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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K/A
(AMENDMENT NO. 1)
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______ to ______
Commission File Number 0-22067
NATIONAL AUTO FINANCE COMPANY, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 65-0688619
(State or other jurisdiction of (I.R.S Employer
incorporation or organization) Identification No.)
10302 DEERWOOD PARK BOULEVARD, SUITE 100 JACKSONVILLE, FLORIDA 32256
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (904) 996-2500
Securities registered pursuant to Section 12(b) of the Act: NONE
Securities registered pursuant to Section 12(g) of the Act: COMMON STOCK, PAR
VALUE $0.01 PER SHARE
Indicate by check mark whether the Registrant: (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes [ ] No [X]
Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of Registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. [X]
As of April 26, 1999, the aggregate market value of the common stock of
the Registrant held by non-affiliates, based upon the $0.19 per share closing
price of the Common Stock on such date on the OTC Bulletin Board was
approximately $3,240,143. The number of shares of the registrant's Common Stock
outstanding on April 26, 1999 was 17,280,762.
[Indicate by check mark whether the Registrant has filed all documents
and reports required to be filed by Section 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court: Yes [ ] No [X]]
DOCUMENTS INCORPORATED BY REFERENCE:
[NONE.]
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EXPLANATORY NOTE
This Amendment No. 1 on Form 10-K/A to the Annual Report on Form 10-K of
National Auto Finance Company, Inc. ("NAFI" or the "Company"), amends and
restates in their entirety Item 14 of Part IV.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act of 1934, the Registrant has duly caused this amendment to be signed on its
behalf by the undersigned, thereunto duly authorized.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ Keith B. Stein
-----------------------------------
Keith B. Stein,
Chairman of the Board and Chief
Executive Officer
Date: August 19, 1999
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ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
Exhibits
Number Description Method of Filing
3.1 Certificate of Incorporation of the Company.(1)
3.1-1 Certificate of the Designations, Preferences and Rights of the Series A
Preferred Stock of the Company.(3)
3.2 By-laws of the Company.(1)
4.1 Specimen Certificate of Common Stock.(4)
4.2 Promissory Note, dated October 31, 1994, payable by National Auto
Finance Company LP to the order of Gary L. Shapiro.(1)
4.2-1 Amended and Restated Promissory Note, dated as of January 3, 1997,
payable by National Auto Finance LP to the order of Gary L. Shapiro.(3)
4.3 Promissory Note, dated October 6, 1994, payable by National Auto
Finance Company LP to the order of Edgar A. Otto.(1)
4.3-1 Amended and Restated Promissory Note, dated as of January 3, 1997,
payable by National Auto Finance Company LP to the order of Edgar A. Otto.(3)
4.4 Promissory Note, dated November 8, 1994, payable by National Auto
Finance Company LP to the order of Stephen L. Gurba.(1)
4.4-1 Amended and Restated Promissory Note, dated as of January 3, 1997,
payable by national Auto Finance Company LP to the order of Stephen L. Gurba.(3)
4.5 Promissory Note, dated March 27, 1995, payable by National Auto Finance
Company LP to the order of Nova Financial Corporation.(1)
4.5-1 Amended and Restated Promissory Note, dated as of January 3, 1997,
payable by National Auto Finance Company LP to the order of Nova Financial
Corporation.(3)
4.6 Promissory Note, dated May 1, 1995, payable by National Auto Finance
Company LP to the order of Nova Corporation.(1)
4.6-1 Amended and Restated Promissory Note, dated as of January 3, 1997,
payable by National Auto Finance Company LP to the order of Nova Corporation.(3)
4.7 Securities Purchase Agreement (the "Securities Purchase Agreement") by
and among National Auto Finance Company, Inc., The 1818 Mezzanine Fund, LP, PC
Investment Company, Progressive Investment Company, Inc., and Manufacturers Life
Insurance Company (U.S.A.) dated December 22, 1997.(5)
4.7-1 Waiver and Amendment No. 1 to the Securities Purchase Agreement, dated
March 27, 1998, by and among National Auto Finance Company, Inc., The 1818
Mezzanine Fund, LP, PC Investment Company, Progressive Investment Company, Inc.
and Manufacturers Life Insurance Company.(5)
4.8 Form of Senior Subordinated Promissory Note issued pursuant to the
Securities Purchase Agreement.(5)
4.9 Form of Warrant to Purchase Shares of Common Stock of National Auto
Finance Company, Inc. issued pursuant to the Securities Purchase Agreement.(5)
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4.10 Agreement, dated March 27, 1998, by and between National Auto Finance
Company, Inc. and The Structured Finance High Yield Fund, LLC.(5)
4.11 Senior Subordinated Promissory Note, dated March 27, 1998, executed by
National Auto Finance Company, Inc. in favor of The Structured Finance High
Yield Fund, LLC, in the amount of $20,000,000.00.(5)
4.12 Warrant, issued March 27, 1998, executed by National Auto Finance
Company, Inc.(5)
10.1 Second Amended and Restated Agreement of Limited Partnership of
National Auto Finance Company LP, dated as of September 1, 1995, by and among
National Auto Finance Corporation, The S Associates Limited Partnership, The O
Associates Limited Partnership, Stephen L. Gurba, Craig Schnee, Roy E. Tipton,
Blane H. MacDonald, Michael B. Colley, Irwin I. Kent, William G. Magro, Kevin G.
Adams, Kamala R. Chapman, Keith B. Stein, Colleen S. McMillen, Richard H.
Steffer, Tim Rooney, Lynn Dunham-Sirota and IronBrand Capital, LLC.(1)
10.1-1 First Amendment to Second Amended and Restated Partnership Agreement,
dated December 1, 1996.(3)
10.2 1996 Share Incentive Plan.(3)
10.3 401(k) Plan.(1)
10.4 Employment Agreement, dated as of July 1, 1996, between National Auto
Finance Company, Inc. and William G. Magro.(3)
10.4-1 First Amendment to Employment Agreement, dated as of May 27, 1997,
between National Auto Finance Company, Inc. and William G. Magro.(5)
10.5 [Intentionally Omitted]
10.5-1 [Intentionally Omitted]
10.6 [Intentionally Omitted]
10.7 [Intentionally Omitted]
10.8 Receivables Purchase Agreement, dated as of December 8, 1994, by and
between National Auto Finance Company LP, as Seller, and NAFCO Funding Trust, as
Purchaser.(1)
10.9 Promissory Note, dated December 8, 1994, payable by NAFCO Funding Trust
to the order of National Auto Finance Company LP(1)
10.10 NAFCO Auto Receivables Master Trust Pooling and Administration
Agreement, dated as of December 8, 1994, among NAFCO Funding Trust, as
Transferor, National Auto Finance Company LP, as the Administrator, and Bankers
Trust Company, as Trustee.(1)
10.10-1 Consent and Amendment, dated as of July 2, 1996, to NAFCO Auto
Receivables Master Trust Pooling and Administration Agreement, dated as of
December 8, 1994, among NAFCO Funding Trust, as Transferor, National Auto
Finance Company LP, as the Administrator, and Bankers Trust Company, as
Trustee.(5)*
10.11 Series 1994-R, Class B Supplement, dated as of December 8, 1994, to the
Pooling and Administration Agreement, dated as of December 8, 1994, among NAFCO
Funding Trust, as Transferor, National Auto Finance Company LP, as the
Administrator, and Bankers Trust Company, as Trustee.(1)
10.12 Trust Agreement, dated as of October 5, 1994, between National Auto
Finance Corporation and Bankers Trust.(1)
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10.13 First Amendment and Restated Trust Agreement of NAFCO Funding Trust,
dated as of December 8, 1994, between National Auto Finance Company LP, as
Depositor, The Chase Manhattan Bank (USA), as Owner Trustee and Gary L. Shapiro
and Edgar A. Otto, as Co-Trustees.(1)
10.14 Amended and Restated Servicing Agreement, dated as of December 5, 1994,
by and between World Omni Financial Corp. and National Auto Finance Company
LP(1)
10.14-1 Amendment to Amended and Restated Servicing Agreement, dated as of
September 6, 1995, by and among World Omni Financial Corp. and National Auto
Finance Company LP(5)*
10.14-2 Second Amendment to Amended and Restated Servicing Agreement, dated as
of June 24, 1997, by and between Omni Financial Services of America, Inc., as
assignee of World Omni Financial Corp., and National Auto Finance Company, Inc.,
as assignee of National Auto Finance Company LP(5)*
10.14-3 Third Amendment to the Amended and Restated Servicing Agreement, dated
as of September 12, 1997, by and between Omni Financial Services of America,
Inc. and National Auto Finance Company, Inc.(5)*
10.14-4 Fourth Amendment to the Amended and Restated Servicing Agreement, dated
as of October 12, 1997, by and between Omni Financial Services of America,
Inc.(5)*
10.14-5 Supplement to the Amended and Restated Servicing Agreement, dated as of
December 5, 1994, as amended as of October 1, 1995, between World Omni Financial
Corp. ("WOFC"), as Servicer, and National Auto Finance Company LP, dated as of
November 21, 1995 by and between Omni Financial Services of America, Inc., as
assignee of WOFC ("Servicer") and NAFCO.(1)
10.14-6 Supplement to the Amended and Restated Servicing Agreement, dated as of
December 5, 1994, as amended as of October 1, 1995, between World Omni Financial
Corp. (WOFC) and National Auto Finance Company LP (NAFCO), dated as of November
13, 1996 by and between Omni Financial Services of America, Inc., as assignee of
WOFC, and NAFCO.(2)
10.14-7 Supplement to Amended and Restated Servicing Agreement, December 5,
1994, as amended as of October 1, 1995 and November 13, 1996, dated as of July
23, 1997, by and between Omni Financial Services of America, Inc. and National
Auto Finance Company, Inc.(5)*
10.14-8 Supplement to Amended and Restated Servicing Agreement, dated as of
December 5, 1994, as amended as of October 1, 1995, June 24, 1997 and July 21,
1997 and supplemented as of November 21, 1995, November 13, 1996, July 12, 1997
and September 19, 1997, by and between Omni Financial Services of America, Inc.
and National Auto Finance Company, Inc.(5)*
10.15 Certificate Purchase Agreement, dated as of December 8, 1994, among
NAFI Funding Trust, National Auto Finance Company LP, as Initial Administrator
and First Union National Bank of North Carolina.(1)
10.16 [Intentionally Omitted]
10.16-1 First Amendment of Management Agreement, dated as of January 1, 1996,
by and between National Auto Finance Company LP, Auto Credit Clearinghouse LP
and National Auto Finance Corporation.(1)
10.16-2 Second Amendment to Management Agreement, dated as of January 1, 1997,
by and among National Auto Finance Corporation, National Auto Finance Company,
Inc., National Auto Finance Company, LP and National Financial Companies
LLC.(5)*
10.17 [Intentionally Omitted]
10.17-1 First Amendment to Services Agreement, dated as of January 1, 1996, by
and between National Auto Finance Corporation and National Financial
Corporation.(1)
10.17-2 Second Amendment to Services Agreement, dated as of January 1, 1997, by
and between National Auto Finance Corporation, National Auto Finance Company,
Inc. and National Financial Companies LLC.(5)*
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10.18 Pooling and Servicing Agreement, dated as of October 1, 1995, by and
among National Financial Auto Funding Trust, as Transferor, National Auto
Finance Company LP, as Master Servicer, and Harris Trust and Savings Bank, as
Trustee.(1)
10.19 Assignment Agreement, dated as of October 1, 1995, between Bankers
Trust Company, as Trustee, and National Financial Auto Funding Trust.(1)
10.20 Transfer Agreement No. 1, dated as of October 1, 1995, between National
Financial Auto Funding Trust and Harris Trust and Savings Bank.(1)
10.21 Insurance and Indemnity Agreement, dated as of November 21, 1995, among
Financial Security Assurance, Inc., National Financial Auto Funding Trust and
National Auto Finance Company LP(1)
10.22 Indemnification Agreement, dated as of November 21, 1995, among
Financial Security Assurance Inc., National Financial Auto Funding Trust and
First Union Capital Markets Corp.(1)
10.23 Master Spread Account Agreement, dated as of November 21, 1995, among
National Financial Auto Funding Trust, Financial Security Assurance Inc. and
Harris Trust and Savings Bank, as Trustee and as Collateral Agent.(1)
10.24 Financial Guaranty Insurance Policy (Policy No.: 50522-N), together
with Endorsement No. 1 thereto, dated November 13, 1996, issued by Financial
Security Assurance Inc. in favor of Harris Trust and Savings Bank, as trustee
for the benefit of the Certificate Holders.(1)
10.25 Custodial Agreement, dated as of November 21, 1995, by and between Omni
Financial Services of America, Inc., as custodian, and National Auto Finance
Company LP, as Master Servicer.(1)
10.26 Amendment, dated as of November 21, 1995, to the First Amended and
Restated Trust Agreement of NAFCO Funding Trust, dated as of December 8, 1994,
among National Auto Finance Company LP, as Depositor, The Chase Manhattan Bank
(USA), as Owner Trustee, and Gary L. Shapiro, Edgar Otto A. and Andrew Stidd, as
Co-Trustees.(1)
10.27 Form of Indemnification Agreement.(4)
10.28 Assignment and Assumption Agreement, dated as of October 7, 1996,
between National Auto Finance Company, Inc. and National Auto Finance Company
LP(1)
10.29 Pooling and Servicing Agreement, dated as of October 21, 1996, by and
among National Financial Auto Funding Trust, as Transferor, National Auto
Finance Company LP, as Servicer, and Harris Trust and Savings Bank, as
Trustee.(2)
10.30 Purchase and Contribution Agreement, dated as of October 21, 1996, by
and between National Auto Finance Company LP and National Financial Auto Funding
Trust.(2)
10.31 Assignment Agreement, dated as of October 21, 1996, between Bankers
Trust Company and National Financial Auto Funding Trust II.(2)
10.32 Master Spread Account Agreement, dated as of November 13, 1996, among
National Financial Auto Funding Trust, Financial Security Assurance Inc. and
Harris Trust and Savings Bank, as Trustee and Collateral Agent.(2)
10.33 Insurance and Indemnity Agreement, dated as of November 13, 1996, among
Financial Security Assurance Inc., National Financial Auto Funding Trust and
National Auto Finance Company LP(2)
10.34 Sale Agreement, dated as of October 21, 1996, by and between National
Financial Auto Funding Trust and National Financial Auto Funding Trust II.(2)
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10.35 Transfer Agreement No. 1, dated as of November 13, 1996, by National
Financial Auto Funding Trust as Transferor to Harris Trust and Savings Bank, as
Trustee, pursuant to a Pooling and Servicing Agreement, dated as of October 21,
1996.(2)
10.36 Form of Financial Guaranty Insurance Policy issued by Financial
Security Assurance Inc.(2)
10.37 Lease Agreement, dated as of June 16, 1997, by and between CTC
Investments II Limited and National Auto Finance Company, Inc.(5)*
10.37-1 First Amendment to Lease Agreement dated June 16, 1997 by and between
CTC Investments II Limited and National Auto Finance Company, Inc. dated October
1, 1997.(5)*
10.38 Referral Agreement, dated as of April 15, 1996, by and between First
Union National Bank of North Carolina and Auto Credit Clearinghouse LP(4)
10.39 Trust Agreement, dated as of July 21, 1997, between National Financial
Auto Funding Trust and Wilmington Trust Company, as trustee.(5)*
10.40 Indenture, dated as of June 29, 1997, by and between National Auto
Finance 1997-1 Trust and Harris Trust and Savings Bank as Trustee.(5)*
10.41 Sale and Servicing Agreement, dated as of June 29, 1997, by and among
National Auto Finance 1997-1 Trust, as Seller, National Financial Auto Finance
1997-1 Trust, National Auto Finance Company, Inc. as Servicer, and Harris Trust
and Savings Bank, as Trust Collateral Agent and Back-up Servicer.(5)*
10.42 Financial Guaranty Insurance Policy, dated as of July 23, 1997,
delivered by Financial Security Assurance, Inc.(5)*
10.43 Purchase and Contribution Agreement, dated June 29, 1997, by and
between National Auto Finance Company, Inc. and National Financial Auto Funding
Trust.(5)*
10.44 Sale Agreement, dated as of June 29, 1997, by and between National
Financial Auto Funding Trust II and National Financial Auto Funding Trust.(5)*
10.45 Indemnification Agreement, dated as of July 23, 1997, by and among
Financial Security Assurance Inc., National Finance Auto Funding Trust and First
Union Capital Markets Corp.(5)*
10.46 Amendment No. 1 dated 1997, by and among National Financial Auto
Funding Trust, Financial Security Assurance Inc., Harris Trust and Savings Bank,
as collateral agent, and National Auto Finance Company, Inc. to Master Spread
Account Agreement dated as of November 21, 1995 and Master Spread Account
Agreement dated as of November 13, 1996, in each case among National Financial
Auto Funding Trust, Financial Security Assurance Inc. and Harris Trust and
Savings Bank, as trustee and as collateral agent.(5)*
10.47 Amendment No. 1 dated October 1, 1997, among Financial Security
Assurance Inc., National Financial Auto Funding Trust and National Auto Finance
Company, Inc. to Insurance and Indemnity Agreement dated as of November 21, 1995
and Insurance and Indemnity Agreement dated as of November 13, 1996 in each case
among Financial Security Assurance Inc., National Financial Auto Funding Trust
and National Auto Finance Company, Inc.(5)*
10.48 Amendment to First Amended and Restated Trust Agreement dated as of
December 8, 1994 among National Auto Finance Company, Inc., the Trustee, and the
Co-Trustees, and Section 10.03 of the Trust Agreement dated as of December 8,
1995 among National Auto Finance Company, Inc., the Trustee and the Co-Trustees,
made as of October 1, 1997 among National Auto Finance Company, Inc., The Chase
Manhattan Bank Delaware, as Trustee of National Financial Auto Funding Trust II
and National Financial Auto Funding Trust II and the co-trustee of such
trusts.(5)*
10.49 Investment Agreement dated as of October 1, 1997 by and between
National Auto Finance Company, Inc. and FSA Portfolio Management, Inc.(5)*
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10.50 Revolving Credit Agreement dated as of September 29, 1997 among
National Auto Finance Company, Inc. and BankBoston, N.A., for itself and as
agent for the other lending institutions named therein.(5)*
10.50-1 Amendment Agreement No. 1 to Revolving Credit Agreement dated October
1, 1997 by and between National Auto Finance Company, Inc. and BankBoston, N.A.
and the other lending institutions party thereto and BankBoston, N.A., as agent
for itself and other banking institutions.(5)*
10.50-2 Amendment Agreement No. 2 to Revolving Credit Agreement dated December
19, 1997 by and between National Auto Finance Company, Inc. and BankBoston, N.A.
and the other lending institutions party thereto and BankBoston, N.A., as agent
for itself and other banking institutions.(5)*
10.50-3 Amendment Agreement No. 3 to the Revolving Credit Agreement, dated
March 19, 1998, by and among National Auto Finance Company, Inc. BankBoston,
N.A. and the other lending institutions party thereto.(5)*
10.50-4 Amendment Agreement No. 4 to the Revolving Credit Agreement, dated
March 27, 1998, by and among National Auto Finance Company, Inc. BankBoston,
N.A. and the other lending institutions party thereto.(5)*
10.51 Trademark Collateral Security and Pledge Agreement dated as of
September 29, 1997, between National Auto Finance Company, Inc. and BankBoston,
N.A., for itself and other banking institutions.(5)*
10.52 Pledge Agreement made as of September 29, 1997 by and among National
Auto Finance Company, Inc., National Chartered Auto Corporation and BankBoston,
N.A.(5)*
10.53 Note dated as of September 29, 1997 payable by National Auto Finance
Company, Inc. to BankBoston, N.A., as agent.(5)*
10.54 [Intentionally Omitted]
10.55 [Intentionally Omitted]
10.56 [Intentionally Omitted]
10.57 Lease Agreement dated April 8, 1996, by and between CanPro Investments
Ltd. and National Auto Financial Corporation or its assignee Auto Credit
Clearinghouse.(5)*
10.58 Software License, Support and Usage Agreement dated as of February 14,
1997 by and between BNI, Inc. and National Auto Finance Company LP(5)*
10.58-1 First Amendment to Software License, Support and Usage Agreement dated
as of December 15, 1997 by and between BNI, Inc. and National Auto Finance
Company LP(5)*
10.59 Software Sublicense, Support and Usage Agreement dated as of February
17, 1997, by and between Pinnacle Portfolio Services LLC and National Auto
Finance Company, Inc.(5)*
10.60 Consent and Amendment, dated as of September 25, 1997, between National
Financial Auto Funding Trust, National Auto Finance Company, Inc., First Union
National Bank and Bankers Trust Company, as Trustee of National Financial Auto
Receivables Master Trust.(5)*
10.61 Security Agreement, dated as of September 29, 1997, between National
Auto Finance Company, Inc. and BankBoston, N.A., as agent for itself and other
banking institutions.(5)*
10.62 [Intentionally Omitted.]
10.63 Amendment, dated as of September 25, 1997, to Pooling and Servicing
Agreements, dated as of October 1, 1995 and October 21, 1996, each among
National Financial Auto Funding Trust, National Auto Finance Company, Inc., as
successor to National Auto Finance Company LP, and Harris Trust and Savings
Bank, as trustee.(5)*
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10.64 Waiver letter of Financial Assurance Inc., dated as of September 25,
1997, to National Auto Finance Company, Inc. and National Financial Auto Funding
Trust.(5)*
10.65 [Intentionally Omitted.]
10.66 Insurance and Indemnity Agreement, among Financial Security Assurance
Inc., National Auto Finance 1997-1 Trust, National Financial Auto Funding Trust
and National Auto Finance Company, Inc., dated as of July 23, 1997.(5)*
10.67 Master Spread Account Agreement, dated as July 23, 1997, among National
Financial Auto Funding Trust, Financial Security Assurance Inc. and Harris Trust
and Savings Bank, as Trustee and as Collateral Agent.(5)*
10.68 Custodial Agreement, dated as of July 23, 1997, by and between Omni
Financial Services of America, Inc., as custodian, and National Auto Finance
Company, Inc., as servicer.(5)*
10.69 $1.5 million Promissory Note, dated as of August 25, 1997, payable by
National Auto Finance Company, Inc. to First Union National Bank.(5)*
10.70 Security Agreement, dated as of August 25, 1997, delivered by National
Auto Finance Company, Inc. to First Union National Bank.(5)*
10.71 Loan Agreement, dated as of August 25, 1997, by and between First Union
National Bank and National Auto Finance Company, Inc.(5)
10.72 Voting Agreement by and among The 1818 Mezzanine Fund, LP, PC
Investment Company, Progressive Investment Company, Inc. and National Auto
Finance Company, L.P dated December 22, 1997.(5)
10.73 Restated Registration Rights Agreement, dated March 27, 1998, by and
among National Auto Finance Company, Inc. and Certain Investors.(5)*
10.74 Junior Subordination Agreement, dated as of March 27, 1998, among
BankBoston, N.A., The 1818 Mezzanine Fund, LP, PC Investment Company,
Manufacturers Life Insurance Company (U.S.A.), Nova Financial Corporation, Nova
Corporation, The Structured Finance High Yield Fund, LLC and National Auto
Finance Company, Inc.(5)*
10.75 Indenture, dated as of December 15, 1997, by and between National Auto
Finance 1998-1 Trust and Harris Trust and Savings Bank at Trustee.(5)*
10.76 Sale and Servicing Agreement, dated as of December 15, 1997, by and
among National Auto Finance 1998-1 Trust, as Seller, National Financial Auto
Finance 1998-1 Trust, National Auto Finance Company, Inc. as Servicer, and
Harris Trust and Savings Bank, as Trust Collateral Agent and Back-up
Servicer.(5)*
10.77 Insurance and Indemnity Agreement, among Financial Security Assurance
Inc., National Auto Finance 1998-1 Trust, National Financial Auto Funding Trust
and National Auto Finance Company, Inc., dated as of January 20, 1998.(5)*
10.78 Master Spread Account Agreement, dated as January 20, 1998, among
National Financial Auto Funding Trust, Financial Security Assurance Inc. and
Harris Trust and Savings Bank, as Trustee and as Collateral Agent.(5)*
10.79 Custodial Agreement, dated as of January 20, 1998, by and between Omni
Financial Services of America, Inc., as custodian, and National Auto Finance
Company, Inc., as servicer.(5)*
10.80 Sale Agreement, dated as of December 15, 1997, by and between National
Financial Auto Funding Trust Il and National Financial Auto Funding Trust.(5)*
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10.81 Trust Agreement, dated as of December 15, 1997, between National
Financial Auto Funding Trust and Wilmington Trust Company.(5)*
10.82 Purchase and Contribution Agreement, dated December 15, 1997, by and
between National Auto Finance Company, Inc. and National Financial Auto Funding
Trust.(5)*
10.83 Assignment Agreement, dated as of December 15, 1997, between Bankers
Trust Company and National Financial Auto Funding Trust II.(5)*
10.84 Indemnification Agreement, dated as of January 20, 1998, by and among
Financial Security Assurance Inc., National Financial Auto Funding Trust and
First Union Capital Markets Corp.(5)*
10.85 Amendment, dated as of January 20, 1998, by and among National
Financial Auto Funding Trust, Financial Security Assurance Inc., Harris Trust
and Savings Bank, as collateral agent, and National Auto Finance Company, Inc.
to Master Spread Account Agreement dated as of November 21, 1995, Master Spread
Account Agreement dated as of November 13, 1996, and Master Spread Account
Agreement dated as of July 23, 1997 in each case among National Financial Auto
Funding Trust, Financial Security Assurance Inc. and Harris Trust and Savings
Bank, as trustee and as collateral agent.(5)*
10.86 Referral Agreement, dated as of February 26, 1998, by and between U.S.
Bank, N.A. and Auto Credit Clearinghouse, a division of National Auto Finance
Company, Inc.(5)*
10.87 Restructuring Agreement, dated as of April 7, 1999 by and among the
Company, National Auto Finance Company, L.P., National Auto Finance Corporation,
The 1818 Mezzanine Fund, L.P., PC Investment Company, Progressive Investment
Company, Inc. Manufacturers Life Insurance Company (U.S.A.), and The Structured
Finance High Yield Fund, LLC.
10.88 Revolving Credit, Term Loan and Security Agreement dated as of March
31, 1999 by and among National Auto Funding Trust, the Company and First Union
National Bank.
10.89 Note Exchange Agreement dated as of April 7, 1999 by and among the
Company, Nova Financial Corporation, Nova Corporation, Stephen L. Gurba, Edgar
Otto and Gary L. Shapiro.
10.90 Amended and Restated Junior Subordination Agreement, dated as of April
7, 1999 among The 1818 Mezzanine Fund, L.P., PC Investment Company,
Manufacturers Life Insurance Company (U.S.A.), The Structured Finance High Yield
Fund, and others, and the Company.
10.91 Release and Consent Not to Sue, dated as of April 7, 1999 by National
Auto Finance Company L.P., National Auto Finance Corporation, Nova Financial
Corporation, Nova Corporation, Gary L. Shapiro, Edgar A. Otto, and Stephen L.
Gurba for itself or himself and on behalf of others, releasing the Company and
others from certain claims, etc.
10.92 Release dated as of April 7, 1999 by The 1818 Mezzanine Fund, L.P., PC
Investment Company, Progressive Investment Company, Inc., Manufacturers Life
Insurance Company (U.S.A.), and The Structured Finance High Yield Fund, LLC for
itself and other named Releasors releasing the Company and other named
Releasees.
10.93 Amended and Restated Pooling and Administration Agreement, dated as of
December 8, 1994 and restated in its entirety as of April 7, 1999 by and among
National Financial Auto Funding Trust II, the Company and Bankers Trust Company.
10.94 Amendment One to Back-up Servicing Agreement, dated as of March 31,
1999 by and among CSC Logic/MSA LLP, the Company, First Union National Bank and
Bankers Trust, as trustee and National Financial Auto Funding Trust II.
10.95 Consent and Amendment, dated as of March 31, 1999 by and among National
Financial Auto Funding Trust II, the Company, First Union National Bank and
Bankers Trust Company, as trustee.
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10.96 Reissuance of Series 1994-R class B Certificate registered in the name
of First Union National Bank as owner of a fractional undivided interest in the
National Financial Auto Receivables Master Trust.
10.97 Certificate Agreement, dated as of March 31, 1999 between National
Chartered Auto Corporation and the Company.
10.98 Consent and Amendment, dated as of March 31, 1999 to the Pooling and
Servicing Agreement dated as of October 1, 1995, and the Pooling and Servicing
Agreement, dated as of October 21, 1996 each among National Financial Auto
Funding Trust, the Company, and Harris Trust and Savings Bank, as trustee.
10.99 National Auto Finance Company, Inc. Owner Trustee and National
Financial Auto Funding Trust Indenture Trustee Irrevocable Instruction Letter
dated as of March 31, 1999 addressed to Wilmington Trust Company, as Owner
Trustee, Harris Trust and Savings Bank, as Trustee, and Chase Manhattan Bank
Delaware, as Trustee, each as trustee to various trusts.
10.100 Amendment to Trust Agreement dated as of March 31, 1999 of the First
Amended and Restated Trust Agreement dated as of December 8, 1994 among the
Company, Chase Manhattan Bank Delaware, as Trustee and certain other
Co-Trustees.
10.101 Agreement for Monitoring and Back-up Servicing, dated as of March 31,
1999 among the Company, CSC Logic/MSA LLP and Financial Security Assurance Inc.
10.102 Amendment to Custodian Agreement, dated as of March 31, 1999 to the
Custodian Agreement, dated as of October 15, 1998, by and among Harris Trust and
Savings Bank as Custodian, the Company as Administrator and Harris Trust and
Savings Bank as trustee of various trusts.
10.103 Supplement to Back-up Servicing Agreement, dated as of March 31, 1999
by and among National Auto Funding Trust, the Company and Harris Trust and
Savings Bank to the Back-up Servicing Agreement dated as of March 31, 1999.
10.104 Agreement and Amendment, dated as of March 31, 1999 among Financial
Security Assurance Inc., National Financial Auto Funding Trust, the Company,
National Auto Finance 1997-1 Trust and National Auto Finance 1998-1 Trust to
Insurance and Indemnity Agreements dated as of November 21, 1995, November 13,
1996, July 23, 1997 and January 20, 1998 in each case among Financial Security
Assurance Inc., National Financial Auto Funding Trust and the Company and with
respect to the Insurance and Indemnity Agreement dated as of July 23, 1997, also
among National Auto Finance 1997-1 Trust and with respect to the Insurance and
Indemnity Agreement dated as of January 20, 1998 also among National Auto
Finance 1998-1 Trust.
10.105 Agreement and Amendment dated as of March 31, 1999 among Financial
Security Assurance Inc., National Financial Auto Funding Trust, Harris Trust and
Savings Bank, to Series 1996-1 Supplement, Series 1997-1 Supplement and Series
1998-1 Supplement each dated as of March 31, 1998 to the First Amended and
Restated Master Spread Account Agreement dated as of March 31, 1998.
10.106 Commitment of First Union National Bank to Purchase Subordinated
Asset-Backed Notes.
10.107 Subordination and Intercreditor Agreement, dated as of March 31, 1999,
by and among National Financial Auto Funding Trust, National Auto Finance 1996-1
Trust, National Auto Finance 1997-1 Trust, National Auto Finance Trust 1998-1
Trust, the Company, First Union National Bank, Financial Security Assurance,
Inc., and Harris Trust and Savings Bank, as Trustee and Collateral Agent.
10.108 Fairness Opinion of Rothschild, Inc.
12
<PAGE> 1
EXHIBIT 10.87
RESTRUCTURING AGREEMENT
RESTRUCTURING AGREEMENT, dated as of April 7, 1999 (the
"Agreement"), by and among National Auto Finance Company, Inc., a Delaware
corporation (the "Company"), National Auto Finance Company, L.P., a Delaware
limited partnership (the "Partnership"), National Auto Finance Corporation, a
Delaware corporation (the "General Partner"), the Partners (as defined below),
The 1818 Mezzanine Fund, L.P., a Delaware limited partnership (the "Fund"), PC
Investment Company, a Delaware corporation ("PCI"), Progressive Investment
Company, Inc., a Delaware corporation ("Progressive"), Manufacturers Life
Insurance Company (U.S.A.), a Michigan corporation ("ML"), and The Structured
Finance High Yield Fund, LLC, a Delaware limited liability company ("SFHY"). The
Fund, PCI, ML and SFHY are sometimes collectively referred to herein as the
"Noteholders," and the Fund and Progressive are sometimes collectively referred
to herein as the "Equityholders."
PRELIMINARY STATEMENT
Pursuant to a Securities Purchase Agreement, dated as of
December 22, 1997 (the "December Agreement"), (i) the Fund, PCI and ML purchased
from the Company $40,000,000 aggregate principal amount of the Company's Senior
Subordinated Notes due December 22, 2004 (the "Notes"), and 1,038,924 detachable
warrants to purchase initially 1,038,924 shares of the Company's Common Stock,
par value $.01 per share (the "Common Stock"), and (ii) the Fund and Progressive
purchased 1,904,762 shares of the Company's Common Stock.
SFHY purchased from the Company, pursuant to a Securities
Purchase Agreement, dated as of March 27, 1998 (the "March Agreement"; the
December Agreement and the March Agreement are sometimes collectively referred
to herein as the "Agreements"), $20,000,000 aggregate principal amount of the
Company's Notes and 593,671 detachable warrants to purchase initially 593,671
shares of the Company's Common Stock.
The Partnership is the owner, directly and indirectly, of
4,230,000 shares of the Company's Common Stock (the "Partnership Shares"). In
consideration of, and as part of the transactions contemplated by, this
Agreement, the Partnership has agreed to grant the nominees of the Noteholders
and the Equityholders from time to time serving on the Company's Board of
Directors (the "Board") an irrevocable proxy to vote the Partnership Shares.
The Noteholders and the Equityholders have asserted potential
claims against the Partnership, National Auto Finance Corporation, a Delaware
corporation and the general partner of the Partnership (the "General Partner"),
Nova Financial Corporation, a Delaware corporation ("Nova Financial"), Nova
Corporation, a Delaware corporation ("Nova"), Gary L. Shapiro ("Shapiro"), Edgar
A. Otto ("Otto") and Stephen L. Gurba ("Gurba"), each a limited partner of the
Partnership (collectively, the "Partners"), which claims the parties desire to
settle. In consideration of, and as part of the transactions contemplated by,
this Agreement, the Noteholders and Equityholders have agreed to release the
Partnership, the General Partner and the Partners from certain liabilities and
have agreed not to bring certain causes of action against them.
<PAGE> 2
The Company has issued its junior subordinated promissory
notes in the aggregate principal amount of $430,152, $961,714, $33,714, $27,246
and $487,656, to Shapiro, Otto, Gurba, Nova Financial and Nova, respectively
(such promissory notes as amended to the date hereof, the "Junior Notes"). The
Company is in default under the Junior Notes. In consideration of, and as part
of the transactions contemplated by, this Agreement, the holders of the Junior
Notes (the "Junior Noteholders") have agreed to restructure the terms of the
Junior Notes.
The Company has been unable to satisfy certain affirmative,
negative and financial covenants under the Agreements. The Company, the
Noteholders and the Equityholders now desire, on the terms and conditions set
forth in this Agreement, to restructure the terms of the Notes and the Junior
Notes and to waive breaches of certain of the covenants contained in, and
defaults under, the Agreements, the Notes and the Junior Notes and to provide
for the issuance of the Shares (as defined in Section 3 hereof) to the
Noteholders and the Equityholders (collectively, the "Restructuring").
Capitalized terms used but not defined herein shall have the
meanings ascribed to such terms in the Agreements.
In consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Waivers and Amendments.
(a) In accordance with Section 14.5 of each of the Agreements,
the Noteholders and the Equityholders hereby waive the currently existing
defaults and breaches by the Company of (i) the representations and warranties
contained in each of the Agreements and the Notes, and (ii) the affirmative,
negative and financial covenants contained in Sections 9.1, 9.2, 9.4, 9.6, 10.1,
10.2, 10.4, 10.9, 11.1(iii), 11.1(iv), 11.1(v) and 11.1(vi) of each of the
Agreements. The Company hereby represents and warrants to the Noteholders and
the Equityholders that, to the knowledge of the Company after due inquiry, it is
not in default or breach of any covenant contained in either of the Agreements,
other than Sections 9.1, 9.2, 9.4, 9.6, 10.1, 10.2, 10.4, 10.9, 11.1(iii),
11.1(iv), 11.1(v) and 11.1(vi) of each thereof.
(b) The Company, the Noteholders and the Equityholders hereby
amend Section 10.1(a) of each of the Agreements so that, for the period
commencing on the date hereof (the "Restructuring Date") and ending on March 31,
2001 (the "Waiver Period"), the Company shall not be required to comply with the
Consolidated Net Worth covenant set forth in such Section 10.1(a). From and
after April 1, 2001, the Company's required Consolidated Net Worth shall
increase (from the Company's actual Consolidated Net Worth as of March 31, 2001)
through the term of the Amended Notes (as defined in Section 2 hereof) as set
forth in Section 10.1(b) (with respect to Net Income from and after April 1,
2001) and Section 10.1(c) (with respect to proceeds received after April 1,
2001) of each of the Agreements to the extent such sections are applicable to
the period from and after March 31, 2001. Schedule 1(b)(1) attached hereto sets
forth the Company's good faith estimates, based on consultation with its
independent accountants, of the charges that may arise as a result of the
Restructuring and the balance sheet
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<PAGE> 3
effect thereof (it being acknowledged by all parties hereto that the actual
charges or the balance sheet effect thereof may differ from such estimates).
Schedule 1(b)(2) attached hereto sets forth the Company's business plan for the
twenty-four month period commencing April 1, 1999 and ending March 31, 2001 (the
"Business Plan"). The Business Plan has been prepared by the Company in good
faith and is based on assumptions the Company believes to be reasonable as of
the date hereof (it being acknowledged by all parties hereto that actual results
during the periods covered by the Business Plan may differ from the results
contained in the Business Plan).
(c) The Company, the Noteholders and the Equityholders hereby
amend Section 10.2 of each of the Agreements so that the covenant relating to
the Company's Adjusted Interest Expense set forth in each such Section 10.2 will
be waived for the Waiver Period. Such covenant shall become effective and the
Company shall be required to comply with such covenant upon the completion of
the first full fiscal quarter following the Waiver Period. Upon expiration of
the Waiver Period, the Adjusted Interest Expense covenant shall encompass only
those periods after the Waiver Period. Until the end of the fourth full fiscal
quarter following the Waiver Period, compliance by the Company with the Adjusted
Interest Expense covenant shall be determined by calculating the Company's EBIT
and Consolidated Total Interest Expense from the expiration of the Waiver Period
through the end of the quarterly period for which compliance is being determined
and then annualizing each such amount. From and after the end of the fourth full
fiscal quarter following the Waiver Period, the Company shall again comply with
the Adjusted Interest Rate covenant as set forth in Section 10.2 of each of the
Agreements.
(d) The Company, the Noteholders and the Equityholders hereby
amend Article 10 of each of the Agreements to add a new Section 10.15 to each of
the Agreements, which reads in its entirety as follows:
"10.15 Return on Assets. The Company's required Return on
Assets (as defined below) for each of the quarterly periods ending on
the Measurement Dates indicated below (each such quarterly period, a
"Measurement Period") shall not be less than the corresponding amount
set forth below:
<TABLE>
<CAPTION>
Measurement Date Return on Assets
---------------- ----------------
<S> <C>
September 30, 1999 -1.00% (i.e. negative
1.00%)
December 31, 1999 0.01%
March 31, 2000 0.01%
June 30, 2000 1.00%
September 30, 2000 2.00%
December 31, 2000 2.25%
March 31, 2001 and thereafter 2.50%
</TABLE>
For purposes of the covenant set forth in this Section 10.15, the
following terms shall have the following meanings:
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<PAGE> 4
"Return on Assets" shall mean the amount derived by subtracting (A) the
sum of (i) the Portfolio Loss Percentage for the applicable Measurement
Period, (ii) the Portfolio Cost of Funds Percentage for the applicable
Measurement Period, and (iii) the Direct Operating Expense Percentage
for the applicable Measurement Period, from (B) the sum of (x) the
Weighted Average Coupon, (y) the Weighted Average Dealer Discount, and
(z) the Third Party Servicing Revenue Percentage. The Company's Return
on Assets will be measured for each Measurement Period, with results to
be submitted to the Noteholders and the Equityholders no later than the
forty-fifth day after the closing of each Measurement Period. Attached
hereto as Schedule 1(d) is a sample calculation of the Company's Return
on Assets. The Company shall calculate its Return on Assets consistent
with the sample calculation set forth on Schedule 1(d).
"Average NAFI Portfolio Size" shall mean the aggregate principal amount
of all loans in the NAFI Portfolio at the end of each day in the
Measurement Period, divided by the number of days in the applicable
Measurement Period.
"Average Total Portfolio Size" shall mean the aggregate principal
amount of all loans in the Total Portfolio at the end of each day in
the Measurement Period, divided by the number of days in the applicable
Measurement Period.
"Direct Operating Expense Percentage" shall mean all expenses (on an
annualized basis) of the Company for the applicable Measurement Period
that are properly classified in accordance with GAAP as operating
expenses (but excluding depreciation and interest expenses), divided by
the Average Total Portfolio Size during the applicable Measurement
Period.
"NAFI Portfolio" shall mean all loans originated by the Company or
acquired by the Company through its Portfolio Acquisition Program.
"Portfolio Cost of Funds Percentage" shall mean the actual weighted
average composite cost of funds for the applicable Measurement Period,
including the capital costs of the Company's securitization tranches A
and B, the capital costs of the Company's overcollateralization credit
enhancement of any such securitization and the capital costs of all
cash maintained in any spread account of any such securitization.
"Portfolio Loss Percentage" shall mean the actual net principal
liquidations (on an annualized basis) as reported by the Company's loan
servicing system for the applicable Measurement Period, divided by the
Average NAFI Portfolio Size during the applicable Measurement Period.
"Third Party Servicing Revenue Percentage" shall mean all third party
servicing revenue (on an annualized basis) for the applicable
Measurement Period as reported by the Company in accordance with GAAP,
divided by the Average Total Portfolio Size during the applicable
Measurement Period.
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<PAGE> 5
"Total Portfolio" shall mean the NAFI Portfolio and all loans serviced
by the Company for or on behalf of a third party.
"Weighted Average Coupon" shall mean the weighted average coupon of all
loans in the NAFI Portfolio as of the last day of the applicable
Measurement Period, as derived from the Company's loan servicing
system.
"Weighted Average Dealer Discount" shall mean the weighted average
dealer discount of the NAFI Portfolio as of the last day of the
applicable Measurement Period, as derived from the Company's loan
servicing system, divided by the Weighted Average Life of the NAFI
Portfolio.
"Weighted Average Life" shall mean the weighted average life of all
loans in the NAFI Portfolio as of the last day of the applicable
Measurement Period, as derived from the Company's loan servicing
system.
Any other terms used but not defined in this Section 10.15 shall have
the meaning ascribed to such terms in Section 1.1 of each of the
Agreements."
(e) The Company, the Noteholders and the Equityholders hereby
amend Section 11.1(vi) of each of the Agreements by adding the following at the
end of each thereof: "provided, however, that for purposes of determining
whether an "Amortization Event" under Section 9.01(f) or (g) of that certain
Pooling and Administration Agreement, dated as of December 8, 1994, as amended
(as so amended, the "Pooling Agreement"), by and among National Financial Auto
Funding Trust II, the Company and Bankers Trust Company, has occurred and
constitutes an Event of Default under the Agreements, the Company's "Net Loss
Ratio" (as defined in the Pooling Agreement) shall be calculated and determined
as provided in the Pooling Agreement as in effect on the Restructuring Date,
without giving effect to any amendments or waivers, if any, after the
Restructuring Date.
(f) Except to the extent each is expressly amended or waived by
the terms of this Agreement, all terms and conditions of each of the Agreements
and all other instruments and agreements executed thereunder shall remain in
full force and effect in accordance with their respective terms. Following the
Restructuring Date, except as specifically set forth or provided for herein, the
Company again shall comply with all Affirmative Covenants and Negative and
Financial Covenants contained in each of the Agreements.
2. Restructuring Notes. Effective on the Restructuring Date,
the Notes held by the Noteholders shall be amended and restated, in the form of
Exhibit A attached hereto (the "Amended Notes"), to allow the Company, at its
option, for a two-year period ending on the date that is two years from the
Restructuring Date, to pay an amount equal to up to 50% of the scheduled cash
interest payments on the Amended Notes through the issuance of convertible
senior subordinated notes (the "Convertible Notes"), in the form of Exhibit B
attached hereto. Upon presentation of the originally issued Notes from the
Noteholders to the Company, the Company shall mark "Canceled" on the originally
issued Notes and deliver to the Noteholders in exchange therefor Amended Notes
having an aggregate principal amount equal to the aggregate principal amount of
the canceled Notes.
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<PAGE> 6
3. Restructuring Shares. Simultaneously with the execution and
delivery of this Agreement, the Company shall issue, or cause to be issued, to
(i) the Noteholders, on a pro-rata basis (in relation to the aggregate principal
amount of Notes held by them), an aggregate of 7,071,429 shares of the Company's
Common Stock, and (ii) the Equityholders, on a pro-rata basis (in relation to
the number of shares of the Company's Common Stock purchased by each of them
pursuant to the December Agreement), an aggregate of 1,178,571 shares of the
Company's Common Stock (collectively, the "Shares").
4. Releases.
(a) Simultaneously with the execution and delivery of this
Agreement, the Noteholders and the Equityholders shall execute and deliver the
Release in the form of Exhibit C attached hereto.
(b) Simultaneously with the execution and delivery of this
Agreement, the Partnership, the General Partner and the Partners shall execute
and deliver the Release and Covenant Not to Sue in the form of Exhibit D
attached hereto.
(c) Simultaneously with the execution and delivery of this
Agreement, the Company, the Noteholders and the Equityholders shall execute and
deliver the Release in the form of Exhibit E attached hereto.
(d) Anything to the contrary notwithstanding, the releases
contemplated by and provided for in Sections 4(b) and 4(c) shall not release any
of the released parties from any claims brought by holders of the Company's
securities not signing the releases (such as from shareholder derivative or
class action claims).
5. Voting Proxy and Transfer Limitations.
(a) Simultaneously with the execution and delivery of this
Agreement, the Partnership shall execute and deliver to the Noteholders and the
Equityholders a proxy with respect to the Partnership Shares, in the form
attached hereto as Exhibit F (the "Proxy"). The Partnership shall deliver to the
Company or its transfer agent the certificate(s) representing the Partnership
Shares for the purpose of imprinting thereon the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN
IRREVOCABLE PROXY AND CERTAIN LIMITATIONS ON TRANSFER AS
CONTEMPLATED BY AND SET FORTH IN THAT CERTAIN RESTRUCTURING
AGREEMENT, DATED AS OF APRIL 7, 1999, BY AND AMONG THE COMPANY
AND NATIONAL AUTO FINANCE COMPANY, L.P., NATIONAL AUTO FINANCE
CORPORATION, THE PARTNERS (AS DEFINED THEREIN), THE 1818
MEZZANINE FUND, L.P., PC INVESTMENT COMPANY, PROGRESSIVE
INVESTMENT COMPANY, INC., MANUFACTURERS LIFE INSURANCE COMPANY
(U.S.A.) AND THE STRUCTURED FINANCE HIGH YIELD FUND, LLC.
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<PAGE> 7
(b) The Partnership agrees not to sell, assign, transfer,
pledge, encumber or otherwise dispose of the Partnership Shares, except (i) in
an arm's length transaction to a party who is not an affiliate (as defined in
Rule 405 under the Securities Act of 1933, as amended) of the Partnership or its
partners, or (ii) if to an affiliate (as defined in Rule 405 under the
Securities Act of 1933, as amended) of the Partnership or its partners, subject
to the Proxy (in which case the buyer, assignee, transferee or pledgee, as the
case may be, shall agree in writing to be bound by the terms of this Agreement,
including, without limitation, the Proxy and the transfer limitations set forth
in this Section 5(b)). The foregoing notwithstanding, the Partnership may
distribute the Partnership Shares to the partners of the Partnership, provided
each such partner shall execute and deliver to the Noteholders and the
Equityholders an instrument agreeing to be bound by the terms of this Agreement,
including, without limitation, the Proxy and the transfer limitations set forth
in this Section 5(b).
6. Board Representation. The Company and the Noteholders hereby
amend Section 9.10(d) of each of the Agreements so that, upon completion of the
Restructuring and (subject to the other provisions of Section 9.10 of each of
the Agreements) from time to time thereafter, each of the Fund, PCI and SFHY
shall have the right to designate a total of two directors to the Board. The
Company shall take all action within its power to cause the appointment or
election of such separate and individual designees of each of the Fund, PCI and
SFHY.
7. Affiliated Transactions. The Company, the Noteholders and
the Equityholders hereby amend Section 10.4 of each of the Agreements so that
from and after the Restructuring Date, anything to the contrary in Section 10.9
of each of the Agreements notwithstanding, the Company shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction with any Affiliate
of the Company, including payments on the Company's Preferred Stock (other than
payments on Preferred Stock issued to Noteholders, if any), unless such
transaction is approved by the Board, including the affirmative vote of a
majority of the representatives of the Noteholders; provided that no such
approval shall be required in connection with the Company's ongoing transactions
with BNI, Inc. or any ordinary course transaction between the Company and the
Noteholders or the Equityholders (or any of their respective affiliates).
