Date
which the Purchaser cannot terminate on thirty (30) days notice without payment
of premium or penalty.

         6.6  DISCLOSURE. To its knowledge, there is no fact or condition which
materially and adversely affects the business or condition of any of the
Properties which has not been set forth in this Agreement or in the other
documents, certificates or statements furnished to the Purchaser in connection
with the transactions contemplated hereby.

         6.7  UTILITIES, ETC. To its knowledge, all utilities and services
necessary for the use and operation of each of the Properties (including,
without limitation, road access, gas, water, electricity and telephone) are
available thereto and are of sufficient capacity to meet adequately all needs
and requirements necessary for the current use and operation of each of the
Properties. To its knowledge, no fact, condition or proceeding exists which
would result in the termination or material impairment of the furnishing of such
utilities to any of the Properties.

         6.8  COMPLIANCE WITH LAW. To its knowledge, except as disclosed to the
Purchaser in writing not less than ten (10) days' prior to the expiration of the
Review Period, including in any engineering report, (i) each of the Properties
and the current use and operation thereof do not violate any material federal,
state, municipal and other governmental statutes, ordinances, by-laws, rules,
regulations or any other legal requirements, including, without limitation,
those relating to construction, occupancy, zoning, adequacy of parking,
environmental protection, occupational health and safety and fire safety
applicable thereto; and (ii) at the time of the Closing there will be in effect
all material licenses, permits and other authorizations necessary for the
current use,

                                     - 14 -

<PAGE>

occupancy and operation thereof. Except as disclosed to the Purchaser in writing
not less than ten (10) days prior to the expiration of the Review Period, none
of the Candlewood Parties has received written notice of any threatened request,
application, proceeding, plan, study or effort which would materially adversely
affect the present use or zoning of any of the Properties or which would modify
or realign any adjacent street or highway in a material and adverse way.

         6.9  TAXES. To its knowledge, other than the amounts disclosed by tax
bills, no taxes or special assessments of any kind (special, bond or otherwise)
are or have been levied with respect to any of the Properties, or any portion
thereof, which are outstanding or unpaid, other than amounts not yet due and
payable or, if due and payable, not yet delinquent.

         6.10 NOT A FOREIGN PERSON. It is not a "foreign person" within the
meaning of Section 1445 of the United States Internal Revenue Code of 1986, as
amended, and the treasury regulations promulgated thereunder.

         6.11 HAZARDOUS SUBSTANCES. Except as disclosed to the Purchaser or as
described in any environmental report delivered to the Purchaser prior to the
expiration of the Review Period, to its knowledge, neither it nor any tenant or
other occupant or user of any of the Properties, or any portion thereof, has
stored or disposed of (or engaged in the business of storing or disposing of) or
has released or caused the release of any hazardous waste, contaminants, oil,
radioactive or other material on any of the Properties, or any portion thereof,
the removal of which is required or the maintenance of which is prohibited or
penalized by any applicable Federal, state or local statutes, laws, ordinances,
rules or regulations, and, to each Candlewood Party's knowledge, except as
disclosed to the Purchaser or as described in any environmental report delivered
to the Purchaser prior to the expiration of the Review Period, each of the
Properties is free from any such hazardous waste, contaminants, oil, radioactive
and other materials, except any such materials maintained in accordance with
applicable law.

         6.12 INSURANCE. It has not received written notice from any insurance
carrier of defects or inadequacies in any of the Properties which, if
uncorrected, would result in a termination of insurance coverage or a material
increase in the premiums charged therefor.

         6.13 OWNERSHIP OF SELLERS. Candlewood indirectly owns a fifty percent
(50%) interest in all of the issued and

                                     - 15 -

<PAGE>

outstanding beneficial interests in the Sellers and the transactions
contemplated by this Agreement are of direct material benefit to Candlewood.

         6.14 SUBSTANTIAL COMPLETION. Physical completion of the Improvements on
each of the Properties has occurred, including, without limitation, physical
completion of a hotel of the brand and consisting of the number of rooms set
forth on Schedule A, consistent with the Plans and Specifications therefor, free
of all liens and encumbrances (other than Permitted Encumbrances) such that the
Opening Date of each of the Properties shall have occurred and the Improvements
may be used for their intended use.

         6.15 CONDITION OF PROPERTIES. To its knowledge, each of the Properties
is in good working order and repair, mechanically and structurally sound, free
from material defects in materials and workmanship.

         The representations and warranties made in this Agreement by the
Candlewood Parties are made as of the date hereof and shall be deemed remade by
the Candlewood Parties as of the Closing Date with the same force and effect as
if made on, and as of, such date; provided, however, that, the Candlewood
Parties shall have the right prior to the Closing Date to modify the
representations and warranties by notice to the Purchaser and, in such event,
the Purchaser shall have the rights provided in Section 2.3. All representations
and warranties made in this Agreement by the Candlewood Parties shall survive
the Closing for a period of one (1) year thereafter.

         Except as otherwise expressly provided in this Agreement or any
documents to be delivered to the Purchaser at the Closing, the Candlewood
Parties disclaim the making of any representations or warranties, express or
implied, regarding the Properties or matters affecting the Properties, whether
made by the Candlewood Parties, on the Candlewood Parties' behalf or otherwise,
including, without limitation, the physical condition of the Properties, title
to or the boundaries of the Real Property, pest control matters, soil
conditions, the presence, existence or absence of hazardous wastes, toxic
substances or other environmental matters, compliance with building, health,
safety, land use and zoning laws, regulations and orders, structural and other
engineering characteristics, traffic patterns, market data, economic conditions
or projections, and any other information pertaining to the Properties or the
market and physical environments in which they are located. The Purchaser
acknowledges (i) that the Purchaser has entered into

                                     - 16 -

<PAGE>

this Agreement with the intention of making and relying upon its own
investigation or that of third parties with respect to the physical,
environmental, economic and legal condition of each Property and (ii) that the
Purchaser is not relying upon any statements, representations or warranties of
any kind, other than those specifically set forth in this Agreement or in any
document to be delivered to the Purchaser at any Closing, made by the Candlewood
Parties or anyone acting on the Candlewood Parties' behalf. The Purchaser
further acknowledges that it has not received from or on behalf of the
Candlewood Parties any accounting, tax, legal, architectural, engineering,
property management or other advice with respect to this transaction and is
relying solely upon the advice of third party accounting, tax, legal,
architectural, engineering, property management and other advisors. Subject to
the provisions of this Agreement, the Purchaser shall purchase the Properties in
their "as is" condition on the Closing Date.

SECTION 7.        REPRESENTATIONS AND WARRANTIES OF PURCHASER

         To induce the Candlewood Parties to enter in this Agreement, the
Purchaser represents and warrants to the Candlewood Parties as follows:

         7.1  STATUS AND AUTHORITY OF THE PURCHASER. The Purchaser is a Maryland
real estate investment trust duly organized, validly existing and in trust good
standing under the laws of the State of Maryland, and has all requisite power
and authority under the laws of such state and under its charter documents to
enter into and perform its obligations under this Agreement and to consummate
the transactions contemplated hereby. The Purchaser has duly qualified and is in
good standing as a trust or unincorporated business association in each
jurisdiction in which the nature of the business conducted by it requires such
qualification, except where the failure to do so could not reasonably be
expected to have a material adverse effect.

         7.2  ACTION OF THE PURCHASER. The Purchaser has taken all necessary
action to authorize the execution, delivery and performance of this Agreement,
and upon the execution and delivery of any document to be delivered by the
Purchaser on or prior to the Closing Date such document shall constitute the
valid and binding obligation and agreement of the Purchaser, enforceable against
the Purchaser in accordance with its terms, except as enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar laws of
general application affecting the rights and remedies of creditors.

                                     - 17 -

<PAGE>

         7.3  NO VIOLATIONS OF AGREEMENTS. Neither the execution, delivery or
performance of this Agreement by the Purchaser, nor compliance with the terms
and provisions hereof, will result in any breach of the terms, conditions or
provisions of, or conflict with or constitute a default under, or result in the
creation of any lien, charge or encumbrance upon any property or assets of the
Purchaser pursuant to the terms of any indenture, mortgage, deed of trust, note,
evidence of indebtedness or any other agreement or instrument by which the
Purchaser is bound.

         7.4  LITIGATION. No investigation, action or proceeding is pending and,
to the Purchaser's knowledge, no action or proceeding is threatened and no
investigation looking toward such an action or proceeding has begun, which
questions the validity of this Agreement or any action taken or to be taken
pursuant hereto.

         The representations and warranties made in this Agreement by the
Purchaser shall be continuing and shall be deemed remade by the Purchaser as of
the Closing Date with the same force and effect as if made on, and as of, such
date. The Purchaser's liability with respect to all representations and
warranties made in this Agreement by the Purchaser shall survive the Closing for
a period of one (1) year thereafter.

SECTION 8.        COVENANTS OF THE CANDLEWOOD PARTIES

         Candlewood, with respect to all Properties, and each Seller, with
respect to each of its Properties, hereby covenant with the Purchaser between
the date of this Agreement and the Closing Date as follows:

         8.1  COMPLIANCE WITH LAWS, ETC. To comply or to cause compliance in all
material respects with (i) all applicable laws, regulations and other
requirements from time to time of every governmental body having jurisdiction of
the Properties or the use or occupancy of the Improvements located on the Real
Property and (ii) all terms, covenants and conditions of all instruments of
record and other agreements affecting the Properties.