8. Representations. (a) Each of the Noteholders, the
Equityholders, the Company, the Partnership, the General Partner, Nova and Nova
Financial severally and not jointly, as to itself only, represents and warrants
to the other parties hereto as follows:
(i) it is a corporation, limited liability company or limited
partnership, as the case may be, duly organized, validly existing and
in good standing under the laws of the jurisdiction of its
organization, with full corporate, limited liability company or
partnership power and authority, as the case may be, to execute and
deliver the Restructuring Documents (as defined in Section 11(n)) and
to consummate the transactions contemplated thereby;
(ii) the Restructuring Documents have been duly authorized,
executed and delivered by it and constitute legal, valid and binding
obligations of it, enforceable against it in accordance with their
respective terms (except as such enforceability may be
-7-
<PAGE> 8
limited by bankruptcy, insolvency or similar laws of general
application from time to time affecting the rights of creditors
generally and subject to general principles of equity); and
(iii) the execution and delivery of the Restructuring Documents
and the performance by it of its obligations thereunder will not
constitute a violation, breach or default (with or without the passage
of time or the giving of notice, or both) on its part under its
organizational documents, under any federal, state, local or foreign
law, rule or regulation, under any order or judgment that is binding on
it or any of its properties, or under any agreement, instrument or
document to which it is a party or by which it or any of its properties
are bound.
(b) In addition to the representations and warranties contained
in Section 8(a) above, the Company represents and warrants to the Noteholders
and the Equityholders as follows:
(i) the Shares and the shares of Common Stock issuable upon
conversion of the Convertible Notes (the "Conversion Shares") are duly
authorized and, upon issuance as provided herein or in the Convertible
Notes, as the case may be, will be validly issued, fully paid and
nonassessable; and
(ii) upon issuance as provided herein or in the Convertible
Notes, as the case may be, the Shares and the Conversion Shares will be
free and clear of any mortgage, pledge, security interest, encumbrance,
charge or other lien.
The foregoing notwithstanding, the Noteholders and the
Equityholders acknowledge that the Company will be required to amend its
certificate of incorporation to increase the number of authorized shares of
Common Stock to permit the issuance of the Conversion Shares. The Company hereby
covenants and agrees to take all action within its power (including seeking the
requisite stockholder approval) to amend its certificate of incorporation as
soon as practicable following the Restructuring Date (but no later than June 30,
1999) to increase the number of authorized shares of Common Stock to permit the
issuance of the Conversion Shares.
(c) In addition to the representations and warranties contained
in Section 8(a) above, the Partnership represents and warrants to the
Noteholders and the Equityholders as follows:
(i) the Partnership Shares are owned, beneficially and of
record, by the Partnership, free and clear of any liens, claims,
security interests, pledges, charges, encumbrances, mortgages or other
defects or restrictions of any kind whatsoever; and
(ii) the Partnership owns no shares of the Company's Common
Stock, other than the Partnership Shares.
(d) Each of the Partners (other than Nova and Nova Financial),
severally and not jointly, as to himself only, represents and warrants to the
other parties hereto as follows:
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<PAGE> 9
(i) he has full power and authority to execute and deliver the
Restructuring Documents and to consummate the transactions contemplated
thereby;
(ii) the Restructuring Documents have been duly executed and
delivered by him and constitute his legal, valid and binding
obligations, enforceable against him in accordance with their
respective terms (except as such enforceability may be limited by
bankruptcy, insolvency or similar laws of general application from time
to time affecting the rights of creditors generally and subject to
general principles of equity); and
(iii) the execution and delivery of the Restructuring Documents
and the performance by him of his obligations thereunder will not
constitute a violation, breach or default (with or without the passage
of time or the giving of notice, or both) on his part under any
federal, state, local or foreign law, rule or regulation, or under any
order or judgment that is binding on him or any of his properties, or
under any agreement, instrument or document to which he is a party or
by which he or any of his properties are bound.
9. Conditions to the Restructuring.
(a) Simultaneously with the execution and delivery of this
Agreement, the Company and First Union National Bank shall execute and deliver
(i) the Amended and Restated Pooling and Administration Agreement, (ii) the
Revolving Credit, Term Loan and Security Agreement, and (iii) the Commitment
Letter and the agreements, instruments and documents contemplated thereby, in
the forms attached hereto as Exhibit G-1, G-2 and G-3, respectively.
(b) Simultaneously with the execution and delivery of this
Agreement, the Company, the Partnership and the Junior Noteholders shall execute
and deliver the Note Exchange Agreement and the agreements, instruments and
documents contemplated thereby, in the forms attached hereto as Exhibit H (the
"Junior Restructuring Documents").
(c) Simultaneously with the execution and delivery of this
Agreement, the Partnership shall execute and deliver to the Company the
Certificate Sale Agreement and the Assignment contemplated thereby, and attached
thereto as Exhibit A, in the forms attached hereto as Exhibit I.
(d) Simultaneously with the execution and delivery of this
Agreement, the Board shall receive an opinion from Rothschild Inc. with respect
to the fairness to the Company and its equityholders (other than the
Equityholders and the Partnership), from a financial point of view, of the
transactions contemplated by the Restructuring Documents.
The parties hereto (other than the Company) consent to the
Company's execution and delivery of the foregoing agreements, instruments and
documents and acknowledge and agree that such execution and delivery, and the
consummation of the transactions contemplated thereby, do not violate or
constitute a default under either of the Agreements, the Notes or the Junior
Notes.
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<PAGE> 10
10. Indemnification.
(a) In addition to all sums due or to be due under the Amended
Notes and Convertible Notes, the Company agrees to indemnify and hold harmless
the Noteholders and the Equityholders, their respective Affiliates and each of
their respective officers, directors, agents, employees, members and partners
(each, an "Indemnified Party") to the fullest extent permitted by law from and
against all losses, claims, damages, expenses (including reasonable fees and
disbursements of counsel as provided for in Section 11(o) hereof) or other
liabilities ("Losses") resulting from any breach of any agreement, covenant or
undertaking of the Company contained in the Restructuring Documents or any
legal, administrative or other actions (including actions brought by any
equityholders of the Company or derivative actions brought by a Person claiming
through the Company or in the Company's name), proceedings or investigations
(whether formal or informal), or written threats thereof, based upon, relating
to or arising out of the Restructuring Documents or the transactions
contemplated thereby or any Indemnified Party's role in the Restructuring
transactions; provided, however, that the Company shall not be liable under this
Section 10: (a) for any amount paid in settlement of claims without the
Company's consent (which consent shall not be unreasonably withheld), (b) with
respect to Losses arising solely out of actions brought by the partners or
shareholders of the Fund, PCI, Progressive, ML or SFHY against an Indemnified
Party or by one Indemnified Party against another, or (c) to the extent that it
is finally judicially determined that such Losses resulted primarily from the
willful misconduct, bad faith or gross negligence of such Indemnified Party or a
breach of the Indemnified Party's agreements herein; provided, further, that if
and to the extent that such indemnification is unenforceable for any reason, the
Company shall make the maximum contribution to the payment and satisfaction of
such indemnified Losses which shall be permissible under applicable laws. In
connection with the obligation of the Company to indemnify for Losses as set
forth above, the Company further agrees to reimburse each Indemnified Party for
all such documented Losses (including reasonable fees and disbursements of
counsel) as they are incurred by such indemnified party; provided, however, that
if an Indemnified Party is reimbursed hereunder for any Losses, such
reimbursement of Losses shall be refunded to the extent it is finally judicially
determined that the Losses in question resulted primarily from the willful
misconduct, bad faith or gross negligence of such Indemnified Party.
(b) In addition to all sums due or to be due under the New
Junior Notes (as defined in the Note Exchange Agreement that is part of the
Junior Restructuring Documents) and the Junior Convertible Interest Notes (as
defined in the New Junior Notes), the Company agrees to indemnify and hold
harmless the Partnership, Shapiro, Otto and Gurba (each, a "Partnership
Indemnitee") to the fullest extent permitted by law from and against all losses,
claims, damages, expenses (including reasonable fees and disbursements of
counsel) or other liabilities ("Partnership Losses") resulting from any legal
actions (including actions brought by any equityholders of the Company or
derivative actions brought by a Person claiming through the Company or in the
Company's name) brought against any Partnership Indemnitee as a result of such
Partnership Indemnitee's role in the transactions contemplated by the
Restructuring Documents to which it is a party; provided, however, that the
Company shall not be liable under this Section 10(b): (i) for any amount paid in
settlement of claims without the Company's consent (which consent shall not be
unreasonably withheld), (ii) with respect to Partnership Losses arising solely
out of actions brought by the partners of the Partnership against a Partnership
Indemnitee or by one Partnership Indemnitee against another, or (iii) to the
extent
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<PAGE> 11
that it is finally judicially determined that such Partnership Losses resulted
primarily from the willful misconduct, bad faith or gross negligence of a
Partnership Indemnitee or a breach of a Partnership Indemnitee's agreements in
the Restructuring Documents; provided, further, that if and to the extent that
such indemnification is unenforceable for any reason, the Company shall make the
maximum contribution to the payment and satisfaction of such indemnified
Partnership Losses which shall be permissible under applicable laws.
11. Miscellaneous.
(a) Survival of Provisions. All representations, warranties,
covenants and other agreements made herein shall survive the execution and
delivery of the Restructuring Documents.
(b) Notices. All notices, demands and other communications
provided for or permitted hereunder shall be made in writing and shall be by
registered or certified first-class mail, return receipt requested, telecopier,
courier services or personal delivery to the following addresses, or to such
other addresses as shall be designated from time to time by a party in
accordance with this Section 11(b).
<TABLE>
<S> <C>
if to the Fund: with a copy to:
The 1818 Mezzanine Fund, L.P. Cadwalader, Wickersham & Taft
c/o Brown Brothers Harriman & Co. 100 Maiden Lane
59 Wall Street New York, New York 10038
New York, New York 10005 Attention: David C. L. Frauman, Esq.
Attention: Joseph P. Donlan Telecopier No.: (212) 504-6666
Telecopier No.: (212) 493-8429
if to PCI or Progressive: with a copy to:
3 Parklands Drive, 2nd Floor Cadwalader, Wickersham & Taft
Darien, Connecticut 06820 100 Maiden Lane
Attention: Evelyn Erb New York, New York 10038
Telecopier No.: (203) 655-1200 Attention: David C. L. Frauman, Esq.
Telecopier No.: (212) 504-6666
if to ML: with a copy to:
c/o MF Private Capital, Inc. Manufacturers Life Insurance Company
45 Milk Street, Suite 600 Corporate Law Department
Boston, Massachusetts 02109-5105 200 Bloor Street East
Attention: Raymond L. Britt, Jr. Toronto, Ontario M4W 1ES, Canada
Telecopier No.: (617) 451-5601 Attention: William Dawson, Esq.
Telecopier No: (416) 926-5657
</TABLE>
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<PAGE> 12
<TABLE>
<S> <C>
if to SFHY: with a copy to:
The Structured Finance High Yield Fund, LLC Cadwalader, Wickersham & Taft
c/o Prudential Investments--Structured Finance Group 100 Maiden Lane
One Gateway Center, 11th Floor New York, New York 10038
Newark, New Jersey 07106-5311 Attention: David C. L. Frauman, Esq.
Attention: Steven M. Tompson Telecopier No.: (212) 504-6666
Telecopier No.: (973) 802-2147
if to the Company: with a copy to:
National Auto Finance Company, Inc. Weil, Gotshal & Manges LLP
10302 Deerwood Park Blvd., Suite 100 767 Fifth Avenue
Jacksonville, Florida 32256 New York, New York 10153-0119
Attention: Keith B. Stein Attention: Howard Chatzinoff, Esq.
Telecopier No.: (904) 996-2557 Telecopier No.: (212) 310-8007
if to the Partnership: with a copy to:
National Auto Finance Company, L.P. O'Sullivan, Graev & Karabell, LLP
Via Mizner Financial Plaza 30 Rockfeller Plaza
700 South Federal Highway, Suite 200 New York, New York 10112
Boca Raton, Florida 33432 Attention: Charles E. Bachman, Esq.
Attention: Gary L. Shapiro Telecopier No.: (212) 408-2420
Telecopier No.: (561) 417-0033
if to Gary L. Shapiro: with a copy to:
National Financial Companies, LLC O'Sullivan, Graev & Karabell, LLP
Via Mizner Financial Plaza, Ste. 200 30 Rockefeller Plaza
700 South Federal Highway New York, New York 10112
Fax: (561) 417-8827 Attention: Charles E. Bachman, Esq.
Telecopier No.: (212) 408-2420
if to Edgar A. Otto: with a copy to:
Congress Point Financial Corp. O'Sullivan, Graev & Karabell, LLP
6400 Congress Avenue, Suite 2800 30 Rockefeller Plaza
Boca Raton, Florida 33487 New York, New York 10112
Main Facsimile: (561) 988-7087 Attention: Charles E. Bachman, Esq.
Telecopier No.: (212) 408-2420
if to Stephen L. Gurba: with a copy to:
Bulova Technologies O'Sullivan, Graev & Karabell, LLP
101 North Queen Street 30 Rockefeller Plaza
P. O. Box 4787 New York, New York 10112
Lancaster, Pennsylvania 17604-4787 Attention: Charles E. Bachman, Esq.
Fax: (717) 397-2434 Telecopier No.: (212) 408-2420
</TABLE>
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<PAGE> 13
All such notices and communications shall be deemed to have
been duly given: if delivered by hand, when personally delivered; if delivered
by courier, when delivered to the recipient by commercial overnight courier
service; if mailed, five Business Days after being deposited in the mail,
postage prepaid; and if telecopied, upon confirmation of receipt.
(c) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns and
permitted transferees of the parties hereto.
(d) Assignments.
The Company may not assign any of its rights or obligations
under this Agreement (other than in connection with a transaction permitted
pursuant to Section 10.3 of the Agreements) without the written consent of the
holders of a majority (i) in aggregate principal amount of the Amended Notes
held by the Noteholders, and (ii) of the aggregate number of shares of Common
Stock held by the Equityholders.
Subject to the other limitations contained in the Amended
Notes, the Convertible Notes and this Agreement, the Noteholders and
Equityholders and any subsequent Holder of Amended Notes, Convertible Notes or
Common Stock may, at any time, or from time to time, sell, agree to sell or
assign to one or more other Persons who agree to be bound by all of the terms of
this Agreement, all or any portion of the Amended Notes, Convertible Notes or
Common Stock. Subject to the other limitations contained in the Amended Notes,
the Convertible Notes and this Agreement, in the event of any such sale or
assignment of an Amended Note or Convertible Note, upon surrender for exchange
of any Amended Note or Convertible Note at the office of the Company designated
for notices in accordance with Section 11(b), the Company shall execute and
deliver in exchange therefor, without expense to the Holder (provided the
Company shall not be responsible for any transfer taxes in connection with any
such sale or assignment), one or more new Amended Notes or Convertible Notes, as
the case may be, in the same aggregate principal amount as the then unpaid
principal amount of the Amended Note or Convertible Note so surrendered as such
Holder shall specify, dated as of the date to which interest has been paid on
the Amended Note or Convertible Note so surrendered (or, if no interest has been
paid, the date of such surrendered Amended Note or Convertible Note), in the
name of such Person or Persons as may be designated by such Holder in writing,
and otherwise of the same form and tenor as the Amended Note or Convertible Note
so surrendered for exchange.
Subject to the limitations contained in certificates
representing the Shares or the Partnership Shares and this Agreement, in the
event of any sale or assignment of any certificate representing any of the
Shares or the Partnership Shares at the office of the Company designated for
notices in accordance with Section 11(b), the Company shall execute and deliver
in exchange therefor, without expenses to the holder (provided the Company shall
not be responsible for any transfer taxes in connection with any such sale or
assignment), one or more certificates representing shares of Common Stock in the
same amount as surrendered as such holder shall specify in the name of such
Person or Persons as may be designated by such holder in writing, and otherwise
of the same form. Every Amended Note, Convertible Note or certificate
representing any Shares or the Partnership Shares surrendered for transfer shall
be duly endorsed,
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<PAGE> 14
or accompanied by a written instrument of transfer duly executed by the holder
of such Amended Note, Convertible Note or certificate representing any Shares or
the Partnership Shares or its attorney duly authorized in writing.
(e) Amendment and Waiver.
(i) No failure or delay on the part of any party hereto in
exercising any right, power or remedy under any of the Restructuring
Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, power or remedy preclude any other
or further exercise thereof or the exercise of any other right, power
or remedy.
(ii) Any amendment, supplement or modification of or to any
provision of this Agreement, the Amended Notes or the Convertible
Notes, any waiver of any provision of this Agreement, the Amended Notes
or the Convertible Notes, and any consent to any departure by the
Company from the terms of any provision of this Agreement, the Amended
Notes or the Convertible Notes, shall be effective (i) only if it is
made or given in writing and signed by the Company and (x) if such
amendment, supplement or modification affects the holders of the
Amended Notes, the holders of 66% of the aggregate principal amount of
the Amended Notes outstanding, (y) if such amendment, supplement or
modification affects the holders of the Convertible Notes, the holders
of 66% of the aggregate principal amount of the Convertible Notes
outstanding or (z) if such amendment, supplement or modification
affects both the holders of the Amended Notes and the Convertible
Notes, the holders of 66% of the aggregate principal amount of both the
Amended Notes and the Convertible Notes, and (ii) only in the specific
instance and for the specific purpose for which made or given.
Notwithstanding the foregoing, without the consent of each holder of an
Amended Note or Convertible Note affected, an amendment may not:
(1) reduce the rate of or extend the time for payment of
interest on any Amended Note or Convertible Note;
(2) reduce the principal of or extend the maturity of any
Amended Note or Convertible Note;
(3) change the time at which any Amended Note or
Convertible Note shall or may be prepaid in
accordance with Sections 3 and 4 of the Amended Notes
and Sections 4 and 5 of the Convertible Notes;
(4) make any Amended Note or Convertible Note payable in
money or securities other than as stated in the
Amended Notes or Convertible Notes; or
(5) make any change in the first or second sentence of
this Section 11(e)(i) or (ii).
(f) Counterparts. This Agreement and any of the other
Restructuring Documents may be executed in any number of counterparts and by the
parties hereto in separate
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<PAGE> 15
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(h) Determinations. All elections or determinations to be made
by the Company, any Noteholder, any Equityholder or the Board hereunder in its
opinion or judgment or with its approval or otherwise shall be made by it in its
sole discretion, unless otherwise specified herein.
(i) Governing Law. This Agreement has been negotiated, executed
and delivered in the State of New York and shall be governed by and construed in
accordance with the laws of the State of New York, without regard to principles
of conflicts of law.
(j) Jurisdiction. Each party to this Agreement hereby
irrevocably agrees that any legal action or proceeding arising out of or
relating to the Restructuring Document or transactions contemplated thereby may
be brought in the courts of the State of New York located in New York City or of
the United States of America for the Southern District of New York and hereby
expressly submits to the personal jurisdiction and venue of such courts for the
purposes thereof and expressly waives any claim of improper venue and any claim
that such courts are an inconvenient forum. Each party hereby irrevocably
consents to the service of process of any of the aforementioned courts pursuant
to a contractual provision in any such suit, action or proceeding by the mailing
of copies thereof by registered or certified mail, postage prepaid, to the
address set forth in Section 11(b), such service to become effective 10 days
after such mailing. TO THE EXTENT NOT PROHIBITED BY APPLICABLE LAW WHICH CANNOT
BE WAIVED, EACH PARTY HEREBY WAIVES AND COVENANTS THAT IT WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY
FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION, OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THE RESTRUCTURING DOCUMENTS OR THE SUBJECT MATTER THEREOF,
IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE.
(k) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired,
unless the provisions held invalid, illegal or unenforceable shall substantially
impair the benefits of the remaining provisions hereof.
(l) Rules of Construction. Unless the context otherwise
requires, "or" is not exclusive, and references to sections or subsections refer
to sections or subsections of this Agreement.
(m) Remedies. If a breach of this Agreement, the Amended Notes
or the Convertible Notes by the Company occurs and is continuing, the
Noteholders or any subsequent
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<PAGE> 16
holder of Amended Notes or Convertible Notes may pursue any available remedy by
proceeding at law or in equity to enforce the performance (including, without
limitation, the specific performance) of any provision of the Amended Notes, the
Convertible Notes or this Agreement. The Noteholders or any holder of Amended
Notes or Convertible Notes may maintain a proceeding even if it does not possess
any of the Amended Notes or Convertible Notes or does not produce any of them in
the proceeding. No remedy is exclusive of any other remedy. All available
remedies are cumulative.
(n) Entire Agreement. This Agreement and the exhibits and
schedules hereto, the Amended Notes and the Convertible Notes, the Proxy, the
Junior Restructuring Documents and the releases described herein (collectively,
the "Restructuring Documents"), are intended by the parties as a final
expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein and therein; provided, however, that
notwithstanding the foregoing, except as expressly amended or otherwise modified
by any of the provisions of any of the Restructuring Documents, the provisions
of the Agreements shall remain in full force and effect and unaffected by the
provisions of or the Restructuring Documents. There are no restrictions,
promises, warranties or undertakings, other than those set forth or referred to
herein or therein. The Restructuring Documents supersede all prior agreements
and understandings among the parties with respect to such subject matter. This
Agreement shall not be effective unless and until this Agreement and each of the
other Restructuring Documents has been signed by each of the parties whose
signature is provided for herein and therein.
(o) Noteholders and Equityholders' Attorneys' Fees. All
reasonable attorney's fees, charges and disbursements and all reasonable
out-of-pocket expenses incurred by the Noteholders and the Equityholders in
connection with the negotiation, execution and delivery of this Agreement and
the other Restructuring Documents and the transactions contemplated hereby and
thereby shall be paid by the Company. In any action or proceeding brought to
enforce any provision of this Agreement or any of the other Restructuring
Documents or any other document or instrument contemplated hereby or thereby, or
where any provision hereof or thereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees,
charges and disbursements in addition to any other available remedy.
(p) Partnership Counsel Fees. Simultaneously with the execution
and delivery of this Agreement, the Company shall pay to the Partnership, by
wire transfer in immediately available funds, $15,000 in contribution to the
counsel fees incurred by the Partnership in connection with the transactions
contemplated hereby.
(q) Publicity. Except as may be required by applicable law or a
listing agreement with any securities exchange or The Nasdaq Stock Market, Inc.,
the Company, the Noteholders and the Equityholders severally agree that none of
them shall issue a publicity release or announcement or otherwise make any
public disclosure concerning this Agreement or the transactions contemplated
hereby, without prior approval of the others of them. If any announcement is
required by law to be made by any party referred to in this Section 11(q), prior
to making such announcement such party, to the greatest extent practicable (i)
will deliver a draft of such announcement to such other parties referred to in
this Section 11(q), and (ii) shall give such other parties an opportunity to
comment thereon.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed and delivered by their respective officers or partners
hereunto duly authorized as of the date first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ Keith B. Stein
-------------------------------------
Name: Keith B. Stein
Title: Chief Executive Officer
NATIONAL AUTO FINANCE COMPANY, L.P.
By: National Auto Finance Corporation,
its general partner
By: /s/ Gary L. Shapiro
-------------------------------------
Name: Gary L. Shapiro
Title: President
NATIONAL AUTO FINANCE CORPORATION
By: /s/ Gary L. Shapiro
-------------------------------------
Name: Gary L. Shapiro
Title: President
NOVA FINANCIAL CORPORATION
By: /s/ Gary L. Shapiro
-------------------------------------
Name: Gary L. Shapiro
Title: President
<PAGE> 1
EXHIBIT 10.88
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
AMONG
NATIONAL FINANCIAL AUTO FUNDING TRUST,
NATIONAL AUTO FINANCE COMPANY, INC.
AND
FIRST UNION NATIONAL BANK
DATED AS OF MARCH 31, 1999
<PAGE> 2
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
TABLE OF CONTENTS
<TABLE>
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SECTION 1. DEFINITIONS .................................................. 1
1.1 Defined Terms ................................................ 1
SECTION 2. COMMITMENT TO LEND ........................................... 18
2.1 Establishment of Line of Credit .............................. 18
2.2 Term Loan .................................................... 18
2.3 Special Provisions Regarding Lender's Model Amount ........... 18
2.4 Use of Proceeds .............................................. 19
2.5 Removal of Underlying Transactions from the Borrowing Base ... 19
SECTION 3. BORROWING PROCEDURES; CERTAIN LOAN TERMS ..................... 19
3.1 Borrowing Procedures for Revolving Loans; Deemed Requests
for Amounts Due on each Payment Date ......................... 19
3.2 Conversion to Term Loan; Swap Agreement Requirement .......... 21
3.3 Capital Adequacy ............................................. 21
SECTION 4. INTEREST AND FEES ............................................ 22
4.1 Revolving Loans .............................................. 22
4.2 Term Loan .................................................... 22
4.3 Method of Calculating Interest and Fees ...................... 22
SECTION 5. REPAYMENT OF PRINCIPAL ....................................... 22
5.1 Principal Payments and Prepayments ........................... 22
5.2 Term Loan Principal Payments ................................. 23
(c) Put Option; Release of Lien .................................. 23
SECTION 6. APPLICATION OF AMOUNTS ON DEPOSIT IN ACCOUNTS ................ 24
6.1 Application of Amounts ....................................... 24
6.2 Taxes ........................................................ 25
SECTION 7. BORROWER'S AND NAFI'S REPRESENTATIONS AND WARRANTIES ......... 26
7.1 Existence and Power .......................................... 26
7.2 Transaction Documents Authorized; Binding Obligations ........ 26
7.3 No Conflict; Legal Compliance ................................ 26
7.4 Executive Offices ............................................ 26
7.5 Litigation ................................................... 27
7.6 Consents and Approvals ....................................... 27
7.7 Other Agreements ............................................. 27
7.8 Margin Regulations ........................................... 29
</TABLE>
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<TABLE>
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7.9 Taxes ............................................................... 29
7.10 Solvency ............................................................ 30
7.11 Material Adverse Change ............................................. 30
7.12 Good Title to the Collateral; First Priority Security Interest ...... 30
7.13 Investment Company Act .............................................. 30
7.14 Early Amortization Events ........................................... 30
7.15 FSA Indebtedness .................................................... 30
7.16 Representations with respect to NAFI ................................ 31
7.17 Delivery of Physical Certificates ................................... 33
7.19 Survival of Representations and Warranties .......................... 33
SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER AND NAFI .................... 33
8.1 Borrowing Base Certificates; Additional Access and Information ...... 33
8.2 Existence; Compliance with Law, Books and Records, Commingling
of Funds ............................................................ 34
8.3 Reserved ............................................................ 34
8.4 Notice of Liens ..................................................... 34
8.5 Obligations with Respect to Contracts .............................. 34
8.6 Preservation of Security Interest ................................... 35
8.7 Reserved ............................................................ 35
8.8 Separately Taxable Entity ........................................... 35
8.9 Taxable Income from the Contracts ................................... 35
8.10 Maintenance of Swap Agreement ....................................... 35
8.11 Enforcement of Underlying Documents ................................. 35
8.12 Borrower's Identity ................................................. 35
8.13 Audit Reports ....................................................... 35
8.14 Financial Statements ................................................ 36
8.15 Inspection .......................................................... 36
8.16 Covenants With Respect to NAFI ...................................... 36
8.17 Cooperation in Connection with Participations ....................... 37
8.18 Agreement to Hold in Trust .......................................... 37
8.19 Communication with Accountants ...................................... 37
8.20 Performance of Servicing Duties ..................................... 37
8.21 Joint and Several Liability ......................................... 37
8.22 Maintenance of Lockbox .............................................. 38
SECTION 9. NEGATIVE COVENANTS OF THE BORROWER AND NAFI ....................... 38
9.1 Liens; Negative Pledges; and Encumbrances ........................... 38
9.2 Expenditures and Acquisitions ....................................... 38
9.3 Disposition of Assets ............................................... 38
9.4 Indebtedness and Guarantees ......................................... 38
9.5 No Subsidiaries ..................................................... 38
9.6 Amendments of Charter Documents; Transaction Documents .............. 38
9.7 No Use of Lender's Name ............................................. 39
</TABLE>
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<PAGE> 4
<TABLE>
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9.8 Limitation on Activities of Borrower ..................... 39
9.9 Insolvency Proceedings ................................... 39
9.10 No Redemption ............................................ 39
9.11 No Advances .............................................. 39
9.12 Guarantees ............................................... 39
9.13 ERISA .................................................... 39
SECTION 10. GRANTS OF SECURITY INTEREST; THE COLLATERAL ............ 40
10.1 Security Interest ........................................ 40
10.2 Creation of Accounts; Investments ........................ 42
SECTION 11. RELATIONSHIP AMONG THE BANKS ........................... 42
11.1 Appointment and Authorization ............................ 42
11.2 Delegation of Duties ..................................... 43
11.3 Liability of Agent ....................................... 43
11.4 Reliance by the Agent .................................... 43
11.5 Notice of Default ........................................ 44
11.6 Credit Decision .......................................... 44
11.7 Indemnification by Banks ................................. 44
11.8 Reserved ................................................. 45
11.9 Successor Agent .......................................... 45
11.10 Collateral Matters ....................................... 46
11.11 No Petition Covenant ..................................... 46
11.12 Documents ................................................ 46
11.13 Indemnification by Borrower .............................. 46
11.14 Costs and Expenses ....................................... 47
11.15 Reliance by the Banks .................................... 48
SECTION 12. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS ............ 48
12.1 Notice ................................................... 48
12.2 Default .................................................. 48
12.3 Warranties ............................................... 48
12.4 Additional Documents; Financing Statements ............... 48
12.5 No Material Adverse Change ............................... 48
SECTION 13. CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN ......... 48
13.1 Note ..................................................... 48
13.2 Other Agreements and Financing Statements ................ 48
13.3 Resolutions .............................................. 50
13.4 Incumbency Certificate ................................... 51
13.5 By-laws .................................................. 51
13.6 Certificate of Incorporation ............................. 51
13.7 Good Standing ............................................ 51
13.8 UCC Searches ............................................. 51
</TABLE>
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<PAGE> 5
<TABLE>
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13.9 Fees and Costs ............................................. 51
13.10 Other Transaction Document Conditions ...................... 52
13.11 Due Diligence .............................................. 52
13.12 Reliance Letters ........................................... 52
13.13 Reserved ................................................... 52
13.14 No Material Adverse Change ................................. 52
13.15 Reserved ................................................... 52
13.16 Opinions ................................................... 52
13.17 Certified Copies of Underlying Transaction Documents ....... 52
SECTION 14. EVENTS OF DEFAULT AND REMEDIES ........................... 53
14.1 Events of Default .......................................... 53
14.2 Waiver of Default .......................................... 54
14.3 Remedies ................................................... 54
14.4 Rights and Remedies Cumulative ............................. 56
14.5 Intercreditor Agreement; Limitation on Amounts Due ......... 56
SECTION 15. EXPENSES AND INDEMNITIES ................................. 57
15.1 Expenses ................................................... 57
15.2 Indemnification ............................................ 58
(a) General Indemnity ...................................... 58
(b) Procedures for Suits ................................... 58
(c) Survival; Defense ...................................... 59
SECTION 16. MISCELLANEOUS ............................................ 59
16.1 Survival ................................................... 59
16.2 No Waiver by Lender ........................................ 59
16.3 Notices .................................................... 59
16.4 Headings ................................................... 60
16.5 Severability ............................................... 60
16.6 Entire Agreement; Construction; Amendments and Waivers ..... 60
16.7 Reliance by Lender ......................................... 60
16.8 Marshaling; Payments Set Aside ............................. 60
16.9 No Set-Offs by Borrower or NAFI ............................ 61
16.10 Binding Effect, Assignment and Transfer .................... 61
16.11 Counterparts ............................................... 61
16.12 Equitable Relief ........................................... 61
16.13 Governing Law .............................................. 62
16.14 Consent to Jurisdiction .................................... 62
16.15 Waiver of Jury Trial ....................................... 62
16.16 No Petition by Lender or Agent ............................. 62
16.18 General Interpretive Principles ............................ 63
</TABLE>
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INDEX OF EXHIBITS
Exhibit A Form of Note
Exhibit B Form of Request for Borrowing
Exhibit C Form of Borrowing Base Report
Exhibit D Form of Payment Schedule
Exhibit E Borrower's Swap Account Information
Exhibit F Definitions of "Available Amounts"
Exhibit G Form of Irrevocable Instruction Letter
Exhibit H Exceptions to Sections 7.5 and 7.18(c)
Litigation Concerning NAFI and or the Borrower
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<PAGE> 7
REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT
THIS REVOLVING CREDIT, TERM LOAN AND SECURITY AGREEMENT is dated as of
March 31, 1999, by and among National Financial Auto Funding Trust, a Delaware
business trust ("Borrower"), National Auto Finance Company, Inc. ("NAFI") and
First Union National Bank ("Lender").
RECITALS
A. Borrower desires to obtain from Lender a revolving credit facility
in the principal amount of up to the Facility Amount for a period of up to two
years, which shall then convert to a term loan for up to a four year period, in
either case secured by, among other things, all Free Cash Flow (as defined
herein) payable to the Borrower from various securitization entities
affiliated with the Borrower, and other amounts, all as more particularly
described below; and
B. Lender has agreed to make such loans to Borrower, but only upon the
terms and subject to the conditions hereinafter set forth and in reliance on the
representations and warranties set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter set forth, and intending to be legally bound, the
parties hereto agree as follows:
SECTION 1. DEFINITIONS.
1.1 DEFINED TERMS. As used herein, the following terms have the
following meanings:
"1995-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of November 21, 1995, among NAFI, the Borrower and
FSA, as amended.
"1995-1 POOLING AND SERVICING AGREEMENT" means the Pooling and
Servicing Agreement, dated as of October 1, 1995, among the Borrower, as
transferor, NAFI, as master servicer, and Harris, as trustee and collateral
agent, as amended.
"1995-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1995-1 Pooling and
Servicing Agreement and the 1995-1 Insurance and Indemnity Agreement.
"1996-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of November 13, 1996, among NAFI, the Borrower and
FSA as amended.
"1996-1 POOLING AND SERVICING AGREEMENT" means the Pooling and
Servicing Agreement, dated as of October 21, 1996, among the Borrower, NAFI, as
servicer, and Harris, as trustee and collateral agent, as amended.
<PAGE> 8
-2-
"1996-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1996-1 Pooling and
Servicing Agreement and the 1996-1 Insurance and Indemnity Agreement.
"1997-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of July 23, 1997, among FSA, National Auto Finance
1997-1 Trust, the Borrower and NAFI, as amended.
"1997-1 INDENTURE" means the Indenture, dated June 29, 1997, between
National Auto Finance 1997-1 Trust, as issuer, and Harris, as indenture trustee,
as amended.
"1997-1 SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of June 20, 1997, among National Auto Finance 1997-1 Trust,
as issuer, the Borrower, as seller, NAFI, as servicer, and Harris, as trust
collateral agent and back-up servicer, as amended.
"1997-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1997-1 Sale and
Servicing Agreement and the 1997-1 Insurance and Indemnity Agreement.
"1998-1 INSURANCE AND INDEMNITY AGREEMENT" means the Insurance and
Indemnity Agreement, dated as of January 20, 1998, among FSA, National Auto
Finance 1998-1 Trust, the Borrower and NAFI, as amended.
"1998-1 INDENTURE" means the Indenture, dated as of December 15, 1997,
between National Auto Finance 1998-1 Trust, as Issuer, and Harris, as Indenture
Trustee, as amended.
"1998-1 SALE AND SERVICING AGREEMENT" means the Sale and Servicing
Agreement, dated as of December 15, 1997, among National Auto Finance 1998-1
Trust, as issuer, the Borrower, as seller, NAFI, as servicer, and Harris, as
trust collateral agent and back-up servicer, as amended.
"1998-1 TRANSACTION" means the transactions contemplated and put into
effect by the Underlying Transaction Documents related to the 1998-1 Sale and
Servicing Agreement and the 1998-1 Insurance and Indemnity Agreement.
"ACCRUED INTEREST" means, for any Payment Date, an amount equal to the
sum of the product of one-three hundred sixtieth of the Interest Rate and the
outstanding principal balance of each of the Loans on each day of the Collection
Period related thereto.
"AFFILIATE" means, with respect to any Person, each Person that
controls, is controlled by or is under common control with such Person or any
affiliate of such Person, provided, however, that in no case shall Lender be
deemed to be an Affiliate of Borrower for purposes of this Agreement. For the
purpose of this definition, "control" of a Person shall mean the possession,
directly or indirectly, of the power to direct or cause the direction of its
management or policies, whether through the ownership of voting securities, by
contract or otherwise.
<PAGE> 9
-3-
"AGENT" has the meaning set forth in Section 11.1 hereof.
"AGENT-RELATED PERSONS" means the Lender and any successor Agent
appointed pursuant to Section 11.9, together with their respective Affiliates
and the officers, directors, employees, agents and attorneys-in-fact of such
Persons and Affiliates.
"AGGREGATE CONTRACT BALANCE" means at any time of determination and for
one or more Underlying Transactions, as the context may require, an amount equal
to the sum of the Contract Balances of all of the Contracts.
"AGREEMENT" means this Revolving Credit, Term Loan and Security
Agreement dated as of March 31, 1999, including all amendments, modifications
and supplements hereto, renewals, extensions or restatements hereof, and all
appendices, exhibits and schedules to any of the foregoing, and shall refer to
the Agreement as the same may be in effect from time to time.
"AMORTIZATION PERIOD BORROWING BASE" means the product of the Borrowing
Base multiplied by the Conversion Date Borrowing Base Ratio.
"AVAILABLE FUNDS" means, as of the date of determination, an amount
equal to the lesser of (a) the Borrowing Base; and (b) the Facility Amount minus
the Borrowed Funds.
"BACK-UP SERVICER" shall mean, initially, CSC LOGIC/MSA LLP d/b/a Loan
Servicing Enterprise, and thereafter, the Person appointed by the Servicer and
acceptable to Lender to perform the duties of Back-up Servicer.
"BANK" means an assignee of the Lender to whom the Lender transfers all
or part of the Loans pursuant to either a sale or a participation agreement.
"BANKRUPTCY CODE" means the Bankruptcy Code of 1978, as amended, as
codified under Title 11 of the United States Code, and the Bankruptcy Rules
promulgated thereunder, as the same may be in effect from time to time.
"BORROWER" shall mean National Financial Auto Funding Trust, a Delaware
business trust.
"BORROWER'S ACCOUNT" shall mean the account specified in Exhibit E
hereto, or such other account as may be specified from time to time by Borrower
in writing.
"BORROWED FUNDS" means, as of the date of determination, the aggregate
amount of all Loans hereunder minus any amounts thereof that the Borrower has
previously repaid to the Lender as provided herein.
"BORROWING BASE" means, as of and for any date of determination, an
amount equal, in each instance as reported on the most recently submitted
Borrowing Base Report, to the least of
<PAGE> 10
-4-
(i) the product of (x) 0.26 and (y), with respect to the related Due Period, the
sum of (1) all of the amounts deposited in (A) all of the Underlying Spread
Accounts and (B) any other deposit, trust or reserve accounts created for any
Original Underlying Transaction the purpose and mechanics of which are
materially similar to those of the Spread Accounts and from which funds are sent
directly to the Lender and (2) the sum of the following amounts as determined
with respect to each Original Underlying Transaction subject, as of the date of
determination, to the Lien of this Agreement: the excess of (A) the aggregate
outstanding Principal Balance of all Contracts in the related Original
Underlying Transaction over (B) the aggregate outstanding principal balance of
the securities issued to securityholders other than NAFI or any Affiliates of it
in the related Original Underlying Transaction, (ii) the product of (x) 0.055
and (y) all outstanding principal balance due to be paid by each Underlying
Trustee related to an Original Underlying Transaction, with respect to the
1995-1 Transaction and 1996-1 Transaction, to senior certificateholders under
the 1995-1 Pooling and Servicing Agreement and the 1996-1 Pooling and Servicing
Agreement, respectively, and, with respect to the 1997-1 Transaction and 1998-1
Transaction, to the noteholders pursuant to the 1997-1 Indenture and the 1998-1
Indenture, respectively, (iii) the Lender's Model Amount and (iv) the Facility
Amount.
"BORROWING BASE CERTIFICATE" means a properly completed certificate,
which certificate shall be substantially in the form set forth in Exhibit C
hereto and executed by a Responsible Officer of Borrower, together with the
accompanying report with appropriate insertions setting forth the components of
the Borrowing Base as of the date of determination for which such report is
submitted.
"BUSINESS DAY" means, except when used with respect to LIBOR, any day
which is not a Saturday, Sunday or a legal holiday under the laws of the State
of Florida, Delaware or North Carolina and is not a day on which banking
institutions located in the State of Florida or North Carolina are authorized or
permitted by law or other governmental action to close, and when used with
respect to LIBOR, a day upon which dealings may be effected in deposits of U.S.
dollars in the London interbank foreign currency deposits market and on which
banks may conduct business in London, England, New York, New York, Charlotte,
North Carolina and Jacksonville, Florida.
"CALCULATION DATE" means, with respect to a Collection Period, the
close of business on the last day of such Collection Period.
"CHARGES" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes, levies, assessments, charges or claims, in
each case then due and payable, upon or relating to (a) the Loan (but not with
respect to Lender), (b) Borrower's employees, payroll, income or gross receipts,
(c) Borrower's ownership or use of any of its Properties or (d) any other aspect
of Borrower's business.
"CHASE" means Chase Manhattan Bank Delaware, a Delaware banking
corporation.
"CLOSING DATE" means April 7, 1999.
<PAGE> 11
-5-
"CODE" means the Internal Revenue Code of 1986, as amended, the
Treasury Regulations adopted thereunder, as the same may be in effect from time
to time.
"COLLATERAL" has the meaning set forth in Section 10.1 hereof.
"COLLECTION PERIOD" means with respect to any Payment Date, the period
of time commencing upon the opening of business on the immediately preceding
Payment Date thereto (or, with respect to the first Collection Period, the
Closing Date) and concluding at the close of business on the Business Day
immediately preceding such Payment Date.
"COMMITMENT EXPIRATION DATE" means March 31, 2001.
"CONTRACT" with respect to the 1995-1 Transaction and the 1996-1
Transaction, has the respective meanings set forth in the Underlying Transaction
Documents therefor as of the date the related Underlying Transaction,
respectively, closed, and, with respect to the 1997-1 Transaction and the 1998-1
Transaction, has the meaning set forth in the definition of "Receivable" set
forth in the Underlying Transaction Documents therefor as of the date the
related Underlying Transaction, respectively, closed.
"CONTRACT BALANCE" means, with respect to the 1995-1 Transaction and
the 1996-1 Transaction, the "Outstanding Principal Balance" as defined therein
as of the date the related Underlying Transaction, respectively, closed, and,
with respect to the 1997-1 Transaction and the 1998-1 Transaction, the
"Principal Balance", as defined therein as of the date the related Underlying
Transaction, respectively, closed, of any Contract.
"CONTRACT FILES" means the files containing documents that the
Custodian for each Underlying Transaction is required to keep pursuant to the
Underlying Transaction Documents.
"CONVERSION DATE" means the earliest of (1) the Commitment Expiration
Date, (2) the day that an Event of Default occurs, and (3) the day that an Early
Amortization Event occurs.
"CONVERSION DATE BORROWING BASE RATIO" means a fraction, the numerator
of which is the outstanding principal amount of the Note on the Conversion Date
and the denominator of which is the Borrowing Base on the same date.
"CUSTODIAN" shall mean the Person performing the duties of Custodian
under the Custodian Agreement, initially, Harris.
"CUSTODIAN AGREEMENT" shall mean the Custodian Agreement, dated as of
October 15, 1998, among the Custodian, Harris, in its capacity as Underlying
Trustee, and NAFI, as administrator.
"CUT-OFF DATE" means the date upon which the initial advance of a Loan
is made hereunder.
<PAGE> 12
-6-
"DELIVERY" means the physical delivery of the certificates
representing the Pledged Certificates to the Lender, endorsed to the Lender or
in blank.
"DUE PERIOD" means, with respect to any Payment Date, the calendar
month immediately preceding such Payment Date.
"EARLY AMORTIZATION EVENT" means the occurrence of any one of the
following:
(i) A "Servicer Default" occurs, as such term is defined
in the respective Underlying Transaction Document, as
amended through the Closing Date and as may be
thereafter amended by the parties thereto with Lender
consent.
(ii) The Borrower fails to maintain the Borrowing Base
required pursuant to this Agreement for more than
three Business Days.
(iii) Any event that would otherwise constitute an
"Insurance Agreement Event of Default" (except as
irrevocably waived on the Closing Date by FSA for
purposes of this Agreement), as defined in and with
respect to, any one or more of the Underlying
Transactions or any other specifically quantifiable
event or test contained in any Underlying Transaction
Document relating to the delinquency, net loss or
default rate of the pool of Contracts therein occurs
that, with either notice, knowledge or the passage of
time, would entitle either the securityholders, the
Underlying Trustee on behalf of the securityholders
or a guarantor or other credit support provider to
liquidate the receivables pool securing the
securities or to terminate the servicer thereunder
(even though such liquidation or termination may not
actually occur), however, the percentage, if any,
used to trigger such Insurance Agreement Event of
Default or other such event shall be deemed for the
purposes hereof to be one percent (1%) less than such
percentage set forth in the related Underlying
Document, (for the purposes of this clause (iii), a
"Percentage Test"); provided, however, that, upon
either the occurrence of a cure of such Insurance
Agreement Event of Default or other test or event is
cured within any grace period afforded by the
applicable Underlying Transaction Document or receipt
of the written irrevocable waiver to such Insurance
Agreement Event of Default, test or event, such Early
Amortization Event shall be deemed cured hereunder
and any Conversion Date triggered thereby not to have
occurred. Notwithstanding any provision to the
contrary contained in any Underlying Transaction
Document or amendment thereto affecting, waiving, or
suspending any underlying test, such Percentage Test
<PAGE> 13
-7-
shall itself remain operative and effective until the
termination of this agreement.
"ELIGIBLE INVESTMENT" means any of:
(a) negotiable instruments or securities represented by instruments in
bearer or registered or book-entry form which evidence:
(i) obligations which have the benefit of the full faith and
credit of the United States of America, including depository
receipts issued by a bank as custodian with respect to any
such instrument or security held by the custodian for the
benefit of the holder of such depository receipt,
(ii) demand deposits or time deposits in, or bankers' acceptances
issued by, any depositary institution or trust company
incorporated under the laws of the United States of America or
any state thereof and subject to supervision and examination
by Federal or state banking or depositary institution
authorities; provided that at the time of investment or
contractual commitment to invest therein, the certificates of
deposit or short-term deposits (if any) or long-term
unsecured debt obligations (other than such obligation whose
rating is based on collateral or on the credit of a Person
other than such institution or trust company) of such
depositary institution or trust company) of such depositary
institution or trust company has a credit rating from S&P of
"A-1+" or higher, in the case of the certificates of deposit
or short-term deposits, or are rated "AA" or higher by S&P in
the case of long-term unsecured debt obligations,
(iii) certificates of deposit having, at the time of investment (or
contractual commitment to invest therein), a rating from S&P
of "A-1+" or higher, or
(iv) investments in money market funds which are (or which are
composed of instruments or other investments which are) rated
"AA" or higher by S&P at the time of investment therein;
(b) demand deposits in the name of the Lender in any depositary
institution or trust company referred to in clause (a)(ii) above;
(c) commercial paper (having original or remaining maturities of no
more than 270 days) having, at the time of investment or contractual commitment
to invest therein, a credit rating from S&P of "A-1+" or higher;
(d) Eurodollar time deposits that are obligations of institutions whose
time deposits carry a credit rating from S&P of "AA" or higher; and
<PAGE> 14
-8-
(e) repurchase agreements involving any Eligible Investment described
in any of clauses (a)(i), (a)(iii) or (d) above, so long as the other party to
the repurchase agreement has a credit rating from S&P of "AA" or higher.
"ERISA" means the Employee Retirement Income Security Act of 1974,
including, unless the context otherwise requires, the rules and regulations
thereunder, as amended from time to time.
"EVENT OF DEFAULT" means any of the events set forth in Section 14.1.
"EXTENDED CONTRACT" means a Contract that has had its original maturity
date extended.
"FACILITY AMOUNT" means an amount equal to $8,000,000.00.
"FEDERAL RESERVE BOARD" means the Board of Governors of the Federal
Reserve System and any successor thereto.
"FILING LOCATIONS" means the jurisdictions in which UCC financing
statements are required to be filed in order to perfect a security interest in
the Collateral.
"FINAL INSURANCE TERMINATION DATE" means the last to occur of the
Insurance Termination Dates.
"FIRST PRIORITY COLLATERAL" has the meaning set forth in Section 8.4.
"FREE CASH FLOW" has the meaning given to it in the Irrevocable
Instruction Letter.
"FSA" means Financial Security Assurance Inc.
"FUNB TERMINATION DATE" has the meaning set forth in Section 13.2.
"GAAP" means generally accepted accounting principles set forth from
time to time in the opinions and pronouncements of the Accounting Principles
Board and the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board (or agencies with
similar function of comparable stature and authority within the accounting
profession), or in such other statements by such other entity as may be in
general use by significant segments of the U.S. accounting profession, which are
applicable to the circumstances as of the date of determination.
"GOVERNMENTAL AUTHORITY" means (a) any federal, state, county,
municipal or foreign government, or political subdivision thereof, (b) any
governmental or quasi-governmental agency, authority, board, bureau, commission,
department, instrumentality or public body, (c) any
<PAGE> 15
-9-
court or administrative tribunal or (d) with respect to any Person, any
arbitration tribunal or other non-governmental authority to the jurisdiction of
which such Person has consented.
"HARRIS" means Harris Trust and Savings Bank.
"INCOME TAXES" means any federal, state, local or foreign taxes based
upon, measured by, or imposed upon gross or net income, gross or net receipts,
capital, net worth, or the privilege of doing business, including but not
limited to the Michigan single business tax, the Massachusetts excise tax, and
the Kentucky license tax, and any minimum taxes or withholding taxes based upon
any of the foregoing, including any penalties, interest or additions to tax
imposed with respect thereto.
"INDEBTEDNESS" means, as to any Person, (a) all indebtedness of such
Person for borrowed money, (b) all leases of equipment of such Person as lessee,
(c) to the extent not included in clause (b), above, all capital leases of such
Person as lessee, (d) any obligation of such Person for the deferred purchase
price of Property or services (other than trade or other accounts payable in the
ordinary course of business and not more than ninety (90) days past due), (e)
any obligation of such Person that is secured by a Lien on assets of such
Person, whether or not that Person has assumed such obligation or whether or not
such obligation is nonrecourse to the credit of such Person, (f) obligations of
such Person arising under acceptance facilities or under facilities for the
discount of accounts receivable of such Person and (g) any obligation of such
Person to reimburse the issuer of any letter of credit issued for the account of
such Person upon which a draw has been made.