         8.2  APPROVAL OF AGREEMENTS. Except as otherwise authorized by this
Agreement or in the ordinary course of business, not to enter into, modify,
amend or terminate any other agreement with respect to any Property which would
encumber or be binding upon such Property from and after the Closing Date
without in each instance obtaining the prior

                                     - 18 -

<PAGE>

written consent of the Purchaser, which consent shall not be unreasonably
withheld, delayed or conditioned.

         8.3  NOTICE OF MATERIAL CHANGES OR UNTRUE REPRESENTATIONS. Upon
learning of any material change in any condition with respect to any of the
Properties or of any event or circumstance which makes any representation or
warranty of the Candlewood Parties to the Purchaser under this Agreement untrue
or misleading in any material respect, promptly to notify the Purchaser thereof
(the Purchaser agreeing, on learning of any such fact or condition, promptly to
notify the Candlewood Parties thereof).

         8.4  FINANCIAL INFORMATION. To provide to the Purchaser, promptly upon
request at the Candlewood Parties' sole cost and expense, such audited and
unaudited financial and other information and certifications of the Candlewood
Parties with respect to the Candlewood Parties and the Properties as the
Purchaser may from time to time reasonably request in order to comply with any
applicable securities laws and/or any rules, regulations or requirements of the
Securities and Exchange Commission and, if required or requested, to permit the
Purchaser to incorporate by reference any information included in filings made
by Candlewood with the Securities and Exchange Commission. Notwithstanding the
foregoing, the Candlewood Parties shall not be required to provide, pursuant to
this Agreement, audited financial information with respect to individual
Properties, unless the Purchaser shall pay for the cost thereof.

SECTION 9.        APPORTIONMENTS

         9.1  REAL PROPERTY APPORTIONMENTS. Representatives of the Purchaser and
the Candlewood Parties shall perform any and all of the adjustments and
apportionments which are appropriate and usual for a transaction of this nature
and taking into account [the simultaneous execution of the Second Amended
Lease]. The adjustments hereunder shall be calculated or paid in an amount based
upon a fair and reasonable estimated accounting performed and agreed to by
representatives of the Candlewood Parties and the Purchaser at or prior to the
Closing. Subsequent final adjustments and payments shall be made in cash or
other immediately available funds as soon as practicable after the Closing Date
and in any event within ninety (90) days after the Closing Date, based upon an
agreed accounting performed by representatives of the Candlewood Parties and the
Purchaser. In the event the parties have not agreed with respect to the
adjustments required to be made pursuant to this Section 9.1

                                     - 19 -

<PAGE>

within such ninety-day period, upon application by either party, Ernst & Young,
LLP or other certified public accountants reasonably acceptable to the Purchaser
and the Candlewood Parties shall determine any such adjustments which have not
theretofore been agreed to between the Candlewood Parties and the Purchaser. The
charges of such accountant shall be borne by the Candlewood Parties.

         9.2  CLOSING COSTS. The Candlewood Parties shall pay all costs and
expenses associated with the transactions contemplated hereby, including,
without limitation, recording costs, title insurance premiums, the costs and
expenses of preparing engineering and environmental reports, market studies and
appraisals and the reasonable costs and expenses of legal counsel retained by
the Purchaser.

         The obligations of the parties under this Section 9 shall survive the
Closing.

SECTION 10.       DEFAULT

         10.1 DEFAULT BY THE CANDLEWOOD PARTIES. If the Candlewood Parties shall
have made any representation or warranty herein which shall be untrue or
misleading in any material respect, or if the Candlewood Parties shall fail to
perform any of the material covenants and agreements contained herein to be
performed by the Candlewood Parties and such failure continues for a period of
ten (10) days after notice thereof from the Purchaser or if the Tenant shall
default in its obligations under the Agreement to Lease and such default shall
continue beyond the expiration of any applicable cure period, the Purchaser may
terminate this Agreement and/or pursue any and all remedies available to it at
law or in equity, including, but not limited to, a suit for specific performance
or other equitable relief.

         10.2 DEFAULT BY THE PURCHASER. If the Purchaser shall have made any
representation or warranty herein which shall be untrue or misleading in any
material respect, or if the Purchaser shall fail to perform any of the covenants
and agreements contained herein to be performed by it and such failure shall
continue for a period of ten (10) days after notice thereof from the Candlewood
Parties or if the Purchaser shall default in its obligations under the Agreement
to Lease and such default shall continue beyond the expiration of any applicable
cure period, the Candlewood Parties may, as their sole and exclusive remedy at
law and in equity, terminate this Agreement. In the event that the Candlewood
Parties shall so terminate this Agreement,

                                     - 20 -

<PAGE>

the Purchaser shall thereupon pay to the Candlewood Parties, as liquidated
damages and not as a penalty, the sum of Twenty Five Thousand Dollars ($25,000)
plus all expenses incurred by the Candlewood Parties in connection with the
transactions contemplated hereby, whereupon the Purchaser shall have no further
monetary or, except as expressly provided herein, nonmonetary obligations
hereunder.