"INDEMNIFIED LIABILITIES" has the meaning set forth in Section 15.2(a).
"INDEMNIFIED MATTERS" has the meaning set forth in Section 11.13.
"INDEMNIFIED PERSON" has the meaning set forth in Section 15.2(a).
"INDEMNITEE" has the meaning set forth in Section 11.13.
"INDEX MATURITY" means deposits in dollars having a maturity of one
month.
"INSURANCE POLICY" means with respect to any Contract, an insurance
policy covering physical damage to the related Vehicle or the collectibility of
the payments under the Contract; but shall not include any policy issued by FSA
under any of the 1995-1 Insurance and Indemnity Agreement, the 1996-1 Insurance
and Indemnity Agreement, 1997-1 Insurance and Indemnity Agreement or the 1998-1
Insurance and Indemnity Agreement.
"INSURANCE PROCEEDS" means, depending on the context, any amounts
payable or any payments made, to the Servicer, the Borrower, or, if NAFI is not
the Servicer hereunder, NAFI under an Insurance Policy.
<PAGE> 16
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"INSURANCE TERMINATION DATE" means, in the singular, the termination
date (as defined on the Closing Date with such amendments as have been consented
to by the Lender) of the 1995-1 Insurance and Indemnity Agreement, the 1996-1
Insurance and Indemnity Agreement, the 1997-1 Insurance and Indemnity Agreement
or the 1998-1 Insurance and Indemnity Agreement, in each case as such agreement
terminates in accordance with its terms pursuant to Section 4.01 of such
agreement, and in the plural, all of such termination dates but such Insurance
Termination Dates shall be determined without regard to the existence of any
other transactions involving FSA and any member of the NAFI Group.
"INTANGIBLES" means goodwill and other items shown as intangible on
NAFI's balance sheet.
"INTERCREDITOR AGREEMENT" means the Subordination and Intercreditor
Agreement among Lender, FSA, Borrower, NAFI, the Trustee and the Underlying
Trusts dated as of the Closing Date.
"INTEREST ARREARAGE" means, with respect to any Payment Date, any
Accrued Interest and previously accumulated but unpaid Interest Arrearage due on
the immediately preceding Payment Date, but remaining unpaid as of such Payment
Date, together with interest thereon at the Interest Rate.
"INTEREST RATE" means the LIBOR Rate plus 500 basis points.
"INTEREST RESERVE ACCOUNT" means the account established by Lender
pursuant to Section 10.2 hereof.
"INTEREST RESERVE ACCOUNT DEPOSIT AMOUNT" means the amount of aggregate
interest due on the Loan during the six immediately succeeding Collection
Periods, as calculated by the Lender in its good faith and reasonable commercial
judgment, and after giving effect to all outstanding advances made upon such
date and any advances requested by the Borrower as of such date as if such
borrowings were themselves advances, provided that, the Interest Reserve Account
Deposit Amount shall be recalculated on a timely basis with respect to amounts
deposited to the Interest Reserve Account in respect of any such requested
advances made by the Borrower which do not become actual advances made
hereunder, and such deposited amounts that so fail to become related to amounts
that become advances hereunder shall be promptly reimbursed to the Borrower.
"INVESTMENT" means, when used in connection with any Person, any
investment by or of that Person, whether by means of purchase or other
acquisition of stock or other securities of any other Person or by means of loan
or advance, capital contribution, guaranty or other debt or equity participation
or interest, or otherwise, in any other Person, including any partnership and
joint venture interests of such Person in any other Person or in any item of
transportation-related equipment, owned by a Person unaffiliated with Borrower
and on lease to another third party, in which Borrower acquires a right to
share, directly or indirectly.
<PAGE> 17
-11-
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended (15 U.S.C. 80a-1 et seq.), as the same may be in effect from time to
time, or any successor statute thereto.
"IRREVOCABLE INSTRUCTION LETTER" means the Irrevocable Instruction
Letter, executed by NAFI, the Borrower, the Co-trustees of the Borrower,
Wilmington and the Underlying Trustees, in the form attached as Exhibit G
hereto.
"ISSUING TRUST" means when used with respect to an Underlying Trust,
such Underlying Trust that has issued outstanding securities as of the date of
determination that are insured by FSA.
"IRS" means the Internal Revenue Service and any successor thereto.
"KNOWLEDGE GAP" means the period, if any, commencing with the
occurrence of an Early Amortization Event hereunder and terminating upon the
awareness of either the Borrower or NAFI of such Early Amortization Event.
"LENDER'S MODEL AMOUNT" means the amount derived from the model used by
the Lender to calculate on the Closing Date and each Calculation Date the
Borrowing Base. The Lender's Model Amount (with such changes as are needed in
the Lender's reasonable business judgment and good faith to correct any manifest
errors) shall be re-run from time to time after reasonable consultation with the
Borrower at the office of the Lender. The inclusion of any amount in the
Borrowing Base based on the Lender's Model Amount shall not be deemed a
determination by the Lender as to the actual value of the Collateral; it being
the Borrower's responsibility to determinate the value/collectibility of the
Collateral, and the Borrower shall bear all risks concerning the same. Without
limiting the foregoing, the Borrower acknowledges that it has received and
reviewed the Lender's Model, and expressly approves the Lender's Model Amount
for all purposes of this Agreement, including for purposes of calculating the
Borrowing Base.
"LIBOR DETERMINATION DATE" means, with respect to any LIBOR Period, the
day that is two Business Days in London, England prior to the first day of such
LIBOR Period.
"LIBOR PERIOD" means a Collection Period; provided that (i) no LIBOR
Period with respect to any Loans shall extend beyond the Maturity Date and (ii)
each determination by the Lender of any LIBOR Period shall, in the absence of
manifest error, be conclusive, and at the Borrower's reasonable request the
Lender shall demonstrate the basis for such determination.
"LIBOR RATE" means, with respect to the related LIBOR Period, the
offered rates for deposits in Dollars having the Index Maturity commencing on
the related LIBOR Determination Date which appears on the Dow Jones Telerate
Service Page 3750 as of approximately 11:00 a.m. London time, on the LIBOR
Determination Date. If the Dow Jones Telerate Service Page 3750 is not
available, the LIBOR Rate with respect to such LIBOR Period will be determined
at approximately 11:00 a.m., London time, on such LIBOR Determination Date on
the basis of the rate
<PAGE> 18
-12-
at which deposits in Dollars having the Index Maturity are offered to prime
banks in the London interbank market selected by the Agent and in a principal
amount equal to an amount of not less than $1,000,000 and that is representative
for a single transaction in such market at such time. The Agent will request the
principal London office of each of such banks to provide a quotation of its
rate. If at least two such quotations are provided, the LIBOR Rate will be the
arithmetic mean (rounded upwards as aforesaid) of such quotations. If fewer than
2 quotations are provided, the LIBOR Rate with respect to such LIBOR Period will
be the arithmetic mean (rounded upwards as aforesaid) of the rates quoted at
approximately 11:00 a.m., New York City time, on such LIBOR Determination Date
by three major banks in New York, New York selected by the Agent for loans in
United States dollars to leading European banks having the Index Maturity and in
a principal amount of not less than $1,000,000 and that is representative for a
single transaction in such market at such time; provided, however, that if the
banks selected as aforesaid are not quoting as described in this sentence, the
LIBOR Rate in effect for the applicable LIBOR Period will be the LIBOR Rate in
effect for the immediately preceding LIBOR Period.
"LIEN" means any mortgage, pledge, hypothecation, assignment for
security, security interest, encumbrance, levy, lien or charge of any kind,
whether voluntarily incurred or arising by operation of law or otherwise,
affecting any Property, including any agreement to grant any of the foregoing,
any conditional sale or other title retention agreement, any lease in the nature
of a security interest, and the filing of or agreement to file or deliver any
financing statement (other than a precautionary financing statement with respect
to a lease that is not in the nature of a security interest) under the UCC or
comparable law of any jurisdiction.
"LOAN" means the Revolving Loans and the Term Loan.
"MATERIAL ADVERSE EFFECT" means any set of circumstances or events
which, individually or in the aggregate, (a) has or would reasonably be expected
to have any material adverse effect upon the validity or enforceability of any
Transaction Document or Underlying Transaction Document, (b) is or would
reasonably be expected to be material and adverse to the condition (financial or
otherwise) or business operations of Borrower, or (c) materially impairs or
would reasonably be expected to materially impair the ability of Lender to
enforce any of its legal remedies pursuant to the Transaction Documents.
"MATURITY DATE" means the later of (i) the Final Insurance Termination
Date and (ii) December 31, 2004.
"NAFI" means National Auto Finance Company, Inc., a Delaware
corporation.
"NAFI GROUP" means, as of any relevant date, the affiliated group
within the meaning of section 1504 of the Code of which NAFI, or any successor
thereto, is the common parent, or of which the Borrower is a member, and shall
mean any group eligible to file consolidated, combined or unitary returns for
state, local or foreign tax purposes which includes the Borrower, regardless of
the identity of the common parent.
<PAGE> 19
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"NON-RECOURSE DEBT" means Indebtedness of any Person either (a) for
borrowed money that, at all times, (i) is secured by Liens on specific assets
of such Person and the proceeds of such assets that constitute the sole source
of repayment to the lender or obligee of such Indebtedness, and (ii) as to which
such Person is not otherwise liable for repayment in the event of a deficiency
or default in payment except for liability for misrepresentations by such
Person, defects in title caused by such Person or impairment of the obligee's or
lender's Lien caused by such Person or (b) for which such Person has only
partial liability for repayment of any deficiency and the balance of which is
debt described in clause (a) above.
"NOTE" means the Borrower's note in the form of Exhibit A hereto, and
any and all replacements, extensions, substitutions and renewals thereof.
"OBLIGATIONS" has the meaning set forth in Section 10.1.
"OBLIGOR" means with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"ORIGINAL UNDERLYING TRANSACTION DOCUMENTS" means the agreements,
contracts, documents, amendments, consents, instruments, certificates and other
papers executed in connection with the Original Underlying Transactions
including, but not limited to, the 1995-1 Insurance and Indemnity Agreement, the
1996-1 Insurance and Indemnity Agreement, the 1997-1 Insurance and Indemnity
Agreement, the 1998-1 Insurance and Indemnity Agreement, the 1995-1 Pooling and
Servicing Agreement, the 1996-1 Pooling and Servicing Agreement, the 1997-1 Sale
and Servicing Agreement, the 1998-1 Sale and Servicing Agreement, the 1997-1
Indenture (as defined in the Irrevocable Instruction Letter) and the 1998-1
Indenture (as defined in the Irrevocable Instruction Letter), and as the same
may have been or may hereafter be amended.
"ORIGINAL UNDERLYING TRANSACTIONS" means when used in the singular,
any of, and when used in the plural all of, the 1995-1 Transaction, the 1996-1
Transaction, the 1997-1 Transaction and the 1998-1 Transaction.
"OTHER TAXES" has the meaning set forth in Section 6.2(b).
"PAY-OFF AMOUNT" has the meaning set forth in Section 5.1(a)(ii)
hereof.
"PAYMENT DATE" means the 21st day of each calendar month, or if such
day is not a Business Day, the immediately following Business Day, commencing on
April 21, 1999.
"PERMITTED LIENS" means Liens granted in favor of Lender under this
Agreement and Liens granted to any of an Underlying Trustee, a bond insurer,
back-up servicer, custodian or collateral agent under any Underlying Transaction
Document.
<PAGE> 20
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"PERMITTED OUTSTANDING BORROWINGS" means the maximum amount that the
Borrower is permitted to borrow at any one time in accordance with this
Agreement, which in no case shall exceed the Borrowing Base.
"PERMITTED PURPOSE" has the meaning set forth in Section 2.4.
"PERSON" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, public benefit corporation, firm, joint stock company, estate,
entity or Governmental Authority.
"PLAN" means any pension plan (as defined in Section 3(2) of ERISA)
covered by Title IV of ERISA or section 412 of the Tax Code or section 302 of
ERISA, which is maintained by a Commonly Controlled Entity or in respect of
which a Commonly Controlled Entity has liability or any welfare plan (as defined
in section 3(3) of ERISA which requires contributions or payments to be made on
account of persons who are no longer employees except as required by section
4980B of the Tax Code).
"PLEDGED CERTIFICATES" means the certificates evidencing beneficial
ownership interests in either the National Auto Finance 1997-1 Trust or the
National Auto Finance 1998-1 Trust.
"POTENTIAL EVENT OF DEFAULT" means the occurrence of any of the events
or conditions specified in Section 14.1, whether or not any requirement for
notice or lapse of time or other condition precedent has been satisfied.
"PRINCIPAL BALANCE" means with respect to any date of determination the
sum of the following principal balances as of the last day of the Due Period
immediately preceding such date of determination: (1) the "Pool Outstanding
Principal Balance" of each of the 1995-1 Transaction and the 1996-1 Transaction,
each as defined in its related Underlying Transaction as of the closing date
related thereto and (2) the "Principal Balance" of each of the 1997-1
Transaction and the 1998-1 Transaction, each as also defined in its related
Underlying Transaction as of the closing date related thereto.
"PROPERTY" means any interest in any kind of property or asset, whether
real, personal or mixed, whether tangible or intangible.
"REGULATIONS T, U AND X" means, collectively, Regulations T, U and X
adopted by the Federal Reserve Board (12 C.F.R. Parts 220, 221 and 224,
respectively) and any other regulation in substance substituted therefor.
"RESPONSIBLE OFFICER" means with respect to NAFI, the President, Senior
Vice President, Vice President, Chief Executive Officer, Executive Vice
President, Chief Financial Officer, Treasurer or Corporate Controller of NAFI;
and with respect to the Borrower, any trust officer, trustee or co-trustee of
the Borrower.
<PAGE> 21
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"REVOLVING LOANS" has the meaning set forth in Section 2.1 hereof.
"S&P" means Standard & Poor's Ratings Group, a division of McGraw-Hill
Inc.
"SEC" means the Securities and Exchange Commission and any successor
thereto.
"SERVICER" means the Person performing the duties of the Servicer under
the Underlying Transaction Documents, initially, NAFI.
"SERVICER DEFAULT" has, with respect to any Underlying Transaction, the
meaning specified as either "Servicer Default" or "Servicer Termination Event",
as the case may be, in the related Underlying Transaction Documents.
"SOLVENT" means, as to any Person at any time, that (1) when used in
Section 3.2(c), Section 14.5 hereof, any cross-reference thereto or the
Intercreditor Agreement, (a) the fair value of the Property of such Person is
greater than the fair value of such Person's liabilities (excluding disputed,
contingent and unliquidated liabilities (but including any such liabilities for
which reserves have been established under GAAP)) as such value is established
in the reasonable judgment of the Lender and liabilities evaluated in the
reasonable judgment of the Lender for purposes of Section 101(31) of the
Bankruptcy Code; (b) the present fair saleable value of the Property of such
Person in an orderly liquidation of such Person is greater than the amount that
will be required to pay the probable liability of such Person on its debts as
they become absolute and matured; (c) such person is able to pay its debts and
other liabilities (excluding disputed, contingent and unliquidated liabilities
(but including any such liabilities for which reserves have been established
under GAAP)) as they mature in the normal course of business and (d) such Person
is not engaged in business or a transaction, and is not about to engage in
business or a transaction, for which such Person's Property would, in the
reasonable judgment of the Lender, constitute unreasonably small capital; and
(2) when used in any other context means (a) the fair value of the Property of
such Person is greater than the amount of such Person's liabilities (including
disputed, contingent and unliquidated liabilities) as such value is established
and liabilities evaluated for purposes of Section 101(31) of the Bankruptcy
Code; (b) the present fair saleable value of the Property of such Person in an
orderly liquidation of such Person is not less than the amount that will be
required to pay the probable liability of such Person on its debts as they
become absolute and matured; (c) such Person is able to realize upon its
Property and pay its debts and other liabilities (including disputed, contingent
and unliquidated liabilities) as they mature in the normal course of business;
(d) such Person does not intend to, and does not believe that it will, incur
debts or liabilities beyond such Person's ability to pay as such debts and
liabilities mature; and (e) such Person is not engaged in business or a
transaction, and is not about to engage in business or a transaction, for which
such Person's Property would constitute unreasonably small capital.
"STATUTORY RESERVES" means a fraction (expressed as a decimal), the
numerator of which is the number one and the denominator of which is the number
one minus the aggregate of the maximum reserve percentages (including, without
limitation, any marginal, special, emergency or supplemental reserves),
expressed as a decimal, established by the Board of Governors of the
<PAGE> 22
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Federal Reserve System any other banking authority to which the Lender is
subject for Eurocurrency Liabilities (as defined in Regulation D of the Board of
Governors of the Federal Reserve System). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D. The Loans
shall be deemed to constitute Eurocurrency Liabilities and as such shall be
deemed to be subject to such reserve requirements without benefit of or credit
for proration, exceptions or offsets which may be available from time to time to
the Lender under such Regulation D. Statutory, Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SWAP AGREEMENT" means an interest rate swap agreement or a combination
of other derivatives which have the net effect of creating a synthetic interest
rate swap agreement between the Borrower and the Swap Counterparty providing for
payment of LIBOR to Borrower in return for a fixed rate of interest by Borrower,
in each case, on a notional amount based on the outstanding principal balance of
the Loan, on terms reasonably satisfactory to the Lender.
"SWAP BREAKAGE COSTS" means the payment, if any, necessary in order to
induce the Swap Counterparty to (i) decrease the notional amount of the Swap
Agreement or to enter into a revised Swap Agreement in order to provide for an
effective notional amount equal to the outstanding principal balance of the Loan
or (ii) terminate the Swap Agreement in the event of a full prepayment of the
Term Loan.
"SWAP COUNTERPARTY" means the Lender.
"SWAP COUNTERPARTY ACCOUNT" shall mean the account specified in the
Swap Agreement for payments to the Swap Counterparty.
"TERM LOAN" has the meaning set forth in Section 2.2 hereof.
"TERM LOAN MONTHLY PRINCIPAL" means, with respect to a Payment Date
occurring on or after the Conversion Date, the greater of (A) the amount of
principal due on the Notes necessary to maintain the limits of the Amortization
Period Borrowing Base or (B) an amount equal to the quotient of (1) the
outstanding principal amount of the Term Loan on the Conversion Date divided by
(2) forty-eight, provided that (i) the Term Loan Monthly Principal shall equal
the entire outstanding principal balance of the Term Loan on the Maturity Date,
and (ii) that the Term Loan Monthly Principal shall never exceed the outstanding
principal balance of the Note.
After the Conversion Date, in the event that the Borrower shall have
failed to deliver all of the documents required by Section 3.2 hereof, the Term
Loan Monthly Principal shall equal all amounts collected by the Servicer for its
own account on the Contracts after payment of the amounts set forth in clauses
(1) through (6) of Section 6.1(b) until such documents are delivered to the
Lender; provided that the Term Loan Monthly Principal shall never exceed the
outstanding principal balance of the Note.
<PAGE> 23
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"TERM LOAN MONTHLY PRINCIPAL ARREARAGE" means, for any Payment Date,
that portion of the Term Loan Monthly Principal payment that was due on the
immediately preceding Payment Date, that was not paid on such immediately
preceding Payment Date.
"TRANSACTION DOCUMENT", when used in the singular, and "TRANSACTION
DOCUMENTS" when used in the plural, means any and all of this Agreement, the
Note, the Irrevocable Instruction Letter, any and all other agreements,
amendments, consents, documents and instruments executed and delivered by or on
behalf of Borrower, NAFI, Lender, or any of their respective authorized
designees evidencing or otherwise relating to the Loan and the Liens granted to
Lender with respect to the Loan, as the same may from time to time be amended,
modified, supplemented or renewed.
"TRANSACTION PAYMENT DOCUMENTS" has the meaning set forth in Section
8.18.
"UCC" means the Uniform Commercial Code as the same may, from time to
time, be in effect in the applicable jurisdiction; provided, however, in the
event that, by reason of mandatory provisions of law, any and all of the
attachment, perfection or priority of the Lien of Lender in and to the
Collateral is governed by the Uniform Commercial Code as in effect in a
jurisdiction other than the applicable jurisdiction the term "UCC" shall mean
the Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such attachment, perfection or priority and
for purposes of definitions related to such provisions.
"UNDERLYING DETERMINATION DATE" means the close of business of the last
day of the Due Period, or if such day is not a Business Day, the immediately
preceding Business Day.
"UNDERLYING SPREAD ACCOUNT" means, in the singular, any one of, and in
the plural, all of the Spread Accounts as defined in each of the Underlying
Transactions.
"UNDERLYING TRANSACTION" means, in the singular, any one of, and, in
the plural, all of the Original Underlying Transactions and any other
transaction subject to the Lien of Section 10.1.
"UNDERLYING TRANSACTION DOCUMENTS" means the agreements, contracts,
documents, amendments, consents, instruments, certificates and other papers
executed in connection with the Underlying Transactions, as the same may have
been or may hereafter be amended, including, with respect to the Original
Underlying Transaction Documents.
"UNDERLYING TRUST" means, in the singular, any of National Auto Finance
1995-1 Trust, National Auto Finance 1996-1 Trust, National Auto Finance 1997-1
Trust or National Auto Finance 1998-1 Trust and, in the plural, all of such
trusts.
"UNDERLYING TRUSTEE" means, in the singular, either Chase or Harris,
and in the plural, both of them, in their capacities as trustees, trust
collateral agents or collateral agents in the Underlying Transactions and any
other trustee designated with respect to an Underlying Transaction.
<PAGE> 24
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"UNSCHEDULED PRINCIPAL PAYMENTS" with respect to any Payment Date, any
and all unscheduled amounts received first by an Underlying Trustee on behalf of
the Borrower and second, paid by such Underlying Trustee to the Lender pursuant
to the Irrevocable Instruction Letter.
"VEHICLE" means the vehicle relating to a Contract.
"WILMINGTON" means Wilmington Trust Company.
SECTION 2. COMMITMENT TO LEND.
2.1 ESTABLISHMENT OF LINE OF CREDIT. Subject to the terms and
conditions hereof, and in reliance upon the representations and warranties
contained herein, the Lender hereby establishes a revolving credit facility
(collectively the "Revolving Loans") convertible into a Term Loan in favor of
the Borrower as set forth in Section 2.2. Under the Revolving Loans, subject to
the terms and conditions hereof, the Borrower may borrow from the Lender from
time to time prior to the Conversion Date an aggregate principal amount at any
time not in excess of the Permitted Outstanding Borrowings.
2.2 TERM LOAN. On the Conversion Date, the Revolving Loans shall
convert to a term loan (the "Term Loan").
2.3 SPECIAL PROVISIONS REGARDING LENDER'S MODEL AMOUNT. Each of the
Borrower and NAFI acknowledges and agrees that the Lender's Value Model is
proprietary information. The Borrower and NAFI shall hold all non-public
information relating to the Lender's Value Model obtained by it under this
Agreement in confidence, and in no case less than in accordance with its
customary procedures for holding information of that nature. In order to
facilitate the Borrower's, NAFI's and the Lender's calculation of the applicable
Borrowing Base the Lender has delivered to the Borrower or NAFI the full text of
the formulas used in the Lender's Value Model. The Borrower and NAFI each hereby
covenants to and agrees with the Lender that (i) it will hold the Lender's Value
Model in confidence and not disclose or deliver it in any form or variation to
any third party, except those persons in the Borrower's or NAFI's organization
or its advisors, provided that the Borrower's and NAFI's advisors shall agree in
writing to hold the Lender's Value Model in confidence prior to its disclosure
to such advisors who need to know such information in order to periodically
calculate the Borrower Base (the "Permitted Purpose"), unless such information
becomes public knowledge or is otherwise required to be disclosed by law, (ii)
the Borrower or NAFI, as the case may be, shall use the Lender's Value Model
solely for the Permitted Purpose and (iii) upon termination of this Agreement,
the Borrower and NAFI, as applicable, will return the full text of the formulas
used in the Lender's Value Model to the Lender. Without limiting the foregoing,
the Borrower and NAFI covenants to and agrees with the Lender that neither the
Borrower nor NAFI shall duplicate, copy or in any manner make extracts from the
Lender's Value Model. THE BORROWER AND NAFI HEREBY AGREES TO INDEMNIFY THE
LENDER FOR ANY AND ALL DAMAGES, LOSSES, COSTS OR EXPENSES INCURRED BY THE LENDER
BY REASON OF THE BORROWER'S OR NAFI'S BREACH OF THE PROVISIONS OF THIS
SUBSECTION 2.3.
<PAGE> 25
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2.4 USE OF PROCEEDS. The Borrower shall apply the proceeds of each
advance made to it hereunder, either (i) for either NAFI or the Borrower to
acquire new receivables or new Contracts or (ii) for the general working capital
purposes of NAFI or the Borrower. Irrespective of what Borrower or NAFI may
otherwise be permitted, the Borrower and NAFI each hereby covenants and agrees
that neither of them nor any affiliate of either of them shall apply the
proceeds of any advance made hereunder to pay dividends, debtholders, other
securityholders or any acceleration of payments that exist with respect to
either NAFI, the Borrower or any Affiliate of either of them. Other than as
expressly set forth herein, the Borrower will not, and will not permit any
Affiliate to, directly or indirectly, use any part of such proceeds (i) for the
purpose of making any payment other than those permitted by Section 6.1 hereof,
or (ii) for any other purpose which would violate any provision of any
applicable statute, regulation, order or restriction. This restriction shall not
apply to payment obligations of NAFI, as Seller or Servicer of Contracts or
other receivables, or of Borrower or any other Affiliate under the Underlying
Transaction Documents.
2.5 REMOVAL OF UNDERLYING TRANSACTIONS FROM THE BORROWING BASE. At any
time that, but for the transactions contemplated by the Transaction Documents,
an Underlying Transaction would have been terminated pursuant to the terms of
such Underlying Transaction Documents, the Lender may, in its sole discretion,
deliver to the Borrower a written notice declaring its intention to irrevocably
remove such Underlying Transaction from any calculation made hereunder with
respect to the Borrowing Base; and, immediately upon presentation to the
Borrower of such notice, the Borrowing Base hereunder shall from that time forth
be calculated without computation of such Underlying Transaction and the
Contracts related to it. Notwithstanding any other provision contained in any
Transaction Document, upon receipt of such notice by the Borrower, the Borrower
may redeem the securities related to such Underlying Transaction and terminate
the related Insurance and Indemnity Agreement, Pooling and Servicing Agreement,
Indenture, or Sale and Servicing Agreement, as the case may be, to the extent
permitted by the terms of the Underlying Transaction Documents. Within five (5)
Business Days after receipt by the Lender of the prepayment required by Section
5.2(c), the Lender shall release its Lien upon that portion of the Collateral
directly relating to such Underlying Transaction for which the Borrower has
prepaid.
In the event that an Underlying Transaction is so removed from the
Borrowing Base, the Borrower shall nonetheless be obligated to maintain the
Permitted Outstanding Borrowings in accordance with the terms of Section 3.1(g)
hereto.
SECTION 3. BORROWING PROCEDURES; CERTAIN LOAN TERMS.
3.1 BORROWING PROCEDURES FOR REVOLVING LOANS; DEEMED REQUESTS FOR
AMOUNTS DUE ON EACH PAYMENT DATE.
(a) On and after the Closing Date, and prior to the Conversion Date,
subject to the terms and conditions set forth herein, Lender shall make
available to Borrower by wire transfer to Borrower's Account a Revolving Loan in
the amount not to exceed the Available Funds.
<PAGE> 26
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(b) On or after the Closing Date and prior to the Conversion Date, on
any date during any Collection Period, Borrower may request a Revolving Loan in
an amount not to exceed the Available Funds. The Borrower may not request more
than one Revolving Loan during any calendar week.
(c) Reserved.
(d) Borrower shall give Lender three Business Days prior written notice
of each requested Revolving Loan under Section 3.1(b) hereof. Each such notice
shall be in the form of Exhibit B-1 hereto and shall specify (i) the borrowing
date (which shall be a Business Day), and (ii) the amount of the Revolving Loan
requested. Each request for a Revolving Loan shall be received by Lender not
later than 11:00 a.m., Charlotte time one (1) Business Day prior to the
borrowing date with respect to such requested Revolving Loan. Each Revolving
Loan shall be made by the Lender in an amount as requested by the Borrower,
provided that (i) each such Revolving Loan shall be in a minimum amount of
$500,000 and integral multiples of $50,000 in excess thereof and (ii) that such
amount shall not be in excess of the Available Funds on such date. Each such
written notice shall be irrevocable. With respect to all Revolving Loans
outstanding as of the first day of any LIBOR Period, the effective LIBOR Rate
shall be reset to the LIBOR Rate then in effect on the Payment Date occurring in
such LIBOR Period.
(e) On or before 11:00 a.m. Charlotte time on the borrowing date
specified for a requested Revolving Loan, provided that all conditions precedent
set forth in Section 12 and all other terms and conditions of this Agreement to
the making of such requested Revolving Loan have been satisfied (unless waived
in accordance with the provisions of this Agreement), Lender shall make funds
available in the amount of such requested Revolving Loan to Borrower by wire
transfer to Borrower's Account.
(f) Subject to the terms and conditions of this Agreement, on each
Payment Date and the Conversion Date, Borrower, without any action, shall be
deemed to have irrevocably requested a Revolving Loan in an amount equal to the
Accrued Interest due on such Payment Date and any Interest Arrearage for such
Payment Date, to the extent that such amounts have not previously been paid and
funds are not available therefor as described in Section 6.1(a) hereof. Lender
shall remit the proceeds of such Revolving Loan on such Payment Date in the
manner set forth in Section 6.1(a) hereof.
(g) Subject to the Intercreditor Agreement and Section 14.5 hereof, if
the Loan at any time exceeds the Permitted Outstanding Borrowings, calculated
using the Borrowing Base, or after the Conversion Date, the Amortization Period
Borrowing Base as of the date of determination, the Borrower shall, within one
Business Day after either the Borrower or NAFI becomes aware of such occurrence,
inform the Lender in writing of such calculation and, subject to Section 5.2(c),
immediately pay to the Lender amounts in cash sufficient to reduce the Loan to
be equal to or less than the Permitted Outstanding Borrowings as of the date of
payment.
<PAGE> 27
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3.2 CONVERSION TO TERM LOAN; SWAP AGREEMENT REQUIREMENT.
(a) The Revolving Loans shall convert to the Term Loan on the
Conversion Date. On or prior to the Conversion Date, the Borrower shall inform
the Lender in writing of the fixed rate of interest that will be payable to the
Swap Counterparty under the Swap Agreement.
(b) No later than 11:00 a.m. Charlotte time on the Conversion Date,
Borrower shall deliver a completed Borrowing Base Certificate to Lender
reflecting the Borrowing Base on the Conversion Date. On the Conversion Date, at
the request of the Borrower and if no Early Amortization Event or Event of
Default has occurred, Lender shall make a final Revolving Loan in the amount
equal to the amount, if any, by which (i) the lesser of (A) the Available Funds,
calculated with respect to the most recent Borrowing Base Certificate and (B)
the Facility Amount, exceeds (ii) the outstanding principal balance of the Loan,
taking into account the final Revolving Loan made on the Conversion Date
pursuant to Section 3.1(f).
(c) On or prior to the Conversion Date, Borrower shall arrange for and
enter into the Swap Agreement with the Swap Counterparty; provided, that no Swap
Agreement shall be entered into by the Borrower before the Final Insurance
Termination Date without the consent of FSA, which consent shall not be
unreasonably withheld so long as FSA is satisfied that the Swap Agreement does
not impair the special-purpose or bankruptcy-remote characteristics of the
Borrower, cannot under any reasonably foreseeable circumstances cause the
Borrower to be not Solvent, and cannot materially impair the rights and remedies
of FSA or any securityholder that has the benefit of any FSA financial guaranty
insurance policy or any fiduciary or agent of either of them under the
Underlying Transaction Documents. Borrower shall deliver the related payment
schedule no later than the second Business Day prior to Conversion Date. If FSA
consents as set forth above, Borrower shall deliver a copy of the executed Swap
Agreement as soon as practicable, but in no event later than the second day
prior to the Conversion Date.
3.3 CAPITAL ADEQUACY. On or prior to the Conversion Date, if Lender
shall reasonably determine that the application or adoption of any law, rule,
regulation, directive, interpretation, treaty or guideline regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof, whether or not having the force of law (including, without limitation,
application of changes to Regulation H and Regulation Y of the Federal Reserve
Board issued by the Federal Reserve Board on January 19, 1989 and regulations of
the Comptroller of the Currency, Department of the Treasury, 12 C.F.R. Part 3,
Appendix A, issued by the Comptroller of the Currency on January 27, 1989)
increases the amount of capital required or expected to be maintained by Lender
or any Person controlling Lender, and such increase is based upon the existence
of Lender's obligations hereunder to make the Revolving Loans and other
commitments of this type, then from time to time, within 10 days after demand
from Lender accompanied by the certificate described in the second following
sentence, Borrower shall pay to Lender such amount or amounts as will reasonably
compensate Lender or such controlling Person, as the case may be, for such
increased capital requirement. Subject to the Intercreditor Agreement and
Section 14.5, Lender shall make such demand within 90 days after Lender first
becomes aware of such increase. The determination of any amount to be paid by
Borrower under this Section 3.3 shall take into
<PAGE> 28
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consideration the policies of Lender or any Person controlling Lender with
respect to capital adequacy and shall be based upon reasonable averaging,
attribution and allocation methods. A certificate of Lender setting forth the
calculation of the amount or amounts as shall be necessary to reasonably
compensate Lender as specified in this Section 3.3 shall be delivered to
Borrower and shall be conclusive in the absence of manifest error.
SECTION 4. INTEREST AND FEES.
4.1 REVOLVING LOANS. Subject to the Intercreditor Agreement and Section
14.5, the Accrued Interest and any Interest Arrearage shall be due and payable
in arrears on each Payment Date prior to the Conversion Date with respect to the
Revolving Loans.
4.2 TERM LOAN. Subject to the Intercreditor Agreement and Section 14.5,
the Accrued Interest and any Interest Arrearage with respect to the Term Loan
shall be due and payable, in arrears, on each Payment Date after the Conversion
Date and at the Maturity Date.
4.3 METHOD OF CALCULATING INTEREST AND FEES. Interest and any fees
shall be computed on the basis of a year consisting of 360 days and paid for
actual days elapsed; provided, however, that in no event shall interest on the
Note exceed the highest lawful rate permissible under any law applicable
thereto.
SECTION 5. REPAYMENT OF PRINCIPAL.
5.1 PRINCIPAL PAYMENTS AND PREPAYMENTS.
(a) Mandatory Payments. Subject to the Intercreditor Agreement and
Section 14.5, there shall be mandatory payments of principal:
(i) (A) prior to the Conversion Date, principal shall
be due and payable on each Payment Date in an
amount equal to the excess, if any, of (x) all
outstanding principal balance of the Revolving
Loans over (y) the Borrowing Base;
(B) on and after the Conversion Date and prior to the
Maturity Date (other than as set forth in paragraph
(ii) immediately below), as set forth in Section
5.2 hereof; and
(C) on the Maturity Date, all outstanding principal on
all of the Loan(s) shall be immediately due and
payable.
(ii) If an Event of Default has been declared hereunder, on
the date that any acceleration of the Revolving Loans
pursuant to Section 14.3 hereof has been declared with
respect thereto, the entire aggregate outstanding
principal balance of the Loan, plus any accrued and
<PAGE> 29
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unpaid interest thereon (the "Payoff Amount"), shall be
due and payable.
(iii) If at any time the outstanding principal balance of the
Note is less than $100,000.00, the Borrower shall make
prepayment within five (5) Business Days thereafter of
an amount equal to such outstanding principal balance of
the Note.
(b) Optional Prepayments. Subject to the Intercreditor Agreement and
Section 14.5, the Borrower may from time to time, upon at least one Business
Day's prior written notice received by the Lender, prepay the principal of the
Revolving Loans in whole or in part; provided that any partial prepayment shall
be in an amount not less than $50,000, or in integral multiples of $50,000 in
excess thereof.
5.2 TERM LOAN PRINCIPAL PAYMENTS.
(a) Mandatory Scheduled Prepayments and Arrearages. Subject to the
Intercreditor Agreement and Section 14.5, the Term Loan Monthly Principal shall
be payable on each Payment Date after the Conversion Date; provided that the
entire outstanding principal balance of the Term Loan shall be due and payable
on the Maturity Date or upon a declaration of acceleration as provided in
Section 14.3 hereof.
(b) Optional Prepayments. Subject to the Intercreditor Agreement and
Section 14.5 hereof, on any Payment Date after the Conversion Date, the Borrower
may in an amount not less than $500,000 upon at least ten Business Days' prior
written notice received by the Lender, prepay the principal of the Term Loan in
whole or in part; provided that (i) such prepayment shall be made after payment
of the amounts described in clauses (1) through (7) of Section 6.1(b) hereof,
and (ii) Borrower shall have paid any Swap Breakage Costs incurred in connection
with any corresponding reduction in the notional balance on the Swap Agreement.
Optional prepayments of principal under this Section 5.2(b) shall not be deemed
to include any amounts included in the definition of Term Loan Monthly Principal
as it relates to such Payment Date.
(c) Put Option; Release of Lien. (i) Subject to the Intercreditor
Agreement and Section 14.5, within five (5) Business Days of the Lender's
request to remove an Underlying Transaction from the Borrowing Base pursuant to
Section 2.5, the Borrower shall prepay or cause the prepayment of the amount of
the outstanding principal balance of the Loan necessary to maintain all of the
Borrowing Base amounts required by this Agreement, including but not limited to
Section 3.1(9) hereto.
<PAGE> 30
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SECTION 6. APPLICATION OF AMOUNTS ON DEPOSIT IN ACCOUNTS.
6.1 APPLICATION OF AMOUNTS.
(a) Subject to the Intercreditor Agreement, on each Payment Date prior
to the Conversion Date, the Lender shall apply the Free Cash Flow received by
it, if any to pay the following amounts in the following priority:
(1) to the Lender, any Interest Arrearage for such Payment Date;
(2) to the Lender, the Accrued Interest for such Payment Date;
(3) to the Lender, any amount payable to the Lender pursuant to
Sections 5.1(a)(i), 6.2, 8.15, 14.3 and 15 hereof;
(4) to the Borrower, any amount remaining.
(b) Subject to the Intercreditor Agreement, on each Payment Date on or
after the Conversion Date, provided that an Event of Default has not occurred
hereunder, the Lender shall apply all Free Cash Flow received by it, if any, to
pay the following amounts in the following priority:
(1) to the Lender, any Interest Arrearage for such Payment Date;
(2) to the Lender, the Term Loan Monthly Principal;
(3) to the Lender, the Accrued Interest for such Payment Date;
(4) to the Lender, Term Loan Monthly Principal Arrearage;
(5) Reserved;
(6) to the Lender, any Unscheduled Principal Payments;
(7) to the Lender, any amount remaining until all of the
then-outstanding Obligations are paid in full; and
(8) any amounts remaining to the Borrower.
(c) In the event that an Event of Default has occurred, amounts
received by the Lender pursuant to this Section will instead be applied in
accordance with the priorities set forth in Section 14.3(b).
(d) Nothing herein (except Section 14.5 hereof and the Intercreditor
Agreement) shall in any way limit Lender's rights with respect to any Collateral
upon an Event of Default.
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6.2 TAXES
(a) Subject to the Intercreditor Agreement and Section 14.5, any and
all payments by Borrower or, if applicable, NAFI, to Lender under this Agreement
shall be made free and clear of, and without deduction or withholding for, any
and all present or future taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, in the case
of Lender, Income Taxes.
(b) Subject to the Intercreditor Agreement and Section 14.5, in
addition, the Borrower or NAFI shall pay any present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery of, or otherwise with respect to, this Agreement or any other
Transaction Documents (hereinafter referred to as "Other Taxes").
(c) Subject to the Intercreditor Agreement and Section 14.5, the
Borrower or NAFI shall indemnify and hold harmless Lender for the full amount of
Other Taxes (including any such Other Taxes imposed by any jurisdiction on
amounts payable under this Section 6.2) paid by Lender and any liability
(including penalties, interest, additions to tax and expenses) arising therefrom
or with respect thereto, whether or not such Other Taxes were correctly or
legally asserted. Payment under this indemnification shall be made within thirty
(30) days from the date Lender makes written demand therefor and provides
written evidence of payment thereof or a copy of any invoice therefor, except
for any such Other Taxes that may be paid thereafter without penalty and are
being contested in good faith by appropriate proceedings and for which an
adequate reserve has been established and is maintained in accordance with GAAP.
(d) Subject to the Intercreditor Agreement and Section 14.5, if either
the Borrower or NAFI shall be required by law to deduct or withhold any Other
Taxes from or in respect of any sum payable hereunder to the Lender then:
(i) the sum payable shall be increased as necessary so
that after making all required deductions (including
deductions applicable to additional sums payable
under this Section 6.2) the Lender, shall receive an
amount equal to the sum it would have received had no
such deductions been made;
(ii) the Borrower shall make such deductions, and
(iii) the Borrower shall pay the full amount deducted to
the relevant taxation authority or other authority in
accordance with applicable law.
(e) The obligations in this Section 6.2 shall survive the termination
of the Transaction Documents and payment of all other Obligations.
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SECTION 7. BORROWER'S AND NAFI'S REPRESENTATIONS AND WARRANTIES.
Each of the Borrower and NAFI hereby makes the following
representations and warranties to Lender, as of the Closing Date and each date
upon which the Borrower requests, and each date upon which the Borrower
receives, a Revolving Loan hereunder:
7.1 EXISTENCE AND POWER. Borrower is a trust, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and licensed as a foreign business trust and authorized to do
business in each jurisdiction within the United States where its ownership of
Property and assets or conduct of business requires such qualification, except
where failure to be so qualified and licensed would not have a Material Adverse
Effect. Borrower has all of the trust power and authority, rights and franchises
to own its Property and to carry on its business as now conducted. Borrower has
all of the trust power and authority to execute, deliver and perform the terms
of the Transaction Documents (to the extent it is a party thereto) and all other
instruments and documents contemplated hereby or thereby.
7.2 TRANSACTION DOCUMENTS AUTHORIZED; BINDING OBLIGATIONS. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which Borrower is a party have been duly authorized by
all necessary trust action on the part of Borrower, its owner trustee, its
co-trustees and NAFI. The Transaction Documents constitute the legally valid and
binding obligations of Borrower, enforceable against Borrower, to the extent
Borrower is a party thereto, in accordance with their respective terms, except
as enforcement thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws affecting the enforcement of creditors' rights
generally and by general principles of equity, regardless of whether
enforceability is at law or in equity.
7.3 NO CONFLICT; LEGAL COMPLIANCE. The execution, delivery and
performance of this Agreement, and each of the other Transaction Documents to
which the Borrower is a party will not: (a) contravene any provision of
Borrower's trust agreement; (b) contravene, conflict with or violate any
applicable law or regulation, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority, which contravention,
conflict or violation, in the aggregate, would have a Material Adverse Effect;
or (c) violate or result in the breach of, or constitute a default under any
indenture or other loan or credit agreement, or other agreement or instrument to
which Borrower is a party (including, without limitation, each of the Underlying
Transaction Documents) or by which Borrower, or its Property is bound or
affected. Borrower is not in violation or breach of or default under any law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award or any contract, agreement, lease, license, indenture or other instrument
to which it is a party, the non-compliance with, the violation or breach of or
the default under which would have a Material Adverse Effect.
7.4 EXECUTIVE OFFICES. The Borrower's chief executive office is c/o
Chase Manhattan Bank Delaware, 1201 Market Street, 9th Floor, Wilmington,
Delaware 19801. The Borrower's principal place of business is 10302 Deerwood
Park Blvd., Suite 100, Jacksonville, Florida 32256.
<PAGE> 33
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7.5 LITIGATION. Except as set forth in Exhibit H hereto, there are no
claims, actions, suits, proceedings or other litigation pending or, to the best
of Borrower's knowledge, threatened against Borrower, at law or in equity before
any Governmental Authority or, to the best of Borrower's knowledge, any
investigation by any Governmental Authority of Borrower's Properties that (a)
asserts the invalidity of any Transaction Document or Underlying Transaction
Document, (b) seeks to prevent the consummation of any of the transactions
contemplated by any Transaction Document or Underlying Transaction Document, (c)
seeks any determination or ruling that would materially and adversely affect the
performance by the Borrower of its obligations under any Transaction Document
or Underlying Transaction Document, (d) individually or in the aggregate, would
reasonably be expected to have a material adverse effect on the Borrower's
ability to perform its obligations under any Transaction Document or Underlying
Transaction Document or (e) would reasonably be expected to have a material
adverse effect on the value of, or the Lender's security interest in, the
Collateral in the aggregate.
7.6 CONSENTS AND APPROVALS. No approval, authorization or consent of
any trustee or holder of any indebtedness or obligation of Borrower or of any
other Person (including, without limitation, FSA) under any material agreement,
contract, lease or license or similar document or instrument to which Borrower
is a party or by which Borrower is bound, that has not been obtained by the
Closing Date, is required to be obtained by Borrower in order to make or
consummate the transactions contemplated under the Transaction Documents. All
consents and approvals of, filings and registrations with, and other actions in
respect of, all Governmental Authorities required to be obtained by Borrower in
order to make or consummate the transactions contemplated under the Transaction
Documents have been, or prior to the time when required will have been,
obtained, given, filed or taken.
7.7 OTHER AGREEMENTS. Borrower is not a party to any material
agreements other than this Agreement, the other Transaction Documents and:
(1) the Note;
(2) the Irrevocable Instruction Letter;
(3) the Intercreditor Agreement;
(4) the 1995-1 Pooling and Servicing Agreement;
(5) the Assignment Agreement; dated as of October 1, 1995, between
Bankers Trust Company, not in its individual capacity but
solely as trustee for the National Financial Auto Receivables
Master Trust, and the Borrower;
(6) the Transfer Agreement, dated as of October 1, 1995, between
the Borrower and Harris;
<PAGE> 34
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(7) the 1995-1 Insurance and Indemnity Agreement as amended as of
March 31, 1998;
(8) the Indemnification Agreement dated as of November 21, 1995,
among FSA, the Borrower and First Union Capital Markets Corp.;
(9) the First Amended and Restated Master Spread Account
Agreement, dated as of March 31, 1998 among the Borrower,
FSA and Harris (as Trustee and Collateral Agent), and the
Series 1996-1, 1997-1 and 1998-1 Supplements thereto;
(10) the Placement Agent Agreement, dated as of November 21, 1995,
between First Union Capital Markets Corp. and the Borrower;
(11) the 1996-1 Pooling and Servicing Agreement as amended as of
March 31, 1998;
(12) the Purchase and Contribution Agreement, dated as of October
21, 1996, between NAFI and the Borrower;
(13) the Sale Agreement, dated as of October 21, 1996, between the
Borrower and National Financial Auto Funding Trust II;
(14) the Transfer Agreement, dated as of November 13, 1996, between
the Borrower and Harris;
(15) the 1996-1 Insurance and Indemnity Agreement;
(16) the Indemnification Agreement, dated as of November 13, 1996,
among FSA, the Borrower and First Union Capital Markets Corp.;
(17) the Underwriting Agreement, dated as of November 13, 1996,
between First Union Capital Markets Corp. and the Borrower;
(18) the 1997-1 Sale and Servicing Agreement;
(19) the Purchase and Contribution Agreement, dated as of July 29,
1997, between NAFI and the Borrower;
(20) the Sale Agreement, dated as of June 29, 1997, between
National Financial Auto Funding Trust II and the Borrower;
(21) the Indemnification Agreement, dated as of July 23, 1997,
among FSA, the Borrower and First Union Capital Markets Corp.;
<PAGE> 35
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(22) the 1997-1 Insurance and Indemnity Agreement as amended as of
March 31, 1998;
(23) the Trust Agreement, dated as of July 21, 1997, between the
Borrower, as Depositor, and Wilmington, as Owner Trustee;
(24) the 1998-1 Sale and Servicing Agreement;
(25) the Trust Agreement, dated as of December 15, 1997, between
the Borrower and Wilmington;
(26) the Purchase and Contribution Agreement, dated as of December
15, 1997, between NAFI, and the Borrower;
(27) the Sale Agreement, dated as of December 15, 1997, between
National Financial Auto Funding Trust II and the Borrower;
(28) the 1998-1 Insurance and Indemnity Agreement as amended as of
March 31, 1998;
(29) the Indemnification Agreement, dated as of January 20, 1998,
among FSA, the Borrower and First Union Capital Markets Corp.;
and the Lender has received all of the foregoing documents, together with any
amendments or modifications thereto, prior to the Closing Date and a
certification of a Responsible Officer of NAFI that such documents and
amendments have been delivered and are the true and correct copies thereof.
7.8 MARGIN REGULATIONS. Borrower does not own any "margin security", as
that term is defined in Regulation U of the Federal Reserve Board. None of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any such "margin security," for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any such "margin security" or for any other purpose which would cause the Loan
to be considered a "purpose credit" within the meaning of Regulations T, U and
X.
7.9 TAXES. All federal, state, local and foreign tax returns, reports
and statements required to be filed by Borrower have been filed with the
appropriate Governmental Authorities where failure to file may have a Material
Adverse Effect, and all Charges and other impositions shown thereon to be due
and payable by Borrower have been paid prior to the date on which any fine,
penalty, interest or late charge may be added thereto for nonpayment thereof, or
any such fine, penalty, interest, late charge or loss has been paid. Borrower
has paid when due and payable all Charges upon the books of Borrower and no
Government Authority has asserted any Lien against the Borrower with respect to
unpaid Charges. All material amounts have been withheld by Borrower from its
employees for all periods in compliance with the tax, social security and
unemployment
<PAGE> 36
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withholding provisions of applicable federal, state, local and foreign law and
such withholdings have been timely paid to the respective Governmental
Authorities (other than for taxes that are being contested in good faith by the
Borrower and for which the Borrower has established adequate reserves).