         10.3 LIMITATION OF REMEDIES. Notwithstanding anything to the contrary
contained in this Agreement, in the deeds or the other documents to be delivered
pursuant to this Agreement (collectively, the "Conveyance Documents") or
otherwise with respect to the Properties, neither Purchaser nor Candlewood nor
any affiliate of Candlewood shall have any remedy (pre-Closing or post-Closing)
under this Agreement or the Conveyance Documents against, nor shall Purchaser or
Candlewood or any affiliate of Candlewood be entitled to make any recovery in
connection with this Agreement, the Conveyance Documents or otherwise with
respect to the Properties from (i) any Seller, (ii) Candlewood Hotel Company
Fund I, LLC, a Delaware limited liability company ("Candlewood Fund I"), the
sole member of each Seller, (iii) MMBC Equity Member I, LLC, a Delaware limited
liability company (a member of Candlewood Fund I), or any of its affiliates or
(iv) MMBC Funding I, LLC, a Delaware limited liability company (lender to
Candlewood Fund I), or any of its affiliates (each of the entities described in
the clauses (i) through (iv), inclusive, above are hereinafter collectively
referred to as the "Non-Liable Parties") and Purchaser and Candlewood hereby
waive and release the Non-Liable Parties from any and all claims for liabilities
or damages arising under this Agreement, the Conveyance Documents or otherwise
with respect to the Properties. Candlewood hereby assumes all of the liability
of the Non-Liable Parties under this Agreement, the Conveyance Documents or
otherwise with respect to the Properties, and it is expressly understood that
Candlewood is not a Non-Liable Party. The provisions of this Section 10.3 shall
survive the execution and delivery of the Conveyance Documents.

SECTION 11.       MISCELLANEOUS

         11.1 AGREEMENT TO INDEMNIFY. (a) Subject to any express provisions of
this Agreement to the contrary, (i) Candlewood shall indemnify and hold harmless
the Purchaser from and against any and all obligations, claims, losses, damages,
liabilities, and expenses (including, without limitation, reasonable attorneys'
and accountants' fees and disbursements) arising out of (x) events, contractual
obligations, acts or omissions of the

                                     - 21 -

<PAGE>

Candlewood Parties that occurred in connection with the ownership or operation
of any Property prior to the Closing or (y) any damage to property of others or
injury to or death of any person or any claims for any debts or obligations
occurring on or about or in connection with any Property or any portion thereof
at any time or times prior to the Closing, and (ii) subject to the terms and
conditions of the Second Amended Lease, the Purchaser shall indemnify and hold
harmless the Candlewood Parties from and against any and all obligations,
claims, losses, damages, liabilities and expenses (including, without
limitation, reasonable attorneys' and accountants' fees and disbursements)
arising out of (x) events, contractual obligations, acts or omissions of
Purchaser that occur in connection with the ownership or operation of any
Property on or after the Closing, or (y) any damage to property of others or
injury to or death of any person or any claims for any debts or obligations
occurring on or about any Property or any portion thereof at any time or times
after the Closing.

         (b)  Whenever it is provided in this Agreement that an obligation of
the Candlewood Parties will be assumed by the Purchaser on or after the Closing,
the Purchaser shall be deemed to have also agreed to indemnify and hold harmless
the Candlewood Parties and their respective successors and assigns from and
against all claims, losses, damages, liabilities, costs, and expenses
(including, without limitation, reasonable attorneys' and accountants' fees and
expenses) arising from any failure of the Purchaser to perform the obligation so
assumed on or after the Closing.

         (c)  Whenever either party shall learn through the filing of a claim or
the commencement of a proceeding or otherwise of the existence of any liability
for which the other party is or may be responsible under this Agreement, the
party learning of such liability shall notify the other party promptly and
furnish such copies of documents (and make originals thereof available) and such
other information as such party may have that may be used or useful in the
defense of such claims and shall afford said other party full opportunity to
defend the same in the name of such party and shall generally cooperate with
said other party in the defense of any such claim.

         (d)  The provisions of this Section 11.1 shall survive the Closing and
the termination of this Agreement.