7.10 SOLVENCY. Borrower is Solvent.
7.11 MATERIAL ADVERSE CHANGE. Other than has been disclosed in writing
to Lender, there has been no material adverse change in the financial or other
condition of either the Borrower or NAFI since December 31, 1998.
7.12 GOOD TITLE TO THE COLLATERAL; FIRST PRIORITY SECURITY INTEREST.
The Borrower owns the Collateral free and clear of any Lien, except for
Permitted Liens. Any lender that held heretofore a security interest or other
Lien (other than a Permitted Lien) on any of the Collateral has effectively
released such Lien. This Agreement creates in favor of the Lender a valid
security interest in the Borrower's interest in the Collateral. Upon the filing
of the financing statements described in Section 13.2 hereof, and Delivery of
the Pledged Certificates, such security interest will be a perfected security
interest in the Collateral and a first priority perfected security interest in
the First Priority Collateral. Such filing statement has been properly filed by
the Borrower and does thus create, as of the date hereof, a perfected security
interest in favor of the Lender in the Collateral and a first priority perfected
security interest in the First Priority Collateral.
7.13 INVESTMENT COMPANY ACT. The Borrower is not required to be
registered as an investment company under the Investment Company Act.
7.14 EARLY AMORTIZATION EVENTS. There have not been any early
amortization events, amortization events, credit triggers, defaults, or other
event, that with either notice or the passage of time would constitute an event
of default or events of default that have occurred with respect to the
Underlying Transactions other than those that have been cured, duly waived or
previously disclosed in writing by either the Borrower or NAFI to the Lender and
FSA.
7.15 FSA INDEBTEDNESS. As of the Closing Date, the Borrower has no
Indebtedness, obligation or liability for the payment of money of any kind or
nature (whether or unmatured or contingent or non-contingent) to FSA or any
Affiliate of FSA pursuant to any agreement to which FSA is a party other than
Indebtedness, obligations and liabilities (whether matured or umnatured or
contingent or non-contingent) in connection with policies issued by FSA or
otherwise, with regard the Underlying Transaction Documents. During the term of
this Agreement, the Borrower will not have at any time any Indebtedness or
obligation or liability for the payment of money of any kind or nature (whether
matured or unmatured or contingent or non-contingent) to FSA or any Affiliate
of FSA pursuant to any agreement to which FSA is a party other than
Indebtedness, obligations or liabilities (whether matured or unmatured or
contingent or non-contingent) in connection with securitization transactions,
including, without limitation, the Underlying Transactions.
<PAGE> 37
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7.16 REPRESENTATIONS WITH RESPECT TO NAFI.
(a) Existence and Power. NAFI is a corporation, duly organized, validly
existing and in good standing under the laws of the State of Delaware and is
duly qualified and licensed as a foreign corporation and authorized to do
business in each jurisdiction within the United States where its ownership of
Property and assets or conduct of business requires such qualification, except
where failure to be so qualified and licensed would not have a Material Adverse
Effect. NAFI has all of the corporate power and authority, rights and franchises
to own its Property and to carry, on its business as now conducted. NAFI has all
of the corporate power and authority to execute, deliver and perform the terms
of the Transaction Documents (to the extent it is a party thereto) and all other
instruments and documents contemplated hereby or thereby.
(b) Transaction Documents and Note Authorized; Binding Obligations. The
execution, delivery and performance of this Agreement and each of the other
Transaction Documents to which NAFI is a party have been duly authorized by all
necessary corporate action on the part of NAFI, its shareholders or its Board of
Directors, as needed. The Transaction Documents constitute the legally valid and
binding obligations of NAFI, enforceable against NAFI, to the extent NAFI is a
party thereto, in accordance with their respective terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether enforceability is at law or
in equity.
(c) No Conflict; Legal Compliance. The execution, delivery and
performance of this Agreement, and each of the other Transaction Documents to
which NAFI is a party will not: (a) contravene any provision of NAFI's
certificate of incorporation; (b) contravene, conflict with or violate any
applicable law or regulation, or any order, writ, judgment, injunction, decree,
determination or award of any Governmental Authority, which contravention,
conflict or violation, in the aggregate, would have a Material Adverse Effect;
or (c) violate or result in the breach of, or constitute a default under any
indenture or other loan or credit agreement, or other agreement or instrument to
which NAFI is a party (including, without limitation, each of the Underlying
Transaction Documents) or by which NAFI, or its Property is bound or affected.
NAFI is not in violation or breach of or default under any law, rule,
regulation, order, writ, judgment, injunction, decree, determination or award or
any contract, agreement, lease, license, indenture or other instrument to which
it is a party, the non-compliance with, the violation or breach of or the
default under which would have a Material Adverse Effect.
(d) Executive Offices. NAFI's chief executive office and principal
place of business is 10302 Deerwood Park Blvd., Suite 100, Jacksonville, FL
32256.
(e) Litigation. Except as set forth in Exhibit H hereto, there are no
claims, actions, suits, proceedings or other litigation pending or, to the best
of NAFI's knowledge, threatened against NAFI, at law or in equity, before any
Governmental Authority or, to the best of NAFI's knowledge, any investigation by
any Governmental Authority of NAFI's Properties that (a) asserts the invalidity
of any Transaction Document or Underlying Transaction Document, (b) seeks to
prevent the
<PAGE> 38
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consummation of any of the transactions contemplated by any Transaction Document
or Underlying Transaction Document, (c) seeks any determination or ruling that
would materially and adversely affect the performance by NAFI, either in its
individual capacity or as initial Servicer of those respective obligations under
any Transaction Document or Underlying Transaction Document, (d) individually or
in the aggregate, would reasonably be expected to have a material adverse
effect on its ability to perform its respective obligations under any
Transaction Document or Underlying Transaction Document, or (e) would reasonably
be expected to have a material adverse effect on the value of, or the Lender's
security interest in, the Collateral in the aggregate.
(f) Consents and Approvals. No approval, authorization or consent of
any trustee or holder of any indebtedness or obligation of NAFI or of any other
Person (including, without limitation, FSA) under any material agreement,
contract, lease or license or similar document or instrument to which NAFI is a
party or by which NAFI is bound, that has not been obtained by the Closing Date,
is required to be obtained by NAFI in order to make or consummate the
transactions contemplated under the Transaction Documents. All consents and
approvals of, filings and registrations with, and other actions in respect of,
all Governmental Authorities required to be obtained by NAFI in order to make or
consummate the transactions contemplated under the Transaction Documents have
been, or prior to the time when required will have been, obtained, given, filed
or taken.
(g) Margin Regulations. NAFI does not own any "margin security", as
that term is defined in Regulation U of the Federal Reserve Board. None of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing or carrying any such "margin security," for the purpose of reducing
or retiring any indebtedness which was originally incurred to purchase or carry
any such "margin security" or for any other purpose which would cause the Loan
to be considered a "purpose credit" within the meaning of Regulations T, U and
X.
(h) Taxes. All federal, state, local and foreign tax returns, reports
and statements required to be filed by NAFI have been filed with the appropriate
Governmental Authorities where failure to file may have a Material Adverse
Effect, and all Charges and other impositions shown thereon to be due and
payable by NAFI have been paid prior to the date on which any fine, penalty,
interest or late charge may be added thereto for nonpayment thereof, or any such
fine, penalty, interest, late charge or loss has been paid. NAFI has paid when
due and payable all Charges upon the books of NAFI and no Government Authority
has asserted any Lien against NAFI with respect to unpaid Charges. All material
amounts have been withheld by NAFI from its employees for all periods in
compliance with the tax, social security and unemployment withholding provisions
of applicable federal, state, local and foreign law and such withholdings have
been timely paid to the respective Governmental Authorities (other than for
taxes that are being contested in good faith by the borrower and for which NAFI
has established adequate reserves).
(j) Investment Company Act. NAFI is not required to be registered as an
investment company under the Investment Company Act.
<PAGE> 39
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7.17 DELIVERY OF PHYSICAL CERTIFICATES. The Borrower has caused
Wilmington Trust Company, as Underlying Trustee of the 1997-1 Transaction and
1998-1 Transaction, to Deliver the Pledged Certificates.
7.18 OWNERSHIP. The Borrower is 100% owned by NAFI, and each of the
1997-1 Trust and 1998-1 Trust are 100% owned by the Borrower, and (a) each
Underlying Trustee has so registered the Borrower as the sole owner of the
Underlying Trust related to it upon such Underlying Trustee's books and records
and (b) the owner trustee of the Borrower has registered NAFI as the sole owner
of the Borrower on such owner trustee's books and records.
7.19 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Until payment and
performance in full of the Obligations, the representations and warranties
contained herein shall have a continuing effect as having been true when made.
SECTION 8. AFFIRMATIVE COVENANTS OF THE BORROWER AND NAFI.
Either the Borrower or NAFI, as provided below, covenants and agrees
that, until full complete and indefeasible payment and performance of the
Obligations, unless Lender shall otherwise consent in writing, Borrower or NAFI,
as the case may be, covenants and agrees as follows:
8.1 BORROWING BASE CERTIFICATES; ADDITIONAL ACCESS AND INFORMATION.
(a) On each Calculation Date, Borrower shall deliver to Lender a
Borrowing Base Certificate dated as of such Calculation Date duly executed by
either the Borrower or NAFI, signed by a Responsible Officer of either the
Borrower or NAFI and properly completed.
(b) Promptly upon reasonable request therefore by Lender, either the
Borrower or NAFI will furnish to the Lender any information which is in the
Borrower's or NAFI's possession relating to the Collateral, including
information which is necessary in order for the Lender to enforce its rights
under this Agreement. In addition both the Borrower and NAFI will either provide
or, to the extent of their control thereof, instruct the Custodian to provide
the Lender with access to the Contract Files and any documentation regarding the
Collateral which is in the Borrower's (or NAFI's) possession in order to permit
the Lender to obtain any such information. Such access will be afforded without
charge, but only (i) upon reasonable request and with reasonable notice to
Borrower or NAFI, as the case may be, (ii) during normal business hours, (iii)
subject to Borrower's or NAFI's, as appropriate, or normal security and
confidentiality procedures and (iv) at offices designated by the Borrower or
NAFI, as appropriate.
(c) Promptly upon any officer of either the Borrower or NAFI obtaining
knowledge (i) of any condition or event which constitutes an Early Amortization
Event, Event of Default or Potential Event of Default under this Agreement, (ii)
that any Person has given any notice to either the Borrower or NAFI or taken any
other action with respect to a claimed default or event or condition of the type
referred to in Section 14.1(b) or (c), (iii) of the institution of any
litigation
<PAGE> 40
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or of the receipt of written notice from any Governmental Authority as to the
commencement of any formal investigation involving an alleged or asserted
liability of either the Borrower or NAFI of any material amount or any adverse
judgment in any litigation involving a potential material liability of either
the Borrower or NAFI, either the Borrower or NAFI shall deliver to Lender a
certificate of either the Borrower or NAFI signed by a Responsible Officer of
either the Borrower or NAFI, specifying the notice given or action taken by such
Person and the nature of such claimed default. Early Amortization Event, Event
of Default, Potential Event of Default, event or condition and what action
either the Borrower or NAFI has taken, is taking and proposes to take with
respect thereto.
(d) Promptly after its receipt thereof, the Borrower shall deliver to
the Lender a copy of each monthly and any other servicing report delivered to it
with regard to each Underlying Transaction.
8.2 EXISTENCE; COMPLIANCE WITH LAW, BOOKS AND RECORDS, COMMINGLING OF
FUNDS. Borrower shall (a) keep in full effect its existence, rights and
franchises as a business trust under the laws of the State of Delaware and all
of its licenses, permits, governmental approvals, rights, privileges and
franchises necessary in the normal conduct of its business as now conducted or
presently proposed to be conducted; (b) obtain and preserve its qualification to
do business as a foreign business trust in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of the rights of Lender under this Agreement; (c) comply with (i)
the provisions of its trust agreement and (ii) the requirements of all
applicable laws, rules, regulations or orders of any Governmental Authority to
the extent that the failure to comply therewith would not, in the aggregate,
have a Material Adverse Effect, (d) maintain its books and records separate from
the books and records of any other entity and (e) maintain separate bank
accounts and, except as contemplated by this Agreement, not permit funds of
Borrower to be commingled with funds of any other entity.
8.3 RESERVED.
8.4 NOTICE OF LIENS. Either the Borrower or NAFI will notify Lender of
the existence of any Lien (except Permitted Liens) on any of its Property
immediately upon discovery thereof and Borrower and NAFI shall defend the
priority of the security interest of Lender in the Collateral now existing or
hereafter created, including the first-priority perfected security interest of
the Lender in the Free Cash Flow, the Pledged Certificates, the Interest Reserve
Account, the Swap Agreement and all income or proceeds of the foregoing or
relating thereto (all of the foregoing, cumulatively, the "First Priority
Collateral") against all claims of third parties claiming through or under
either the Borrower or NAFI.
8.5 OBLIGATIONS WITH RESPECT TO CONTRACTS. Both the Borrower and NAFI
will duly fulfill all obligations on each of their parts to be fulfilled under
or in connection with each Contract, if any, and will do nothing to impair the
continued, valid existence of, or the rights of the Lender in, the Collateral.
<PAGE> 41
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8.6 PRESERVATION OF SECURITY INTEREST. Each of the Borrower and NAFI
shall execute and file such continuation statements and any other documents and
take such other actions which may be required by law to fully preserve and
protect the perfected security interest of Lender in the Collateral and the
first-priority security interest of the Lender in the First Priority Collateral.
8.7 RESERVED.
8.8 SEPARATELY TAXABLE ENTITY. Borrower and NAFI have filed, and will
continue to file, returns for federal income tax purposes at all times until the
termination of this Agreement and satisfaction in full of all Obligations of
Borrower hereunder, Borrower or NAFI files, and will continue to file, returns
for federal income tax purposes. Either the Borrower or NAFI shall deliver to
the Lender copies of each such returns filed from the Closing Date until the
termination of this Agreement. The Borrower is taxable neither as a corporation
nor as a publically traded partnership.
8.9 TAXABLE INCOME FROM THE CONTRACTS. Borrower shall report and
include in gross income for Income Tax purposes in its consolidated, combined or
unitary return the income from all of the Underlying Transactions and shall
deduct the interest paid or accrued, in accordance with its applicable method of
accounting for federal income tax purposes.
8.10 MAINTENANCE OF SWAP AGREEMENT. Subject to Section 3.2(c), any Swap
Agreement entered into by Borrower shall be maintained with a notional amount in
an amount equal to the outstanding principal balance of the Loan(s). Subject to
Section 3.2(c) hereof, if at any time the notional amount of the Swap Agreement
exceeds the outstanding principal balance of the Loan by more than $500,000,
Borrower shall, within five (5) Business Days of such time, enter into a revised
Swap Agreement or an offsetting Swap Agreement, and shall pay subject to the
Intercreditor Agreement and Section 14.5 hereof all Swap Breakage Costs
associated therewith.
8.11 ENFORCEMENT OF UNDERLYING DOCUMENTS. Subject to the Intercreditor
Agreement and Section 14.5 hereof, each of the Borrower and NAFI shall, at the
expense of NAFI, and on behalf of the Lender and themselves, enforce all of
their rights under the Contracts and the Underlying Transaction Documents as
needed to protect the Lender's interests in the Collateral. Neither the Borrower
nor NAFI shall either cause or seek to cause Harris, Wilmington, Chase, any
related Custodian or Back-up Servicer to make any distribution or pay any
dividends or other amounts of any kind or nature to any party in contravention
of the Irrevocable Instruction Letter.
8.12 BORROWER'S IDENTITY. Borrower shall avoid the appearance of
conducting business on behalf of NAFI or any Affiliate of NAFI (other than the
Borrower itself). Borrower shall conduct its business solely in its own name so
as not to mislead others as to the identity of the Person with which such others
are concerned.
8.13 AUDIT REPORTS. Either the Borrower or NAFI shall deliver copies of
any audited reports performed with respect to, or encompassing, either the
Borrower or the Collateral, within ten (10) Business Days of their receipt of
the same.
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8.14 FINANCIAL STATEMENTS. As soon as available and in any event within
90 days after the close of each quarterly accounting period in each fiscal year
of the Borrower (other than the fourth quarterly accounting period of each such
fiscal year), either the Borrower or NAFI shall deliver to the Lender the
consolidated and the consolidating balance sheet of the Borrower and NAFI as at
the end of such quarterly period and the related consolidated and the
consolidating statements of income and cash flow of the Borrower and NAFI for
such quarterly period and for the elapsed portion of the fiscal year ended with
the last day of such quarterly period.
8.15 INSPECTION. At any time and from time to time during regular
business hours the Lender or any agent, delegee, successor or assign to it may
visit and inspect the premises, offices, properties, books and records of the
Borrower, NAFI and the Servicer (if a Person other than NAFI), and interview any
of their employees or independent accountants for the purpose of discussing the
performance of this transaction or any of the Underlying Transactions or the
Contracts. Unless either an Early Amortization Event, Event of Default or
Potential Event of Default is occurring, in which case, the costs of such
inspection will be borne by the Borrower or any Affiliate thereof, such costs
will be borne by the Lender. In addition, if an Early Amortization Event,
Potential Event of Default or an Event of Default shall occur at any time and
from time to time during regular business hours, upon prior written notice to
the Borrower, the Borrower agrees to permit each of the Lender or any such
Person's agents or representatives or other Persons designated by it, including,
without limitation, attorneys or auditors to visit at the expense of the
Borrower the offices and properties of the Borrower for the purpose of (i)
examining the systems used in the processing, administration and servicing of
the Contracts, including, without limitation, the Borrower's record-keeping,
accounting, auditing and other internal control systems related thereto, (ii)
examining and making copies of and abstracts from all books, records, files and
documents (including, without limitation, computer tapes and disks) in the
possession or under the control of the Borrower relating to the generation,
invoicing, servicing and collection of the Contracts and (iii) reviewing the
continuing performance by the Borrower of its obligations and duties under the
Transaction Documents; provided that Borrower and NAFI shall have the right to
be present at any such visit and shall be notified by Lender of any such
scheduled visit not less than two (2) Business Days in advance of such visit.
8.16 COVENANTS WITH RESPECT TO NAFI.
(a) Payment of Taxes. NAFI shall promptly pay and discharge all Charges
when due and payable, except (i) such as may be paid thereafter without penalty
or (ii) such as are being contested in good faith by appropriate proceedings and
for which an adequate reserve has been established and is maintained in
accordance with GAAP. NAFI shall promptly notify Lender of any material
challenge, contest or proceeding pending by or against NAFI before any taxing
authority.
In addition to the financial information described above, the Borrower
will also furnish or cause to be furnished or made available to the Lender, (i)
the Borrowing Base Certificate at the times required under Section 3.2, (ii)
upon request of the Lender, the electronic records and computer tapes maintained
by the Borrower summarizing the characteristics and distribution of the
Contracts in all of the Underlying Transactions and (iii) such other information
regarding the business, affairs and condition of the Borrower and its
Affiliates, the Collateral, cash payments made
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by the Borrower's Affiliates in respect of taxes and the scheduled amortization
of the Free Cash Flow, as such Lender may from time to time reasonably request.
The Borrower will permit the Lender to inspect and audit the books and records
and any of the properties or assets of the Borrower and its Affiliates not more
than once per year prior to the occurrence of an Early Amortization Event, a
Potential Event of Default or Event of Default, at the Lender's expense, and
after any such occurrence, at such times as the Lender may from time to time
request, each such inspection to be at the Borrower's expense.
8.17 COOPERATION IN CONNECTION WITH PARTICIPATIONS. Subject to the
Intercreditor Agreement, if the Lender chooses to exercise its rights granted to
it pursuant to Section 11.1 hereof, the Borrower and NAFI each hereby covenants
and agrees to re-execute new notes, documents, agreements, supplements,
amendments, instruments and certificates as necessary and to cooperate with any
and all other commercially reasonable requests of the Lender to facilitate the
closing of such transaction.
8.18 AGREEMENT TO HOLD IN TRUST. As of the Closing Date, either the
Borrower or NAFI will have caused to be executed by all necessary parties the
Irrevocable Instruction Letter and this Agreement, which are referred to herein
collectively as the "Transaction Payment Documents". To the extent that,
notwithstanding the Transaction Payment Documents, the Borrower or NAFI receives
any amounts which should, in accordance with the Transaction Payment Documents,
have been sent to either the Lender or its designee, the Borrower or NAFI will
hold the same in trust for the Lender immediately upon receipt thereof, and
forthwith deliver the same to the Lender in the form received, together with the
Borrower's or NAFI's (as the case may be) endorsement thereon where necessary to
permit collection thereof.
8.19 COMMUNICATION WITH ACCOUNTANTS. Each of the Borrower and NAFI
authorizes the Lender to communicate directly with the Borrower's and NAFI's,
respectively, independent certified public accountants and has authorized those
accountants to disclose to the Lender any and all financial statements and other
supporting financial documents and schedules and the Borrower and NAFI will
continue to keep such authorization in effect; provided that Borrower and NAFI
shall have the right to be present at all times.
8.20 PERFORMANCE OF SERVICING DUTIES. The Borrower and NAFI shall
comply in all material respects with the provisions of each of their charter
agreements and other Underlying Transaction Documents relating to any
Transaction Document, and perform the duties of servicer in compliance with the
terms thereof.
8.21 JOINT AND SEVERAL LIABILITY. The representations, warranties and
covenants of the Borrower and NAFI hereunder shall be the joint and several
obligations of the Borrower and NAFI. Notwithstanding the foregoing sentence,
neither the Borrower nor NAFI shall be jointly and severally liable for any
other obligations other than as expressly provided for herein. Specifically,
NAFI shall not be the guarantor of, or liable in any respect for, the obligation
to pay either any principal or interest on the Note.
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8.22 MAINTENANCE OF LOCKBOX. Subject to the rights of any other parties
to the Underlying Transaction Documents, NAFI and the Borrower shall cause the
lockbox account to which payments from the Obligors pursuant to the Underlying
Transaction Documents are sent to be maintained at all times prior to the
termination of this Agreement.
SECTION 9. NEGATIVE COVENANTS OF THE BORROWER AND NAFI.
Until full, complete and indefeasible payment and performance of the
Obligations, unless Lender shall otherwise consent in writing, either Borrower
or NAFI, as the case may be, covenants and agrees as follows:
9.1 LIENS; NEGATIVE PLEDGES; AND ENCUMBRANCES. Neither Borrower nor
NAFI shall create, incur, assume or suffer to exist any Lien of any nature upon
or with respect to any of Property of the Borrower or any of the Collateral,
whether now or hereafter owned, leased or acquired, except for Permitted Liens.
9.2 EXPENDITURES AND ACQUISITIONS. Borrower shall not make any capital
expenditures, acquire any assets of any kind, except as required or permitted by
the Underlying Transaction Documents.
9.3 DISPOSITION OF ASSETS. Borrower shall not sell, assign or otherwise
dispose of, any of its assets, except for such sales, assignments or other
dispositions that it is required to make pursuant to the Underlying Transaction
Documents or to facilitate a future securitization transaction.
9.4 INDEBTEDNESS AND GUARANTEES. Borrower shall not create, incur,
assume or suffer to exist, any Indebtedness other than (a) trade payables and
expense accruals less than $50,000 in connection with its operations in the
normal course of business, (b) Obligations to Lender arising under this
Agreement and the other Transaction Documents, (c) the Swap Agreement, (d)
amounts that the Borrower is required as of the date hereof to pay FSA or any
other party pursuant to the Underlying Transaction Documents, (e) as required by
Section 2.4 and (f) other amounts previously approved in writing by the Lender
and FSA. Nothing in this Section 9.4 is intended to permit the Borrower to take
any action that would be prohibited or restricted by the Underlying Transaction
Documents.
9.5 NO SUBSIDIARIES. Borrower shall have no Affiliate that is
controlled by it other than the Issuing Trusts pursuant to the Underlying
Transaction Documents.
9.6 AMENDMENTS OF CHARTER DOCUMENTS; TRANSACTION DOCUMENTS. Neither the
Borrower nor NAFI shall amend the Borrower's trust agreement after the Closing
Date without the prior written consent of the Lender and shall conduct the
Borrower's business within the limitations set forth therein. Neither the
Borrower nor NAFI shall amend any Underlying Transaction Document or Transaction
Document in any respect that (i) could be adverse to the rights and interest of
the Lender, without the prior written consent of the Lender or (ii) could
adversely alter
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the timing or amount of any payment of Free Cash Flow or the interest of the
Borrower in either any of the Collateral or any Underlying Transaction
Document.
9.7 NO USE OF LENDER'S NAME. Except as required by law, neither the
Borrower nor NAFI shall use or authorize others to use Lender's name or marks in
any publication or medium, including, without limitation, any prospectus,
without Lender's advance written authorization.
9.8 LIMITATION ON ACTIVITIES OF BORROWER. Borrower shall not (i) engage
in any activity other than the acquisition, ownership, leasing, selling and
pledging of the property contributed to Borrower, and performing its obligations
under this Agreement, the other Transaction Documents, any Underlying
Transaction Document, or in connection with any future securitization
transaction that the Borrower enters into, and (ii) enter into any material
agreement other than this Agreement, the other Transaction Documents, any
Underlying Transaction Document or in connection with any future securitization
transaction that the Borrower enters into.
9.9 INSOLVENCY PROCEEDINGS. Neither the Borrower nor NAFI shall (a)
commence any case, proceeding or other action under any existing or future
bankruptcy, insolvency or similar law seeking to have an order for relief
entered with respect to it, or seeking reorganization, arrangement, adjustment,
windup, liquidation, dissolution, composition or other relief with respect to it
or its debts, (b) seek appointment of a receiver, trustee, custodian or other
similar official for it or any part of its assets, (c) make a general assignment
for the benefit of creditors, or (d) take any action in furtherance of, or
consenting or acquiescing in, any of the foregoing.
9.10 NO REDEMPTION. Borrower shall not transact an early redemption of
any of its outstanding indebtedness in a financing transaction other than as
permitted hereunder with respect to the Obligations or as required pursuant to
the Underlying Transaction Documents.
9.11 NO ADVANCES. Neither the Borrower nor NAFI shall make any advances
to any record or beneficial owner of the Borrower or the shareholders, partners,
members or other similar Person other than the advance of proceeds of the Loans
from the Borrower to NAFI expressly permitted by Section 2.4 and only for the
uses expressly permitted thereunder, other than advance as Servicer or otherwise
required under the Underlying Transaction Documents.
9.12 GUARANTEES. The Borrower shall not guarantee (directly or
indirectly), endorse or otherwise become contingently liable (directly or
indirectly) for the obligations of, or own or purchase any stock, obligations or
securities of or any other interest in, or make any capital contribution to, any
other Person, engage in any other action that bears on whether the separate
legal identity of Borrower shall be respected, including, without limitation (i)
holding itself out as being liable for the debts of any other party or (ii)
acting other than in its corporate name and through its duly authorized officers
or agents.
9.13 ERISA. The Borrower shall not incur or assume any obligation to
make contributions or payments of any kind to or with respect to any Plan, take
actions or refrain from taking actions which could result in liabilities with
respect to any Plan, and permit any condition to
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occur which could result in a Lien on assets of the Borrower with respect to any
Plan, or become a Plan or permit its assets to become assets of an employee
benefit plan within the meaning of the Plan asset regulations.
SECTION 10. GRANTS OF SECURITY INTEREST; THE COLLATERAL.
10.1 SECURITY INTEREST. Subject to the Intercreditor Agreement, as
collateral security for the prompt, complete and indefeasible payment and
performance of (a) the entire principal amount of and all interest accrued on
the Loan, (b) all fees payable to the Lender hereunder, including, without
limitation, any and all commitment fees, agent fees and attorneys' fees and any
and all other fees, expenses, costs or other sums chargeable to Borrower under
any of the Transaction Documents, (c) all other amounts and other obligations of
the Borrower to the Lender arising under this Agreement or any other Transaction
Documents and (d) all covenants and duties regarding such amounts, of any kind
or nature, arising under any of the Transaction Documents (collectively, the
"Obligations"), Borrower hereby assigns, pledges and grants, as appropriate, to
the Lender a lien on and security interest in all of the Borrower's right, title
and interest in and to (but none of its obligations under) the following
property, whether now existing or owned or hereafter arising or acquired by the
Borrower (collectively, the "Collateral"):
(1) the Trust Property of the 1995-1 Transaction and the 1996-1
Transaction (as defined in the 1995-1 Pooling and Servicing
Agreement and the 1996-1 Pooling and Servicing Agreement,
respectively) and Trust Estates of the 1997-1 Transaction and
1998-1 Transaction (as defined in the 1997-1 Sale and
Servicing Agreement and the 1998-1 Sale and Servicing
Agreement, respectively), subject, in each case, to the prior
claims of (i) in the case of the Trust Property of the 1995-1
Transaction, the parties referenced in subsections (i) through
(x) of Section 4.01 of the 1995-1 Pooling and Servicing
Agreement; (ii) in the case of the Trust Property of the
1996-1 Transaction, the parties referenced in subsections (i)
through (x) of Section 4.01 of the 1996-1 Pooling and
Servicing Agreement; (iii) in the case of the Trust Estate of
the 1997-1 Transaction, the parties referenced in subsections
(b)(i) through (x) of Section 5.7 of the 1997-1 Sale and
Servicing Agreement; and (iv) in the case of the Trust Estate
of the 1998-1 Transaction, the parties referenced in
subsections (b)(i) through (x) of Section 5.7 of the 1998-1
Sale and Servicing Agreement; and, further subject to the
claims of any parties entitled, under the terms of the
aforementioned Underlying Transaction Documents, to amounts
deposited to the Collection Account (as such term is defined
in each of the aforementioned Underlying Transaction
Documents) that do not constitute Available Amounts (as such
term is defined in each of the aforementioned Underlying
Transaction Documents as in effect on the date hereof, which
definition is set forth in Exhibit F hereto, but with any such
changes thereto as shall have been consented to by FUNB);
(2) the Pledged Certificates;
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(3) the Interest Reserve Account, all amounts on deposit therein
from time to time, and any investments thereof and earnings
thereon;
(4) all of the Borrower's rights (other than rights to payments
excluded from the definition of Collateral pursuant to
paragraph 1 above), but none of the obligations of either,
under the Underlying Transaction Documents (other than any
such rights granted, assigned, or subject to a security
interest for the benefit of the Underlying Trustees for the
Underlying Transactions as of the related closing date), and
the Transaction Documents;
(5) the Swap Agreement, and all payments thereunder;
(6) all of the Borrower's rights, interests and title to all of
the Insurance Policies and any Insurance Proceeds related to
the Contracts other than such as are subject to the security
interest of the Underlying Trustees for the Underlying
Transactions as of the related closing date;
(7) all of the Borrower's rights in, to and under any
"collateral", "trust property" or similar term evidencing a
valid, perfected security interest of a related
securityholder, which may be a first priority security
interest, or stream of payments therefrom as defined in the
agreements, indentures or other documents entered into by the
Borrower or such subsidiary after the Closing Date which
definition incorporates, directly or indirectly, any
Contracts, Spread Account, other Collateral or any other
collateral of any Underlying Transaction (but subordinate to
any rights or claims prior to those of the Borrower of the
Underlying Trustee, the securityholders and FSA or anyone
other than the Borrower pursuant to the Underlying Transaction
Documents);
(8) all income or proceeds of the foregoing or relating thereto.
The assignment under this Section 10.1 does not constitute and is not
intended to result in a creation or an assumption by the Lender of any
obligation of the Borrower or NAFI, or any other Person in connection with the
Collateral or under any agreement or instrument relating thereto. Anything
herein to the contrary notwithstanding, but subject to the Intercreditor
Agreement and Section 14.5 hereof, (a) either Borrower or NAFI, as the case may
be, shall remain liable under the Contracts and the Underlying Transaction
Documents to the extent set forth therein to perform all of its duties and
obligations thereunder to the same extent as if this Agreement had not been
executed, (b) the exercise by Lender of any of its rights in the Collateral
shall not release either Borrower or NAFI, as the case may be, from any of its
duties or obligations under the Contracts or the Underlying Transaction
Documents and (c) Lender shall not have any obligations or liability under the
Contracts by reason of this Agreement, nor shall Lender be obligated to perform
any of the obligations or duties of Borrower thereunder or to take any action to
collect or enforce any claim for payment assigned hereunder.
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10.2 CREATION OF ACCOUNTS; INVESTMENTS.
(a) Prior to the Closing Date, either the Borrower or NAFI shall, or
shall cause the Servicer to establish with the Lender the following segregated
trust account with the designations indicated: the Interest Reserve Account
designated "First Union National Bank of North Carolina - National Financial
Auto Funding Trust Interest Reserve Account."
(b) Subject to the Intercreditor Agreement and Section 14.5, Prior to
each advance made hereunder, the Borrower shall deposit in the Interest Reserve
Account the amount necessary to maintain the Interest Reserve Account Deposit
Amount as of the related advance date. Subject to the Intercreditor Agreement
and Section 14.5, borrower hereby covenants and agrees that until all of the
Obligations have been paid in full to the Lender, the funds on deposit in the
Interest Reserve Account shall always be not less than the Interest Reserve
Account Deposit Amount.
(c) All amounts on deposit in the Interest Reserve Account shall upon
the direction of the Lender be invested in Eligible Investments held by and in
the name of the Lender maturing no later than the close of business on the
Business Day immediately preceding the next Payment Date.
(d) The Interest Reserve Account shall be the property of the Borrower,
subject to the grant of a security interest therein to the Lender as set forth
above, and shall be so treated for Income Tax informational reporting purposes.
All earnings on amounts on deposit in the Interest Reserve Account shall be for
the account of the Borrower and the Borrower agrees that it shall include such
earnings in its income for Income Tax informational reporting purposes and the
Lender shall not be liable for any taxes thereon.
(e) Promptly upon the release of the Lien of this Agreement and the
payment in full of all of the Obligations, the Lender shall release to the
Borrower or its designee all amounts on deposit in the Interest Reserve Account,
including all investments and interest thereon.
SECTION 11. RELATIONSHIP AMONG THE BANKS.
11.1 APPOINTMENT AND AUTHORIZATION. Subject to the Intercreditor
Agreement and Section 16.10 hereof, the Lender may elect to transfer (pursuant
to a sale or participation) all or any portion of the Loan to one or more Banks,
in which event, the Lender may act as the agent, on behalf of itself and such
Banks under this Agreement (the "Agent") and under each of the other Transaction
Documents and the Agent is authorized to take such action on behalf of itself
and such Banks under the provisions of this Agreement and each other Transaction
Document and to exercise such powers and perform such duties as are expressly
delegated to it by the terms of this Agreement or any other Transaction
Document, together with such powers as are reasonably incidental thereto.
Notwithstanding any provision to the contrary contained elsewhere in this
Agreement or in any other Transaction Document, the Agent shall not have any
duties or responsibilities, except those expressly set forth herein, nor shall
the Agent have or be deemed to have any fiduciary relationship with any
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Bank, and no implied covenants, functions, responsibilities, duties, obligations
or liabilities shall be read into this Agreement or any other Transaction
Document or otherwise exist against the Agent.
11.2 DELEGATION OF DUTIES. The Agent may execute any of its duties
under this Agreement or any other Transaction Document by or through agents,
employees or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Agent shall not be
responsible for the negligence or misconduct of any agent or attorney-in-fact
that it selects with reasonable care.
11.3 LIABILITY OF AGENT. None of the Agent-Related Persons shall (a) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Transaction Document (except for its
own gross negligence or willful misconduct), or (b) be responsible in any manner
to any Bank for any recital, statement, representation or warranty made by
Borrower, or any officer thereof, contained in this Agreement or in any other
Transaction Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by the Agent under or in connection
with, this Agreement or any other Transaction Document, or for the value of any
Collateral or the validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Transaction Document, or for any
failure of the Borrower or any other party to any Transaction Document to
perform its obligations hereunder or thereunder. No Agent-Related Person shall
be under any obligation to any Bank to ascertain or to inquire as to the
observance or performance of any of the agreements contained in, or conditions
of, this Agreement or any other Transaction Document, or to inspect the
properties, books or records of Borrower or its Subsidiaries or its
Subsidiaries.
11.4 RELIANCE BY THE AGENT.
(a) The Agent shall be entitled to rely, and shall be fully protected
in relying, upon any writing, resolution, notice, consent, certificate,
affidavit, letter, telegram, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons, and upon advice
and statements of legal counsel (including counsel to Borrower), independent
accountants and other experts selected by the Agent. The Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Transaction Document unless it shall first receive such advice or
concurrence of the majority of Banks as it deems appropriate and, if it so
requests, it shall first be indemnified to its satisfaction by the Banks against
any and all liability and expense which may be incurred by it by reason of
taking or continuing to take any such action. The Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement or
any other Transaction Document in accordance with a request or consent of the
majority of Banks and such request and any action taken or failure to act
pursuant thereto shall be binding upon all of the Banks.
(b) For purposes of determining compliance with the conditions
precedent specified in Section 12, each Bank shall be deemed to have consented
to, approved or accepted or to be satisfied with each document or other matter
either sent by the Agent to such Bank for consent, approval, acceptance or
satisfaction, or required thereunder to be consented to or approved by or
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acceptable or satisfactory to the Bank, unless an officer of the Agent
responsible for the transactions contemplated by the Transaction Documents shall
have received notice from the Bank prior to the initial borrowing specifying its
objection thereto and either such objection shall not have been withdrawn by
notice to the Agent to that effect or the Bank shall not have made available to
the Agent the Bank's ratable portion of such borrowing.
11.5 NOTICE OF DEFAULT. The Agent shall not be deemed to have knowledge
or notice of the occurrence of any Early Amortization Event, Event of Default or
Potential Event of Default, except with respect to defaults in the payment of
principal, interest and fees required to be paid to the Agent on behalf and for
the benefit of the Banks, unless the Agent shall have received written notice
from a Bank or the Borrower referring to this Agreement, describing such Event
of Default or Potential Event of Default and stating that such notice is a
"notice of default". In the event that the Agent receives such a notice, the
Agent shall give notice thereof to the Banks. The Agent shall take such action
with respect to such Early Amortization Event, Event of Default or Potential
Event of Default as shall be requested by the majority of Banks in accordance
with this Agreement; provided, however, that unless and until the Agent shall
have received any such request, the Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such Early
Amortization Event, Event of Default or Potential Event of Default as it shall
deem advisable or in the best interest of the Banks.
11.6 CREDIT DECISION. Each Bank expressly acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it and that no
act by the Agent hereinafter taken, including any review of the affairs of
Borrower, shall be deemed to constitute any representation or warranty by the
Agent to any Bank. Each Bank represents to the Agent that it has, independently
and without reliance upon the Agent and based on such documents and information
as it has deemed appropriate, made its own appraisal of and investigation into
the business, prospects, operations, property, financial and other condition and
creditworthiness of Borrower, and all applicable bank regulatory laws relating
to the transactions contemplated thereby, and made its own decision to enter
into this Agreement and extend credit to Borrower under and pursuant to this
Agreement. Each Bank also represents that it will, independently and without
reliance upon the Agent and based on such documents and information as it shall
deem appropriate at the time, continue to make its own credit analysis,
appraisals and decisions in taking or not taking action under this Agreement and
the other Transaction Documents, and to make such investigations as it deems
necessary to inform itself as to the business, prospects, operations, property,
financial and other condition and creditworthiness of Borrower. Except for
notices, reports and other documents expressly herein required to be furnished
to the Banks by the Agent, the Agent shall not have any duty or responsibility
to provide any Bank with any credit or other information concerning the
business, prospects, operations, property, financial and other condition or
creditworthiness of Borrower, which may come into the possession of any of the
Agent-Related Persons.
11.7 INDEMNIFICATION BY BANKS. Whether or not the transactions
contemplated hereby shall be consummated, the Banks shall indemnify upon demand
the Agent-Related Persons (to the extent not reimbursed by or on behalf of
Borrower and without limiting the obligation of Borrower to do so), ratably from
and against any and all liabilities, obligations, losses, damages,
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penalties, actions, judgments, suits, costs, expenses and disbursements of any
kind whatsoever which may at any time (including at any time following the
repayment of the Loans and the termination or resignation of the related Agent)
be imposed on, incurred by or asserted against any such Person in any way
relating to or arising out of this Agreement or any document contemplated by or
referred to herein or therein or the transactions contemplated hereby or thereby
or any action taken or omitted by any such Person under or in connection with
any of the foregoing; provided, however, that no Bank shall be liable for the
payment to the Agent-Related Persons of any portion of such liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each Bank shall
reimburse the Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including reasonable attorney fees) incurred by the
Agent in connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Transaction Document, or any
document contemplated by or referred to herein to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrower. Without
limiting the generality of the foregoing, if the United States Internal Revenue
Service or any other Governmental Authority of the United States or other
jurisdiction asserts a claim that the Agent did not properly withhold tax from
amounts paid to or for the account of any Bank (because the appropriate form was
not delivered, was not properly executed, or because such Bank failed to notify
the Agent of a change in circumstances which rendered the exemption from, or
reduction of, withholding tax ineffective, or for any other reason), such Bank
shall indemnify the Agent fully for all amounts paid, directly or indirectly, by
the Agent as tax or otherwise, including penalties and interest, and including
any taxes imposed by any jurisdiction on the amounts payable to the Agent under
this Section 11.7, together with all costs and expenses (including reasonable
attorney fees). The obligation of the Banks in this Section 11.7 shall survive
the payment of all Obligations.
11.8 RESERVED.
11.9 SUCCESSOR AGENT. Subject to the Intercreditor Agreement, the Agent
may resign as Agent upon thirty (30) days' notice to the Banks. If the Agent
shall resign as Agent under this Agreement, the majority of Banks shall appoint
from among the Banks a successor agent for the Banks. If no successor agent is
appointed prior to the effective date of the resignation of the Agent, the Agent
may appoint, after consulting with the Banks and the Borrower, a successor agent
from among the Banks. Upon the acceptance of its appointment as successor agent
hereunder, such successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such successor
agent and the retiring Agent's appointment, powers and duties as Agent shall be
terminated. After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 11.9 and Sections 11.13 and 11.14 shall inure to
its benefit as to any actions taken or omitted to be taken by it while it was
Agent under this Agreement. If no successor agent has accepted appointment as
Agent by the date which is thirty (30) days following a retiring Agent's notice
of resignation, the retiring Agent's resignation shall nevertheless thereupon
become effective and the Banks shall perform all of the duties of the Agent
hereunder until such time, if any, as the majority of Banks appoint a successor
agent as provided for above.
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11.10 COLLATERAL MATTERS.
(a) The Agent is authorized on behalf of all the Banks, without the
necessity of any notice to or further consent from the Banks, from time to time
to take any action with respect to any Collateral or the Transaction Documents
which may be necessary to perfect and maintain perfected the security interest
in and liens upon the Collateral granted pursuant thereto.
(b) The Banks irrevocably authorize the Agent, at its option and in its
discretion, to release any lien granted to or held by the Agent upon any
Collateral (i) upon termination of this Agreement and payment in full of all
Loans and all other Obligations payable under this Agreement and under any other
Transaction Document; (ii) constituting property sold or to be sold or disposed
of as part of or in connection with any disposition permitted hereunder; (iii)
constituting property in which the Borrower owned no interest at the time the
lien was granted or at any time thereafter; (iv) constituting property leased to
the Borrower under a lease which has expired or been terminated in a transaction
permitted under this Agreement or is about to expire and which has not been, and
is not intended by the Borrower to be, renewed or extended; (v) consisting of an
instrument evidencing Indebtedness or other debt instrument, if the indebtedness
evidenced thereby has been paid in full; (vi) if approved, authorized or
ratified in writing by the majority of Banks or all the Banks, as the case may
be, or (vii) liens securing Indebtedness permitted under Section 6.13(c). Upon
request by the Agent at any time, the Banks will confirm in writing the Agent's
authority to release particular types or items of Collateral pursuant to this
Section 11.10(b).
11.11 NO PETITION COVENANT. Prior to the date that is one year and one
day after the payment in full by the Borrower of all Indebtedness under this
Agreement, each Bank agrees that it will not institute against Borrower or any
Underlying Trust, or join any other Person in instituting against Borrower or
any Underlying Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other proceedings under the laws of the United
States, any state of the United States, or any other jurisdiction.
11.12 DOCUMENTS. The Agent shall deliver to each Bank a copy of any
document which is delivered to the Agent pursuant to this Agreement.
11.13 INDEMNIFICATION BY BORROWER. Subject to the Intercreditor
Agreement and Section 14.5, to the fullest extent permitted by law, the Borrower
agrees to protect, indemnify, defend and hold harmless the Agent (solely in its
capacity as Agent hereunder), each Bank (other than, for the purposes of this
Section 11.13, the Lender with respect to its role as Lender hereunder) and
each of their respective directors, officers, employees and agents and any
Person who controls any of them within the meaning of the federal, state and
foreign securities laws (each an "Indemnitee") from and against any liabilities,
losses, obligations, damages, penalties, expenses or costs of any kind or nature
and from any suits, judgments, claims or demands (including in respect of or for
attorney costs and other reasonable fees and other disbursements of counsel for
and consultants of such Indemnities in connection with any investigative,
administrative or judicial proceeding, whether or not such Indemnities shall be
designated a party thereto) based on any Federal, state, local or foreign law or
other statutory regulation, including securities, environmental
<PAGE> 53
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and commercial law or other statutory regulation, which arises under common law
or at equitable cause or on contract or otherwise on account of or in connection
with any matter or thing or any action or failure to act by Indemnities, or any
of them, arising out of or relating to the Transaction Documents or any
agreement or instrument contemplated by the Transaction Documents, except to the
extent such liability arises from the willful misconduct or negligence of any of
the Indemnitees (collectively, the "Indemnified Matter"). Upon receiving
knowledge of any suit, claim or demand asserted by any Person that the Agent or
any Bank believes is covered by this indemnity, the Agent or such Bank shall
give the Borrower notice of the matter and an opportunity to defend it, at the
Borrower's sole cost and expense, with legal counsel reasonably satisfactory to
the Agent and the Banks. The Agent or the Banks may also require the Borrower to
defend the matter. The obligations of the Borrower under this Section 11.13
shall survive the payment and performance of the Obligations and the termination
of this Agreement. To the extent that the undertaking to indemnify, pay and hold
harmless set forth in this Section 11.13 may be unenforceable because it is
violative of any law or public policy, the Borrower shall contribute the maximum
portion which it is permitted to pay and satisfy under applicable law to the
payment and satisfaction of all Indemnified Matters incurred by the Indemnities.
11.14 COSTS AND EXPENSES. Subject to the Intercreditor Agreement and
Section 14.5, Borrower shall, whether or not the transactions contemplated
hereby shall be consummated:
(a) pay or reimburse the Agent (other than in its capacity as the
Lender) within five (5) Business Days after demand for all costs and expenses
incurred by the Agent (other than in its capacity as the Lender) in connection
with the development, preparation, delivery, administration and execution of,
and any amendment, supplement, waiver or modification to (in each case, whether
or not consummated), this Agreement, any other Transaction Document and any
other documents prepared in connection herewith (including any commitment letter
and related documents preceding this Agreement) or therewith, and the
consummation of the transactions contemplated hereby and thereby, including the
reasonable attorney costs incurred by the Agent (other than in its capacity as
the Lender) with respect hereto and thereto;
(b) pay or reimburse the Agent (other than in its capacity as Lender)
and each Bank within five (5) Business Days after demand for all reasonable
costs and expenses incurred by them in connection with the enforcement,
attempted enforcement, or preservation of any rights or remedies (including in
connection with any "workout" or restructuring regarding the Loans, and
including in any insolvency proceedings or appellate proceeding) under this
Agreement, any other Transaction Document, and any such other documents,
including reasonable attorney costs incurred by the Agent (other than in its
capacity as Lender) and any Bank; and
(c) pay or reimburse the Agent (other than in its capacity as the
Lender) within five (5) Business Days after demand for all reasonable audit,
environmental inspection and review. search and filing, registration and
recording costs, fees and expenses, incurred or sustained by the Agent (other
than in its capacity as Lender) in connection with the matters referred to under
clauses (a) and (b) of this Section 11.14.
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11.15 RELIANCE BY THE BANKS. All covenants, agreements, representations
and warranties made herein by Borrower shall, notwithstanding any investigation
by the Banks or the Agent be deemed to be material to and to have been relied
upon by the Banks.
SECTION 12. CONDITIONS PRECEDENT TO ALL REVOLVING LOANS.
The obligation of 1he Lender to make any Revolving Loan is subject to
the satisfaction of each of the following conditions precedent:
12.1 NOTICE. The Lender shall have received timely notice of such
Revoking Loan and such other documents required by Section 3.1 hereof.
12.2 DEFAULT. Before and after giving effect to such Revolving Loan, no
Early Amortization Event, Potential Event of Default or Event of Default shall
have occurred and be continuing.
12.3 WARRANTIES. Before and after giving effect to such Revolving Loan.
the representations and warranties in Section 7 shall be true and correct in all
respects as though made on the date of such Revolving Loan, and the Borrowing
Base Certificate delivered together with the request for such Revolving Loan
shall be properly prepared and accurate.
12.4 ADDITIONAL DOCUMENTS; FINANCING STATEMENTS. Lender shall have
received (a) acknowledgment copies (or other evidence of filing satisfactory to
Lender) of financing statements (i) filed with the Secretary of the States in
the Filing Locations naming Borrower as debtor, Lender as secured party, and the
Collateral as collateral thereunder and (b) any release of lien by any third
party with a security interest or other encumbrance on any of the Collateral
other than Permitted Liens.
12.5 NO MATERIAL ADVERSE CHANGE. Other than has been disclosed in
writing to Lender, there shall have been no material adverse change in the
financial condition, operation or assets of the Borrower or NAFI since December
31, 1998.
SECTION 13. CONDITIONS PRECEDENT TO INITIAL REVOLVING LOAN.
The obligation of the Lender to make its initial Revolving Loan
hereunder is subject to the satisfaction of the condition precedent, in addition
to the applicable conditions precedent set forth in Section 12 above, that the
Borrower shall have either delivered to the Lender all of the following, each
duly executed and dated the date of the initial Revolving Loan, in form and
substance satisfactory to the Lender or otherwise satisfied the Lender with
regard to those conditions incapable of being delivered:
13.1 NOTE. The Note.
13.2 OTHER AGREEMENTS AND FINANCING STATEMENTS.
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(a) The fully-executed Irrevocable Instruction Letter, including the
acknowledgments of Chase, Harris and Wilmington.
(b) Letter Agreement executed by Harris, as custodian of each
Underlying Transaction, in which Harris agrees to hold the Collateral for the
benefit of the Lender, as Lender under this Agreement (but subordinate to the
rights of FSA and the certificateholders and noteholders of the Underlying
Transactions) until such day as this Agreement terminates (such day, the "FUNB
Termination Date").
(c) The written consent. agreement or covenant. as the case may be, of
FSA, dated at or prior to the Closing Date, to:
(i) the agreements described in subparagraphs (a) and (b) of this
Section 13.2;
(ii) the revised FSA Spread Account requirement;
(iii) release of Free Cash Flow directly from each Spread Account to
the Lender after the revised FSA Spread Account requirement is
reached and the instruction of FSA to each underlying
Collateral Agent to do so;
(iv) execution, delivery and performance of this Agreement;
(v) waiver of the requirement that NFAFT be the agent of any party
financing cash flows;
(vi) amendment of the other Underlying Transaction Documents,
including the following amendments; (1) Section 203(m) of the
1995-1 Insurance and Indemnity Agreement and the 1996-1
Insurance and Indemnity Agreement; and (2) Section 206(l) of
the 1997-1 Insurance and Indemnity Agreement and 1998-1
Insurance and Indemnity Agreement;
(vii) that FSA will not amend any Underlying Transaction Document
and will make reasonable commercial efforts not to consent or
agree to the amendment of any Underlying Transaction Document
that may adversely affect the interests of the Lender
hereunder without the prior written consent of the Lender,
(viii) covenant of FSA that it will, at such time as the interests of
FSA in any Underlying Transaction is satisfied, promptly and
irrevocably instruct each collateral agent of each Underlying
Transaction to accept instructions only from the Lender from
the time the interests of FSA in the Underlying Transactions
are paid in full until the Lender informs FSA that the
obligations have been paid in full;
<PAGE> 56
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(ix) covenant of FSA that it will neither terminate nor consent or
agree to the termination of any Underlying Transaction
document until such time as it is notified in writing by the
Lender that the Obligations have been paid in full; and
(x) covenant that FSA will promptly instruct each Custodian, to
(A) acknowledge the Lien, subordinated to the Lien of FSA, of
the Lender on the related Contracts, (B)(i) immediately after
the time that FSA's interests in such contracts are
extinguished covenant that such Custodian will not act to
affect adversely the interests of the Lender in the Contracts
related to such Underlying Transaction and any other related
Collateral that the Custodian holds, (C) to establish a
bailment of such Contracts on behalf of the Lender that arises
immediately upon the extinguishment of FSA's interests thereon
and is maintained for a long as any of the Obligations
hereunder are paid in full and (D) only accept the
instructions of the Lender with respect thereto until such
time as the Obligations paid in full.
(d) An agreement by which the collateral agent for each Underlying
Transaction acknowledges receipt of FSA's instruction to remit Free Cash Flow
directly from each Underlying Spread Account to the Lender and the covenant of
such collateral agent only to take instructions from the Lender with regard to
any Collateral from the time that FSA so instructs it until such time as the
Lender informs the collateral agent that the Obligations have been repaid in
full;
(e) UCCs filed with respect to the Free Cash Flow and other Collateral
in the jurisdiction of the chief executive office of NFAFT;
(e) UCC searches against NFAFT in the States of Delaware and Florida;
(f) any and all other documentation, certifications and representations
reasonably requested by the Lender.
13.3 RESOLUTIONS.
(a) A copy, duly certified by a Responsible Officer of either the
Borrower or NAFI, of (i) the Trust Agreement of the Borrower or its
certificateholder(s) of beneficial interest, as appropriate, authorizing or
ratifying the execution and delivery of this Agreement, the Note and the other
Transaction Documents and authorizing the borrowings hereunder, (ii) all
documents evidencing other necessary corporate action and (iii) all approvals or
consents, if any, with respect to this Agreement, the Note and the other
Transaction Documents.
(b) A copy, duly certified by the secretary or an assistant secretary
of NAFI, of (i) the resolutions of NAFI's Board of Directors authorizing or
ratifying the execution and delivery of this Agreement, the Note and the other
Transaction Documents and authorizing the borrowings hereunder, (ii) all
documents evidencing other necessary corporate action and (iii) all approvals or
consents, if any, with respect to this Agreement, the Note and the other
Transaction Documents.
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13.4 INCUMBENCY CERTIFICATE.
(a) A certificate of a trust officer of the Borrower or the secretary
or an assistant secretary of the Borrower's certificateholders certifying the
names of the Borrower's officers authorized to sign this Agreement, the Note and
the other Transaction Documents to which it is a party, together with the true
signatures of such officers.
(b) A certificate of the secretary or an assistant secretary of NAFI
certifying the names of NAFI's officers authorized to sign the Transaction
Documents to which it is a party, together with the true signatures of such
officers.
13.5 BY-LAWS.
(a) A copy, certified as true and correct by a trust officer of its
trust agreement as amended.
(b) A copy, certified as true and correct by the secretary or an
assistant secretary of NAFI, of NAFI's By-laws.
13.6 CERTIFICATE OF INCORPORATION.
(a) A copy, certified by the Secretary of State of Delaware, of the
Borrower's Certificate of Trust, together with all amendments thereto.
(b) A copy, certified by the Secretary of State of Delaware, of NAFI's
Certificate of Incorporation, together with all amendments thereto.
13.7 GOOD STANDING.
(a) A current Good Standing Certificate issued by the Secretary of
State of Delaware where the Borrower is qualified to do business.
(b) A current Good Standing Certificate issued by the Secretary of
State of Delaware where NAFI is qualified to do business.
13.8 UCC SEARCHES. Delivery to the Lender of UCC Search Reports
bringing down to a date within the week of the initial advance those UCC
Searches delivered to the Lender with respect to the Borrower and NAFI on or
prior to the Closing Date.
13.9 FEES AND COSTS. Evidence to the Lender's reasonable satisfaction
that the Borrower shall have paid in immediately available funds all costs and
expenses of Lender incurred in connection with negotiation and documentation of
the Transaction Documents including, but not limited to, the fees and
disbursements of its counsel.
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13.10 OTHER TRANSACTION DOCUMENT CONDITIONS. Evidence to the Lender's
reasonable satisfaction that all conditions set forth in all other Transaction
Documents have been fulfilled.
13.11 DUE DILIGENCE. Completion, satisfactory to the Lender in its
reasonable discretion, of its due diligence investigation of the Contracts by
Baker and Associates or by Lender itself and other Lender agents as reasonably
requested by Lender.
13.12 RELIANCE LETTERS. Receipt by the Lender of reliance letters
satisfactory to the Lender and its counsel from the Borrower's counsel as to
those opinions given by the Borrower's counsel at the closing of each of the
Underlying Transactions, including and not limited to, previously issued tax,
true sale, perfection and nonconsolidation opinions.
13.13 RESERVED.
13.14 NO MATERIAL ADVERSE CHANGE. A certificate of the Co-Trustee of
Borrower or a Responsible Officer of NAFI stating that there has been no
material adverse change in the financial condition, operations or assets since
the December 31, 1998 of either the Borrower or NAFI.
13.15 RESERVED.
13.16 OPINIONS. (A) Originally executed copies of the opinions of
NFAFT's counsel agreed to on the Closing Date, to the effect that: (i) on or
prior to the Closing Date, the Lender has a first-priority perfected security
interest in the First Priority Collateral and a perfected security interest in
all other Collateral subordinate only to that of the Underlying Trustee for each
Underlying Transactions, (ii) upon the filing of a bankruptcy petition with
respect to NAFI, (a) NFAFT would not be consolidated with NAFI, (b) the
automatic stay provisions of the Bankruptcy Code would not apply with respect to
any payment in respect of the Collateral to the Lender, (c) none of the
Collateral would become property of NAFI's estate; and (B) opinion of counsel
for each of Chase, Harris and Wilmington, to the effect that each of their
signatures as trustees under the Underlying Transaction Documents and all
documents, certificates, instruments and filings related thereto are legal,
valid binding, duly authorized, etc., and that there are no conflicts, etc., and
that such Underlying Trustee is duly organized.
13.17 CERTIFIED COPIES OF UNDERLYING TRANSACTION DOCUMENTS. (i) Copies
of the Underlying Transaction Documents requested by the Lender (including, but
not limited to, those documents set forth in Section 7.7) and certified by the
Borrower or NAFI, including but not limited to the 1995-1 Pooling and Servicing
Agreement, the 1996-1 Pooling and Servicing Agreement, the 1997-1 Sale and
Servicing Agreement, the 1998-1 Sale and Servicing Agreement, the 1997-1
Indenture, the 1998-1 Indenture and the trust agreement of the Borrower and of
each issuer in each of the Underlying Transactions; and (ii) copies, certified
by the Borrower or NAFI, of the Servicing, Custodial and Back-up Servicing
Agreements in effect for the Underlying Transactions.
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13.18 OTHER AGREEMENTS. Any other agreements or documents reasonably
requested by Lender as the Lender deems necessary.
SECTION 14. EVENTS OF DEFAULT AND REMEDIES.
14.1 EVENTS OF DEFAULT. The occurrence of any one or more of the
following shall constitute an Event of Default:
(a) Failure to Pay. Borrower fails to pay any sum when due pursuant to
the terms hereof and such failure to pay continues for more than two (2)
Business Days; provided, however, that a failure to pay interest or any Term
Loan Monthly Principal on the Loan on any Payment Date other than the Maturity
Date shall not be an Event of Default hereunder, but shall constitute an
Interest Arrearage or Term Loan Monthly Principal Arrearage, respectively,
payable on the earlier of the Maturity Date or the immediately succeeding
Payment Date;
(b) Failure to Perform. Either the Borrower or NAFI fails or neglects
to perform, keep or observe in any material respect any of the affirmative
covenants contained in this Agreement or in any other Transaction Document
within thirty (30) calendar days after Borrower shall become aware thereof,
whether by written notice from Lender or otherwise;
(c) Warranty. Any representation, warranty or negative covenant made by
the Borrower or NAFI herein shall be untrue in any material respect when made or
deemed made; or any schedule, statement, report, notice or certificate
specifically required herein to be furnished by the Borrower or NAFI to the
Lender shall be untrue in any material respect on the date as of which the facts
set forth therein are stated or certified; or any certification made or deemed
made by the Borrower or NAFI to the Lender herein shall be untrue or misleading
in any material respect on or as of the date made or deemed made;
(d) Insolvency. The Borrower becomes insolvent, or generally fails to
pay, or admits in writing its inability to pay, its debts as they mature, or
applies for, consents to, or acquiesces in, the appointment of a trustee,
receiver or other custodian for the Borrower or for a substantial part of the
property of the Borrower, or makes a general assignment for the benefit of
creditors; or, in the absence of such application, consent or acquiescence, a
trustee, receiver or other custodian is appointed for the Borrower or for a
substantial part of the property of the Borrower and is not discharged within 30
days; or any bankruptcy, reorganization, debt arrangement or other proceeding
under any bankruptcy or insolvency law, or any dissolution or liquidation
proceeding, is instituted by or against the Borrower and, if instituted against
the Borrower, is consented to or acquiesced in by the Borrower or remains for 30
days undismissed; or any warrant of attachment or similar legal process is
issued against any substantial part of the property of the Borrower which is not
released within 30 days of service;
(e) Cross-Defaults. The occurrence of any "Default", "Event of Default"
or other event that, upon the occurrence thereof, permits the trustee or
securityholders related thereto to foreclose upon or liquidate the related
collateral or terminate the servicer thereof by NAFI, the
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Borrower or any other member of the NAFI Group under any credit agreement,
security agreement, indenture, pooling and servicing agreement, sale and
servicing agreement, servicing contract, sale agreement, transfer agreement, or
other similar agreement, document or contract (after giving effect to any grace
period set forth in the related transaction document applicable thereto) to
which NAFI or the Borrower or any Affiliate of either is a party and such
Default, Event of Default or other event is neither cured nor waived;
14.2 WAIVER OF DEFAULT. An Event of Default may be waived only with the
written consent of Lender. Any Event of Default so waived shall be deemed to
have been cured and not to be continuing; but no such waiver shall be deemed a
continuing waiver or shall extend to or affect any subsequent like default or
impair any rights arising from any such subsequent like default.
14.3 REMEDIES. (a) Upon the occurrence and continuance of any Event of
Default, Lender shall have no further obligation to advance money, extend credit
to or for the benefit of Borrower or undertake any other liability or
obligation.
Subject to the Intercreditor Agreement and Section 14.5 hereof, if an
Event of Default has occurred and is continuing, Lender may, at its option, do
any one or more of the following:
(i) after the Final Insurance Termination Date and the termination of
the Intercreditor Agreement, declare all or any of the Obligations of the
Borrower to be immediately due and payable, and upon such declaration such
obligations so declared due and payable shall immediately become due and
payable;
(ii) terminate this Agreement; or
(iii) after the Final Insurance Termination Date and the termination of
the Intercreditor Agreement in lieu of or in addition to exercising any other
power hereby granted, may upon notice to Borrower, proceed by an action or
actions in equity or at law for the seizure and/or sale of the Collateral or any
part thereof, for the specific performance of any covenant or agreement herein
contained or in aid of the execution of any power herein granted, for the
foreclosure or sale of the Collateral or any part thereof under the judgment or
decree of any court of competent jurisdiction, for the appointment of a receiver
pending any foreclosure hereunder or the sale of the Collateral or any part
thereof or for the enforcement of any other appropriate equitable or legal
remedy; and upon the commencement of judicial proceedings by Lender to enforce
any right under this Agreement, or contained in the Collateral and Lender shall
be entitled as a matter of right against Borrower to such appointment of a
receiver, without regard to the adequacy of the security by virtue of this
Agreement or any other collateral or to the solvency of Borrower.
(b) Subject to the Intercreditor Agreement, all cash proceeds received
by Lender in respect of any possession, seizen or sale of, collection from or
other realization upon all or any part of the Collateral pursuant to this
Section 14.3 shall be applied as follows:
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(i) first, to the payment of all costs and expenses incident to
the enforcement of this Agreement or the protection of the
Collateral, including but not limited to reasonable
compensation to the agents, contractors and attorneys of
Lender;
(ii) second, to the payment of all other Obligations, initially to
any Interest Arrearage, then to any other interest due and
owing, thereafter to reduce all principal on the Note until
the outstanding balance on the Note shall equal zero and
finally, to any other Obligations not previously paid;
(iii) third, to the payment in full of other amounts owed by the
Borrower or NAFI to the Lender pursuant to any other
agreement, indenture, contract, instruments or document; and
(iv) fourth, the remainder, if any, to Borrower or to whomever may
be lawfully entitled to receive such remainder.
(c) Subject to the Intercreditor Agreement, the Lender shall have the
right to become the purchaser at any public or private sale made pursuant to the
provisions of this Section 14.3 and shall have the right to credit against the
amount of the bid made therefor the amount payable to the purchasing Lender out
of the net proceeds of such sale. Absent manifest error, recitals contained in
any conveyance to any purchaser at any sale made hereunder shall conclusively
establish the truth and accuracy of the matters therein stated, including,
without limitation, nonpayment of the Obligations and advertisement and conduct
of such sale in the manner provided herein. Borrower does hereby ratify and
confirm all legal acts that Lender may do in carrying out the provisions of this
Section 14.3.
(d) Subject to the Intercreditor Agreement, any sale, seizure, taking
or ownership of the Collateral or any part thereof pursuant to the provisions of
this Section 14.3 shall operate to divest all right, title, interest, claim and
demand of Borrower or NAFI, as the case may be, in and to the Property sold and
shall be a perpetual bar against Borrower and NAFI. Nevertheless, if requested
by Lender so to do, either the Borrower or NAFI shall join in the execution,
acknowledgment and delivery of all proper conveyances, assignments and
transfers of the Property so sold. It shall not be necessary for Lender to have
physically present or constructively in its possession any of the Collateral at
any such sale, and either the Borrower or NAFI shall deliver all of the
Collateral to the purchaser at such sale on the date of sale and, if it should
be impossible or impracticable then to take actual delivery of the Collateral,
the title and right of possession to the Collateral shall pass to the purchaser
at such sale as completely as if the same had been actually present and
delivered.
(e) Subject to any requirements of applicable law, neither the
Borrower, NAFI nor any of their Affiliates shall at any time have or assert any
right, under any law pertaining to the marshaling of assets, the sale of
Property in the inverse order of alienation, the administration of estates of
decedents, appraisement, valuation, stay, extension or redemption now or
hereafter in force in order to prevent or hinder the rights of Lender or any
purchaser of the Collateral or any part
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thereof under this Agreement, and Borrower or NAFI, to the extent permitted by
applicable law, hereby waives the benefit of all such laws.
(f) Subject to the Intercreditor Agreement, upon any sale made under
the powers of sale herein granted and conferred, the receipt of Lender shall be
sufficient discharge to the purchaser or purchasers at any sale for the purchase
money, and such purchaser or purchasers and the heirs, devisees, personal
representatives, successors and assigns thereof shall not, after paying such
purchase money and receiving such receipt of Lender, be obliged to see to the
application thereof or be in otherwise answerable for any loss, misapplication
or nonapplication thereof.
(g) Subject to the Intercreditor Agreement, if Borrower of NAFI fails
to perform any agreement contained herein, then the Lender may perform, or cause
performance of, such agreement, and the expenses of the Lender incurred in
connection therewith shall constitute additional Obligations and shall be
payable by NAFI under Section 15 hereof.
(h) Subject to the Intercreditor Agreement, if an Event of Default
hereunder has occurred and is continuing, the Borrower and NAFI hereby appoint
the Lender as attorney-in-fact to exercise all rights of the Borrower and NAFI
under the Underlying Transaction Documents, including the right to direct the
Underlying Trustees to the extent that the Borrower is entitled to so under the
Underlying Transaction Documents.
14.4 RIGHTS AND REMEDIES CUMULATIVE. The enumeration of the rights and
remedies of Lender set forth in this Agreement is not intended to be exhaustive
and the exercise by Lender of any right or remedy shall not preclude the
exercise of any other rights or remedies, all of which shall be cumulative, and
shall be in addition to any other right or remedy given hereunder or under the
other Transaction Documents and the Underlying Transaction Documents or that may
now or hereafter exist in law or in equity or by suit or otherwise. No delay or
failure to take action on the part of Lender in exercising any right, power or
privilege shall operate as a waiver hereof, nor shall any single or partial
exercise of any such right, power or privilege preclude other or further
exercise thereof or the exercise of any other right, power or privilege or shall
be construed to be a waiver of any Early Amortization Event, Event of Default or
Potential Event of Default. No course of dealing between NAFI, Borrower and
Lender or their respective agents or employees shall be effective to change,
modify or discharge any provision of this Agreement or any of the Transaction
Documents or to constitute a waiver of any Event of Default or Potential Event
of Default.
14.5 INTERCREDITOR AGREEMENT; LIMITATION ON AMOUNTS DUE. (a)
Notwithstanding anything in this Agreement or any other Transaction Document to
the contrary, the rights of the Lender to exercise any remedies hereunder or
otherwise under law or in equity are subject to the terms of the Intercreditor
Agreement. Notwithstanding anything in this Agreement, in any other Transaction
Document or otherwise, until the Final Insurance Termination Date, all rights
and remedies of the Lender under this Agreement, in any other Transaction
Document or otherwise, whether at law or in equity, are subject to and limited
by the Intercreditor agreement. In the event of any contradiction or ambiguity
between any Transaction Document and the Intercreditor Agreement, the terms of
the Intercreditor Agreement shall govern. All disputes with respect to
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matters addressed in the Intercreditor Agreement shall be determinated by
reference to the Intercreditor Agreement exclusively and no provision of this
Agreement or any other Transaction Document should be interpreted as altering,
amending explaining or clarifying any provision of the Intercreditor Agreement.
(b) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, no obligation or liability shall become due and
payable hereunder at any time before the Final Insurance Termination Date if the
effect of such obligation or liability becoming due would be to cause the
Borrower to not be Solvent. Subject to the terms of the Intercreditor Agreement,
any amount that is prevented by operation of this restriction from becoming due
and payable may, at the option of the Lender, become an arrearage that becomes
due and payable no earlier than the first to occur of the date upon which
Borrower can satisfy such obligation or liability in full and remain Solvent and
the day following the Final Insurance Termination Date.
(c) Notwithstanding anything in this Agreement or any other Transaction
Document to the contrary, the total amount of principal due under this Agreement
and any other Transaction Document, excluding interest and any arrearages of
interest but including any arrearages of principal, shall not at any time
exceed $8,000,000 (eight million dollars).
SECTION 15. EXPENSES AND INDEMNITIES.
15.1 EXPENSES. Subject to the Intercreditor Agreement and Section 14.5,
Borrower and NAFI agree to pay promptly on demand, and in any event within
thirty (30) days of the invoice date therefor, (a) costs, expenses, charges and
other disbursements of the Lender incurred in connection with the negotiation,
preparation, execution, administration, continuation (including without
limitation all costs, expenses, charges and other disbursements incurred by or
on behalf of Lender in connection with the preparation and execution of the
Transaction Documents; (b) reasonable attorneys' fees and allocated expenses of
outside counsel incurred by or on behalf of Lender in connection with the
preparation of the Transaction Documents, amendments and consents thereto of the
Underlying Transaction Documents and all amendments and modifications thereof,
extensions thereto or substitutions therefor, and all reasonable attorney's fees
and allocated expenses of outside counsel in connection with the furnishing of
opinions of counsel (including, without limitation, any opinions reasonably
requested by Lender as to any legal matters arising hereunder) and of Borrower's
and NAFI's performance of and compliance with all agreements and conditions
contained herein or in any of the other Transaction Documents on its part to be
performed or complied with; and (c) regardless of the existence of an Early
Amortization Event, Event of Default or Potential Event of Default, all legal,
appraisal, audit, accounting, consulting or other fees, costs, expenses, charges
or other disbursements incurred by or on behalf of Lender in connection with any
litigation, contest, dispute, suit, proceeding or action (whether instituted by
Lender or any other Person and which Lender or such other Person is the
prevailing party) seeking to enforce any Obligations of, or collecting any
payments due from either the Borrower or NAFI under this Agreement and the Note,
all of which amounts shall be deemed to be part of the Obligations.
<PAGE> 64
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15.2 INDEMNIFICATION. (a) GENERAL INDEMNITY. Subject to the
Intercreditor Agreement and Section 14.5.
(i) to the fullest extent permitted under applicable law, either the
Borrower or NAFI shall pay, indemnify, and hold Lender and its employees (each,
an "Indemnified Person") harmless from and against any and all liabilities,
obligations, losses, penalties, actions, judgements, suits, costs, expenses and
damages (including reasonable attorney's fees) arising directly from any
investigation, litigation or proceeding (including any case, action or
proceeding before any court or other Governmental Authority relating to
bankruptcy, reorganization, insolvency, liquidation, dissolution or relief of
debtors or any appellate proceeding), (i) the negligence, bad faith, willful
misconduct, misfeasance, malfeasance or theft committed by any director,
officer, employee or agent of the Borrower or NAFI, as the case may be; (ii) the
breach by the Borrower or NAFI, as the case may be, of any representation,
warranty or covenant under this Agreement; or (iii) the violation by the
Borrower or NAFI of any federal, state or foreign law, rule or regulation, or
any judgment, order or decree applicable to it; whether or not any Indemnified
Person is a party hereto (all the foregoing, collectively, the "Indemnified
Liabilities"); provided that neither the Borrower nor NAFI shall have any
obligation hereunder to any Indemnified Person with respect to Indemnified
Liabilities arising from the gross negligence, willful misconduct or violation
of the Transaction Documents by any Indemnified Person;
(ii) to the fullest extent permitted under applicable law, each of the
Borrower and NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless the Lender, from and against
any and all obligations, fees, liabilities, losses, damages, penalties claims,
demands, actions, suits, judgments, costs and expenses, including reasonable
legal expenses and attorneys fees, of every kind and nature whatsoever
(collectively, "INDEMNIFIABLE EXPENSES"), imposed on, incurred by, or asserted
against the Lender by any Person in connection with any (i) Revived Claim (as
defined in the Intercreditor Agreement) and (ii) payments made by the Lender in
connection with preference payments made to Noteholders and Certificateholders
(each as defined in the Intercreditor Agreement), pursuant to certain provisions
of the relevant Underlying Transaction Documents, including, but not limited to
Section 4.05 of the 1995-1 and 1996-1 Pooling and Servicing Agreements, Section
5.19 of the 1997-1 and 1998-1 Indentures and Section 6.2 of the 1997-1 and
1998-1 Sale and Servicing Agreement; and
(iii) to the fullest extent permitted under applicable law, each of the
Borrower and NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless the Lender from Indemnifiable
Expenses resulting in an out-of-pocket expenditure or payment by the Lender to
the extent such Indemnifiable Expenses resulted from the existence of the
Transaction Documents or any of the accommodations, consents or waivers made by
the Lender with respect to either FSA's or the Senior Lien Holder's (each as
defined in the Intercreditor Agreement) rights or remedies thereunder.
(b) PROCEDURES FOR SUITS. If a claim is made for which a party seeks
indemnification hereunder, the indemnified party and any counsel retained by it
shall consult with the indemnifying party on all material issues and matters
with respect thereto and the indemnifying
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party will have no liability hereunder with respect to any claim if the
indemnifying party has not consented (which consent shall not be unreasonably
withheld) to the resolution or handling of any such matter or issue, including,
without limitation, any settlement made without the indemnifying party's prior
written consent.
(c) SURVIVAL; DEFENSE. The obligations in this Section 15.2 shall
survive the termination of the Transaction Documents and payment of all other
Obligations. Subject to the Intercreditor Agreement and Section 14.5, at the
election of either the Borrower or NAFI, either the Borrower or NAFI shall
defend such Indemnified Person using legal counsel satisfactory to such
Indemnified Person in such Person's sole discretion, at the cost and expense of
either the Borrower or NAFI. Subject to the Intercreditor Agreement and Section
14.5, all amounts owing under this Section 15.2 shall be paid within thirty (30)
days after written demand.
SECTION 16. MISCELLANEOUS.
16.1 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of the
Transaction Documents and the making of the Loan hereunder.
16.2 NO WAIVER BY LENDER. No failure or delay on the part of Lender in
the exercise of any power, right or privilege under this Agreement, the Note or
any of the other Transaction Document shall impair such power, right or
privilege or be construed to be a waiver of any default or acquiescence therein,
nor shall any single or partial exercise of any such power, right or privilege
preclude other or further exercise thereof or of any other right, power or
privilege.
16.3 NOTICES. Except as otherwise provided in this Agreement, any
notice or other communication herein required or permitted to be given shall be
in writing and may be delivered in person, with receipt acknowledged, or sent by
telex, facsimile, telecopy, computer transmission or by United States mail,
registered or certified, return receipt requested, or by Federal Express or
other nationally recognized overnight courier service, postage prepaid and
confirmation of receipt requested, and addressed as set forth on the signature
pages to this Agreement or at such other address as may be substituted by notice
given as herein provided. The giving of any notice required hereunder may be
waived in writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration or other communication hereunder
shall be deemed to have been duly given or served on the date on which the same
shall have been personally delivered, with receipt acknowledged, or sent by
telex, facsimile, telecopy; or computer transmission (with appropriate
confirmation), three (3) Business Days after the same shall have been deposited
in the United States mail or on the next succeeding Business Day if the same has
been sent by Federal Express or other nationally recognized overnight courier
service. Failure or delay in delivering copies of any notice, demand, request,
consent, approval, declaration or other communication to the persons designated
above to receive copies shall in no way adversely affect the effectiveness of
such notice, demand, request, consent, approval, declaration or other
communication. Copies of all such notices, demands, requests, consents,
approvals, declarations or
<PAGE> 66
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other communications sent by Lender or Borrower under the Transaction
Documents must be simultaneously transmitted to the applicable Underlying
Trustee and FSA.
16.4 HEADINGS. Section and subsection headings in this Agreement are
included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
16.5 SEVERABILITY. Whenever possible, each provision of this Agreement,
the Note and each of the other Transaction Documents shall be interpreted in
such a manner as to be valid, legal and enforceable under the applicable law of
any jurisdiction. Without limiting the generality of the foregoing sentence, in
case any provision of this Agreement, the Note or any of the other Transaction
Documents shall be invalid, illegal or unenforceable under the applicable law of
any jurisdiction, the validity, legality and enforceability of the remaining
provisions, or of such provision in any other jurisdiction, shall not in any way
be affected or impaired thereby.
16.6 ENTIRE AGREEMENT; CONSTRUCTION; AMENDMENTS AND WAIVERS.
(a) This Agreement, the Note, the Intercreditor Agreement and each of
the other Transaction Documents dated as of the date hereof. taken together,
constitute and contain the entire agreement among NAFI, Borrower and Lender and
supersede any and all prior agreements, negotiations, correspondence,
understandings and communications between the parties, whether written or oral,
respecting the subject matter hereof.
(b) This Agreement is the result of negotiations between and has been
reviewed by each of Borrower, NAFI, the Lender and their respective counsel;
accordingly, this Agreement shall be deemed to be the product of the parties
hereto, and no ambiguity shall be construed in favor of or against Borrower,
NAFI or Lender. Borrower, NAFI and Lender agree that they intend the literal
words of this Agreement and the other Transaction Documents and that no parol
evidence shall be necessary or appropriate to establish Borrower's or Lender's
actual intentions.
(c) Any and all amendments, modifications, discharges or waivers of, or
consents to any departures from any provision of this Agreement or of any of the
other Transaction Documents shall not be effective unless set forth in a writing
signed by Borrower and Lender. Any waiver or consent with respect to any
provision of the Transaction Documents shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower or NAFI in any case shall entitle Borrower or NAFI to any
other or further notice or demand in similar or other circumstances.
16.7 RELIANCE BY LENDER. All covenants, agreements, representations and
warranties made herein by Borrower shall, notwithstanding any investigation by
Lender be deemed to have been relied upon by Lender.
16.8 MARSHALING; PAYMENTS SET ASIDE. Lender shall be under no
obligation to marshall any assets in favor of Borrower or NAFI or any other
person or against or in payment of
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any or all of the Obligations. To the extent that Borrower or NAFI makes a
payment or payments to Lender, or Lender enforces its rights in the Collateral
and such payment or payments or the proceeds of such enforcement or any part
thereof are subsequently invalidated, declared to be fraudulent or preferential,
set aside or required to be repaid to a trustee, receiver or any other party
under Title 11 of the United States Code or under any other similar federal or
state law, common law or equitable cause, then to the extent of such recovery
the obligation or part thereof originally intended to be satisfied shall be
revived and continued in full force and effect as if such payment had not been
made or such enforcement or set-off had not occurred.
16.9 NO SET-OFFS BY BORROWER OR NAFI. All sums payable by Borrower or
NAFI pursuant to this Agreement, the Note or any of the other Transaction
Documents shall be payable without notice or demand and shall be payable in
United States dollars without set-off or reduction of any manner whatsoever.
16.10 BINDING EFFECT, ASSIGNMENT AND TRANSFER. This Agreement, the Note
and the other Transaction Documents shall be binding upon and shall inure to the
benefit of the parties hereto and thereto and their respective successors and
assigns, except that Borrower or NAFI may not assign its rights hereunder or
thereunder or any interest herein or therein without the prior written consent
of Lender. So long as the Intercreditor Agreement is in effect, all legal and
beneficial interest in the Obligations and any Lien securing the Obligations
shall be held solely by and solely for the benefit of First Union National Bank
unless and until FSA consents in writing to any proposed assignment,
participation, pledge, or other transfer or disposition, which consent of FSA
can be withheld arbitrarily, for any reason or for no reason. Any purported,
transfer or disposition, of any interest in the Obligations or of any Lien
securing the Obligations without such consent of FSA shall be null and void and
the Obligations shall be non-payable and uncollectible and such Lien
unenforceable so long as they are held by any such transferee not so consented
to, without affecting such obligations or liens held by the Lender. After the
Intercreditor Agreement has expired in accordance with its terms, Lender shall
(i) have the right to sell and assign to any Person all or any portion of its
interest under this Agreement, the Note and the other Transaction Documents and
(ii) to grant any participation or other interest herein or therein provided,
however, that after any such sale, assignment or participation, Lender shall
have the right, without the consent of any purchaser, assignee or participant,
to grant any consent or waiver or take any other action hereunder, or agree to
any amendment hereof. No sale, assignment or participation grant shall result in
requiring registration under the Securities Act of 1933, as amended, or
qualification under any state securities law.
16.11 COUNTERPARTS. This Agreement and any amendments, waivers,
consents or supplements hereto may be executed in any number of counterparts,
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument.
16.12 EQUITABLE RELIEF. Borrower and NAFI recognize that, in the event
Borrower or NAFI fail to perform, observe or discharge any of its obligations or
liabilities under this
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Agreement, the Note or any of the other Transaction Documents, any remedy at law
may prove to be inadequate relief to Lender.
16.13 GOVERNING LAW. Except as otherwise expressly provided in any of
the Transaction Documents, in all respects, including all matters of
construction, validity and performance, this Agreement and the Obligations
arising hereunder shall be governed by, and construed and enforced in accordance
with, the laws of the State of New York applicable to contracts made and
performed in such state, without regard to the principles thereof regarding
conflict of laws which would result in the application of the laws of another
jurisdiction, and any applicable laws of the United States of America.
16.14 CONSENT TO JURISDICTION. Borrower and NAFI hereby irrevocably
consent to the personal jurisdiction of the state and federal courts located in
Mecklenberg County, North Carolina, in any action, claim or other proceeding
arising out of any dispute in connection with this Agreement, the Note and the
other Transaction Documents, any rights or obligations hereunder or thereunder,
or the performance of such rights and obligations. Borrower and NAFI hereby
irrevocably consent to the service of a summons and complaint and other process
in any action, claim or proceeding brought by Lender in connection with this
Agreement or the other Transaction Documents, any rights or obligations
hereunder or thereunder, or the performance of such rights and obligations, on
behalf of itself or its Property. Nothing in this Section 16.14 shall affect the
right of the Lender to serve legal process in any other manner permitted by
applicable law or affect the right of Lender to bring any action or proceeding
against Borrower or its properties in the courts of any other jurisdictions.
Nothing in this section shall be deemed to restrict the rights that either the
Borrower or NAFI may otherwise have to file suit in the courts of any other
jurisdiction. Notwithstanding the other provisions of this Section, any dispute
arising between FSA and the Lender with respect to either the Intercreditor
Agreement or other disputes referenced in Section 3.11 thereof shall be
adjudicated pursuant to Section 3.11 of the Intercreditor Agreement.
16.15 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED UNDER
APPLICABLE LAW, LENDER, NAFI AND BORROWER HEREBY IRREVOCABLY WAIVE THEIR
RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY ACTION, CLAIM OR OTHER
PROCEEDING ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS AGREEMENT, THE
NOTE OR THE OTHER TRANSACTION DOCUMENTS, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR
THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS AND OBLIGATIONS.
16.16 NO PETITION BY LENDER OR AGENT. Notwithstanding the provisions of
Section 14(a)(iii), each of the Lender and Agent agree and covenant that prior
to the date which is one year and one day after the payment in full of all Loans
made by the Lender, it will not institute against, or join any other Person in
instituting against, the Borrower or any Underlying Trust, any bankruptcy,
reorganization, receivership, arrangement, insolvency or liquidation
proceedings, or other similar proceedings under any federal or state bankruptcy
or similar law. This Section 16.16 shall survive the termination of this
Agreement.
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16.17 LIMITATION OF LIABILITY. It is expressly understood and agreed by
the parties hereto that (a) this Agreement is executed and delivered by Chase
Manhattan Bank Delaware (as successor to Chase Manhattan Bank USA, N.A.), not
individually or personally but solely as Owner Trustee of the Borrower, in the
exercise of the powers and authority conferred and vested in it, (b) each of the
representations, undertakings and agreements herein made on the part of the
Borrower is made and intended not as personal representations, undertakings and
agreements by Chase Manhattan Bank Delaware (as successor to Chase Manhattan
Bank USA, N.A.) but is made and intended for the purpose of binding only the
Borrower and (c) under no circumstances shall Chase Manhattan Bank Delaware (as
successor to Chase Manhattan Bank USA, N.A.) be personally liable for the
payment of any indebtedness or expenses of the Borrower or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by the Borrower under this Agreement or the other Transaction
Documents.
16.18 GENERAL INTERPRETIVE PRINCIPLES. For purposes of this Agreement
except as otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Agreement have the meanings assigned to
them in this Agreement and include the plural as well as the singular, and the
use of any gender herein shall be deemed to include the other gender;
(b) accounting terms not otherwise defined herein have the meanings
assigned to them in accordance with GAAP as in effect on the date hereof;
(c) references herein to "Articles", "Sections", "Subsections",
"paragraphs", and other subdivisions without reference to a document are to
designated Articles, Sections, Subsections, paragraphs and other subdivisions
of this Agreement;
(d) a reference to a Subsection without further reference to a Section
is a reference to such Subsection as contained in the same Section in which the
reference appears, and this rule shall also apply to paragraphs and other
subdivisions;
(e) the words "herein", "hereof", "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
provision; and
(f) the term "include" or "including" shall mean without limitation by
reason of enumeration.
(g) the term "Lender", upon the exercise of the Lender's right to
become the Agent pursuant to Section 11 when used in conjunction with the
exercise of rights granted hereunder, shall be deemed to be Agent.
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WITNESS the due execution hereof by the respective duly authorized officers of
the undersigned as of the date first written above.
NATIONAL FINANCIAL AUTO FUNDING TRUST,
as Borrower
By: CHASE MANHATTAN BANK DELAWARE (as successor to Chase Manhattan Bank USA,
N.A.), not in its individual capacity, but solely as Owner Trustee for National
Financial Auto Funding Trust
By: /s/ DENIS KELLY
----------------------------------
Printed Name: Denis Kelly
Title: Trust Officer
Notice to be sent to:
National Financial Auto Funding Trust
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Attention:
---------------------
Telephone: (904) 996-2500
Facsimile: (904) 996-2557
FIRST UNION NATIONAL BANK,
as Lender
By /s/ TERENCE P. BEGLEY
----------------------------
Printed Name: Terence P. Begley
Title: Senior Vice President
Notice to be sent to:
First Union National Bank
One First Union Center
301 South College Street, TW-10
Charlotte, NC 28288-0610
Attention: Reggie Imamura
Telephone: 704/374-6501
Facsimile: 704/374-3254
<PAGE> 71
NATIONAL AUTO FINANCE COMPANY, INC.
By /s/ KEITH B. STEIN
----------------------------------------------
Printed Name: Keith B. Stein
-----------------------------------
Title: Vice Chairman and Chief Executive Officer
------------------------------------------
Notices to be sent to:
10302 Deerwood Park Blvd.
Suite 100
Jacksonville, FL 32256
Attention: Keith B. Stein
Telephone: (904) 996-2548
Facsimile: (904) 996-2557
<PAGE> 72
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EXHIBIT A
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND NO TRANSFER
HEREOF MAY BE EFFECTED UNLESS THE TRANSACTION
RELATING THERETO SHALL BE EXEMPT WITHIN THE MEANING
OF SUCH ACT AND THE RULES AND REGULATIONS OF THE
SECURITIES AND EXCHANGE COMMISSION ADOPTED THEREUNDER
NOTE
Up to $8.000,000.00 Dated: April 7, 1999
Due: March 31, 2005
FOR VALUE RECEIVED, National Financial Auto Funding Trust ("Borrower ")
hereby promises to pay to First Union National Bank ("Lender "), at its office
located at One First Union Center, 301 South College Street, Charlotte, North
Carolina 28288, the principal sum of EIGHT MILLION Dollars ($8,000,000.00) or
such lesser portion thereof as has been advanced by Lender, together with
interest thereon, pursuant to the Revolving Credit, Term Loan and Security
Agreement dated as of March 31, 1999 between Borrower and Lender (the
"Agreement"). Any capitalized terms used herein and not otherwise defined shall
have the meanings set forth in the Agreement. Principal and interest shall be
due and payable on this Note in accordance with the Agreement.
All payments under this Note shall be made by Borrower in lawful money
of the United States of America in immediately available funds delivered to
Lender, not later than 11:00 a.m., North Carolina time, on the date due at First
Union National Bank, One First Union Center, 301 South College Street,
Charlotte, North Carolina 28288, Attention: Hannah Carmody, or such other place
within the United States as shall have been designated in writing by Lender,
unless Lender shall have withdrawn the amount of such payment from the
Collection Account or the Security Deposit Account pursuant to the Agreement.
This Note is the Note referred to in, and secured by, the Agreement, to
which reference is made as to the nature and extent of the security
("Collateral") for this Note, the rights of Lender, Borrower and any holder of
this Note with respect to the Collateral and the acceleration of the maturity of
this Note. The Borrower may prepay this Note, in whole or in part, in the
manner, to the extent, under the circumstances, and subject to any additional
payments provided for in the Agreement, and not otherwise.
Borrower promises to pay interest on the aggregate unpaid principal
amount hereof from time to time outstanding at the rate and on the dates set
forth in the Agreement. All payments of principal and, to the extent permitted
by law, interest, shall be paid on the dates set forth in the Agreement.
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The Borrower hereby authorizes the Lender to endorse on the schedule of
advances, loans, payments and reductions due under the Note annexed hereto as
Schedule I all advances, payments, loans and all reductions on the balance due
under the Note, which endorsements shall, in the absence of manifest error, be
conclusive as to such balance: provided, however, that the failure to make such
notation with respect to the original principal sum, advance, reduction or
payment on the balance due under the Note shall not limit or otherwise affect
the obligations of the Borrower under the Agreement or this Note.
This Note is the Note referred to in the Agreement, which, among other
things, contains provisions for the acceleration of the maturity hereof upon the
happening of certain events and for optional prepayment of the principal hereof
prior to the maturity thereof, all upon the terms and conditions therein
specified. This Note shall be construed in accordance with and governed by the
laws of the State of New York and applicable federal law.
Except as expressly provided in the Agreement, the Borrower hereby
waives diligence, presentment, demand, protest and notice of any kind
whatsoever. The nonexercise by the holder of any of its rights hereunder in any
particular instance shall not constitute a waiver thereof in that or any
subsequent instance.
It is expressly understood and agreed by the parties hereto that (a)
this Agreement is executed and delivered by Chase Manhattan Bank Delaware (as
successor to Chase Manhattan Bank USA, N.A.), not individually or personally but
solely as Owner Trustee of the Borrower, in the exercise of the powers and
authority conferred and vested in it, (b) each of the representations,
undertakings and agreements herein made on the part of the Borrower is made and
intended not as personal representations, undertakings and agreements by Chase
Manhattan Bank Delaware (as successor to Chase Manhattan Bank USA, N.A.) but is
made and intended for the purpose of binding only the Borrower and (c) under no
circumstances shall Chase Manhattan Bank Delaware (as successor to Chase
Manhattan Ban USA, N.A.) be personally liable for the payment of any
indebtedness or expenses of the Borrower or be liable for the breach or failure
of any obligation, representation, warranty or covenant made or undertaken by
the Borrower under the Agreement or the other Transaction Documents.
This Note is subject to (a) the restrictions contained in Section 14.5
of the Agreement and (b) the terms and conditions of the Intercreditor
Agreement. Any transfer or pledge of any interest in this Note is subject to the
transfer restrictions in Section 16.10 of the Agreement and in the
Intercreditor Agreement.
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This Note shall be construed in accordance with and governed by the
laws of the State of New York.
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in its
individual capacity but solely as Owner
Trustee for National Financial Auto Funding
Trust
By: /s/ EXECUTED BY AUTHORIZED OFFICER
-----------------------------------------------
Title:
--------------------------------------------
<PAGE> 75
-70-
SCHEDULE I
SCHEDULE OF ADVANCES, NOTE PAYMENTS AND NOTE BALANCE
<TABLE>
<CAPTION>
Amount of Payment of Payment of
Date Advance Principal Interest Balance of Note
--------- ------------- -------------- -------------- -------------------
<S> <C> <C> <C> <C>
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
--------- ------------- -------------- -------------- -------------------
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</TABLE>
<PAGE> 76
-71-
EXHIBIT B-1
FORM OF REQUEST FOR BORROWING
,
---------------------- ------
First Union National Bank
One First Union Center TW-10
301 South College Street
Charlotte, North Carolina 28288-0610
Attention:
----------------------------
Ladies/Gentlemen:
Reference is made to the Revolving Credit, Term Loan and Security Agreement
dated as of March 31, 1999 (as the same may be amended, supplemented or
otherwise modified, the "Agreement") between National Financial Auto Funding
Trust and First Union National Bank. All terms used herein which are defined in
the Agreement shall have the same meaning herein as therein.
Pursuant to Section 3.1 [(b)]/[(c)] of the Agreement, this Notice of Borrowing
in respect of the Revolving Loans represents the request of the undersigned to
borrow on ____________, _____ (the "Borrowing Date") a Revolving Loan in an
aggregate principal amount of $___________ . The proceeds of such Revolving Loan
are to be deposited on the Borrowing Date in the Borrower's Account in
immediately available funds.
[FOR DRAWS UNDER 3.1(b) USE THE FOLLOWING PARAGRAPH]
Attached hereto is an Addition Certificate indicating that Additional Free Cash
Flows with an aggregate Contract Balance of $_______ were added to the
Collateral on _____________, _____ in accordance with Section [10.3] [10.4] of
the Agreement. The undersigned hereby certifies that all of the requirements of
Section [10.3] [10.4] of the Agreement and all of the conditions precedent set
forth in Section 12 of the Agreement have been satisfied.
[FOR DRAWS UNDER 3.1(c) USE THE FOLLOWING PARAGRAPH]
The undersigned hereby certifies that as of the Borrowing Date (i) all of the
conditions precedent contained in Section 12 of the Agreement have been
satisfied and (ii) the aggregate amount of the outstanding Revolving Loans
(after giving effect to the Revolving Loan requested hereunder) does not exceed
the Borrowing Base as set forth in the attached Borrowing Base Certificate dated
as of ____________, _____.
<PAGE> 77
-72-
IN WITNESS WHEREOF, the undersigned has executed and delivered this Notice of
Borrowing as of this ____ day of ____________, ____.
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely as
Owner Trustee for National Financial
Auto Funding Trust
By: /s/ Executed By Authorized Officer
--------------------------------------
Name: Executed By Authorized Officer
------------------------------------
Title:
-----------------------------------
<PAGE> 78
-73-
EXHIBIT C
FORM OF BORROWING BASE CERTIFICATE
,
--------------------- ------
First Union National Bank
One First Union Center TW-10
301 South College Street
Charlotte, North Carolina 28288-0610
Attention:
------------------------------
Ladies/Gentlemen:
Reference is made to the Revolving Credit, Term Loan and Security Agreement
dated as of March 31, 1999 (as the same may be amended, supplemented or
otherwise modified, the "Agreement") between National Financial Auto Funding
Trust and First Union National Bank. All terms used herein which are defined in
the Agreement shall have the same meaning herein as therein.
Pursuant to Section 3 and Section 8.1(a) of the Agreement, the undersigned
hereby certifies (i) that the aggregate outstanding principal balance of the
Revolving Loans on _________, _____ (the "Calculation Date") was (a)
$_____________, and (b) did not exceed the Facility Amount, (ii) that the
Borrowing Base on such date was $_______________ and (iii) the representations
contained in Section 7 of the Agreement are true and correct on the Addition
Date related hereto. The related calculations are set forth in Schedule I
hereto.
IN WITNESS WHEREOF, the undersigned has executed and delivered this Borrowing
Base Certificate as of this ___ day of ___________, _____.
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: CHASE MANHATTAN BANK DELAWARE, not in
its individual capacity but solely as
Owner Trustee for National Financial
Auto Funding Trust
By: /s/ Executed By Authorized Officer
-----------------------------------------
Name: Executed By Authorized Officer
---------------------------------------
Title:
--------------------------------------
<PAGE> 79
-74-
EXHIBIT C (CONT.)
FORM OF SCHEDULE 1 TO BORROWING BASE CERTIFICATE
SCHEDULE 1
TO
BORROWING BASE CERTIFICATE
DATED ___________, ____
[(FUNB TO PROVIDE)]
<PAGE> 80
-75-
EXHIBIT D
FORM OF SWAP PAYMENT SCHEDULE
<TABLE>
<CAPTION>
Payment Date Scheduled Payments Servicing Fee Payment due to Swap Counterparty Scheduled Principal Payment
------------ ------------------ ------------- -------------------------------- ---------------------------
<S> <C> <C> <C> <C>
</TABLE>
<PAGE> 81
-76-
EXHIBIT E
BORROWER'S ACCOUNT INFORMATION
<PAGE> 82
-77-
EXHIBIT F
DEFINITIONS OF "AVAILABLE AMOUNTS"
The following are the definitions of Available Amounts set forth with
respect to each of the Original Underlying Transactions as of the closing date
related thereto and the Closing Date.