         11.2 BROKERAGE COMMISSIONS. Each of the parties hereto represents to
the other parties that it dealt with no broker, finder or like agent in
connection with this Agreement or the

                                     - 22 -

<PAGE>

transactions contemplated hereby. The Candlewood Parties shall be solely
responsible for and shall indemnify and hold harmless the Purchaser and its
respective legal representatives, heirs, successors and assigns from and against
any loss, liability or expense, including, reasonable attorneys' fees, arising
out of any claim or claims for commissions or other compensation for bringing
about this Agreement or the transactions contemplated hereby made by any broker,
finder or like agent other than such loss, liability or expense arising from the
Purchaser's breach of its representation made in this Section 11.2. The
provisions of this Section 11.2 shall survive the Closing and any termination of
this Agreement.

         11.3 PUBLICITY. The parties agree that no party shall, with respect to
this Agreement and the transactions contemplated hereby, contact or conduct
negotiations with public officials, make any public pronouncements, issue press
releases or otherwise furnish information regarding this Agreement or the
transactions contemplated to any third party without the consent of the other
parties, which consent shall not be unreasonably withheld, delayed or
conditioned, except as required by law or unless such action is taken based on
advice of counsel given in good faith. No party, or its employees shall trade in
the securities of any parent or affiliate of the Sellers or of the Purchaser
until a public announcement of the transactions contemplated by this Agreement
has been made. No party shall record this Agreement or any notice thereof,
except as required by law or unless such action is taken based on advice of
counsel given in good faith.

         11.4 NOTICES. (a) Any and all notices, demands, consents, approvals,
offers, elections and other communications required or permitted under this
Agreement shall be deemed adequately given if in writing and the same shall be
delivered either in hand, by telecopier with written acknowledgment of receipt,
or by mail or Federal Express or similar expedited commercial carrier, addressed
to the recipient of the notice, postpaid and registered or certified with return
receipt requested (if by mail), or with all freight charges prepaid (if by
Federal Express or similar carrier).

         (b)  All notices required or permitted to be sent hereunder shall be
deemed to have been given for all purposes of this Agreement upon the date of
acknowledged receipt, in the case of a notice by telecopier, and, in all other
cases, upon the date of receipt or refusal, except that whenever under this
Agreement a notice is either received on a day which is not a Business Day

                                     - 23 -

<PAGE>

or is required to be delivered on or before a specific day which is not a
Business Day, the day of receipt or required delivery shall automatically be
extended to the next Business Day.

         (c)  All such notices shall be addressed,

         if to the Candlewood Parties to:

                  Candlewood Hotel Company, Inc.
                  8621 E. 21st Street North, Suite 200
                  Wichita, Kansas 67206
                  Attn: Mr. Tim Johnson
                  [Telecopier No. (316) 631-1382]

         with a copy to:

                  GoodSmith, Gregg & Unruh
                  105 West Adams Street, 26th Floor
                  Chicago, Illinois 60603
                  Attn: Kenneth Crews, Esq.
                  [Telecopier No. 312-322-0056]

         If to the Purchaser, to:

                  Hospitality Properties Trust
                  400 Centre Street
                  Newton, Massachusetts 02458
                  Attn: Mr. John G. Murray
                  [Telecopier No. (617) 969-5730]

         with a copy to:

                  Sullivan & Worcester LLP
                  One Post Office Square
                  Boston, Massachusetts 02109
                  Attn: Nancy S. Grodberg, Esq.
                  [Telecopier No. (617) 338-2880]

         (d)  By notice given as herein provided, the parties hereto and their
respective successors and assigns shall have the right from time to time and at
any time during the term of this Agreement to change their respective addresses
effective upon receipt by the other parties of such notice and each shall have
the right to specify as its address any other address within the United States
of America.

         11.5 WAIVERS, ETC. Any waiver of any term or condition of this
Agreement, or of the breach of any covenant, representation

                                     - 24 -

<PAGE>

or warranty contained herein, in any one instance, shall not operate as or be
deemed to be or construed as a further or continuing waiver of any other breach
of such term, condition, covenant, representation or warranty or any other term,
condition, covenant, representation or warranty, nor shall any failure at any
time or times to enforce or require performance of any provision hereof operate
as a waiver of or affect in any manner such party's right at a later time to
enforce or require performance of such provision or any other provision hereof.
This Agreement may not be amended, nor shall any waiver, change, modification,
consent or discharge be effected, except by an instrument in writing executed by
or on behalf of the party against whom enforcement of any amendment, waiver,
change, modification, consent or discharge is sought.

         11.6 ASSIGNMENT; SUCCESSORS AND ASSIGNS. This Agreement and all rights
and obligations hereunder shall not be assignable by any party without the
written consent of the other parties, except that (x) Purchaser may assign this
Agreement to any entity wholly owned, directly or indirectly, by the Purchaser
(provided, however, that, in the event this Agreement shall be assigned to any
entity wholly owned, directly or indirectly, by the Purchaser, Hospitality
Properties Trust shall remain liable for the obligation of the "Purchaser"
hereunder) and (y) after the Closing, the Sellers may assign its surviving
rights, if any, under this Agreement to the Tenant. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective legal representatives, successors and permitted assigns. This
Agreement is not intended and shall not be construed to create any rights in or
to be enforceable in any part by any other persons.

         11.7 SEVERABILITY. If any provision of this Agreement shall be held or
deemed to be, or shall in fact be, invalid, inoperative or unenforceable as
applied to any particular case in any jurisdiction or jurisdictions, or in all
jurisdictions or in all cases, because of the conflict of any provision with any
constitution or statute or rule of public policy or for any other reason, such
circumstance shall not have the effect of rendering the provision or provisions
in question invalid, inoperative or unenforceable in any other jurisdiction or
in any other case or circumstance or of rendering any other provision or
provisions herein contained invalid, inoperative or unenforceable to the extent
that such other provisions are not themselves actually in conflict with such
constitution, statute or rule of public policy, but this Agreement shall be
reformed and construed in any such jurisdiction or case as if such

                                     - 25 -

<PAGE>

invalid, inoperative or unenforceable provision had never been contained herein
and such provision reformed so that it would be valid, operative and enforceable
to the maximum extent permitted in such jurisdiction or in such case.

         11.8 COUNTERPARTS, ETC. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and shall supersede and take the place of any other
instruments purporting to be an agreement of the parties hereto relating to the
subject matter hereof.

         11.9 GOVERNING LAW. This Agreement shall be interpreted, construed,
applied and enforced in accordance with the laws of The Commonwealth of
Massachusetts applicable to contracts between residents of Massachusetts which
are to be performed entirely within Massachusetts, regardless of (i) where this
Agreement is executed or delivered; or (ii) where any payment or other
performance required by this Agreement is made or required to be made; or (iii)
where any breach of any provision of this Agreement occurs, or any cause of
action otherwise accrues; or (iv) where any action or other proceeding is
instituted or pending; or (v) the nationality, citizenship, domicile, principal
place of business, or jurisdiction of organization or domestication of any
party; or (vi) whether the laws of the forum jurisdiction otherwise would apply
the laws of a jurisdiction other than The Commonwealth of Massachusetts; or
(vii) any combination of the foregoing.

         To the maximum extent permitted by applicable law, any action to
enforce, arising out of, or relating in any way to, any of the provisions of
this Agreement may be brought and prosecuted in such court or courts located in
The Commonwealth of Massachusetts as is provided by law; and the parties consent
to the jurisdiction of said court or courts located in The Commonwealth of
Massachusetts and to service of process by registered mail, return receipt
requested, or by any other manner provided by law.

         11.10 PERFORMANCE ON BUSINESS DAYS. In the event the date on which
performance or payment of any obligation of a party required hereunder is other
than a Business Day, the time for payment or performance shall automatically be
extended to the first Business Day following such date.

                                     - 26 -

<PAGE>

         11.11 ATTORNEYS' FEES. If any lawsuit or arbitration or other legal
proceeding arises in connection with the interpretation or enforcement of this
Agreement, the prevailing party therein shall be entitled to receive from the
other party the prevailing party's costs and expenses, including reasonable
attorneys' fees incurred in connection therewith, in preparation therefor and on
appeal therefrom, which amounts shall be included in any judgment therein.

         11.12 SECTION AND OTHER HEADINGS. The headings contained in this
Agreement are for reference purposes only and shall not in any way affect the
meaning or interpretation of this Agreement.

         11.13 NONLIABILITY OF TRUSTEES. THE DECLARATION OF TRUST ESTABLISHING
THE PURCHASER, A COPY OF WHICH, TOGETHER WITH ALL AMENDMENTS THERETO (THE
"DECLARATION"), IS DULY FILED WITH THE DEPARTMENT OF ASSESSMENTS AND TAXATION OF
THE STATE OF MARYLAND, PROVIDES THAT THE NAME "HOSPITALITY PROPERTIES TRUST"
REFERS TO THE TRUSTEES UNDER THE DECLARATION COLLECTIVELY AS TRUSTEES, BUT NOT
INDIVIDUALLY OR PERSONALLY, AND THAT NO TRUSTEE, OFFICER, SHAREHOLDER, EMPLOYEE
OR AGENT OF THE PURCHASER SHALL BE HELD TO ANY PERSONAL LIABILITY, JOINTLY OR
SEVERALLY, FOR ANY OBLIGATION OF, OR CLAIM AGAINST, THE PURCHASER. ALL PERSONS
DEALING WITH THE PURCHASER, IN ANY WAY, SHALL LOOK ONLY TO THE ASSETS OF THE
PURCHASER FOR THE PAYMENT OF ANY SUM OR THE PERFORMANCE OF ANY OBLIGATION.