For the 1995-1 Transaction and the 1996-1 Transaction, the definition of
"Available Amounts" is as follows:
Available Amount: With respect to any Distribution Date, an amount
equal to (i) the amount on deposit in the Certificate Account on the
preceding Distribution Date after giving effect to all withdrawals
therefrom on such preceding Distribution Date, plus (ii) the amount, if
any, to be transferred by the Trustee to the Certificate Account from
the Pre-Funding Period Reserve Account, the Revolving Account and/or
the Pre-Funding Account on such Distribution Date pursuant to Section
3.12(b), Section 3.13(b) or Section 3.14(b), as applicable, plus (iii)
the amount to be transferred by the Trustee to the Certificate Account
from the Collection Account on such Distribution Date pursuant to
Section 3. 1 0 (b), plus (iv) any amounts paid by the Certificate
Insurer to the Trustee pursuant to Section 4.04(e) hereof for
distribution to the Certificateholders on such Distribution Date.
and, with respect to 1997-1 Transaction and the 1998-1 Transaction, the
definition of "Available Amounts" is:
"Available Amount" means, with respect to any Distribution Date, an
amount equal to the sum of (i) the amount on deposit in the
Distribution Account on the preceding Distribution Date after giving
effect to all withdrawals therefrom on such preceding Distribution
Date, (ii) the amount, if any, to be transferred by the Trust
Collateral Agent to the Distribution Account from the Pre-Funding
Period Reserve Account and/or the Pre-Funding Account, if any, as
provided herein, (iii) the amount to be transferred by the Trust
Collateral Agent to the Distribution Account from the Collection
Account on such Distribution Date pursuant to Section 5.1(c), and (iv)
any amounts paid by the Insurer to the Trust Collateral Agent pursuant
to Section 5.11 hereof for distribution on such Distribution Date.
Capitalized terms used in either of the foregoing definitions shall be deemed to
have the meaning set forth in the related Pooling and Servicing Agreement or
Sale and Servicing Agreement, as the case may be, as of the closing date related
thereto.
<PAGE> 1
EXHIBIT 10.89
EXECUTION COPY
NOTE EXCHANGE AGREEMENT
Note Exchange Agreement, dated as of April 7, 1999 (the
"Agreement") by and among National Auto Finance Company, Inc., a Delaware
corporation (the "Company"), Nova Financial Corporation, a Delaware corporation
("Nova Financial"), Nova Corporation, a Delaware corporation ("Nova"), Stephen
L. Gurba ("Gurba"), Edgar Otto ("Otto") and Gary L. Shapiro ("Shapiro") (each of
Nova Financial, Nova, Gurba, Otto and Shapiro individually, a "Junior
Noteholder", and collectively, the "Junior Noteholders").
RECITALS
A. Reference is made to that certain Restructuring Agreement, dated as
of April 7, 1999 (the "Restructuring Agreement"), by and among the Company,
National Auto Finance Company, L.P., Shapiro, Otto, Gurba, The 1818 Mezzanine
Fund, L.P., PC Investment Company, Progressive Investment Company, Inc.,
Manufacturers Life Insurance Company (U.S.A.), The Structured Finance High Yield
Fund, LLC, Nova Financial and Nova.
B. It is a condition precedent to the completion of the Restructuring
(as defined in the Restructuring Agreement) that each of the Junior Noteholders
agree to amend certain provisions of the Amended and Restated Promissory Notes
of the Company (the "Junior Notes") held by the Junior Noteholders.
C. Each Junior Noteholder will derive financial and other benefits from
the Company's entering into the Restructuring Agreement.
D. Each Junior Noteholder, by entering into this Agreement, wishes to
induce the Company to enter into the Restructuring Agreement.
Now therefore, in consideration of the foregoing recitals, the mutual
covenants and agreements set forth herein and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
AGREEMENT
1. Exchange of Junior Notes for New Junior Notes. Each Junior
Noteholder agrees to exchange (the "Exchange"), on the Restructuring
Date (as defined in the Restructuring Agreement), the Junior Note held
by it for a new note (the "New Junior Note") substantially in the form
of Exhibit A hereto. Each New Junior Note will have a principal amount
equal to the sum of (a) the principal amount of the Junior Note for
which it is exchanged and (b) the aggregate amount of accrued and
unpaid interest on such Junior Note, through March 31, 1999. The
Company agrees to issue a New Junior Note in exchange for each Junior
Note immediately upon receipt of such Junior Note.
<PAGE> 2
2. Waiver and Release. Each Junior Noteholder hereby waives
all currently existing defaults and breaches under the Junior Notes,
including, but not limited to, defaults in the payment of interest
(including default interest) on the Junior Notes by the Company through
the Restructuring Date (as defined in the Restructuring Agreement).
Each Junior Noteholder further agrees to relinquish any causes of
action, at law or in equity, in any court, administrative proceeding or
other tribunal in the United States or any foreign country, which any
Junior Noteholder may have had, now has, or hereafter can, shall or may
have, against the Company with respect to, or relating to either the
Junior Notes or the issuance of the New Junior Notes in exchange
therefor.
3. Representations. (a) The Company represents and warrants to
each Junior Noteholder as follows:
(i) it is a corporation duly organized, validly
existing and in good standing under the
laws of the state of Delaware, with full
corporate power and authority (A) to issue
and deliver the New Junior Note, (B) to
execute and deliver this Agreement, and any
other agreements and instruments to be
executed and delivered by it pursuant
hereto and thereto and (C) to consummate
the transactions contemplated hereby and
thereby;
(ii) this Agreement and the New Junior Notes
have been duly authorized, executed, issued
and delivered by it and constitute legal,
valid and binding obligations of it,
enforceable against it in accordance with
their respective terms (except as such
enforceability may be limited by
bankruptcy, insolvency or similar laws of
general application from time to time
affecting the rights of creditors generally
and subject to general principles of
equity);
(iii) the execution and delivery of this
Agreement and the New Junior Notes and the
performance by it of its obligations
hereunder or thereunder will not constitute
a violation, breach or default (with or
without the passage of time or the giving
of notice, or both) on its part under its
certificate of incorporation or by-laws, or
under any federal, state or local law, rule
or regulation, or under any order or
judgment that is binding on it or any of
its properties, or under any agreement,
instrument or document to which it is a
party or by which any of its properties are
bound; and
(iv) upon the issuance, to any Junior
Noteholder, of shares of the Company's
common stock, par value $.01 per share
2
<PAGE> 3
(the "CONVERSION SHARES") upon the
conversion by a Junior Noteholder of any
convertible note issued to such Junior
Noteholder in payment of interest on a New
Junior Note, such Conversion Shares will be
duly authorized, validly issued, fully paid
and nonassessable and free and clear of any
mortgage, pledge, security interest,
encumbrance, charge or other lien.
Notwithstanding the foregoing, the Junior
Noteholders acknowledge that the Company
will be required to amend its certificate
of incorporation to increase the number of
authorized shares of Common Stock in
respect of the Conversion Shares.
(b) Each of Nova Financial and Nova, severally and
not jointly, represents to the Company as follows:
(i) it is a corporation duly organized, validly
existing and in good standing under the
laws of its jurisdiction of organization,
with full corporate power and authority to
execute and deliver this Agreement and any
other agreements and instruments to be
executed and delivered by it pursuant
hereto and thereto and to consummate the
transactions contemplated hereby and
thereby;
(ii) this Agreement has been duly authorized,
executed and delivered by it and
constitutes the legal, valid and binding
obligation of it, enforceable against it in
accordance with its terms (except as such
enforceability may be limited by
bankruptcy, insolvency or similar laws of
general application from time to time
affecting the rights of creditors generally
and subject to general principles of
equity); and
(iii) the execution and delivery of this
Agreement and the performance by it of its
obligations hereunder will not constitute a
violation, breach or default (with or
without the passage of time or the giving
of notice, or both) on its part under any
provision of its certificate of
incorporation or by-laws or under any
federal, state or local law, rule or
regulation, or under any order or judgment
that is binding on it or any of its
properties, or under any agreement,
instrument or document to which it is a
party or by which any of its properties are
bound.
3
<PAGE> 4
(b) Each of Gurba, Otto and Shapiro, severally and
not jointly, represents and warrants to the Company as
follows:
(i) he has full power and authority to execute
and deliver this Agreement and any other
agreements and instruments to be executed
and delivered by him pursuant hereto and
thereto and to consummate the transactions
contemplated hereby and thereby;
(ii) this Agreement has been duly authorized,
executed and delivered by him and
constitutes his legal, valid and binding
obligations, enforceable against him in
accordance with its terms (except as such
enforceability may be limited by
bankruptcy, insolvency or similar laws of
general application from time to time
affecting the rights of creditors generally
and subject to general principles of
equity); and
(iii) the execution and delivery of this
Agreement and the performance by him of his
obligations hereunder will not constitute a
violation, breach or default (with or
without the passage of time or the giving
of notice, or both) on his part under any
federal, state or local law, rule or
regulation, or under any order or judgment
that is binding on him or any of his
properties, or under any agreement,
instrument or document to which he is a
party or by which any of his properties are
bound.
4. Choice of Law. This Agreement, including, without
limitation, the interpretation, construction, validity and
enforceability thereof, shall be governed for all purposes by the
internal laws of the State of New York (without regard to the
principles of conflict of laws thereof) and the laws of the United
States applicable to transactions within such state.
5. Notices. Any and all notices or other communications
provided for herein shall be given in accordance with the notice
provisions set forth in the Restructuring Agreement.
6. Submission to Jurisdiction. (a) Any legal action or
proceeding with respect to this Agreement or any document related
hereto may be brought in the state courts of the State of New York or
in the federal courts of the United States of America in the State of
New York, and, by execution and delivery of this Agreement, each party
hereby accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid courts. The parties
hereto hereby irrevocably waive any objection, including, without
limitation, any objection to the laying of venue or based on the
4
<PAGE> 5
grounds of forum non conveniens, which any of them may now or hereafter
have to the bringing of any such action or proceeding in such
respective jurisdictions.
(a) Each party irrevocably consents to the service of
process of any of the aforesaid courts in any such action or
proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to such party at its address
provided herein.
(b) Nothing contained in this Section 6 shall affect
the right of any party hereto to serve process in any other
manner permitted by law.
7. Waiver of Jury Trial. Each of the parties hereto waives any
right it may have to trial by jury in respect of any litigation based
on, or arising out of, under or in connection with this Agreement, any
course of conduct, course of dealing, verbal or written statement or
action of any party hereto.
8. Cumulative Rights. The rights of the parties under this
Agreement are cumulative and in addition to all similar and other
rights of the parties under other agreements.
9. Entire Agreement. This Agreement, the exhibits attached
hereto and the Restructuring Documents (as defined in the Restructuring
Agreement) contain the entire understanding of the parties hereto
respecting the subject matter hereof and supersedes all prior
agreements, discussions and understandings with respect thereto.
10. Severability. If any term, provision, covenant, or
restriction of this Agreement is held by a court of competent
jurisdiction to be invalid, void, or unenforceable, the remainder of
the terms, provisions, covenants, and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected,
impaired, or invalidated.
11. Section Headings. Headings contained in this Agreement are
inserted only as a matter of convenience and in no way define, limit,
or extend the scope or intent of this Agreement or any provisions
hereof.
12. Counterparts. This Agreement may be executed in two or
more counterparts and each counterpart shall be deemed to be an
original and which counterparts together shall constitute one and the
same agreement of the parties hereto.
[SIGNATURES CONTAINED ON NEXT PAGE]
5
<PAGE> 6
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
---------------------------------------
Keith B. Stein
Chief Executive Officer
<PAGE> 7
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
----------------------------------
Keith B. Stein
Chief Executive Officer
NOVA FINANCIAL CORPORATION
By: /s/ Executed by Authorized Officer
-----------------------------------------
Name: Executed by Authorized Officer
------------------------------------
Title:
-----------------------------------
NOVA CORPORATION
By: /s/ Executed by Authorized Officer
-----------------------------------------
Name: Executed by Authorized Officer
------------------------------------
Title:
-----------------------------------
6
<PAGE> 8
/s/ Stephen L. Gurba
-----------------------------------
Stephen L. Gurba
/s/ Edgar Otto
-----------------------------------
Edgar Otto
/s/ Gary L. Shapiro
-----------------------------------
Gary L. Shapiro
7
<PAGE> 9
EXHIBIT A
JUNIOR CONVERTIBLE SUBORDINATED NOTE
FOR VALUE RECEIVED, the undersigned, NATIONAL AUTO FINANCE
COMPANY, INC., a Delaware corporation (the "COMPANY"), promises to pay to the
order of [NAME OF INITIAL HOLDER] (the "HOLDER") the principal sum set forth on
Exhibit A attached hereto (which reflects interest payable on the principal
amount of the Primary Note (as defined below) and the interest accrued on such
interest) on January 31, 2002, (the "PRINCIPAL AMOUNT") with interest thereon
from time to time as provided herein.
1. Primary Note. This Junior Convertible Subordinated Note (this
"JUNIOR CONVERTIBLE INTEREST NOTE") is being issued and delivered pursuant to
the Second Amended and Restated Promissory Note, dated April 7, 1999 (the
"PRIMARY NOTE"), by the Company in favor of Holder.
2. Interest Payments. The Company shall (except as otherwise provided
below) pay the Holder accrued interest, in arrears in cash, at the rate of eight
percent (8%) per annum on the Principal Amount on each January 1, April 1, July
1 and November 1 commencing July 1, 1999 and continuing thereafter until January
31, 2002, at which time, the entire principal balance hereof and the interest
accrued hereon shall be immediately due and payable; provided that the Principal
Amount shall be reduced by the amount of any principal converted pursuant to
Section 5.1 hereof. Interest on this Note shall be paid by check payable to the
order of the Holder and sent to [ADDRESS OF HOLDER] or to such other address as
the Holder may designate from time to time; provided, however, that (a) in
respect of the period up to and ending on March 31, 2001, if the Company
elected, pursuant to Section 2 of the Amended Notes (as defined in the
Restructuring Agreement dated as of April 7, 1999 (the "Restructuring
Agreement") among the Company, National Auto Finance Company, L.P., The 1818
Mezzanine Fund, L.P., PC Investment Company, Progressive Investment Company,
Inc., Manufacturers Life Insurance Company (USA), The Structured Finance High
Yield Fund, LLC, Nova Financial Corporation, Nova Corporation, Gary L. Shapiro,
Edgar A. Otto and Stephen L. Gurba), to pay interest on the Amended Notes (as
defined in the Restructuring Agreement) on the immediately preceding interest
payment date thereunder by issuing Convertible Notes (as defined in the
Restructuring Agreement), the Company shall pay the Specified Percentage (the
"SPECIFIED PERCENTAGE") of the interest accrued on this Junior Convertible
Interest Note by amending Exhibit A to this Note to increase the principal
amount thereof by the amount of such payment and (b) after the period ending
March 31, 2001, the Company, at its option, may elect to pay an amount equal to
up to 100% of the interest accrued on this Note by amending Exhibit A to this
Note to increase the principal amount thereof by the amount of such payment.
Specified Percentage shall mean the product of (x) two and (y) the percentage of
the scheduled cash interest payments on the Amended Notes paid by the Company,
on such immediately preceding interest payment date, through the issuance of
Convertible Notes. Any past due interest shall accrue and shall be payable by
the undersigned at the rate which is the lesser of (1) the maximum rate of
interest permitted under applicable law and (2) eighteen percent (18%) per annum
provided, however, that interest paid by the issuance of this Junior Convertible
Interest Note (or the amendment thereof as provided above) shall not be deemed
past due.
<PAGE> 10
3. Maturity Date. The entire principal balance of, and accrued interest
on, this Junior Convertible Interest Note shall be due and payable, without
notice or demand, on January 31, 2002.
4. Prepayment. The Company shall have the right to prepay in cash,
without penalty, at any time and from time to time prior to maturity, all or any
part of the unpaid principal balance of this Junior Convertible Interest Note
and/or all of any part of the unpaid interest accrued to the date of such
prepayment, provided that any such principal thus paid is accompanied by accrued
interest on such principal.
5. Conversion Rights.
5.1 Conversion by the Holder. The Holder has the right, exercisable
at any time, to convert the principal amount of this Junior Convertible Interest
Note (or any portion thereof that is an integral multiple of $50) into that
number of fully paid nonassessable shares of common stock, par value, $.01 per
share (the "Common Stock"), of the Company obtained by dividing the principal
amount of this Junior Convertible Interest Note by $0.75 per share (the
"Conversion Price"). The Conversion Price shall be adjusted in the event of any
change in the capital structure of the Company (whether by merger,
consolidation, reorganization, recapitalization, stock dividend, stock split,
split-up, split-off, spin-off, combination of shares, exchange of shares, or
other similar change) such that this Junior Convertible Interest Note shall
thereafter be convertible into such securities, cash and/or other property as
would have been received in respect of the shares of Common Stock subject to
this Junior Convertible Interest Note had this Junior Convertible Interest Note
been converted in full immediately prior to such change.
5.2 Conversion Procedure. To convert all or a portion of this Junior
Convertible Interest Note, a holder must (a) complete and sign an irrevocable
notice of election to convert (the "CONVERSION NOTICE"), substantially in the
form of Exhibit B attached hereto, and deliver such Conversion Notice to the
Company, (b) furnish appropriate endorsements or transfer documents if required
by the Company and (c) pay any transfer or similar tax, if required. Any accrued
but unpaid interest shall be paid on the Principal Amount of this Junior
Convertible Interest Note until the date that such Principal Amount is converted
by a holder into Common Stock. The Company shall make no payment or allowance
for dividends on the shares of Common Stock issued upon conversion.
No fractional shares shall be issued upon conversion, but a cash
payment shall be made by the Company in lieu of fractional interests. The
outstanding Principal Amount of this Junior Convertible Interest Note shall be
reduced by the principal amount thereof converted into shares of Common Stock or
other shares of common stock of the Company.
5.3 Satisfaction of Company's Obligation. The Company's delivery
upon conversion of the fixed number of shares of Common Stock or other shares of
common stock of the Company into which this Junior Convertible Interest Note is
then convertible (together with cash in lieu of fractional shares) shall be
deemed to satisfy the Company's obligation to pay that portion of the Principal
Amount that is converted at the maturity date of this Junior Convertible
2
<PAGE> 11
Interest Note and any unpaid interest accrued on this Junior Convertible
Interest Note at the time of the conversion.
6. Waiver. The Company and any endorsers, sureties, guarantors and
all others who are or may become liable for the payment hereof severally waive
notice of intent to accelerate, presentment for payment, demand, notice of
demand, notice of nonpayment or dishonor, protest and notice of protest with
respect to this Junior Convertible Interest Note, notice of acceleration and all
other notices in connection with the delivery, acceptance, performance, or
enforcement of or consideration for this Junior Convertible Interest Note.
7. Stipulation of Jurisdiction. The parties hereby irrevocably and
unconditionally stipulate and agree that the Federal Courts in the State of New
York or the State Court of the State of New York shall have non-exclusive
jurisdiction to hear and finally determine any dispute, claim, or controversy or
action arising out of or connected (directly or indirectly) with this Note.
8. Usury Savings Provision. Neither the undersigned nor any
guarantors, endorsers or other parties now or hereafter becoming liable for
payment of this Junior Convertible Interest Note shall ever be required to pay
interest on this Note at a rate in excess of the maximum interest that may be
lawfully charged under applicable law, and the provisions of this paragraph
shall control over all other provisions of this Junior Convertible Interest Note
and any other instruments now or hereafter executed in connection herewith which
may be in apparent conflict herewith.
9. Governing Law. This Junior Convertible Interest Note and the
rights and duties of the parties hereunder shall be governed for all purposes by
the law of the State of New York and the law of the United States applicable to
transactions within such State.
10. Subordination. This Junior Convertible Interest Note, and the
rights of any holder hereof, are subject to the subordination and other
provisions of that certain Amended and Restated Junior Subordination Agreement,
dated as of April 7, 1999, among the initial holder of the Primary Note (as one
of several subordinating creditors party thereto), certain other parties (as
senior creditors) and the Company.
3
<PAGE> 12
EXHIBIT A TO FORM OF JUNIOR CONVERTIBLE SUBORDINATED NOTE
Original Principal Amount: $
--------------
Interest Rate:
--------------
Interest Period:
--------------
Term:
--------------
[ADDITIONAL INTEREST ON PRIMARY NOTE AND THE JUNIOR CONVERTIBLE SUBORDINATED
NOTE, IF ANY]
<TABLE>
<CAPTION>
Months Principal Balance Interest Earned New Balance
- ------------------------------- ---------------------------- ---------------------------- ----------------------------
<S> <C> <C> <C>
</TABLE>
<PAGE> 13
EXHIBIT B TO FORM OF JUNIOR CONVERTIBLE SUBORDINATED NOTE
To: National Auto Finance Company, Inc.
The undersigned holder of this Junior Convertible Subordinated Note
hereby irrevocably exercises the option to convert this Junior Convertible
Subordinated Note, or the portion below designated, into Common Stock of
National Auto Finance Company, Inc. (the "COMPANY"), or any other class of
common stock of the Company, as permitted by the Articles of Incorporation of
the Company, in accordance with the terms of this Junior Convertible
Subordinated Note, and directs that the shares issuable and deliverable upon
conversion, together with any check in payment for fractional shares, be issued
in the name of and delivered to the undersigned, unless a different name has
been indicated by assignment below. If shares are to be issued in the name of a
person other than the undersigned, the undersigned shall pay all transfer taxes
payable with respect thereto.
Date:
------------------
Convert (circle one): in whole/in part
If conversion in part, portion of Principal Amount of the Junior
Convertible Interest Note to be converted: $____________
[HOLDER]
By: /s/ Executed by Authorized Officer
------------------------------------
Name: Executed by Authorized Officer
Title:
Please print or type below your name and address, including zip code, and Social
Security Number or other identifying number.
<PAGE> 1
EXHIBIT 10.90
EXECUTION COPY
AMENDED AND RESTATED
JUNIOR SUBORDINATION AGREEMENT
AMENDED AND RESTATED JUNIOR SUBORDINATION AGREEMENT (this
"Agreement"), dated as of April 7, 1999, among (a) The 1818 Mezzanine Fund,
L.P., a Delaware limited partnership, PC Investment Company, a Delaware
corporation, Manufacturers Life Insurance Company (U.S.A.), a Michigan
corporation (collectively, the "Senior Subordinated Creditors"), The Structured
Finance High Yield Fund, LLC, a Delaware limited liability company ("SFHY," and
together with the Senior Subordinated Creditors, the "Senior Creditors"), (b)
each of the Persons listed on Schedule 1 hereto and having an address set forth
opposite such Person's name on Schedule 1 (each such Person, a "Subordinating
Creditor" and together the "Subordinating Creditors") and (c) NATIONAL AUTO
FINANCE COMPANY, INC., a Delaware corporation, having its principal office at
10302 Deerwood Park Boulevard, Suite 100, Jacksonville, FL 32256 (the
"Borrower").
WHEREAS, BankBoston, N.A. (the "Agent"), the Borrower, the
Senior Creditors and the Subordinating Creditors have previously entered into
that certain Junior Subordination Agreement, dated as of March 27, 1998 (the
"Prior Subordination Agreement"), and such parties (other than the agent) desire
to amend, restate and supersede in their entirety the terms and provisions of
the Prior Subordination Agreement as set forth herein; and
WHEREAS, pursuant to that certain Securities Purchase
Agreement, dated as of December 22, 1997 (as amended and in effect from time to
time, including any replacement agreement therefor, the "Securities Purchase
Agreement"), between the Borrower, Progressive Investment Company, Inc. and the
Senior Subordinated Creditors, the Senior Subordinated Creditors have extended
credit to the Borrower; and
WHEREAS, pursuant to a Note Purchase Agreement, dated as of
March 27, 1998 (as amended and in effect from time to time, including any
replacement agreement therefor, the "Note Purchase Agreement"), between the
Borrower and SFHY, SFHY has extended credit to the Borrower; and
WHEREAS, each Subordinating Creditor has previously extended
credit to the Borrower evidenced by certain promissory notes (the "Old Junior
Subordinated Notes") described on Exhibit A to the Prior Subordination
Agreement; and
WHEREAS, the commitment of the Banks (as defined in the Prior
Subordination Agreement) has been terminated and all amounts payable by the
Borrower to the Agent and the Banks have been indefeasibly paid in full; and
WHEREAS, the Borrower, National Auto Finance Company, L.P.,
the Senior Creditors, the Subordinating Creditors and certain other parties have
entered into that certain Restructuring Agreement, dated as of April 7, 1999
(the "Restructuring Agreement"), pursuant to which the parties thereto have
agreed, among other things, to waive and amend certain provisions of the Note
Purchase Agreement and the Securities Purchase Agreement; and
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WHEREAS, it is a condition precedent to the Restructuring
Agreement that the Subordinating Creditors agree to certain amendments to the
terms and provisions of the Old Junior Subordinated Notes; and
WHEREAS, the Borrower and the Subordinating Creditors have
entered into that certain Note Exchange Agreement, dated as of April 7, 1999
(the "Exchange Agreement") in order to effect the changes in the Old Junior
Subordinated Notes as contemplated and required by the Restructuring Agreement;
and
WHEREAS, the Exchange Agreement calls for the issuance and
delivery of new promissory notes (as amended with the consent of the Senior
Creditors as provided herein and in effect from time to time, the "Junior
Subordinated Notes") by the Borrower to each Subordinating Creditor in exchange
for the Old Junior Subordinated Notes; and
WHEREAS, Section 10 of the Prior Subordination Agreement
requires that a majority of the Senior Creditors consent to the transactions
contemplated by the Exchange Agreement, including (without limitation) the
exchange of the Junior Subordinated Notes for the Old Junior Subordinated Notes;
and
WHEREAS, it is a condition precedent to the Senior Creditors'
willingness to continue their credit relationships with the Borrower pursuant to
the Note Purchase Agreement and the Securities Purchase Agreement, respectively
(each as amended by the Restructuring Agreement) that the Borrower and the
Subordinating Creditor enter into this Agreement with the Senior Creditors; and
WHEREAS, in order to induce the Senior Creditors to continue
their credit relationships with the Borrower pursuant to the Note Purchase
Agreement and the Securities Purchase Agreement, respectively, the Borrower and
the Subordinating Creditors have agreed to enter into this Agreement with the
Senior Creditors;
NOW, THEREFORE, in consideration of the foregoing, the mutual
agreements herein contained and other good and valuable consideration, the
receipt and adequacy of which are hereby acknowledged, the parties hereto,
intending to be legally bound, hereby agree as follows:
1. Definitions. Terms not otherwise defined herein have the
same respective meanings given to them in the Restructuring Agreement. In
addition, the following terms shall have the following meanings:
"Indebtedness" shall mean as to any Person, (a) all
obligations of such Person for borrowed money (including, without limitation,
reimbursement and all other obligations with respect to surety bonds, letters of
credit and bankers' acceptances, whether or not matured), (b) all obligations
evidenced by notes, bonds, debentures or similar instruments, (c) all
obligations to pay the deferred purchase price of property or services, except
trade accounts payable and accrued liabilities arising in the ordinary course of
business, (d) all interest rate and currency swaps and similar agreements under
which payments are obliged to be made, whether periodically or upon the
happening of a contingency, (e) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such
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Person (even though the rights and remedies of the seller or lender under such
agreement in the event of default are limited to repossession or sale of such
property), (f) all obligations under capital lease obligations, (g) all
indebtedness secured by any lien on any property or asset owned or held by that
Person regardless of whether the indebtedness secured thereby shall have been
assumed by that Person or is non-recourse to the credit of that Person, and (h)
any contingent obligation.
"Person" shall mean any individual, firm, corporation,
division, partnership, trust, incorporated or unincorporated association, joint
venture, joint stock company, governmental authority or other entity of any
kind, and shall include any successor (by merger or otherwise) of any such
entity.
"Senior Debt". All principal, interest, fees, costs,
enforcement expenses (including legal fees and disbursements), collateral
protection expenses and other reimbursement or indemnity obligations on any
Indebtedness of the Borrower whether outstanding as of the date hereof or
thereafter created, incurred or assumed, unless, in the case of any particular
Indebtedness, the instrument creating or evidencing the same or pursuant to
which the same is outstanding expressly provides that such Indebtedness shall
not be senior in right of payment to the Subordinated Debt. Senior Debt shall
also include any monetary obligation of the Borrower created or evidenced by the
Note Purchase Agreement, the Securities Purchase Agreement, the Restructuring
Agreement or any of the Amended Notes or Convertible Notes (each as defined in
the Restructuring Agreement) or any prior, concurrent, or subsequent notes,
instruments or agreements of indebtedness, liabilities or obligations of any
type or form whatsoever relating thereto in favor of any Senior Creditor. Senior
Debt shall expressly include any and all interest accruing or out of pocket
costs or expenses incurred after the date of any filing by or against the
Borrower of any petition under the federal Bankruptcy Code or any other
bankruptcy, insolvency or reorganization act regardless of whether any Senior
Creditor's claim therefor is allowed or allowable in the case or proceeding
relating thereto.
"Subordinated Debt". All principal, interest, fees, costs,
enforcement expenses (including legal fees and disbursements), collateral
protection expenses and other reimbursement and indemnity obligations created or
evidenced by the Junior Subordinated Notes, any Junior Convertible Interest
Notes (as defined in the Junior Subordinated Note) or any prior, concurrent or
subsequent notes, instruments or agreements of indebtedness, liabilities or
obligations of any type or form whatsoever relating thereto in favor of any
Subordinating Creditor.
"Subordinated Documents". Collectively, the Exchange
Agreement, the Junior Subordinated Notes, any Junior Convertible Interest Note,
and any and all guaranties and security interests, mortgages and other liens
directly or indirectly guarantying or securing any of the Subordinated Debt, and
any and all other documents or instruments evidencing or further guarantying or
securing directly or indirectly any of the Subordinated Debt, whether now
existing or hereafter created.
2. General. Notwithstanding anything to the contrary in the
Note Purchase Agreement, the Securities Purchase Agreement or the Restructuring
Agreement, the Subordinated Debt and any and all Subordinated Documents shall be
and hereby are subordinated and the payment thereof is deferred until the full
and final payment in cash or cash
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equivalents of the Senior Debt, whether now or hereafter incurred or owed by the
Borrower. Notwithstanding the immediately preceding sentence, the Borrower shall
be permitted to pay, in cash or by delivery of Junior Convertible Interest
Notes, and the Subordinating Creditors shall be permitted to receive, any
regularly scheduled payment of interest on the Subordinated Debt so long as at
the time of such payment, or after giving effect thereto, no Default or Event of
Default has occurred and is continuing under the Note Purchase Agreement, the
Securities Purchase Agreement or the Restructuring Agreement or would occur
after giving effect thereto; and provided, further, that the Borrower shall be
permitted to pay, and the Subordinating Creditors shall be permitted to receive,
payment of the principal amount on the Subordinated Debt upon the scheduled
maturity thereof on January 31, 2002 so long as at the time of such payment, or
after giving effect thereto, no Default or Event of Default has occurred and is
continuing under the Note Purchase Agreement, the Securities Purchase Agreement
or the Restructuring Agreement or would occur after giving effect thereto.
Notwithstanding any provision contained herein to the contrary, so long as no
Default or Event of Default has occurred and is continuing under the Note
Purchase Agreement, the Securities Purchase Agreement or the Restructuring
Agreement or would occur after giving effect thereto, the Subordinating
Creditors shall be permitted (subject to the Note Purchase Agreement, the
Securities Purchase Agreement and the Restructuring Agreement) to convert the
Subordinated Debt to equity interests in the Borrower.
3. Consent to Exchange Agreement and Related Matters.
Notwithstanding any provision of the Prior Subordination Agreement or of this
Agreement to the contrary, each Senior Creditor signatory hereto hereby consents
to the Subordinating Creditors' entering into the Exchange Agreement and to the
consummation of the transactions contemplated by the Exchange Agreement,
including (without limitation), the exchange of the Junior Subordinated Notes
for the Old Junior Subordinated Notes.
4. Enforcement. The Subordinating Creditors will not take or
omit to take any action or assert any claim with respect to the Subordinated
Debt or otherwise which is inconsistent with the provisions of this Agreement.
Without limiting the foregoing, none of the Subordinating Creditors will assert,
collect or enforce the Subordinated Debt or any part thereof or take any action
to foreclose or realize upon the Subordinated Debt or any part thereof or
enforce any of the Subordinated Documents except to the extent (but only to such
extent) that the commencement of a legal action may be required to toll the
running of any applicable statute of limitations. Until the Senior Debt has been
finally paid in full in cash, the Subordinating Creditors shall not have any
right of subrogation, reimbursement, restitution, contribution or indemnity
whatsoever from any assets of the Borrower or any guarantor of or provider of
collateral security for the Senior Debt. Each Subordinating Creditor further
waives any and all rights with respect to marshalling.
5. Payments Held in Trust. Each Subordinating Creditor will
hold in trust and immediately pay over to the Senior Creditors, and/or any other
holders of Senior Debt, in the same form of payment received, with appropriate
endorsements, for application to the Senior Debt, any cash amount that the
Borrower pays to such Subordinating Creditor with respect to the Subordinated
Debt, or as collateral for the Senior Debt any other assets of the Borrower that
such Subordinating Creditor may receive with respect to the Subordinated Debt,
in each case except with respect to payments expressly permitted pursuant to
Section 2.
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6. Defense to Enforcement. If any Subordinating Creditor, in
contravention of the terms of this Agreement, shall commence, prosecute or
participate in any suit, action or proceeding against the Borrower, then the
Borrower may interpose as a defense or plea the making of this Agreement, and
any Senior Creditor and/or any other holder of Senior Debt, may intervene and
interpose such defense or plea in its name or in the name of the Borrower. If
any Subordinating Creditor, in contravention of the terms of this Agreement,
shall attempt to collect any of the Subordinated Debt or enforce any of the
Subordinated Documents, then any Senior Creditor, other holder of Senior Debt or
the Borrower may, by virtue of this Agreement, restrain the enforcement thereof
in the name of such Senior Creditor and/or other holder of Senior Debt or in the
name of the Borrower. If any Subordinating Creditor, in contravention of the
terms of this Agreement, obtains any cash or other assets of the Borrower as a
result of any administrative, legal or equitable actions, or otherwise, such
Subordinating Creditor agrees forthwith to pay, deliver and assign to the Senior
Creditors and/or any other holders of Senior Debt in each case with appropriate
endorsements, any such cash for application to the Senior Debt and any such
other assets as collateral for the Senior Debt.
7. Bankruptcy, etc.
7.1 Payments relating to Subordinated Debt. At any meeting
of creditors of the Borrower or in the event of any case or proceeding,
voluntary or involuntary, for the distribution, division or application of
all or part of the assets of the Borrower or the proceeds thereof, whether
such case or proceeding be for the liquidation, dissolution or winding up of
the Borrower or its business, a receivership, insolvency or bankruptcy case
or proceeding, an assignment for the benefit of creditors or a proceeding by
or against the Borrower for relief under the federal Bankruptcy Code or any
other bankruptcy, reorganization or insolvency law or any other law relating
to the relief of debtors, readjustment of indebtedness, reorganization,
arrangement, composition or extension or marshalling of assets or otherwise,
the Senior Creditors and/or any other holder of Senior Debt are hereby
irrevocably authorized at any such meeting or in any such proceeding to
receive or collect for the benefit of the Senior Creditors and/or any other
holder of Senior Debt, as the case may be, any cash or other assets of the
Borrower distributed, divided or applied by way of dividend or payment, or
any securities issued on account of any Subordinated Debt, and apply such
cash to or to hold such other assets or securities as collateral for the
Senior Debt, and to apply to the Senior Debt any cash proceeds of any
realization upon such other assets or securities that the Senior Creditors
and/or any other holders of Senior Debt in their discretion elect to effect,
until all of the Senior Debt shall have been paid in full in cash, rendering
to the Subordinating Creditor any surplus to which the Subordinating
Creditors are then entitled.
7.2 Securities by Plan of Reorganization or Readjustment.
Notwithstanding the foregoing provisions of Section 7.1, the Subordinating
Creditors shall be entitled to receive and retain any securities of the
Borrower or any other corporation or other entity provided for by a plan of
reorganization or readjustment (i) the payment of which securities is
subordinate, at least to the extent provided in this Agreement with respect
to Subordinated Debt, to the payment of all Senior Debt under any such plan
of reorganization or readjustment and (ii) all other terms of which are
acceptable to the Senior Creditors and/or any other holders of Senior Debt.
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7.3 Subordinated Debt Voting Rights. At any such meeting
of creditors or in the event of any such case or proceeding, the
Subordinating Creditors shall retain the right to vote and otherwise act with
respect to the Subordinated Debt (including, without limitation, the right to
vote to accept or reject any plan of partial or complete liquidation,
reorganization, arrangement, composition or extension), provided that the
Subordinating Creditors shall not vote with respect to any such plan or take
any other action in any way so as to contest (i) the validity of any Senior
Debt or any collateral therefor or guaranties thereof, (ii) the relative
rights and duties of any holders of any Senior Debt established in any
instruments or agreements creating or evidencing any of the Senior Debt with
respect to any of such collateral or guaranties or (iii) the Subordinating
Creditors' obligations and agreements set forth in this Agreement.
8. Lien Subordination. Each Subordinating Creditor
acknowledges and agrees that the Subordinated Debt is unsecured.
9. Further Agreements of The Subordinating Creditors.
9.1 Further Assurances. Each Subordinating Creditor hereby
agrees, upon request of the Senior Creditors and/or any other holders of
Senior Debt at any time and from time to time, to execute such other
documents or instruments as may be requested by the Senior Creditors and/or
any other holders of Senior Debt further to evidence of public record or
otherwise the senior priority of the Senior Debt as contemplated hereby.
9.2 Books and Records. Each Subordinating Creditor further
agrees to maintain on its books and records such notations as the Senior
Creditors may reasonably request to reflect the subordination contemplated
hereby and to perfect or preserve the rights of the Senior Creditors and/or
any other holders of Senior Debt hereunder. A copy of this Agreement may be
filed as a financing statement in any Uniform Commercial Code recording
office.
10. Freedom of Dealing. Each Subordinating Creditor agrees,
with respect to the Senior Debt and any and all collateral therefor or
guaranties thereof, that the Borrower, the Senior Creditors and/or any other
holders of Senior Debt may agree to increase the amount of the Senior Debt or
otherwise modify the terms of any of the Senior Debt, and the Senior Creditors
and/or the other holders of any Senior Debt may grant extensions of the time of
payment or performance to and make compromises, including releases of collateral
or guaranties, and settlements with the Borrower and all other persons, in each
case without the consent of the Subordinating Creditors or the Borrower and
without affecting the agreements of the Subordinating Creditors or the Borrower
contained in this Agreement; provided, however, that nothing contained in this
Section 10 shall constitute a waiver of the right of the Borrower itself to
agree or consent to a settlement or compromise of a claim which any Senior
Creditor and/or any other holder of Senior Debt may have against the Borrower.
11. Modification or Sale of the Subordinated Debt. None of
the Subordinating Creditors will, at any time while this Agreement is in effect,
modify any of the terms of any of the Subordinated Debt or any of the
Subordinated Documents; nor will any Subordinating Creditor sell, transfer,
pledge, assign, hypothecate or otherwise dispose of any or all of the
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Subordinated Debt to any person other than a person who agrees in a writing,
satisfactory in form and substance to a majority of the Senior Creditors and/or
any other holder of Senior Debt to become a party hereto and to succeed to the
rights and to be bound by all of the obligations of such Subordinating Creditor
hereunder. In the case of any such disposition by any Subordinating Creditor,
such Subordinating Creditor will notify the Senior Creditors and/or any other
holder of Senior Debt at least 10 days prior to the date of any of such intended
disposition.
12. Borrower's Obligations Absolute. Nothing contained in
this Agreement shall impair, as between the Borrower and the Subordinating
Creditors, the obligation of the Borrower to pay to the Subordinating Creditors
all amounts payable in respect of the Subordinated Debt as and when the same
shall become due and payable in accordance with the terms thereof, or prevent
the Subordinating Creditors (except as expressly otherwise provided in Section 4
or Section 7) from exercising all rights, powers and remedies otherwise
permitted by Subordinated Documents and by applicable law upon a default in the
payment of the Subordinated Debt or under any Subordinated Document, all,
however, subject to the rights of the Senior Creditors and/or any other holders
of Senior Debt as set forth in this Agreement. The Borrower hereby represents
that as of the date hereof the Subordinating Creditors are the only holders of
"Junior Subordinated Indebtedness" as such term is defined in the Note Purchase
Agreement and the Securities Purchase Agreement.
13. Termination of Subordination. This Agreement shall
continue in full force and effect, and the obligations and agreements of the
Subordinating Creditors and the Borrower hereunder shall continue to be fully
operative, until all of the Senior Debt shall have been paid and satisfied in
full in cash or cash equivalents and such full payment and satisfaction shall be
final and not avoidable. To the extent that the Borrower or any guarantor of or
provider of collateral for the Senior Debt makes any payment on the Senior Debt
that is subsequently invalidated, declared to be fraudulent or preferential or
set aside or is required to be repaid to a trustee, receiver or any other party
under any bankruptcy, insolvency or reorganization act, state or federal law,
common law or equitable cause (such payment being hereinafter referred to as a
"Voided Payment"), then to the extent of such Voided Payment, that portion of
the Senior Debt that had been previously satisfied by such Voided Payment shall
be revived and continue in full force and effect as if such Voided Payment had
never been made. In the event that a Voided Payment is recovered from any Senior
Creditor and/or any other holder of Senior Debt, an Event of Default shall be
deemed to have existed and to be continuing under the Note Purchase Agreement or
the Securities Purchase Agreement, as the case may be, from the date of such
Senior Creditor's and/or any other Senior Debt holder's initial receipt of such
Voided Payment until the full amount of such Voided Payment is restored to such
Senior Creditor and/or other holder of Senior Debt. During any continuance of
any such Event of Default, this Agreement shall be in full force and effect with
respect to the Subordinated Debt. To the extent that any Subordinating Creditor
has received any payments with respect to the Subordinated Debt subsequent to
the date of any Senior Creditors' and/or other Senior Debt holders' initial
receipt of such Voided Payment and such payments have not been invalidated,
declared to be fraudulent or preferential or set aside or are required to be
repaid to a trustee, receiver, or any other party under any bankruptcy act,
state or federal law, common law or equitable cause, such Subordinating Creditor
shall be obligated and hereby agrees that any such payment so made or received
shall be deemed to have been received in trust for the benefit of the Senior
Creditors and/or other holders of Senior Debt, and such Subordinating Creditor
hereby agrees to pay to the
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Senior Subordinated Creditors, upon demand, the full amount so received by such
Subordinating Creditor during such period of time to the extent necessary fully
to restore to the Senior Creditors and/or other holder of Senior Debt the amount
of such Voided Payment. Upon the payment and satisfaction in full in cash or
cash equivalent of all of the Senior Debt, which payment shall be final and not
avoidable, this Agreement will automatically terminate without any additional
action by any party hereto.
14. Notices. All notices and other communications which are
required and may be given pursuant to the terms of this Agreement shall be in
writing and shall be sufficient and effective in all respects if given in
writing or telecopied, delivered or mailed by registered or certified mail,
postage prepaid, as follows:
If to The 1818 Mezzanine Fund, L.P.:
c/o Brown Brothers Harriman & Co.
59 Wall Street
New York, New York 10005
Attention: Joseph P. Donlan
Telecopier No.: (212) 493-8429
with a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: David C.L. Frauman, Esq.
Telecopier No.: (212) 504-6666
If to PC Investment Company, Inc.:
3 Parklands Drive, 2nd Floor
Darren, Connecticut 06820
Attention: Evelyn Erb
Telecopier No.: (203) 655-1200
with a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: David C.L. Frauman, Esq.
Telecopier No.: (212) 504-6666
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If to Manufacturers Life Insurance Company (U.S.A.):
c/o ManuLife Financial
73 Tremont Street, Suite 1300
Boston, Massachusetts 02108-3915
Attention: Raymond L. Britt, Jr.
Telecopier No.: (617) 854-4403
with a copy to: Manufacturers Life Insurance Company
Corporate Law Department
200 Bloor Street East
Toronto, Ontario M4WlES, Canada
Attention: William Dawson, Esq.
Telecopier No: (416) 926-56576
If to SFHY: The Structured Finance High Yield
Fund, LLC
c/o Prudential Investments-Structured
Finance Group
One Gateway Center, 11th Floor
Newark, New Jersey 07106-5311
Attention: Steven M. Tompson
Telecopier No. (973) 802-2147
with a copy to: Cadwalader, Wickersham & Taft
100 Maiden Lane
New York, New York 10038
Attention: David C.L. Frauman, Esq.
Telecopier No.: (212) 504-6666
If to any Subordinating Creditor, at the address set forth
opposite such Person's name on Schedule 1 hereto
If to the Borrower: 10302 Deerwood Park Boulevard,
Suite 100
Jacksonville, FL 32256
Attention: Keith B. Stein
Telecopier No.: (904) 996-2557
with copies to: Weil, Gotshal & Manges LLP
767 Fifth Avenue
New York, NY 10153
Attention: Howard Chatzinoff, Esq.
Telecopier No.: (212) 310-8007
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or such other address or addresses as any party hereto shall have designated by
written notice to the other parties hereto. Notices shall be deemed given and
effective upon the earlier to occur of (i) the third day following deposit
thereof in the U.S. mail or (ii) receipt by the party to whom such notice is
directed.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO THE PRINCIPLES OF CONFLICTS OF LAW.
16. Waiver of Jury Trial. EACH OF THE SUBORDINATING CREDITORS
AND THE BORROWER EACH HEREBY WAIVES ITS RIGHT TO A JURY TRIAL WITH RESPECT TO
ANY ACTION OR CLAIM ARISING OUT OF ANY DISPUTE IN CONNECTION WITH THIS
AGREEMENT, ANY RIGHTS OR OBLIGATIONS HEREUNDER OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS. EXCEPT AS PROHIBITED BY LAW, EACH OF THE SUBORDINATING
CREDITORS AND THE BORROWER HEREBY WAIVES ANY RIGHT WHICH IT MAY HAVE TO CLAIM OR
RECOVER IN ANY LITIGATION REFERRED TO IN THE PRECEDING SENTENCE ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES OR ANY DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES. EACH OF THE SUBORDINATING CREDITORS AND THE
BORROWER (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY SENIOR
CREDITOR AND/OR OTHER HOLDER OF SENIOR DEBT HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, THAT ANY SENIOR CREDITOR AND/OR OTHER HOLDER OF SENIOR DEBT WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS AND (B)
ACKNOWLEDGES THAT EACH OF THE SENIOR CREDITORS AND/OR OTHER HOLDERS OF SENIOR
DEBT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
WAIVERS AND CERTIFICATIONS CONTAINED HEREIN.
17. Miscellaneous. This Agreement may be executed in several
counterparts and by each party on a separate counterpart, each of which when so
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Agreement, it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against which enforcement is sought. A majority in interest of the Senior
Creditors and/or other holders of Senior Debt may, in their sole and absolute
discretion, waive any provisions of this Agreement benefiting such Persons;
provided, however, that such waiver shall be effective only if in writing and
signed by a majority in interest of the Senior Creditors, and shall be limited
to the specific provision or provisions expressly so waived. This Agreement
shall be binding upon the successors and assigns of the Subordinating Creditors
and the Borrower and shall inure to the benefit of the Senior Creditors and/or
other holders of Senior Debt and the Senior Creditors' and/or other holders' of
Senior Debt respective successors and assigns, any lender or lenders refunding
or refinancing any of the Senior Debt and their respective successors and
assigns, but shall not otherwise create any rights or benefits for any third
party. In the event that any lender or lenders refund or refinance any of the
Senior Debt, the terms "Event of Default," "Note Purchase Agreement,"
"Securities Purchase Agreement," "Restructuring Agreement," "Amended Notes,"
"Convertible Notes" and the like shall refer mutatis mutandis to the agreements
and instruments in favor of such lender or lenders and to the
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related definitions contained therein. This Agreement supercedes and replaces in
its entirety the Prior Subordination Agreement.
[SIGNATURES CONTAINED ON SUCCEEDING PAGES]
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
SENIOR CREDITORS: THE 1818 MEZZANINE FUND, L.P.
By: Brown Brothers Harriman & Co.,
its General Partner
By: /s/ JOSEPH P. DONLAN
----------------------------------------
Name: Joseph P. Donlan
Partner:
PC INVESTMENT COMPANY
By: /s/ EVELYN ERB
----------------------------------------
Name: Evelyn Erb
Title: Portfolio Manager
MANUFACTURERS LIFE INSURANCE
COMPANY (U.S.A.)
By: /s/ RAYMOND L. BRITT
----------------------------------------
Name: Raymond L. Britt
Title: Senior Managing Director
THE STRUCTURED FINANCE HIGH YIELD FUND, LLC
By: /s/ MICHAEL J. BOZZO
----------------------------------------
Name: Michael J. Bozzo
Title: Vice President
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SUBORDINATING CREDITORS: NOVA FINANCIAL CORPORATION
By: /s/ EXECUTED BY AUTHORIZED OFFICER
---------------------------------------
Name: Executed by Authorized Officer
Title:
NOVA CORPORATION
By: /s/ EXECUTED BY AUTHORIZED OFFICER
---------------------------------------
Name: Executed by Authorized Officer
Title:
/s/ STEPHEN L. GURBA
---------------------------------------
Stephen L. Gurba
/s/ EDGAR A. OTTO
---------------------------------------
Edgar A. Otto
/s/ GARY L. SHAPIRO
---------------------------------------
Gary L. Shapiro
BORROWER: NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
---------------------------------------
Keith B. Stein
Chief Executive Officer
13
<PAGE> 14
SCHEDULE 1
SUBORDINATING CREDITORS WITH ADDRESSES
Nova Financial Corporation
1400 Colorado Street, C
Boulder City, Nevada 89005
Nova Corporation
1400 Colorado Street, C
Boulder City, Nevada 89005
Stephen L. Gurba
Bullova Technologies
101 North Queen Street
P.O. Box 4787
Lancaster, PA 17604-4787
Edgar A. Otto
Congress Point Financial Corp.