         11.14 SINGLE AGREEMENT. None of the execution and delivery of this
Agreement, the consummation of the transactions contemplated hereby, or any
communications (whether oral or written), among the Purchaser, any Seller and/or
their affiliates, should be construed as an agreement, express or implied, of
the Purchaser or any of its affiliates, directly or indirectly, to acquire,
finance, sell, joint venture or otherwise dispose of or participate in any other
transaction involving Sellers' or their affiliates' assets or properties.

                         [SIGNATURES ON FOLLOWING PAGES]

                                     - 27 -

<PAGE>

         IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed as a sealed instrument as of the date first above written.

                                  CANDLEWOOD PARTIES:

                                  CANDLEWOOD HOTEL COMPANY, INC.,
                                  a Delaware corporation

                                  By:            /s/ Tim Johnson
                                      -------------------------------------
                                      Tim Johnson
                                      Vice President Treasurer

                                  SELLERS:

                                  CANDLEWOOD BOSTON, MA-BURLINGTON, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC,
                                      a Delaware limited liability company,
                                      its sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a
                                          Delaware limited liability
                                          company, its managing member

                                          By: CANDLEWOOD HOTEL COMPANY,
                                              INC., a Delaware corporation,
                                              its sole member

                                              By:      /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                     - 28 -

<PAGE>

                                  CANDLEWOOD CLARKSTOWN, NY, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC,
                                      a Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:      /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                  CANDLEWOOD ORANGE COUNTY, CA-AIRPORT, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC, a
                                      Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:      /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                     - 29 -

<PAGE>

                                  CANDLEWOOD MERIDEN, CT, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC, a
                                      Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:      /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                  CANDLEWOOD SANTA CLARA, CA, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC, a
                                      Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:     /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                     - 30 -

<PAGE>

                                  CANDLEWOOD MORRIS PLAINS, NJ-PARSIPPANY, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC, a
                                      Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:       /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                  CANDLEWOOD DETROIT, MI-FARMINGTON HILLS, LLC,
                                  a Delaware limited liability company

                                  By: CANDLEWOOD HOTEL COMPANY FUND I, LLC, a
                                      Delaware limited liability company, its
                                      sole member

                                      By: CANDLEWOOD VENTURES I, LLC, a Delaware
                                          limited liability company, its
                                          managing member

                                          By: CANDLEWOOD HOTEL COMPANY, INC., a
                                              Delaware corporation, its sole
                                              member

                                              By:       /s/ Tim Johnson
                                                 -------------------------------
                                                 Tim Johnson
                                                 Vice President Treasurer

                                     - 31 -

<PAGE>

                                  PURCHASER:

                                  HOSPITALITY PROPERTIES TRUST,
                                  a Maryland real estate investment trust

                                  By:     /s/ John G. Murray
                                     -------------------------------------------
                                     John G. Murray
                                     President

                                     - 32 -

<PAGE>

                                   SCHEDULE A

                                 THE PROPERTIES

<TABLE>
<CAPTION>
             LOCATION                                         ALLOCABLE PURCHASE PRICE
             --------                                         ------------------------
<S>                                                           <C>
Orange County Airport (Santa Ana), CA                               $ 9,263,130
San Jose (Santa Clara), CA                                          $ 9,765,641
Hartford (Meriden), CT                                              $ 7,193,703
Boston (Burlington), MA                                             $12,074,042
Detroit (Farmington Hills), MI                                      $ 8,429,876
Morris Plains (Morris Plains), NJ                                   $ 8,760,273
Rockland (Clarkstown), NY                                           $ 9,513,335
</TABLE>

<PAGE>

                            SCHEDULES B-1 THROUGH B-7

                        LEGAL DESCRIPTIONS OF PROPERTIES

                             [See attached copies.]

<PAGE>

                                   SCHEDULE C

                        LIST OF PLANS AND SPECIFICATIONS

                             [See attached copies.]

<PAGE>

                                   SCHEDULE D

                         FORM OF SURVEYOR'S CERTIFICATE

                             SURVEYOR'S CERTIFICATE

TO:      Hospitality Properties Trust
         and its assignees or nominees
         400 Centre Street
         Newton, MA 02458

RE:      Survey Entitled "_______________________________________"
          dated _________ ___, 2003, prepared by
         _______________________________________