6400 Congress Avenue, Suite 2800
Boca Raton, FL 33487
Gary L. Shapiro
National Financial Companies LLC
Via Mizner Financial Plaza, Suite 200
700 South Federal Highway
Boca Raton, Florida 33432
14
<PAGE> 1
EXHIBIT 10.91
EXHIBIT D
RELEASE AND COVENANT NOT TO SUE
Each of National Auto Finance Company L.P., a Delaware limited
partnership, National Auto Finance Corporation, a Delaware corporation, Nova
Financial Corporation, a Delaware corporation, Nova Corporation, a Delaware
corporation, Gary L. Shapiro, Edgar A. Otto and Stephen L. Gurba, for itself or
himself and on behalf of its or his current and former directors, officers,
employees, partners, subsidiaries, divisions, affiliates, predecessors,
successors and assigns (collectively, the "RELEASORS"), in exchange for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, releases and discharges each of National Auto Finance Company,
Inc., a Delaware corporation (the "COMPANY"), The 1818 Mezzanine Fund, L.P., a
Delaware limited partnership, PC Investment Company, a Delaware corporation,
Progressive Investment Company, Inc., a Delaware corporation, Manufacturers Life
Insurance Company (U.S.A.), a Michigan corporation, and The Structured Finance
High Yield Fund, LLC, a Delaware limited liability company, and each of their
respective subsidiaries, divisions, parent organizations, and current and former
directors, officers, partners, owners, members, managing directors, agents,
associates, employees, affiliates, executors, administrators, predecessors
(which, for purposes of this Release and Covenant Not to Sue, shall not include
National Auto Finance Company, L.P.), successors, personal representatives and
assigns (collectively, the "RELEASEES") from all known and unknown actions,
causes of action, suits, debts, dues, sums of money, accounts, bonds, bills,
covenants, contracts, controversies, agreements, promises, damages, judgments,
executions, claims and demands whatsoever, in law or equity (collectively,
"CAUSES OF ACTION"), which against the Releasees the Releasors ever had, now
have, or hereafter can, shall or may have, by reason of any matter, cause or
thing whatsoever from the beginning of this world to the day of this Release and
Covenant Not to Sue, except such as may arise from a breach of (i) any of the
terms of the Restructuring Documents (as such term is defined in that certain
Restructuring Agreement, dated as of even date herewith, by and among the
Releasors and the Releasees (the "RESTRUCTURING AGREEMENT")), (ii) any
indemnification obligation, whether contained in the Company's organizational
documents or arising out of any written contractual arrangement, which the
Company may have to any of the Releasors, including in connection with those
certain actions pending on the date hereof against the Company and certain of
the Releasors, captioned Peckerman v. National Auto Finance Company, Inc., et
al. and Rooks, et al. v. National Auto Finance Company, Inc. (an
"INDEMNIFICATION OBLIGATION"), and (iii) the terms of the Company's Series A
Preferred Stock held by the Releasors.
The foregoing release notwithstanding, each of the Releasors, in
exchange for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, agrees not to bring any Causes of Action, at law
or in equity, in any court, administrative proceeding or other tribunal in the
United States or any foreign country, which any Releasor may have had, now has,
or hereafter can, shall or may have, against any Releasee by reason of any
actions or omissions on the part of any Releasee with respect to or relating to
the Company, including, without limitation, any actions or omissions relating to
or arising out of the Restructuring Documents and the voting of the Proxy (as
such terms are defined in the Restructuring Agreement), except such as may arise
from (i) the breach by any of the Releasees of any term of (a) the Restructuring
Agreement, (b) the Junior Restructuring Documents (as such term is defined in
the Restructuring Agreement), (c) the shares of the Company's Series A Preferred
Stock held by any of the Releasors, and (d) any other written contractual
obligation in
<PAGE> 2
full force and effect on the date hereof owing from the Releasees to the
Releasors, (ii) the failure on the part of the Company to observe or fulfill an
Indemnification Obligation, and (iii) any action or omission on the part of the
Releasees that is directed solely at, and is specifically discriminatory
against, any of the Releasors. The foregoing covenant not to sue shall not
operate as a bar or limitation on the right of the Releasors to assert any Cause
of Action with respect to or relating to the Company in defense or counterclaim
to any Cause of Action asserted by the Releasors against the Releasees.
This Release and Covenant Not to Sue is the release contemplated by,
and attached as Exhibit D to, the Restructuring Agreement.
IN WITNESS WHEREOF, each of the Releasors has duly executed this
Release and Covenant Not to Sue this 7th day of April, 1999.
NATIONAL AUTO FINANCE COMPANY, L.P.
By: National Auto Finance Corporation,
its general partner
By: /s/ GARY L. SHAPIRO
-----------------------------------------
Name: Gary L. Shapiro
Title: President
/s/ EDGAR A. OTTO
-----------------------------------------
Edgar A. Otto
Vice President
NATIONAL AUTO FINANCE CORPORATION
By: /s/ GARY L. SHAPIRO
-----------------------------------------
Name: Gary L. Shapiro
Title: President
/s/ EDGAR A. OTTO
-----------------------------------------
Edgar A. Otto
Vice President
NOVA FINANCIAL CORPORATION
By: /s/ GARY L. SHAPIRO
-----------------------------------------
Name: Gary L. Shapiro
Title: President
/s/ EDGAR A. OTTO
-----------------------------------------
Edgar A. Otto
Vice President
NOVA CORPORATION
By: /s/ GARY L. SHAPIRO
-----------------------------------------
Name: Gary L. Shapiro
Title: President
/s/ EDGAR A. OTTO
-----------------------------------------
Edgar A. Otto
Vice President
-2-
<PAGE> 3
/s/ GARY L. SHAPIRO
-----------------------------------------
GARY L. SHAPIRO
/s/ EDGAR A. OTTO
-----------------------------------------
EDGAR A. OTTO
/s/ STEPHEN L. GURBA
-----------------------------------------
STEPHEN L. GURBA
-3-
<PAGE> 1
EXHIBIT 10.92
EXHIBIT C
RELEASE
Each of The 1818 Mezzanine Fund, L.P., a Delaware limited partnership
(the "FUND"), PC Investment Company, a Delaware corporation ("PCI"), Progressive
Investment Company, Inc., a Delaware corporation ("PROGRESSIVE"), Manufacturers
Life Insurance Company (U.S.A.), a Michigan corporation ("ML"), and The
Structured Finance High Yield Fund, LLC, a Delaware limited liability company
("SFHY"), for itself and on behalf of its parent, subsidiaries, affiliates,
partners, members, officers, directors, employees, agents, successors and
assigns (collectively, the "RELEASORS"), in exchange for good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
releases and discharges National Auto Finance Company, Inc., a Delaware
corporation (the "COMPANY") and its subsidiaries and divisions, and each and all
of their respective current and former directors, officers, employees, agents
and representatives (in their capacity as such) and their respective executors,
administrators, predecessors, successors, personal representatives and assigns
(collectively, the "RELEASEES") from all known and unknown actions, causes of
action, suits, debts, dues, sums of money, accounts, bonds, bills, covenants,
contracts, controversies, agreements, promises, damages, judgments, executions,
claims and demands whatsoever, in law or equity, which against the Releasees the
Releasors ever had, now have, or hereafter can, shall or may have, by reason of
any matter, cause or thing relating to the Company from the beginning of the
world to the date of this Release, provided, however, that this Release shall
not be deemed to release the Company from performing its contractual obligations
under the Restructuring Documents (as such term is defined in that certain
Restructuring Agreement, dated as of even date herewith, by and among the
Company, National Auto Finance Company, L.P., National Auto Finance Corporation,
Nova Financial Corporation, Nova Corporation, Gary L. Shapiro, Edgar A. Otto,
Stephen L. Gurba and the Releasors (the "RESTRUCTURING AGREEMENT").
This Release is the release contemplated by, and attached as Exhibit C
to, the Restructuring Agreement.
IN WITNESS WHEREOF, each of the Releasors has duly executed this
Release this 7th day of April, 1999.
THE 1818 MEZZANINE FUND, L.P.
By: Brown Brothers Harriman and Co.,
its General Partner
By: /s/ JOSEPH P. DONLAN
------------------------------------
Name: Joseph P. Donlan
Title: Senior Manager
<PAGE> 2
PC INVESTMENT COMPANY
By: /s/ EVELYN ERB
------------------------------------
Name: Evelyn Erb
Title: Portfolio Manager
PROGRESSIVE INVESTMENT COMPANY, INC.
By: /s/ EVELYN ERB
------------------------------------
Name: Evelyn Erb
Title: Portfolio Manager
MANUFACTURERS LIFE INSURANCE COMPANY
(U.S.A.)
By: /s/ RAYMOND L. BRITT
------------------------------------
Name: Raymond L. Britt
Title: Senior Managing Director
THE STRUCTURED FINANCE HIGH YIELD
FUND, LLC
By: /s/ MICHAEL J. BOZZO
------------------------------------
Name: Michael J. Bozzo
Title: Vice President
-2-
<PAGE> 1
EXHIBIT 10.93
-------------------------------------------------------------
NATIONAL FINANCIAL AUTO RECEIVABLES MASTER TRUST
(f/k/a NAFCO AUTO RECEIVABLES MASTER TRUST)
AMENDED AND RESTATED
POOLING AND ADMINISTRATION AGREEMENT
dated as of December 8, 1994
among
NATIONAL FINANCIAL AUTO FUNDING TRUST II
(successor to NATIONAL FINANCIAL AUTO FUNDING TRUST, f/k/a NAFCO FUNDING
TRUST),
as Transferor,
NATIONAL AUTO FINANCE COMPANY INC.,
(f/k/a NATIONAL AUTO FINANCE COMPANY L.P.)
as the Administrator,
and
BANKERS TRUST COMPANY,
as Trustee
-------------------------------------------------------------
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS; TRANSITIONAL MATTERS
Section 1.01 Definitions ...........................................................................................1
ARTICLE II
CONVEYANCE OF CERTAIN ASSETS;
ISSUANCE OF CERTIFICATES
Section 2.01 Creation of the Trust: Conveyance of Certain Assets ..................................................1
Section 2.02 Acceptance by Trustee ................................................................................3
Section 2.03 Representations and Warranties of NAFCO Relating to the Trust Assets .................................3
Section 2.04 Repurchase Upon Breach ...............................................................................6
Section 2.05 No Assumption of Obligations Relating to Receivables Related Transferred Assets
or Contracts..........................................................................................................6
ARTICLE III
ADMINISTRATION OF RECEIVABLES
Section 3.01 Acceptance of Appointment and Other Matters Relating to the Administration........................... 6
Section 3.02 Duties of the Administrator and NAFCO ................................................................7
Section 3.03 Compensation .........................................................................................9
Section 3.04 Records of the Administrator and Reports to be Prepared by the Administrator.........................10
Section 3.05 Rights of the Trustee ...............................................................................12
Section 3.06 Further Action Evidencing Transfers .................................................................13
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01 Rights of Certificateholders ........................................................................14
Section 4.02 Establishment of Trust Accounts .....................................................................14
Section 4.03 Distributions .......................................................................................15
Section 4.04 Reserved ............................................................................................19
Section 4.05 Establishment of Reserve Fund .......................................................................19
Section 4.06 Application of Reserve Fund .........................................................................19
Section 4.07 Investment of Funds in Trust Accounts ...............................................................19
Section 4.08 Attachment of Trust Accounts ........................................................................20
Section 4.09 Release of Assets ...................................................................................20
</TABLE>
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ARTICLE V
REPORTS TO CERTIFICATEHOLDERS
Section 5.01 Information to Certificateholders ....................................................................20
Section 5.02 Notice of Early Liquidation at Seller Election .......................................................20
Section 5.03 Annual Tax Information ...............................................................................21
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates ....................................................................................21
Section 6.02 Authentication of Certificates ......................................................................22
Section 6.03 Registration of Transfer an Exchange of Certificates.................................................22
Section 6.04 Mutilated, Destroyed, Lost or Stolen Certificates ...................................................25
Section 6.05 Persons Deemed Owners ...............................................................................25
Section 6.06 Appointment of Paying Agent .........................................................................25
Section 6.07 Access to List of Certificateholders' Names and Addresses............................................26
Section 6.08 Authenticating Agent.................................................................................26
Section 6.09 Tax Treatment .......................................................................................28
Section 6.10 Changes in Amount of Certificates ...................................................................28
ARTICLE VII
NAFCO
Section 7.01 Representations and Warranties of NAFCO Relating to NAFCO and the Transaction Documents .............28
Section 7.02 Covenants of NAFCO ..................................................................................32
Section 7.03 Indemnification by the Class C Certificateholders ...................................................36
ARTICLE VIII
THE ADMINISTRATOR
Section 8.01 Representations and Warranties of the Administrator .................................................37
Section 8.02 Covenants of the Administrator ......................................................................39
Section 8.03 Merger or Consolidation of, or Assumption of the Obligations of, the Administrator...................40
Section 8.04 Administrator Liability..............................................................................41
Section 8.05 Limitation on Liability of the Administrator and Others..............................................41
</TABLE>
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ARTICLE IX
AMORTIZATION EVENTS
<S> <C> <C>
Section 9.01 Amortization Events ..................................................................................42
Section 9.02 Remedies .............................................................................................44
Section 9.03 Additional Rights Upon the Occurrence of Certain Events ..............................................44
ARTICLE X
ADMINISTRATOR DEFAULTS
Section 10.01 Administrator Defaults ...............................................................................45
Section 10.02 Trustee to Act; Appointment of Successor .............................................................47
Section 10.03 Notification Of Administrator Default: Notification of Appointment of Successor
Administrator ........................................................................................................49
ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee ....................................................................................50
Section 11.02 Certain Matters Affecting The Trustee ................................................................52
Section 11.03 Limitation on Liability of Trustee ...................................................................54
Section 11.04 Trustee May Deal with Other Parties ........................ . . .....................................55
Section 11.05 Administrator Pay Trustee's Fees and Expenses and Fees and Expenses under the
Custodian Agreement ..................................................................................................55
Section 11.06 Eligibility Requirements for Trustee .................................................................55
Section 11.07 Resignation or Removal of Trustee ....................................................................56
Section 11.08 Successor Trustee ....................................................................................57
Section 11.09 Merger or Consolidation of Trustee ...................................................................57
Section 11.10 Appointment of Co-Trustee or Separate Trustee ........................................................57
Section 11.11 Tax Returns ..........................................................................................59
Section 11.12 Trustee May Enforce Claims Without Possession of Certificates ........................................59
Section 11.13 Suits for Enforcement ................................................................................59
Section 11.14 Rights of Certificateholders to Direct Trustee .......................................................59
Section 11.15 Representations and Warranties of Trustee ............................................................60
Section 11.16 Maintenance of Office or Agency ......................................................................60
Section 11.17 No Bond ..............................................................................................60
Section 11.18 Statements ...........................................................................................60
ARTICLE XII
TERMINATION
Section 12.01 Termination of Trust .................................................................................61
Section 12.02 Final Distribution ...................................................................................61
</TABLE>
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Section 12.03 Rights Upon Termination of the Trust .................................................................62
Section 12.04 Optional Repurchase of Investor Interest .............................................................62
ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment, Waiver Etc ...............................................................................63
Section 13.02 Actions by Certificateholders ........................................................................64
Section 13.03 Limitation on Rights of Certificateholders ...........................................................65
Section 13.04 Governing Law ........................................................................................66
Section 13.05 Notices ..............................................................................................66
Section 13.06 Severability of Provision ............................................................................66
Section 13.07 Certificates Nonassessable and Fully Paid ............................................................66
Section 13.08 Further Assurances ...................................................................................67
Section 13.09 Nonpetition Covenant .................................................................................67
Section 13.10 No Waiver; Cumulative Remedies .......................................................................67
Section 13.11 Counterparts .........................................................................................67
Section 13.12 Third-Party Beneficiaries ............................................................................67
Section 13.13 Integration ..........................................................................................68
Section 13.14 Binding Effect; Assignability; Survival of Provision .................................................68
Section 13.15 Recourse to NAFCO ....................................................................................68
Section 13.16 Recourse to Trust Assets .............................................................................68
Section 13.17 Submission to Jurisdiction ...........................................................................68
Section 13.18 Waiver of Jury Trial .................................................................................69
Section 13.19 Limitation of Liability ..............................................................................69
Section 13.20 Covenants of National Auto Receivables Master Trust ..................................................69
Section 13.21 Class A Certificates .................................................................................70
Section 13.22 Conditions Precedent .................................................................................70
Section 13.23 Non-Dealer Originations; Balloon Receivable ..........................................................70
Section 13.24 Release ..............................................................................................71
Section 13.25 Post Closing Covenants ...............................................................................71
Section 13.26 Waiver of Prior Amortization Events and Administrator Defaults .......................................71
</TABLE>
(iv)
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBITS
<S> <C>
Exhibit A Form of Certificate
Exhibit B Form of Servicing Agreement
Exhibit C Form of Distribution Date Statement
Exhibit D Trust Accounts
Exhibit E Form of Investor Letter
Exhibit F Form of Accountant's Agreed-Upon Procedures
Exhibit G Form of Borrowing Report
SCHEDULES
Schedule 7.01(h) Office of NAFCO and the Administrator where Records are maintained
Schedule 8.01(g) Schedule of Proceedings
APPENDIX
Appendix A Definitions
</TABLE>
(v)
<PAGE> 7
THIS AMENDED AND RESTATED POOLING AND ADMINISTRATION AGREEMENT,
dated as of December 8, 1994 (this "Agreement"), is by and among NATIONAL
FINANCIAL AUTO FUNDING TRUST II (successor to National Financial Auto Funding
Trust, f/k/a NAFCO Funding Trust), a Delaware business trust ("NAFCO"), as
transferor, NATIONAL AUTO FINANCE COMPANY, INC. (f/k/a National Auto Finance
Company L.P.), a Delaware corporation ("National Auto"), as initial
Administrator, and BANKERS TRUST COMPANY, a New York banking corporation, as
Trustee.
WHEREAS, the parties hereto have entered into a Pooling and
Administration Agreement, dated as of December 8, 1994 (the "Original Pooling
Agreement");
WHEREAS, the parties hereto have entered into various
amendments to the Original Pooling Agreement and now desire to further amend the
Original Pooling Agreement and restate it in its entirety, effective as of April
7, 1999 (the "Effective Date");
NOW THEREFORE, in consideration of the mutual agreements herein
contained, each party agrees as follows for the benefit of the other parties and
the Certificateholders to the extent provided herein:
ARTICLE I
DEFINITIONS; TRANSITIONAL MATTERS
Section 1.01 Definitions. Whenever used in this Agreement,
capitalized terms, unless otherwise defined herein, have the meanings that
Appendix A assigns to such terms. In addition, this Agreement shall be
interpreted in accordance with the conventions set forth in Parts B, C and D of
Appendix A.
ARTICLE II
CONVEYANCE OF CERTAIN ASSETS;
ISSUANCE OF CERTIFICATES
Section 2.01 Creation of the Trust; Conveyance of Certain
Assets.
(a) Upon the execution of this Agreement by the parties hereto,
there is hereby created National Financial Auto Receivables Master Trust
(f/k/a NAFCO Auto Receivables Master Trust).
(b) By execution and delivery of this Agreement, NAFCO does
hereby transfer, assign, set over and otherwise convey to the Trust, for
the benefit of the Certificateholders, all its right, title and interest
in, to and under, whether now existing or hereafter created, without
recourse except as expressly provided otherwise herein, (i) each Receivable
that will be, is or has been transferred by the Seller to NAFCO, pursuant
to the Purchase Agreement
<PAGE> 8
or NAFCO Trust Agreement, from and including the date on which
the first Purchase occurs under the Purchase Agreement to but excluding the
Purchase Termination Date, (ii) all Related Assets, (iii) the Seller
Transaction Documents (all of NAFCO's right, title and interest in, to and
under such Seller Transaction Documents and the Related Assets being herein
called the "Related Transferred Assets"), (iv) all funds from time to time
on deposit in each of the Trust Accounts representing Collections on, or
other proceeds of, the foregoing and, in each case, all certificates and
instruments, if any, from time to time evidencing such funds, all
Investment Proceeds, all claims thereunder or in connection therewith and
all interest, dividends, monies, instruments, securities and other property
from time to time received, receivable or otherwise distributed in respect
of or in exchange for any or all of the foregoing, and (v) all moneys due
or to become due and all amounts received or receivable with respect to any
of the foregoing and all proceeds of the foregoing. Such property shall
constitute the assets of the Trust (collectively, the "Trust Assets"). The
foregoing transfer, assignment, setover and conveyance to the Trust shall
be made to the Trustee, on behalf of the Trust, and each reference in this
Agreement to such transfer, assignment, setover and conveyance shall be
construed accordingly. In no event shall the Trust acquire any real estate
mortgages or interests in any real estate mortgages.
(c) In connection with the transfer described above in
subsection (b), NAFCO has recorded and filed or caused to be recorded and
filed, financing statements (and will record and file continuation
statements with respect to such financing statements when applicable) with
respect to the Trust Assets (whether now existing or hereafter created)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as are necessary or desirable to perfect, and maintain
perfection of, the transfer and assignment of the Trust Assets to the
Trust. The Trustee shall be under no obligation whatsoever to file such
financing statements, or continuation statements to such financing
statements, or to make any other filing under the UCC in connection with
such transfer unless otherwise instructed to do so by the Required
Certificateholders. In connection with the transfer described above in
subsection (b), NAFCO and the Administrator further agree to deliver to the
Trustee each Trust Asset (including any original documents or instruments
included in the Trust Assets as are necessary to effect such transfer) in
which the transfer of an interest is perfected under the UCC or otherwise
by possession. NAFCO or the Administrator shall deliver each such Trust
Asset to the Trustee immediately upon the transfer of any such Trust Asset
to the Trust pursuant to Section 2.01(b).
(d) In connection with the transfer described above in
subsection (b), NAFCO shall, on or prior to the Closing Date, mark the
master data processing records evidencing the Receivables with the
following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD TO NATIONAL
FINANCIAL AUTO FUNDING TRUST II (F/K/A NAFCO FUNDING TRUST)
PURSUANT TO A RECEIVABLES PURCHASE AGREEMENT, DATED AS OF
DECEMBER 8, 1994, BETWEEN NATIONAL AUTO FINANCE COMPANY INC.
(F/K/A NATIONAL AUTO FINANCE COMPANY L.P.), AS SELLER, AND
NATIONAL FINANCIAL AUTO FUNDING
2
<PAGE> 9
TRUST II (F/K/A NAFCO FUNDING TRUST); AND SUCH RECEIVABLES HAVE
BEEN TRANSFERRED TO NATIONAL FINANCIAL AUTO RECEIVABLES MASTER
TRUST (F/K/A NAFCO AUTO RECEIVABLES MASTER TRUST) PURSUANT TO A
POOLING AND ADMINISTRATION AGREEMENT, DATED AS OF DECEMBER 8,
1994, AMONG NATIONAL FINANCIAL AUTO FUNDING TRUST II (F/K/A
NAFCO FUNDING TRUST), AS TRANSFEROR, NATIONAL AUTO FINANCE
COMPANY INC (F/K/A NATIONAL AUTO FINANCE COMPANY L.P.), AS THE
ADMINISTRATOR, AND BANKERS TRUST COMPANY, AS TRUSTEE."
(e) Upon the request of NAFCO, the Trustee will cause the
Class B and Class C Certificates in authorized denominations evidencing the
entire interest in the Trust to be duly authenticated and delivered to or
upon the order of NAFCO pursuant to Section 6.02.
Section 2.02 Acceptance by Trustee. The Trustee hereby
acknowledges its acceptance on behalf of the Trust of all right, title and
interest to the property, now existing and hereafter created, conveyed to
the Trust pursuant to Section 2.01(b) and declares that it shall maintain
such right, title and interest, upon the trust herein set forth, for the
benefit of all Certificateholders, on the terms and subject to the
conditions hereinafter set forth.
Section 2.03 Representations and Warranties of NAFCO Relating
to the Trust Assets.
(a) Representations and Warranties. At the time that any
Receivable or Related Asset is sold or transferred by NAFCO to the Trust,
NAFCO hereby represents and warrants that:
(i) Characteristics of Receivables. Each Receivable (a)
shall have been originated in the United States of America by a
Dealer for the retail sale of a Financed Vehicle in the
ordinary course of such Dealer's business, shall have been
fully and properly executed by the parties thereto, shall have
been purchased by NAFCO from the Seller pursuant to the
Purchase Agreement (or contributed by the Seller to NAFCO
pursuant to NAFCO Trust Agreement), shall have been purchased
by the Seller from such Dealer under an existing dealer
agreement, and shall have been validly assigned by such Dealer
to the Seller, which in turn shall have been validly assigned
pursuant to the Purchase Agreement by the Seller to NAFCO in
accordance with its terms, (b) shall have created a valid,
subsisting, and enforceable first priority security interest in
favor of the Seller in the Financed Vehicle, which security
interest has been validly assigned pursuant to the Purchase
Agreement by the Seller to NAFCO, which in turn shall be
validly assigned by NAFCO to the Trustee, (c) shall contain
customary and enforceable provisions such that the rights and
remedies of the holder thereof shall be adequate for
realization against the collateral of the benefits of the
security, and (d) shall provide for level monthly payments
(provided that the payment in the first or last month in the
life of the Receivable may
3
<PAGE> 10
be minimally different from the level payment) that fully
amortize the Amount Financed over an original term of no
greater than 60 months and the related Contract has not been
modified since its issuance date. Notwithstanding the
foregoing, Receivables that constitute Non-Dealer Originations
and Balloon Receivables may be sold or transferred to the
Trust.
(ii) Compliance with Law. Each Receivable and the sale of
the Financed Vehicle shall have complied in all material
respects at the time it was originated or made and at the
execution of this Agreement shall comply in all material
respects with all requirements of applicable federal, state,
and local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the
Equal Credit Opportunity Act, the Fair Credit Reporting Act,
the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Magnuson-Moss Warranty Act, the Federal
Reserve Board's Regulations B and Z, and state adaptations of
the National Consumer Act and of the Uniform Consumer Credit
Code, and other consumer credit laws and equal credit
opportunity and disclosure laws.
(iii) Binding Obligation. Each Receivable shall represent
the genuine, legal, valid, and binding payment obligation in
writing of the Obligor, enforceable by the holder thereof in
accordance with its terms subject to the effect of bankruptcy,
insolvency, reorganization, or other similar laws affecting the
enforcement of creditors' rights generally. No Obligor on a
Contract is the United States of America, any state or local
governmental agency or instrumentality, or any of the
foregoing.
(iv) Security Interest in Financed Vehicle. Immediately
prior to the sale, assignment, and transfer thereof, each
Receivable shall be secured by a validly perfected first
priority security interest in the Financed Vehicle in favor of
the Seller as secured party or all necessary and appropriate
actions shall have been completed that would result in the
valid perfection of a first priority security interest in the
Financed Vehicle in favor of the Seller as secured party.
(v) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed
Vehicle have been released from the lien granted by the related
Receivable in whole or in part.
(vi) No Defenses. No Contract is subject to any asserted
reduction (including any reduction on account of any offsetting
account payable by NAFCO or the Seller to an Obligor or funds
of an Obligor held by NAFCO or the Seller), cancellation,
rebate (including any advertising rebate) or refund or any
dispute, offset, counterclaim, lien or defense whatsoever;
(vii) No Liens. To the best of NAFCO's knowledge, no liens
or claims shall have been filed for work, labor, or materials
relating to a Financed Vehicle that shall be liens prior to, or
equal with, the security interest in the Financed Vehicle
granted by the Contract.
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(viii) No Default. Except for payment defaults continuing
for a period of not more than 30 days, no default, breach,
violation, or event permitting acceleration under the terms of
any Receivable shall have occurred; and no continuing condition
that with notice or the lapse of time would constitute a
default, breach, violation, or event permitting acceleration
under the terms of any Receivable shall have arisen; and NAFCO
shall not waive any of the foregoing except as otherwise
permitted hereunder.
(ix) Insurance. The Seller, in accordance with its
customary procedures, shall have determined that the Obligor
has obtained or agreed to obtain physical damage insurance
covering the Financed Vehicle or the vehicle is protected by
force-placed insurance.
(x) Title. It is the intention of NAFCO that the transfer
and assignment herein contemplated constitute a sale of the
Receivables from NAFCO to the Trust and that the beneficial
interest in and title to the Receivables not be part of NAFCO's
estate in the event of the filing of a bankruptcy petition by
or against NAFCO under any bankruptcy law. No Receivable has
been sold, transferred, assigned, or pledged by NAFCO to any
Person other than the Trustee on behalf of the Trust.
Immediately prior to the transfer and assignment herein
contemplated, NAFCO had good and marketable title to each
Receivable free and clear of all Liens, security interests, and
rights of others and no offsets, defenses or counterclaims
against it had been asserted or threatened and, immediately
upon the transfer thereof, the Trustee for the benefit of the
Certificateholders shall have good and marketable title to each
Receivable, free and clear of all Liens, security interests,
and rights of others and no offsets, defenses or counterclaims
against it have been asserted or threatened; and the transfer
has been perfected under the UCC.
(xi) Possession; One Contract. With respect to each
Receivable, there is only one Contract, which Contract shall be
held by the Custodian on behalf of the Trustee pursuant to the
Custodian Agreement.
(xii) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give
the Trustee a first priority perfected ownership interest in
the Receivables shall have been made and shall remain in full
force and effect.
(xiii) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(xiv) Delinquency. No Receivable is more than 30 days past
due.
(b) Notice of Breach. The representations and warranties set
forth in this Section 2.03 shall survive the transfer and assignment of the
Receivables and the Related Transferred Assets to the Trust. Upon discovery
by NAFCO, the Administrator or a Responsible Officer
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of the Trustee of a breach of any of the representations and
warranties set forth in this Section 2.03, the party discovering such
breach shall give written notice to the other parties to this Agreement
within three Business Days following such discovery. The Trustee's
obligations in respect of discovering any such breach are limited as
provided in Section 11.02(g).
Section 2.04 Repurchase Upon Breach. NAFCO, the Administrator
or a Responsible Officer of the Trustee, as the case may be, shall inform the
other parties to the Agreement promptly, in writing, upon the discovery of any
breach of NAFCO representations and warranties pursuant to Section 2.03 unless
the breach shall have been cured by the last day of the first full Calculation
Period following the discovery by NAFCO, or receipt of notice by NAFCO, of such
breach, NAFCO shall have an obligation, and the Trustee shall (provided that it
either has made such discovery or has received such notice thereof) enforce such
obligation of NAFCO to repurchase any Receivable materially and adversely
affected by the breach as of such last day. In consideration of the purchase of
the Receivable, NAFCO shall remit, or cause the Seller to remit, to the
Certificate Account on the Business Day immediately preceding the next
succeeding Distribution Date, the Purchase Amount. Except as provided in the
preceding sentence, the sole remedy of the Trustee, the Trust, or the
Certificateholders with respect to a breach of NAFCO's representations and
warranties pursuant to Section 2.03 shall be to require NAFCO to repurchase
Receivables pursuant to this Section 2.04 or to enforce the obligation of the
Seller to repurchase such Receivables pursuant to the Purchase Agreement.
Section 2.05 No Assumption of Obligations Relating to
Receivables, Related Transferred Assets or Contracts. The transfer, assignment,
setover and conveyance described above in Section 2.01 does not constitute and
is not intended to result in a creation or an assumption by the Trust, the
Trustee or any Certificateholder of any obligation of the Administrator, NAFCO
or any other Person in connection with the Receivables or the Related
Transferred Assets or under the related Contracts or any other agreement or
instrument relating thereto, including any obligation to any Obligors. None of
the Trustee, the Trust or any Certificateholder shall have any obligation or
liability to any Obligor or other customer or client of the Seller (including
any obligation to perform any of the obligations of the Seller to any Obligor
under any such Receivables, related Contracts or any other related purchase
orders or other agreements or otherwise). No such obligation or liability is
intended to be assumed by the Trustee, the Trust or any Certificateholder
hereunder, and any such assumption is hereby expressly disclaimed.
ARTICLE III
ADMINISTRATION OF RECEIVABLES
Section 3.01 Acceptance of Appointment and Other Matters
Relating to the Administrator.
(a) The administering of the Receivables and the Related
Transferred Assets shall be conducted by the Administrator hereunder in
accordance with this Section 3.01. Until National Auto is terminated
pursuant to Section 10.01, National Auto is hereby designated
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as, and National Auto hereby agrees to act as, the Administrator under this
Agreement and the other Transaction Documents with respect to the
Receivables and the Related Transferred Assets, and the Certificateholders
by their acceptance of the Certificates consent to National Auto acting as
the Administrator.
(b) Termination. The designation of the Administrator under
this Agreement shall automatically cease and terminate upon termination of
the Trust pursuant to Section 12.01.
(c) Resignation of the Administrator. The Administrator shall
not resign from the obligations and duties hereby imposed on it except upon
the Administrator's determination that (i) the performance of its duties
hereunder is no longer permissible under applicable law and (ii) there is
no reasonable action which the Administrator could take to make the
performance of its duties hereunder permissible under applicable law. If
the Administrator makes a determination that it must resign for the reasons
stated above, the Administrator shall, prior to the tendering of its
resignation, deliver to the Trustee an Opinion of Counsel for the
Administrator, in form and substance reasonably satisfactory to the
Trustee, confirming the satisfaction of the conditions set forth in clause
(i) of the preceding sentence. No resignation by the Administrator shall
become effective until the Trustee or a Successor Administrator shall have
assumed the responsibilities and obligations of the Administrator in
accordance with Section 10.02 hereof. If the Administrator has tendered its
resignation and no Successor Administrator has been appointed, the Trustee
may appoint, or may petition a court of competent jurisdiction to appoint,
a Successor Administrator hereunder. The Trustee shall give prompt notice
to the Applicable Rating Agencies of the appointment of any Successor
Administrator.
Section 3.02 Duties of the Administrator and NAFCO.
(a) Duties of Administrator in General. The Administrator shall
monitor the servicing of and administer the Receivables and the Related
Transferred Assets and, subject to the terms and provisions of this
Agreement, shall have full power and authority, acting alone or through any
Person properly designated by it (provided that in any event the
Administrator shall remain liable for all actions taken), to do any and all
things in connection with such administration which it may deem necessary
or appropriate. The Trustee shall execute and deliver to the Administrator
any powers of attorney or other instruments or documents that are prepared
by the Administrator and stated in an Officer's Certificate to be necessary
or appropriate to enable the Administrator to carry out its administrative
duties hereunder. The Administrator shall exercise the same care and apply
the same policies with respect to the administration of the Receivables and
the Related Transferred Assets as is customary for administering
Receivables and that it would exercise and apply if it owned such
Receivables and the Related Transferred Assets.
The Administrator shall take or cause to be taken all such
actions as it deems necessary or appropriate to collect each Receivable and
Related Transferred Asset (and shall cause any sub-Servicer to take or cause to
be taken all such actions as the Administrator deems necessary or appropriate to
collect each Receivable and Related Transferred Asset for which such
sub-Servicer is responsible in its capacity as sub-Servicer) from time to time,
all in accordance with applicable
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law. The Administrator has appointed Loan Servicing Enterprise to be the Backup
Servicer pursuant to the Backup Servicing Agreement. The Administrator shall not
appoint a Servicer or sub-Servicer without the prior written consent of the
Required Certificateholders.
Without limiting the generality of the foregoing and subject to the next
preceding paragraph and Section 10.01, the Administrator or its designee is
hereby authorized and empowered, unless such power and authority is revoked on
account of the occurrence of an Administrator Default pursuant to Section 10.01,
(i) to instruct the Trustee to make withdrawals and payments from the Trust
Accounts as set forth in this Agreement, (ii) to execute and deliver, on behalf
of the Trust for the benefit of the Certificateholders, any and all instruments
of satisfaction or cancellation, or of partial or full release or discharge, and
all other comparable instruments, with respect to the Receivables and the
Related Transferred Assets, (iii) to make any filings, reports, notices,
applications and registrations with, and to seek any consents or authorizations
from, the Securities and Exchange Commission and any state securities authority
on behalf of the Trust as may be necessary or appropriate to comply with any
federal or state securities laws or reporting requirements or other laws or
regulations, and (iv) after the delinquency of any Receivable or any default in
connection with a Related Transferred Asset and to the extent permitted under
and in compliance with all applicable laws, rules, regulations, judgments,
orders and decrees of courts and other governmental authorities (whether
federal, state, local or foreign) and all other tribunals, to commence or settle
collection proceedings with respect to such Receivable and otherwise to enforce
the fights and interests of the Trust and the Certificateholders in, to and
under such Receivable or Related Transferred Asset (as applicable). The Trustee
shall promptly comply with the instructions of the Administrator to withdraw
funds and make payments from the Trust Accounts pursuant to the terms of this
Agreement.
(b) Modification of Receivables, Etc. So long as no default
shall have occurred and be continuing, the Administrator may adjust, and
may permit any sub-Servicer to adjust the outstanding unpaid balance of any
Receivable, or otherwise modify the terms of any Receivable or amend,
modify or waive any term or condition of any Contract related thereto, all
as it may determine to be appropriate to maximize collection thereof, in
accordance with the Credit and Collection Policy. The Administrator shall,
or shall cause the sub-Servicer to, write off Receivables from time to time
in accordance with the terms of this Agreement (including Section 7.02(n)).
(c) Authorization to Act as NAFCO's Agent. Without limiting the
generality of Section 3.02(a), NAFCO hereby appoints the Administrator as
its agent for the following purposes: (i) specifying accounts to which
payments are to be made to NAFCO, (ii) making transfers among, and deposits
to and withdrawals from, all deposit accounts of NAFCO for the purposes
described in the Transaction Documents, (iii) arranging payment by NAFCO of
all fees, expenses and other amounts payable by NAFCO pursuant to the
Transaction documents, (iv) and taking any other action not specifically
required to be taken by the NAFCO Trustee hereunder or under any other
Transaction Documents. NAFCO irrevocably agrees that (A) it shall be bound
by all actions taken by the Administrator pursuant to the preceding
sentence, and (B) the Trustee and the banks holding all deposit accounts of
NAFCO are entitled to accept submissions, determinations, selections,
specifications,
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transfers, deposits and withdrawal requests, and payments from the
Administrator on behalf of NAFCO.
(d) Grant of Power of Attorney. NAFCO and the Trustee hereby
each grant to the Administrator a power of attorney, with full power of
substitution, to take in the name of NAFCO and the Trustee all steps which
are necessary or appropriate to endorse, negotiate, deposit or otherwise
realize on any writing of any kind held or transmitted by NAFCO or
transmitted or received by the Trustee (whether or not from NAFCO) in
connection with any Receivable or Related Transferred Asset. The power of
attorney that NAFCO and the Trustee have granted to the Administrator
pursuant to this Section 3.02(d) may be revoked by the Trustee, and shall
be revoked by NAFCO, in the event of an Administrator Default. In
exercising its power granted hereby, the Administrator shall take
directions from the Trustee, if any, arising out of the exercise of the
rights granted under Section 11.14.
(e) Turnover of Collections. If NAFCO, the Administrator or any
of their respective agents or representatives shall at any time receive any
cash, checks or other instruments constituting Collections including any
payments received by NAFCO on account of the Receivables, such recipient
shall segregate such payments and hold such payments in trust for, and in a
manner acceptable to the Trustee and shall, promptly upon receipt (and in
any event within one Business Day following receipt), remit all such cash,
checks and instruments, duly endorsed or with duly executed instruments of
transfer, to the Certificate Account.
(f) Credit and Collection Policies. The Administrator shall
comply in all material respects with its Credit and Collection Policy in
regard to each Receivable and the Related Assets and the Contracts related
to each such Receivable, except where the failure so to comply,
individually or in the aggregate for all such failures, would not
reasonably be expected to have a Material Adverse Effect. The Credit and
Collection Policy shall not be modified or amended without the prior
written consent of the Required Certificateholders (such consent not to be
unreasonably withheld) except where such modification or amendment would
not have a Material Adverse Effect on the Certificateholders.
(g) Turnover of Contract Files. Within five (5) Business Days
after the transfer of Contracts to the Trust, the Administrator shall have
delivered to the Custodian (i) the fully executed original of the Contract,
(ii) the certificate of title with respect thereto, and (iii) such other
documents as the Administrator chooses to maintain in its files in
accordance with customary practices and procedures to evidence that a
financed vehicle is owned by the obligor and subject to the interest of the
Administrator as first lienholder or secured party.
Section 3.03 Compensation. The Administrator, as full compensation for
activities performed by the Administrator under this Agreement and the other
Transaction Documents, shall be entitled to a fee (the "Administration Fee") in
respect of each Calculation Period (or portion thereof) prior to the termination
of the Trust pursuant to Section 12.01, payable in arrears on each Distribution
Date as set forth in Section 4.03(a) hereof. The Administration Fee shall be
paid out of funds in the Certificate Account as more fully described in Article
IV, and shall be payable to the Administrator solely to the extent amounts are
available for payment pursuant to Article IV. In no
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event shall the Trust, the Trustee or the Certificateholders be
liable for payment of the Administration Fee.
The fees, costs and expenses of any sub-Servicer, the Trustee,
the Paying Agent, the Authenticating Agent, and the Transfer Agent and
Registrar, and certain other costs and expenses payable from the
Administration Fee pursuant to other provisions of this Agreement, and all
other fees and expenses that are not expressly stated in this Agreement or
any Supplement to be payable by the Trust or NAFCO, other than Federal,
state, local and foreign income and franchise taxes, if any, or any
interest or penalties with respect thereto, of the Trust, shall be paid out
of the Administration Fee and shall be paid by the Administrator from the
funds that constitute the Administration Fee. The Administration Fee shall
be paid to the Administrator solely to the extent that funds are available
to make such payment pursuant to Section 4.03, and there shall be no
recourse to NAFCO for all or any part of the Administration Fee that is
payable from time to time if such funds are at any time insufficient to pay
the Administration Fee.
Section 3.04 Records of the Administrator and Reports to be
Prepared by the Administrator.
(a) Keeping of Records and Books of Account. The Administrator
shall maintain at all times accurate and complete books, records and
account relating to the Receivables, Related Transferred Assets and
Contracts and all Collections thereon in which timely entries shall be
made.
The Administrator shall maintain and implement administrative
and operating procedures (including an ability to generate or cause to be
generated duplicates of Records evidencing Receivables and the Related
Transferred Assets in the event of the destruction of the originals
thereof), and shall keep and maintain all documents, books, records and
other information which the Administrator deems reasonably necessary for
the collection of all Receivables and Related Transferred Assets.
(b) Receivables Reviews. The Administrator shall, during
regular business hours upon reasonable advance notice permit the Trustee or
the Class B Certificateholder and their respective agents or
representatives, at the expense of the Administrator, (i) to examine and
make copies of and abstracts from, and to conduct accounting reviews of,
all Records in the possession or under the control of the Administrator
relating to the Receivables or Related Assets generated by National Auto
and (ii) to visit the offices and properties of the Administrator for the
purpose of examining such materials described in clause (i) above, and to
discuss matters relating to any Receivables or any Related Assets of the
Administrator or the Administrator's performance hereunder with any of the
Authorized Officers of National Auto or, with the prior consent of an
Authorized Officer of National Auto, with employees of National Auto having
knowledge of such matters (the examinations set forth in the foregoing
clauses (i) and (ii) being herein called an "Administrator Receivables
Review"). The Trustee or Class B Certificateholder and their respective
agents or representatives shall be entitled to conduct Administrator
Receivables Reviews whenever the Trustee or Class B Certificateholder, in
its reasonable judgment, deems an Administrator Receivables Review
appropriate.
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(c) Distribution Date Statement. The Administrator shall on
each Determination Date, by 12:00 noon (New York City time), prepare and
deliver to the Trustee, the Applicable Rating Agencies and the
Certificateholders a report substantially in the form of Exhibit C or in
such other form as is reasonably acceptable to the Trustee and the
Administrator (each such report in the form of Exhibit C (as supplemented)
or such other forms being herein called a "Distribution Date Statement");
provided that, with respect to any Distribution Date Statement, if a Force
Majeure, a Distribution Date Statement containing all information for each
day required to be included therein shall be prepared and delivered to the
Trustee, the Certificateholders and the Applicable Rating Agencies by 1:00
p.m. on the second Business Day from the date such Distribution Date
Statement was otherwise required to be delivered.
(d) Borrowing Reports. Prior to 10:00 a.m. New York City time,
on the Business Day on which NAFCO requests a Certificateholder to provide
funds in order to increase the principal amount of such Class A Certificate
or Class B Certificate, the Administrator shall prepare and deliver to the
Trustee a report substantially in the form of Exhibit G (as the same may be
supplemented in accordance with any Supplement) or in such other form as is
reasonably acceptable to the Trustee (each such report in the form of
Exhibit G (as supplemented) or such other forms being herein called a
"Borrowing Report").
(e) Compliance Statements. The Administrator shall deliver to
NAFCO and to the Trustee, on or before April 30 of each year (beginning
April 30, 1995) a certificate signed by a financial officer stating that
(1) a review of its activities relating to the administration of the
Receivables during the prior year ending December 31 and performance under
this Agreement has been made under such officer's supervision, and (2) to
the best of such officer's knowledge, based on such review, the
Administrator has fulfilled all its obligations performance under this
Agreement throughout the period covered by such certificate, or, if there
has been a default in the fulfillment of any such obligations, specifying
each such default known to such officer and the nature and status thereof.
(f) Annual Independent Public Accountant's Administration
Report. The Administrator shall, no later than September 30 of each year
(commencing September 30, 1995), cause either Arthur Andersen & Co., Price
Waterhouse, Coopers & Lybrand, Deloitte & Touche, Ernst & Young, KPMG Peat
Marwick or BDO Siedman (or any of their successors in interest) (which firm
may also render other services to the Administrator or any Affiliate
thereof) to furnish a report, as of June 30 of such year, to NAFCO, the
Seller, each Applicable Rating Agency and the Trustee, which accounting
firm is performing certain agreed upon procedures with respect to certain
documents and records relating to the administration of the Receivables set
forth as Exhibit F hereto and which accounting firm states that, based upon
such agreed-upon procedures, no matters came to its attention that caused
it to believe that such administration was not conducted in compliance with
this Agreement except for such exceptions or errors as such firm shall
believe to be immaterial and such other exceptions as shall be set forth in
such statement. In the event such firm requires the Trustee to agree to the
procedures performed by such firm, NAFCO shall direct the Trustee in
writing to so agree; it being understood and agreed that the Trustee will
deliver
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such letter of agreement in conclusive reliance upon the direction of
NAFCO, and the Trustee makes no independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity, or correctness of such procedures. Each such accountant's report
shall state that the accountants have compared the amounts contained in one
randomly selected Distribution Date Statement from each fiscal quarter
delivered by the Administrator during the period covered by such report
with the records from which such amounts were derived and that, on the
basis of such comparison, such accountants are of the opinion that the
amounts are in agreement with such records, except for such exceptions as
they believe to be immaterial and such other exceptions as shall be set
forth in such report. Notwithstanding the foregoing, the Required
Certificateholders shall have the ability to waive this requirement.
Section 3.05 Rights of the Trustee.
(a) Each of NAFCO and the Administrator hereby authorizes the
Trustee, from time to time after the designation of an Administrator other
than National Auto pursuant to Section 10.02, to take any and all steps in
NAFCO's name and on behalf of NAFCO and the Administrator which are
necessary or appropriate, in the reasonable determination of the Trustee,
to collect all amounts due under any and all Receivables or Related
Transferred Assets, including endorsing the name of NAFCO or the Seller on
checks and other instruments representing Collections and enforcing such
Receivables and the Related Transferred Assets.
(b) NAFCO hereby irrevocably appoints the Trustee to act as
NAFCO's attorney-in-fact, with full authority in the place and stead of
NAFCO and in the name of NAFCO or otherwise, from time to time after the
designation of an Administrator other than National Auto pursuant to
Section 10.02, to take (subject to the same protections which are afforded
the Trustee in Section 11.14 hereof) any action and to execute any
instrument or document that the Trustee, in its reasonable determination,
may deem necessary to accomplish the purposes of this Agreement, including:
(i) to ask, demand, collect, sue for, recover, compromise,
receive and give acquittance and receipts for moneys due and to
become due under or in respect of any Receivable or any Related
Transferred Asset;
(ii) to receive, endorse, and collect any drafts or other
instruments, documents and chattel paper, in connection with
clause (i) above;
(iii) to file any claims or take any action or institute any
proceedings which the Trustee in its reasonable determination may
deem necessary or appropriate for the collection of any of the
Receivables or any Related Transferred Asset or otherwise to
enforce the rights of the Trustee and the Certificateholders with
respect to any of the Receivables or any Related Transferred
Asset; and
(iv) to perform the affirmative obligations of NAFCO under
any Transaction Document.
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NAFCO hereby acknowledges, consents and agrees that the power of attorney
granted pursuant to this Section 3.05(b) is irrevocable and coupled with an
interest.
Section 3.06 Further Action Evidencing Transfers.
(a) Each of NAFCO and the Administrator agrees that from
time to time, as an expense of the Administrator paid out of the
Administration Fee, it will promptly execute and deliver (or
cause any sub-Servicer to execute and deliver) all further
instruments and documents, and will promptly take all further
action (or cause any sub-Servicer to take all further action) as
may be necessary or desirable in order to perfect, protect or
more fully evidence the conveyances hereunder, or to enable the
Certificateholders or the Trustee to exercise or enforce any of
their respective rights hereunder or under any other Transaction
Document. Without limiting the generality of the foregoing, NAFCO
(or, in the case of clause (ii) below, the Administrator) will,
or will cause the Administrator to:
(i) execute and file such financing or continuation
statements, or amendments thereto or assignments thereof,
and such other instruments or notices, as may be required
from time to time pursuant to Section 7.02(c) or as the
Trustee reasonably determines necessary or desirable; and
(ii) mark its master data processing records that
evidence or list Receivables or Related Transferred Assets
as described in Section 2.01(d).
The Administrator shall cause all financing statements and continuation
statements and any other necessary documents relating to the right, title and
interest of the Trustee (for the benefit of the Certificateholders) in and to
the Trust Assets to be promptly recorded, registered and filed, and at all times
to be kept recorded, registered and filed, all in such manner and in such places
as may be required by law fully to preserve, maintain and protect the right,
title and interest of the Trustee hereunder (for the benefit of the
Certificateholders) in and to all property comprising the Trust Assets. The
Administrator shall deliver to the Trustee file-stamped copies of, or filing
receipts for, any document recorded, registered or filed as provided above, as
soon as available following such recording, registration or filing. NAFCO shall
cooperate fully with the Administrator in connection with the obligations set
forth above and will execute any and all documents which are reasonably required
to fulfill the intent of this Section 3.06.