         The undersigned hereby certifies that the above-referenced survey was
prepared from an actual on-the-ground instrument survey of the subject premises;
that the same accurately shows the location of the boundaries of the subject
premises and the location of all streets, highways, alleys and public ways
crossing or abutting said premises; that the dimensions of the improvements and
the locations thereof with respect to the boundaries are accurately shown as the
same were situated on ___________ ___, 2003; that there are no encroachments by
improvements appurtenant to adjoining premises upon the subject premises, nor
from the subject premises, unless shown thereon; that all buildings and
structures, if any, lie wholly within all applicable building restriction lines,
if any, and do not violate any restriction or other recorded agreements set
forth in the title insurance commitment for the subject premises dated
__________ __, 2003, issued to you by _________ Title Insurance Company,
Commitment No. _______ (the "Title Policy"); that all easements and rights of
way which are appurtenant to or burden the subject premises and (i) are referred
to in the Title Commitment or (ii) are apparent from a visual inspection are
delineated thereon, and are located other than through the existing building
shown hereon; that all parking spaces, if any, are delineated thereon; and that,
except as otherwise shown thereon, the subject premises are not located (x)
within any flood hazard or flood way area or district as designed by Federal,
state or municipal authority or (y) within any area subject to regulation by
Federal, state or municipal authority as inland or coastal wetlands, beach,
estuary or the like.

<PAGE>

         Access to and egress from the subject premises and the improvements and
structures thereon to ________ Street, a public way, are provided by the means
indicated thereon. Municipal water, storm sewer facilities and telephone, gas
and electric services of public utilities are available in the locations
indicated thereon.

         The undersigned hereby certifies that the square footage of each parcel
delineated on the above-referenced survey is as set forth thereon, that all such
parcels are contiguous without any strips, gaps or gores existing between any of
said parcels, and that said parcels, when combined, form and create one complete
and uninterrupted parcel without any strips, gaps or gores.

         This survey is made in accordance with the "Minimum Standard Detail
Requirements for Land Title Surveys" jointly established and adopted by ALTA and
ACSM in 1999.

Dated: _________ ___, 2003                     ___________________________
                                                     Registered Land Surveyor
                                                     __________#_______________

[Surveyor's Seal]

<PAGE>

                                   SCHEDULE E

                          FORM OF SELLERS' CERTIFICATE

                               CLOSING CERTIFICATE

         Reference is made to the Purchase and Sale Agreement, dated __________
(the "Purchase Agreement"). Capitalized terms used and not otherwise defined
herein shall have the meanings ascribed to such terms in the Purchase Agreement.

         In connection with the consummation of the transactions contemplated by
the Purchase and Sale Agreement with respect to the properties described on
Exhibit A, the undersigned hereby certifies as follows:

         1.       That the Improvements on each of the Properties include the
number of rooms as set forth in Exhibit A;

         3.       That the Opening Date of each of the Properties is listed on
Exhibit A; and

         4.       That the Properties are being operated as a Candlewood hotel
as set forth in Exhibit A.

         Executed under seal as of this ____ day of __________, 2003.

                                                     ___________________________

                                                     By:_______________________

                                                        Its (Vice) President

<PAGE>

                                    EXHIBIT A

<TABLE>
<CAPTION>
PROPERTY             BRAND       NO. OF ROOMS     OPENING DATE
--------             -----       ------------     ------------
<S>               <C>            <C>              <C>
Santa Ana         Candlewood         122           02/15/2001

Santa Clara       Candlewood         122           04/24/2000

Meriden           Candlewood         124           06/29/2000

Burlington        Candlewood         149           11/17/2000

Farmington        Candlewood         125           06/15/2000

Morris Plains     Candlewood         122           06/05/2000

Clarkstown        Candlewood         124           05/18/2000
</TABLE>

<PAGE>

                                   SCHEDULE F

                         FORM OF ARCHITECT'S CERTIFICATE

                                                             __________ __, 2003

         Reference is made to the Purchase and Sale Agreement, dated __________
(the "Purchase Agreement"), by and between ___________________________, as
sellers, and Hospitality Properties Trust, as purchaser (together with its
successors and assigns ("HPT").

         As an inducement to HPT to acquire the properties identified on Exhibit
A to this letter (the "Properties"), we do hereby:

                  1.       Certify to HPT that we are professional architects,
         duly registered under the laws and applicable regulations of the State
         of ______________;

                  2.       Certify to HPT that, to our knowledge, the Plans and
         Specifications identified on Exhibit B (the "Plans") comply with all
         applicable requirements of all governmental authorities having
         jurisdiction over the improvements located on the Properties,
         including, without limitation, all applicable zoning laws, ordinances,
         rules, regulations and restrictions (but excluding any such ordinances,
         rules, regulations and restrictions relating to environmental matters);
         and

                  3.       Certify to HPT that the improvements have been
         substantially completed in accordance with the Plans.

                                                Very truly yours,

                                                ________________________________

                                                By:_____________________________
                                                     Its:

<PAGE>

                                    EXHIBIT A

                                 THE PROPERTIES

                             [See attached copies.]

<PAGE>

                                    EXHIBIT B

                            PLANS AND SPECIFICATIONS

                             [See attached copies.]

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