(b) If NAFCO or the Administrator fails to perform any of its
agreements or obligations under any Transaction Document and does not
remedy such failure within the applicable cure period, if any, then
the Trustee or its designee may (and shall if requested by the
Required Certificateholders) itself perform, or cause performance of,
such agreement or obligation, and the reasonable expenses of the
Trustee or its designee incurred in connection therewith shall be
payable by the Administrator as provided in Section 11.05 and (if
applicable) by NAFCO as provided in Section 7.03. If, at any time,
NAFCO or the Administrator fails to file any financing statement or
continuation statement, or amendment thereto or assignment thereof,
that is required to be filed pursuant to this Agreement or any of the
other Transaction Documents, the Trustee may (and shall if requested
by the Required
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Certificateholders), and NAFCO and the Administrator hereby
authorize the Trustee to, file such financing or continuation
statements, and amendments thereto and assignments thereof, relative
to all or any of the Receivables or the Related Transferred Assets now
existing or hereafter arising in the name of NAFCO or the
Administrator as an expense of the Administrator paid out of the
Administration Fee.
ARTICLE IV
RIGHTS OF CERTIFICATEHOLDERS AND
ALLOCATION AND APPLICATION OF COLLECTIONS
Section 4.01 Rights of Certificateholders. Each Certificate
shall represent a fractional undivided ownership interest in the Trust,
consisting of, among others, a right to receive Collections, funds on
deposit in the Trust Accounts and other Trust Assets, to the extent and at
the times provided herein, in payment of the principal amount of such
Certificate (which principal amount shall vary from time to time in
accordance with the terms of this Agreement) and interest accrued on the
principal amount of any Certificate from time to time at the applicable
Certificate Rate, and other Obligations owed to the Holder of a
Certificate (all such undivided interests being herein collectively called
the "Certificate Interest").
In addition, the Class C Certificate shall represent the
ownership interest in the remainder of the Trust Assets not allocated
pursuant to this Agreement to the Certificate Interest, including the right
to receive payments at the times and in the amounts specified in this
Article IV to be paid in respect of the Class C Certificates (the "Residual
Interest").
Section 4.02 Establishment of Trust Accounts.
(a) The Trustee shall establish and maintain in the name of the
Trustee, on behalf of the Trust and for the benefit of the
Certificateholders, the segregated trust accounts referred to in
clauses (b) and (c) below and listed on Exhibit D hereto (and such
additional accounts as may be required by any Supplement). Each of the
Trust Accounts shall be established and maintained in the Corporate
Trust Office of the Trustee or as provided in Section 4.02(d) below
and shall bear a designation clearly indicating that funds deposited
therein are held for the benefit of the Certificateholders.
(b) All Collections and all other Trust Assets consisting of cash
or cash equivalents shall be deposited in a segregated trust account
(the "Certificate Account") within two (2) Business Days of receipt.
Funds on deposit in the Certificate Account will be allocated as
provided in Section 4.03.
(c) From time to time prior to the occurrence of an Amortization
Event, the purchase price for purchases of Trust Interests by
Certificateholders pursuant to the applicable Certificate Purchase
Agreement will be deposited by the Trustee in a segregated trust
account (the "Excess Funding Account"). On any Business Day, the
Administrator may cause the Trustee to withdraw from the Excess
Funding Account and distribute to NAFCO
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amounts on deposit therein, provided, (i) that no Amortization
Event shall have occurred and be continuing, and (ii) after giving
effect to such withdrawals from or deposits into the Excess Funding
Account, there shall not exist any Overcollaterallization Deficit.
In addition, funds on deposit in the Excess Funding Account shall be
withdrawn from the Excess Funding Account and deposited in the
Certificate Account in accordance with Section 4.03(c).
(d) Interest accrued on any class of Certificates that is not
distributable to Certificateholders on the Distribution Date relating
to such Interest Period shall be deposited in a segregated trust
account (the "Accrued interest Account") pursuant to Section
4.03(a)(v). The Trustee shall, on the Business Day preceding the
Distribution Date on which such funds a redistributable to
Certificateholders, withdraw such funds from the Accrued interest
Account and deposit such funds in the Certificate Account for
application on such Distribution Date pursuant to Section 4.03(a).
(e) The Certificate Account shall be held by the Trustee for the
benefit of all Certificateholders. Each Trust Account shall be
maintained in the Corporate Trust Office of the Trustee or with a bank
which is organized under the laws of the United States or any state
which is a member of the FDIC and has a certificate of deposit rating
in the highest investment category granted by the Applicable Rating
Agency or otherwise approved by each Applicable Rating Agency.
(f) The Trustee shall possess (for its benefit and for the
benefit of the Certificateholders) all right, title and interest in
and to all funds on deposit from time to time in each of the Trust
Accounts and in all proceeds thereof. The Trust Accounts shall be
under the sole dominion and control of the Trustee for the benefit of
the applicable Certificateholders. Pursuant to the authority granted
to the Administrator, the Administrator shall have the power,
revocable at any time by the Trustee or by the Trustee at the
direction of the Majority Certificateholders, to instruct the Trustee
to make withdrawals and payments from the Trust Accounts for the
purposes of carrying out the Administrator's or the Trustee's duties
hereunder.
Section 4.03 Distributions.
In the manner and to the degree set forth in the applications
of Collections described below in Section 4.03(a), the rights of the Class
B and Class C Certificateholders to receive distributions shall be and
hereby are subordinated to the rights of the Class A Certificateholders to
receive distributions, and the rights of the Class C Certificateholders to
receive distributions shall be and hereby are subordinated to the rights of
the Class A and Class B Certificateholders to receive distributions. On
each Distribution Date, the Trustee (based on the information contained in
the Distribution Date Statement delivered on the related Determination Date
pursuant to Section 3.04(c)) shall make the following distributions from
the Certificate Account in the following order of priorities, satisfying in
full, to the extent required and possible, each priority before making any
distribution with respect to any succeeding priority:
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(a) All Collections, Investment Proceeds in respect of the related
Calculation Period, the aggregate Purchase Amounts for Receivables repurchased
pursuant to Section 2.04 in respect of the related Calculation Period and any
amounts withdrawn from the Excess Funding Account and deposited in the
Certificate Account pursuant to Section 4.03(c) and funds withdrawn from the
Accrued Interest Account and deposited in the Certificate Account on such
Distribution Date pursuant to Section 4.02(d) hereof shall be applied in the
following priority:
(i) to the Backup Servicer and Administrator, an amount equal
to the sum (such sum, the "Clause (1) Amounts") of (1) one-half (1/2)
of the Administration Fee and (2) all unpaid amounts from prior
Calculation Periods distributable pursuant to this subsection (i), if
any, such Clause (i) Amounts to be paid as follows: first, to the
Backup Servicer, an amount equal to the servicing fee, any other fees,
expenses and indemnities payable to the Backup Servicer (each as set
forth in the Back-up Servicing Agreement) and second, to the
Administrator, the remainder of such Clause (i) Amounts; provided,
however, that if the Backup Servicer shall be the Successor
Administrator, the Servicer (as defined in the Portfolio Servicing
Agreement) shall be paid the servicing fee (as set forth in the
Portfolio Servicing Agreement) in lieu of the Administration Fee and
the remainder of the Administration Fee, if any, shall be included in
Collections; provided, further, that for so long as Loan Servicing
Enterprise shall be servicing the Receivables (whether as
Administrator hereunder or as Servicer under the Portfolio Servicing
Agreement or any agreement of similar import), it shall be paid any
Late Fees as and when payable pursuant to Section 4.03(d) in addition
to any amounts owing pursuant to this subsection (i) without regard to
any limitation provided by this subsection (i) (all amounts
distributable under this subsection (i) to Loan Servicing Enterprise,
whether as Backup Servicer, Successor Administrator, or Servicer under
the Portfolio Servicing Agreement are hereby referred to as the "LSE
Amounts");
(ii) subject to Section 11.05 hereof, (A) first, to the
Trustee, an amount equal to the Trustee Fee and the reasonable out of
pocket expenses of the Trustee due and owing on such Distribution Date
and (B) second, to the Custodian, an amount equal to the fees,
expenses and indemnities of the Custodian due and owing on such
Distribution Date, if any; provided, however, that for each
Distribution Date such fees, expenses and indemnities will be no
greater than the amount provided for in the Custodian Agreement;
(iii) to the Class A Certificateholders, an amount equal to the
sum of the Class A Interest Distributable Amount and any outstanding
Class A Interest Carryover Shortfall as of the close of business on
the preceding Distribution Date;
(iv) to the Class B Certificateholders, an amount equal to the
sum of the Class B Interest Distributable Amount and any outstanding
Class B Interest Carryover Shortfall as of the close of business on
the preceding Distribution Date;
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(v) to the Accrued Interest Account in an amount equal to the
excess of (i) interest accrued on the Class A Certificates and Class B
Certificates during the related Interest Period over (ii) the sum of
the Class A Interest Distributable Amount and the Class B Interest
Distributable Amount.
(vi) to the Class A Certificateholders, an amount equal to the
sum of the Class A Principal Distributable Amount and any outstanding
Class A Principal Carryover Shortfall as of the close of business on
the preceding Distribution Date;
(vii) to the Class B Certificateholders, an amount equal to the
sum of the Class B Principal Distributable Amount and any outstanding
Class B Principal Carryover Shortfall as of the close of business on
the preceding Distribution Date;
(viii) to the Reserve Fund in an amount equal to the Reserve
Fund Deposit Amount;
(ix) on any Distribution Date occurring prior to the
Amortization Commencement Date, an amount equal to any
Overcollateralization Deficit remaining after giving effect to the
distributions pursuant to clause (vi) above and clause (vii) above,
either (as specified in the Distribution Date Statement) (a) to the
Excess Funding Account or (b) pro rata to the Class A
Certificateholders and Class B Certificateholders in reduction of the
respective outstanding principal amounts thereof,
(x) on any Distribution Date occurring on or after the
Liquidation Commencement Date, to the Class A Certificateholders, all
remaining funds until the principal balance of the Class A
Certificates has been reduced to zero;
(xi) on any Distribution Date occurring on or after the
Liquidation Commencement Date, to the Class B Certificateholders, all
remaining funds until the principal balance of the Class B
Certificates has been reduced to zero;
(xii) to Loan Servicing Enterprise or any other Backup Servicer
and Administrator, (1) the portion of the Administration Fee not
distributed pursuant to subsection (i) above (subject to the proviso
clauses thereof) and (2) all unpaid amounts distributable pursuant to
this subsection (xi) from prior Distribution Dates, if any, the sum of
(1) and (2) to be paid as follows: first to Loan Servicing Enterprise
or any other Backup Servicer, all LSE Amounts, to the extent not
distributed pursuant to subsection (i) hereof and second to the
Administrator any unpaid Administration Fee to the extent not
distributed pursuant to subsection (i) hereof;
(xiii) to First Union National Bank, any amounts paid by it or
required to be paid by it pursuant to this Agreement, the Backup
Servicing Agreement or the Portfolio Servicing Agreement or otherwise
in connection with the transaction contemplated hereby; and
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(xiv) the remainder to the Class C Certificateholder in respect
of the Residual Interest.
(b) [Reserved].
(c) Commencing with the first Distribution Date occurring on or after
the Amortization Commencement Date and on each succeeding Distribution
Date, until the balance of funds on deposit in the Excess Funding Account
has been reduced to zero, funds on deposit in the Excess Funding Account
shall be deposited in the Certificate Account and applied in reduction of
the outstanding principal amount of the Certificates in the priority set
forth in Section 4.03(a) in an amount equal to the lesser of (i) the
balance of funds on deposit in the Excess Funding Account and (ii) the sum
of the outstanding principal balances of the Class A and Class B
Certificates (or portions thereof) for which the designated interest
charges are maturing on the applicable Distribution Date prior to giving
effect to distributions made pursuant to Section 4.03(a) on such
Distribution Date. In addition, the Administrator may instruct the Trustee
on any Distribution Date prior to the Amortization Commencement Date to
withdraw funds from the Excess Funding Account and deposit such funds in
the Certificate Account for application pro rata to the Class A
Certificateholders and Class B Certificateholders in reduction of the
respective outstanding principal amounts thereof, such withdrawal and
application only to be made to the extent that, after giving effect to
such withdrawals and applications and any withdrawals from the Excess
Funding Account pursuant to Section 4.02(c), there exists no
Overcollaterallzation Deficit.
(d) (1) Prior to and including the Late Fee Testing Date, Loan
Servicing Enterprise, for so long as it shall be Servicer of the
Receivables (whether as Administrator hereunder or as Servicer under the
Portfolio Servicing Agreement or any agreement of similar import), shall
be entitled to retain, as additional compensation, amounts remitted by
Obligors as NSF fees, late fees, extension fees or prepayment charges
allowed by applicable law ("Late Fees"). On the Late Fee Testing Date,
Loan Servicing Enterprise and First Union National Bank shall agree upon
the percentage to be included in the definition of the Late Fee Trigger
Event. After the Late Fee Testing Date, Loan Servicing Enterprise, for so
long as it shall be Servicer of the Receivables (whether as Administrator
hereunder or as Servicer under the Portfolio Servicing Agreement or any
agreement of similar import), shall be entitled to receive such Late Fees
in the amounts, at the times, and from the sources set forth in Section
4.03(d)(2) hereof.
(2) After the Late Fee Testing Date, Loan Servicing Enterprise or
any other Backup Servicer shall deposit all Late Fees received from
Obligors into the Collection Account (as defined in the Portfolio
Servicing Agreement) and such deposits shall be swept within two Business
Days of deposit into the Certificate Account and such amounts shall be
included in Available Certificateholder Finance Charge Collections for
distribution pursuant to Section 4.03. Provided no Late Fee Trigger Event
shall have occurred and be continuing. Certificateholder Finance Charge
Collections shall be applied in the manner otherwise set forth in this
Section 4.03. If a Late Fee Trigger Event shall have occurred and be
continuing, Late Fees shall not be available to pay amounts set forth in
Section 4.03(a)(i) hereof but shall be available for application to pay
all amounts owing pursuant to Section 4.03 (a)(ii) through
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Section 4.03(a)(xiii) hereof; provided, further, that any Late Fees not
necessary for application in Section 4.03(a)(ii) through Section
4.03(a)(x) hereof shall be paid to Loan Servicing Enterprise, for so long
as it shall continue to be Servicer of the Receivables (whether as
Administrator hereunder or as Servicer under the Portfolio Servicing
Agreement or any agreement of similar import), as additional compensation,
payable pursuant to the priority set forth in Section 4.03(a)(xi) hereof.
Section 4.04 Reserved.
Section 4.05 Establishment of Reserve Fund. The Administrator, for the
benefit of the Certificateholders, shall cause to be established and maintained
in the name of the Trustee, on behalf of the Trust, an account (the "Reserve
Fund") which shall be identified as the "Reserve Fund for National Financial
Auto Receivables Master Trust (f/k/a NAFCO Auto Receivables Master Trust)" and
shall bear a designation clearly indicating that the funds deposited therein are
held for the benefit of the Certificateholders.
Section 4.06 Application of Reserve Fund.
(a) If amounts distributed on any Distribution Date pursuant to
Section 4.03 are not sufficient to make the entire distributions required
on such Distribution Date by Section 4.03(a)(iii), (iv), (vi) and (vii),
the Administrator shall cause the Trustee to withdraw funds first from the
Reserve Fund to the extent available therein, and apply such funds first
to complete the distribution pursuant to Section 4.03(a)(iii) through
4.03(a)(vii) in the priority therein provided.
(b) If, after giving effect to the allocations of, distributions from,
and deposits in, the Reserve Fund on any Distribution Date, the amount in
the Reserve Fund is greater than (i) in the case of any Distribution Date
occurring prior to the Liquidation Commencement Date, the Required Reserve
Fund Amount for such Distribution Date, and (ii) in the case of any
Distribution Date occurring on or after the Liquidation Commencement Date,
the Certificate Principal Amount (after giving effect to distributions in
reduction thereof on such Distribution Date), the Administrator shall
cause the Trustee to distribute such excess amount to the holders of the
Class C Certificates. Upon payment in full of the outstanding principal
balance of the Certificates plus all outstanding interest and other
amounts owing in respect of the Certificates, any funds remaining on
deposit in the Reserve Fund shall be paid to the holders of the Class C
Certificates.
Section 4.07 Investment of Funds in Trust Accounts. On any day when
funds on deposit in any Trust Account shall exceed $100,000.00 (after giving
effect to the allocations of such funds required by this Article IV), and at
such other times as investment is practicable, the Trustee, at the written
direction of the Administrator, shall invest and reinvest monies on deposit in
such Trust Account (in the name of the Trustee) in such Eligible Investments as
are specified in a notice from the Administrator, subject to the restrictions
set forth hereinafter. The Trustee shall, at the direction of the Administrator:
(a) invest the funds in the Excess Funding Account in Eligible Investments that
mature not later than one Business Day preceding the next succeeding
Distribution Date (or, if earlier, the Business Day next preceding the Scheduled
Amortization Commencement
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Date or the Final Scheduled Payment Date): (b) invest all other funds in the
Trust Accounts in Eligible Investments that mature not later than one Business
Day preceding the next succeeding Distribution Date (or, if earlier, the
Business Day next preceding the Scheduled Amortization Commencement Date or the
Final Scheduled Payment Date). All Eligible Investments made from funds in any
Trust Account, and the interest, dividends and income received thereon and
therefrom and the net proceeds realized on the sale thereof, shall be deposited
in such Trust Account. The Trustee may liquidate an Eligible Investment prior to
maturity if such liquidation would not result in a loss of all or part of the
principal portion of such Eligible Investment or if, prior to the maturity of
such Eligible Investment, a default occurs in the payment of principal, interest
or any other amount with respect to such Eligible Investment. In the absence of
negligence of the Trustee or willful misconduct by the Trustee, the Trustee
shall have no liability in connection with investment losses incurred on
Eligible Investments. It is intended for income tax purposes that the income
earned through investment of funds in the Trust Accounts shall be treated as
income of the Class C Certificateholders.
Section 4.08 Attachment of Trust Accounts. If the Trustee receives
written notice that any account designated as a Trust Account has or will become
subject to any writ, judgment, warrant of attachment, execution or similar
process, the Trustee shall (notwithstanding any other provision of the
Transaction Documents) promptly notify NAFCO, the Administrator and the
Certificateholders thereof, and shall not deposit or transfer funds into such
Trust Account but shall cause funds otherwise required to be deposited into such
Trust Account to be held in another account pending distribution of such funds
in the manner required by the Transaction Documents.
Section 4.09 Release of Assets. Notwithstanding anything to the
contrary contained herein or in any other Transaction Document, no Receivable
shall be released from the Trust unless and until the Required
Certificateholders shall have given their prior written consent.
ARTICLE V
REPORTS TO CERTIFICATEHOLDERS
SECTION 5.01 Information to Certificateholders.
Distribution Date Statement. Within two Business Days after each
Distribution Date, the Trustee shall send to each Certificateholder a copy of a
monthly report prepared by the Administrator in the form of Exhibit C by
first-class mail, postage prepaid, to the address of such Certificateholder that
is indicated in the Certificate Register.
Section 5.02 Notice of Early liquidation at Seller Election. If NAFC0
shall receive a notice from the Seller, pursuant to Section 8.1 of the Purchase
Agreement, to the effect that the Seller desires to terminate its agreement to
sell Receivables to NAFCO, NAFCO shall deliver a copy of such notice to the
Trustee, and the Trustee shall deliver a copy of such notice to each
Certificateholder and to the Applicable Rating Agencies, as soon as practicable
(and in any event within two Business Days), which notice shall become effective
at the time, and subject to the conditions, specified in such notice and in
Section 8.1. of the Purchase Agreement.
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Section 5.03 Annual Tax Information. On or before February 15, of each
calendar year, beginning with calendar year 1994, the Administrator on behalf of
the Trust, shall furnish or cause to be furnished to each Person who at any time
during the preceding calendar year was a Certificateholder such information for
such preceding calendar year, or the applicable portion thereof during which
such Person was a Holder of record of a Certificate, as is required to be
provided by an issuer of indebtedness under the Internal Revenue Code to the
holders of the issuer's indebtedness and such other customary information as is
necessary to enable the Certificateholders to prepare their federal income tax
returns. Such obligation of the Administrator shall be deemed to have been
satisfied to the extent that substantially comparable information shall be
provided by the Paying Agent to, such Certificateholder pursuant to any
requirements of the Internal Revenue Code as from time to time in effect.
ARTICLE VI
THE CERTIFICATES
Section 6.01 The Certificates. The Class B Certificates shall be
substantially in the form of Exhibit A and the Class C Certificate shall be
substantially in the form of Exhibit B. Upon issuance, all Certificates
including the Class C Certificate shall be executed and delivered by NAFCO to
the Trustee for authentication and redelivery as provided in Section 6.02.
Except to the extent provided otherwise in an applicable Supplement,
Certificates shall be issued in minimum denominations of $20,000 (and such
interests shall not be subdivided in denominations of less than $20,000) and in
integral multiples of $20,000 in excess thereof. The Certificates shall
initially be issued with an initial aggregate Stated Amount in the amount set
out in the related Supplement and Certificate Purchase Agreement.
Each Certificate shall be executed by manual or facsimile signature on
behalf of NAFC0 by an Authorized Officer of the NAFCO Trustee or by any
attorney-in-fact duly authorized to execute such Certificate on behalf of any
such officer. The Certificates shall be authenticated on behalf of the Trust by
manual signature of a duly authorized signatory of the Trustee. Certificates
bearing the manual or facsimile signature of the individual who was, at the time
when such signature was affixed, authorized to sign on behalf of NAFCO or the
Trust (as applicable) shall be valid and binding obligations of the Trust,
notwithstanding that such individuals or any of them ceased to be so authorized
prior to the authentication and delivery of such Certificates or do not hold
such office on the date of issuance of such Certificates. No Certificates shall
be entitled to any benefit under this Agreement, or be valid for any purpose,
unless there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by or on behalf of the
Trustee by the manual signature of a duly authorized signatory, and such
certificate of authentication upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Agreement. Except as
otherwise provided in the applicable Supplement, all Certificates shall be dated
the date of their authentication.
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Section 6.02 Authentication of Certificates.
(a) The Trustee will authenticate and deliver the Class B Certificate
and the Class C Certificate to NAFCO pursuant to an order from NAFCO to
the Trustee.
(b) On each Subsequent Issuance Date, upon the written order of NAFCO,
the Trustee shall authenticate and deliver to NAFCO the Series of
Certificates that are to be issued originally on such Subsequent Issuance
Date (the "Subsequent Issuance Certificates") pursuant to the applicable
Supplement. The Subsequent Issuance Certificates shall be duly
authenticated by or on behalf of the Trustee, in authorized denominations
equal, in the aggregate, to the aggregate Stated Amounts of such
Certificates, in the case of a Series of Certificates.
Section 6.03 Registration of Transfer and Exchange of Certificates.
(a) The Trustee, as agent for NAFCO, shall keep, or shall cause to be
kept, at the office or agency to be maintained in accordance with the
provisions of Section 11.16 a register, in written form or capable of
being converted into written form within a reasonable time (the
"Certificate Register") in which, subject to such reasonable regulations
as it may prescribe, a transfer agent and registrar (which may be the
Trustee) (the "Transfer Agent and Registrar") shall provide for the
registration of the Certificates and of transfers and exchanges of the
Certificates as herein provided. NAFCO hereby appoints the Trustee as the
initial Transfer Agent and Registrar.
NAFCO, or the Trustee, as agent for NAFCO (if the Trustee is not then
acting as Transfer Agent and Registrar), may revoke such appointment as Transfer
Agent and Registrar and remove the then-acting Transfer Agent and Registrar as
Transfer Agent and Registrar if the Trustee or NAFCO (as applicable) determines
in its sole discretion that the then-acting Transfer Agent and Registrar has
failed to perform its obligations under this Agreement in any material respect.
The then-acting Transfer Agent and Registrar shall be permitted to resign as
Transfer Agent and Registrar upon 30 days' prior written notice to the Trustee,
NAFCO and the Administrator; provided, however, that such resignation shall not
be effective and the then-acting Transfer Agent and Registrar shall continue to
perform its duties as Transfer Agent and Registrar until NAFCO or the Trustee
has appointed a successor Transfer Agent and Registrar reasonably acceptable to
NAFCO and the Person so appointed has given NAFCO or the Trustee written notice
that it accepts the appointment. The provisions of Sections 11.01 through 11.05
shall apply to the Transfer Agent and Registrar as if all references to "the
Trustee" in the applicable provisions of Sections 11.01 through 11.05 were also
references to the Transfer Agent and Registrar.
It is intended that the registration of Certificates which is
described in this Section 6.03(a) comply with the registration requirements
contained in Section 163 of the Internal Revenue Code.
(b) None of the Certificates may be sold, transferred or otherwise
disposed of (any such sale, transfer or other disposition, as defined for
purposes of this Section 6.03(b), being called a "Sale", with "Sell"
having a correlative meaning), except in compliance with
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this Section 6.03(b). The Certificates will not be registered under the
provisions of the Securities Act of 1933 (the "Act") and the
Certificateholders, by purchasing their Certificates, acknowledge that the
Certificates will not be so registered.
A Certificateholder may not Sell any of the Certificates held by it
unless
(i) such Sale is to a "qualified institutional buyer" within the
meaning of Rule 144A promulgated under the Securities Act ("Rule
144A") that purchases for its own account or for the account of
another Person that is a "qualified institutional buyer," (or such
Certificateholder reasonably believes its buyer is a "qualified
institutional buyer") which Person is aware that the proposed Sale is
being made in reliance on Rule 144A and to whom such Sale is being
made pursuant to an available exemption from the registration
requirements of applicable state securities laws, and, prior to the
proposed Sale, such Certificateholder has executed and delivered to
the Trustee and NAFCO an investor letter, substantially in the form of
Exhibit E; or
(ii) such Sale is being made pursuant to an applicable exemption
from the registration requirements of the Securities Act and
applicable state securities laws and, prior to the proposed Sale, such
Certificateholder and the proposed transferee each provide the Trustee
and NAFCO with written representations and an opinion of counsel
(which way be in-house counsel), in each case satisfactory in form and
substance to the Trustee and NAFCO, concerning the proposed Sale and
the availability of such exemption.
No Certificateholder or other Person acting on behalf of a Certificateholder
shall use any means of general solicitation or distribution in connection with
the marketing, sale, transfer or other disposition of any Certificates. The
Certificates shall bear a legend substantially as set forth in the form of the
Certificate attached to this Agreement pursuant to which such Certificate is
issued.
The provisions of this Section 6.03(b) shall not apply to any Sale of
any Certificates in a transaction that is registered under the Securities Act
and all applicable state securities laws. None of National Auto or any of its
Subsidiaries, NAFCO or the Trustee shall be required to effect any registration
of the Certificates under the Securities Act or the Securities Exchange Act of
1934, as amended.
NAFCO, the Administrator and the Trustee shall make available to any
selling Certificateholder and any prospective transferee of Certificates such
information within the possession of NAFCO, the Administrator or the Trustee
about the Trust, the Trust Assets and the servicing of the Receivables and the
Related Transferred Assets as is required to permit such Holder to comply with
the requirements of Rule 144A in connection with the resale of Certificates, in
any such case promptly after the same is requested.
(c) In connection with each issuance of a Series of Certificates, the
Administrator on behalf of NAFCO will determine whether such Certificates
may be purchased by employee benefit plans (as defined in ERISA) and shall
cause the Certificates evidencing such Series to bear a legend describing
any restrictions on such purchases.
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(d) (i) The holders of the Class C Certificates shall not transfer,
assign, exchange or otherwise convey or pledge, hypothecate or otherwise
grant a security interest in any Class C Certificate or any interest
represented thereby (except with the prior written consent of the Class B
Certificateholder), (ii) the purchaser of the Class B Certificates shall
at all times retain at least fifty percent (50%) of the Class B
Certificates and shall not transfer, assign, exchange or otherwise convey
or pledge, hypothecate or otherwise grant a security interest in such
Certificates, and any attempt to transfer, assign, exchange, convey,
pledge, hypothecate or grant a security interest in such Class C
Certificates or such Class B Certificates or any interest represented
thereby shall be void and of no effect.
(e) Subject to the requirements of Sections 6.03(b), 6.03(c) and, if
applicable, Section 6.03(d) having been fulfilled, upon surrender for
registration of transfer of any Certificate at any office or agency of the
Transfer Agent and Registrar maintained for such purpose, NAFCO shall
execute, and the Trustee shall authenticate and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of
the appropriate Class and Series which are in authorized denominations of
like aggregate fractional interest in the Certificate Interest, and, in
the case of each Certificate, which bear numbers that are not
contemporaneously outstanding.
At the option of a Certificateholder, such Holder's Certificates may
be exchanged for other Certificates of the same Class and Series (and bearing
the same interest rate as the Certificate surrendered for registration of
exchange) of authorized denominations of like aggregate fractional interests in
the Certificate Interest and bearing numbers that are not contemporaneously
outstanding, upon surrender of the Certificates to be exchanged at any such
office or agency. Whenever any Certificates are so surrendered for exchange,
NAFCO shall execute, and the Trustee shall authenticate and deliver, the
appropriate number of Certificates of the Class and Series which the
Certificateholder making the exchange is entitled to receive. Every Certificate
presented or surrendered for registration of transfer or exchange shall be
accompanied by a written instrument of transfer in a form satisfactory to the
Transfer Agent and Registrar duly executed by the Certificateholder thereof or
his attorney-in-fact duly authorized in a writing delivered to the Transfer
Agent and Registrar.
No service charge shall be made for any registration of transfer or
exchange of Certificates, but the Transfer Agent and Registrar or any
co-transfer agent and co-registrar may require any Certificateholder that is
transferring or exchanging one or more Certificates to pay a sum sufficient to
cover any tax or governmental charge that may be imposed in connection with any
transfer or exchange of Certificates.
All Certificates surrendered for registration of transfer and exchange
shall be canceled and disposed of in a manner satisfactory to the Trustee.
(f) Certificates may be surrendered for registration of transfer or
exchange at the office of the Transfer Agent and Registrar designated in
Section 13.05.
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Section 6.04 Mutilated, Destroyed, Lost or Stolen Certificates. If (a)
any mutilated Certificate is surrendered to the Transfer Agent and Registrar, or
the Transfer Agent and Registrar receives evidence to its, satisfaction of the
destruction, loss or theft of any Certificate and (b) there is delivered to the
Transfer Agent and Registrar and the Trustee such security or indemnity as may
be required by them and NAFCO to hold each of them, the Trust and NAFCO
harmless, then, in the absence of notice to the Trustee that such Certificate
has been acquired by a bona fide purchaser, NAFCO shall execute and, upon the
request of NAFCO, the Trustee shall authenticate and deliver, in exchange for or
in lieu of any such mutilated, destroyed lost or stolen Certificate, a new
Certificate of like Class, Series, tenor, terms and principal amount and bearing
a number that is not contemporaneously outstanding. In connection with the
issuance of any new Certificate under this Section 6.04, the Trustee or the
Transfer Agent and Registrar may require the payment by the Certificateholder of
a sum sufficient to cover any tax or other governmental charge that may be
imposed in relation thereto and any other expenses (including the reasonable
fees and expenses of the Trustee and Transfer Agent and Registrar) connected
therewith. Any duplicate Certificate issued pursuant to this Section 6.04 shall
constitute conclusive and indefeasible evidence of ownership of an interest in
the Trust, as if originally issued, whether or not the lost, stolen or destroyed
Certificate shall be enforceable by anyone, and shall be entitled to all the
benefits of this Agreement equally and proportionately with any and all
Certificates of the same Class and Series that are duly issued hereunder.
Section 6.05 Persons Deemed Owners. Prior to due presentation of a
Certificate for registration of transfer, NAFCO, the Trustee, the Paying Agent,
the Transfer Agent and Registrar and any agent of any of them may treat the
Person in whose name any Certificate is registered as the owner of such
Certificate for the purpose of receiving distributions pursuant to Article IV
and for all other purposes whatsoever, and none of NAFCO, the Trustee, the
Paying Agent, the Transfer Agent and Registrar or any agent of any of them shall
be affected by any notice to the contrary. Any Certificate held by NAFCO or an
Affiliate thereof shall be deemed not to be outstanding for purposes of
determining Majority Certificateholders or Required Certificateholders.
Section 6.06 Appointment of Paying Agent. The Paying Agent shall
initially be the Trustee. NAFCO hereby appoints the Paying Agent as its agent to
make distributions to Certificateholders from the Certificate Account pursuant
to Section 4.03 and to report the amounts of such distributions to the Trustee.
Any Paying Agent shall have the revocable power to withdraw funds from the
certificate Account for the purpose of making the distributions referred to
above. The Trustee or, at any time when the Trustee is also the Paying Agent,
NAFCO may revoke such power of the Paying Agent and remove the Paying Agent if
the Trustee or NAFCO (as applicable) determines in its sole discretion that the
Paying Agent shall have failed to perform its obligations under this agreement
in any material respect. The Paying Agent shall be permitted to resign as Paying
Agent upon 30 days' prior written notice to the Trustee, NAFCO, the
Administrator and the Applicable Rating Agencies. In the event that the Trustee
shall no longer be the Paying Agent, the Trustee shall appoint a successor
Paying Agent (which shall be a bank or trust company) reasonably acceptable to
NAFCO, which appointment shall be effective on the date on which the Person so
appointed gives the Trustee written notice that it accepts the appointment. The
Trustee shall cause such successor Paying Agent or any additional Paying Agent
appointed by the Trustee to execute and deliver to the Trustee an instrument in
which such successor Paying Agent or additional Paying Agent shall agree with
the Trustee that, as Paying Agent, such successor Paying Agent or additional
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Paying Agent will hold all sums, if any, held by it for payment to the
Certificateholders in trust for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders. The Paying
Agent shall return all unclaimed funds to the Trustee, and upon removal of a
Paying Agent such Paying Agent shall also return all funds in its possession to
the Trustee. The provisions of Sections 11.01 through 11.05 shall apply to the
Paying Agent as if all references in the applicable provisions thereof to "the
Trustee" were also references to the Paying Agent.
Section 6.07 Access to List of Certificateholders' Names and
Addresses. The Trustee will furnish or cause to be furnished by the Transfer
Agent and Registrar to NAFCO, the Administrator or the Paying Agent, within two
Business Days after receipt by the Trustee of a request therefor from the
Administrator or the Paying Agent, respectively, in writing, a list in such form
as the Administrator or the Paying Agent may reasonably require, of the names
and addresses of the Certificateholders as of the most recent Record Date. If
any Holder or group of Holders of the Certificates in any Series evidencing not
less than 10% of the aggregate unpaid principal amount of such Series (the
"Applicant") applies in writing to the Trustee, and such application states that
the Applicant desires to communicate with other Certificateholders with respect
to their rights under this Agreement, any Supplement or the Certificates and is
accompanied by a copy of the communication which such Applicant proposes to
transmit, then the Trustee, after having been indemnified to its reasonable
satisfaction by the Applicant for its costs and expenses, shall afford or shall
cause the Transfer Agent and Registrar to afford such Applicant access during
normal business hours to the most recent list of Certificateholders held by the
Trustee, within five Business Days after the receipt of such application and
indemnification. Such list shall be as of a date no more than 45 days prior to
the date of receipt of such Applicant's request.
Every Certificateholder, by receiving and holding a Certificate,
agrees with the Trustee that neither the Trustee, the Transfer Agent and
Registrar, NAFCO, the Administrator nor any of their respective agents, shall be
held accountable by reason of the disclosure of any such information as to the
names and addresses of the Certificateholders hereunder, regardless of the
sources from which such information was derived.
Section 6.08 Authenticating Agent.
(a) The Trustee may appoint one or more Authenticating Agents (each an
"Authenticating Agent") with respect to the Certificates which shall be
authorized to act on behalf of the Trustee in authenticating the
Certificates in connection with the issuance, delivery, registration of
transfer, exchange or repayment of the Certificates. Either the Trustee or
the Authenticating Agent, if any, then appointed and acting on behalf of
the Trustee shall authenticate the Certificates. Whenever reference is
made in this Agreement to the authentication of Certificates by the
Trustee or the Trustee's certificate of authentication, such reference
shall be deemed to include authentication on behalf of the Trustee by an
Authenticating Agent and a certificate of authentication executed on
behalf of the Trustee by an Authenticating Agent. Each Authenticating
Agent must be reasonably acceptable to NAFCO.
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(b) Any institution succeeding to the corporate agency business of an
Authenticating Agent shall continue to be an Authenticating Agent without
the execution or filing of any document or any further act on the part of
the Trustee, such Authenticating Agent or any other Person.
(c) An Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to NAFCO. The Trustee may at any
time terminate the agency of an Authenticating Agent by giving notice of
termination to such Authenticating Agent and to NAFCO. Upon receiving such
a notice of resignation or upon such a termination, or in case at any time
an Authenticating Agent shall cease to be acceptable to the Trustee or
NAFCO, the Trustee may promptly appoint a successor Authenticating Agent.
Any successor Authenticating Agent upon acceptance of its appointment
hereunder shall become vested with all the rights, powers and duties of
its predecessor hereunder, with like effect as if originally named as an
Authenticating Agent. No successor Authenticating Agent shall be appointed
unless acceptable to the Trustee and NAFCO.
(d) The Administrator agrees to pay to each Authenticating Agent (if
any), as an expense of the Administrator paid out of the Administration
Fee, reasonable compensation from time to time for services performed by
such Authenticating Agent under this Section 6.08.
(e) The provisions of Sections 11.01, 11.02, 11.03, 11.04 and 11.05
shall be applicable to any Authenticating Agent as if the references in
the applicable provisions thereof to "the Trustee" were also references to
the Authenticating Agent.
(f) Pursuant to an appointment made under this Section 6.08, the
Certificates may have endorsed thereon, in lieu of the Trustee's
certificate of authentication, an alternate certificate of authentication
in substantially the following form:
"This is one of the Certificates described in the Supplement dated
as of ___________ __, 199_.
_________________________, as Trustee
By:
------------------------------------------
as Authenticating Agent for the Trustee,
By:
------------------------------------------
Authorized Officer."
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Section 6.09 Tax Treatment. It is the intent of NAFCO and the
Certificateholders that, for federal, state and local income and franchise tax
purposes, the Class A and Class B Certificates will be treated as evidence of
indebtedness secured by the Trust Assets and the Trust will not be characterized
as an association taxable as a corporation. NAFCO, by entering into this
Agreement, and each Certificateholder, by its acceptance of its Certificate,
agree to treat the Class A and Class B Certificates for federal, state and local
income and franchise tax purposes as indebtedness. The provisions of this
Agreement and all related Transaction Documents shall be construed to further
these intentions of the parties.
Section 6.10 Changes in Amount of Certificates.
(a) The outstanding principal amount of a Certificate shall at no time
exceed the Stated Amount then applicable to such Certificate. The Stated
Amount of a Certificate may be increased or decreased from time to time by
NAFCO, with the prior written consent of the Holder of such Certificate,
if the Rating Agency Condition shall have been satisfied on or prior to
the effective date of such proposed increase or decrease (as the case may
be).
(b) NAFCO may, pursuant to the Certificate Purchase Agreement or
Supplement that applies to a particular Certificate, request the Holder of
such Certificate to provide funds to the Trustee in respect of such
Holder's Certificate in order to increase the then outstanding principal
amount of such Certificate, which requested increase shall be subject to
the further provisions of this Section 6.11(b) and to the provisions of
such Certificate Purchase Agreement or Supplement. NAFCO may make such a
request at any time prior to the occurrence of an Amortization Event and
provided that there shall not exist an Overcollateralization Deficit
and shall make any such request in a writing that is substantially in the
form required by such Certificate Purchase Agreement or the applicable
Supplement, appropriately completed, and that is delivered to the Holder
of such Certificate at the time required by such Certificate Purchase
Agreement or the applicable Supplement. The outstanding principal amount
of such Holder's Certificate shall be increased on the Business Day on
which such Holder provides to the Excess Funding Account immediately
available funds in the amount of the requested increase by an amount equal
to the amount of such funds.
ARTICLE VII
NAFCO
Section 7.01 Representations and Warranties of NAFCO Relating to NAFCO
an the Transaction Documents. On the date hereof and on each date Receivables
are transferred hereunder, NAFCO hereby represents and warrants that:
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(a) Organization and Good Standing. NAFCO is a business trust duly
organized and validly existing in good standing under the laws of the
State of Delaware and has full power and authority to own its properties
and to conduct its business as such properties are presently owned and
such business is presently conducted. NAFCO had at all relevant times and
now has all necessary power, authority, and legal right to acquire, own
and transfer the Receivables and the Related Transferred Assets.
(b) Due Qualification. NAFCO is duly qualified to do business and is
in good standing as a business trust, and has obtained all necessary
licences and approvals, in all jurisdictions in which the ownership or
lease of property or the conduct of its business requires such
qualification, licenses or approvals and where the failure so to qualify,
to obtain such licenses and approvals or to preserve and maintain such
qualification. licenses or approvals could have a Material Adverse Effect.
(c) Power and Authority; Due Authorization. NAFCO has (i) all
necessary power and authority to (A) execute and deliver this Agreement
and the other Transaction Documents to which it is a party, (B) perform
its obligations under this Agreement and the other Transaction Documents
to which it is a party, (C) transfer, assign, set-over and convey its
right, title and interest in, to and under the Receivables, the Related
Transferred Assets and the funds in the Trust Accounts on the terms and
subject to the conditions herein and therein provided and (ii) duly
authorized by all necessary action such transfer, assignment, set-over and
conveyance and the execution, delivery, and performance of this Agreement
and the other Transaction Documents to which it is a party and the
consummation of the transactions provided for in this Agreement and the
other Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each other
Transaction Document to which NAFCO is a party when executed and delivered
will constitute, a legal, valid and binding obligation of NAFCO,
enforceable against NAFCO 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
generally and by general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The execution, delivery and performance
of, and the consummation of the transactions contemplated by, this
Agreement and the other transaction documents to be signed by NAFCO and
the fulfillment of the terms hereof and thereof will not (i) conflict
with, violate, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, (A) NAFCO Trust Agreement or (B) any indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument to which NAFCO
is a party or by which it or any of its properties is bound, (ii) result
in the creation or imposition of any Adverse Claim upon any of its
properties pursuant to the terms of any such contract, indenture, loan
agreement, mortgage, deed of trust, or other agreement or instrument,
other than this Agreement and the other Transaction Documents, or (iii)
conflict with or violate any federal, state, local or foreign law or any
decision, decree, order, rule, or regulation applicable to NAFCO or any
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of its properties of any court or of any federal, state, local or foreign
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over NAFCO or any of its properties,
which conflict, violation, breach, default or Adverse Claim, individually
or in the aggregate, could have a Material Adverse Effect.
(f) No Proceedings. (i) There is no action, suit, proceeding or
investigation pending or, to the best knowledge of NAFCO, threatened
against NAFCO before any court, regulatory body, arbitrator,
administrative agency, or other tribunal or governmental instrumentality
and (ii) NAFCO is not subject to any order, judgment, decree, injunction,
stipulation or consent order of or with any court or other government
authority, that, in the case of each of foregoing clauses (i) and (ii),
(A) asserts the invalidity of this Agreement or any other Transaction
Document, (B) seeks to prevent the transfer of any Receivables or Related
Transferred Assets to the Trust, the issuance of the Certificates or the
consummation of any of the transactions contemplated by this Agreement
or any other Transaction Document, (C) seeks any determination or ruling
that would materially and adversely affect the performance by NAFCO of
its obligations under this Agreement or any other Transaction Document or
the validity or enforceability of this Agreement or any other Transaction
Document, (D) seeks to affect adversely the income tax attributes of the
transfers hereunder or the Trust under the United States federal income
tax system or any state income tax system or (E) individually or in the
aggregate for all such actions, suits, proceedings and investigations,
could have a Material Adverse Effect.
(g) Governmental Approvals. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority that are
required to be obtained by NAFCO, and all notices to and filings with any
Governmental Authority that are required to be made by NAFCO, in the
case of each of the foregoing in connection with the transfer of
Receivables and Related Transferred Assets to the Trust or the execution,
delivery and performance by NAFCO of this Agreement and any other
Transaction Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement, have been obtained or made
and are in full force and effect, except where the failure to obtain or
make any such authorization, consent, order, approval, notice or filing,
individually or in the aggregate for all such failures, could not have a
Material Adverse Effect.
(h) Offices. NAFCO's principal place of business and chief executive
office is located at the address set forth under NAFCO's signature
hereto, and the offices where NAFCO and the Administrator keep all Records
and all Contracts, purchase orders and agreements related to the
Receivables and the Related Transferred Assets (and all original documents
relating thereto) are located at the addresses specified in Schedule
7.01(h) (or at such other locations, notified to the Administrator and the
Trustee in accordance with Section 7.02(c), in jurisdictions where all
action required by Section 7.02(c) has been taken and completed).
(i) Investment Company Act. NAFCO is not, and is not controlled by, an
"investment company" registered or required to be registered under the
Investment Company Act of 1940, as amended.
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(j) Margin Regulations. No use of any funds obtained by NAFCO under
this Agreement will conflict with or contravene any of Regulations G, T, U
and X promulgated by the Federal Reserve Board from time to time.
(k) Quality of Title.
(i) Immediately before each transfer to the Trust to be made by
NAFCO under this Agreement, each Receivable and Related Asset of NAFCO
which is then to be transferred to the Trust hereunder, and the
related Contracts, shall be owned by NAFCO free and clear of any
Adverse Claim (other than the Adverse Claim of the Trustee); and NAFCO
shall have made all filings and shall have taken all other action
under applicable law in each relevant jurisdiction in order to protect
and perfect the ownership interest of the Trust and its successors in
such Receivables and Related Assets against all creditors of, and
purchasers from, NAFCO or an other person.
(ii) Whenever NAFCO makes a purchase under the Purchase
Agreement or accepts a contribution under NAFCO Trust Agreement, it
shall have acquired a valid and perfected first priority ownership
interest in each Transferred Asset, free and clear of any Adverse
Claim (other than any Adverse Claim arising solely as the result of
any action taken by NAFCO under the Purchase Agreement or under this
Agreement).
(iii) No effective financing statement or other instrument
similar in effect that covers all or part of any Receivable, any
interest therein or any Related Asset with respect thereto is on file
in any recording office except (x) such as may be filed (A) in favor
of Seller in accordance with the Contracts, (B) in favor of NAFCO
pursuant to the Purchase Agreement or NAFCO Trust Agreement and (C) in
favor of the Trustee, for the benefit of the Certificateholders, in
accordance with this Agreement and (y) such as may have been
identified to NAFCO prior to the Closing Date and termination
statements relating to which have been placed with LEXIS Document
Services for filing on the Closing Date or the first Business Day
thereafter.
(iv) No purchase of an interest in any Receivable or Related
Asset of National Auto by NAFCO from National Auto constitutes a
fraudulent transfer fraudulent conveyance under the United States
Bankruptcy Code or applicable state bankruptcy or insolvency laws or
is otherwise void or voidable or subject to subordination under
similar laws or principles or for any other reason.
(v) The purchase of Receivables and Related Assets by NAFCO from
National Auto constitutes a true and valid sale of such Receivables
and Related Assets under applicable state law and true and valid
assignments and transfers for consideration (and not merely a pledge
of such Receivables and Related Assets for security purposes),
enforceable against the creditors of National Auto, and no Receivables
or Related Assets transferred to NAFCO under the Purchase Agreement or
under NAFCO Trust Agreement shall constitute property of National
Auto.
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(1) Accuracy of Information. All written information furnished on and
after the Closing Date by NAFCO to the Administrator, the Trustee or any
Certificateholder pursuant to or in connection with any Transaction
Document or any transaction contemplated herein or therein shall not
contain any untrue statement of a material fact or omit to state material
facts necessary to make the statements made not misleading, in each case
on the date such statement was made and in light of the circumstances
under which such statements were made or such information was furnished.
(m) Compliance with Applicable Laws. NAFCO is in compliance with the
requirements of all applicable laws, rules, regulations, and orders of all
Governmental Authorities (federal, state, local or foreign, and including
environmental laws), a violation of any of which, individually or in the
aggregate for all such violations, could have a Material Adverse Effect.
(n) Valid Transfer. Each transfer made by NAFCO pursuant to this
Agreement constitutes a valid transfer and assignment of all of its
right, title and interest in, to and under the Receivables and the Related
Transferred Assets to the Trust which is perfected and of first priority
under the UCC and otherwise enforceable against creditors of, and
purchasers from, NAFCO and National Auto and free and clear of any Adverse
Claim (other than any Adverse Claim of the Trustee).
The representations and warranties set forth in this Section 7.01
shall survive the transfer and assignment of the Receivables and the other Trust
Assets to the Trust. Upon discovery by NAFCO, the Administrator or a Responsible
officer of the Trustee of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice to the
other parties to this Agreement within three Business Days following such
discovery. The Trustee's obligations in respect of discovering any such breach
are limited as provided in Section 11.02(g).
Section 7.02 Covenants of NAFCO. From the Closing Date until the date
following the Amortization Commencement Date on which the Certificate Invested
Amount shall be reduced to zero and all Obligations of NAFCO and the
Administrator to the Certificateholders that have ever been outstanding
hereunder shall have been finally and fully paid and performed, NAFCO hereby
covenants that NAFCO will:
(a) Compliance with Laws, Etc. Comply in all material respects with
all applicable laws, rules, regulations, judgments, decrees and orders
(including those relating to the Receivables, the Related Transferred
Assets, the funds in the Trust Accounts and the related Contracts and any
other agreements related thereto), where the failure so to comply,
individually or in the aggregate for all such failures, could have a
Material Adverse Effect.
(b) Preservation of Trust Existence. Preserve and maintain its trust
existence, rights, franchises and privileges in the jurisdiction of its
incorporation, and qualify and remain qualified in good standing as a
foreign trust in each jurisdiction where the failure to preserve and
maintain such existence, rights. franchises, privileges and qualifications
could have a Material Adverse Effect.
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(c) Location of Records and Offices. Keep its principal place of
business and chief executive office, and (and will cause the Servicer to)
keep substantially all Records, Contracts and other agreements related to
the Receivables and the Related Transferred Assets (and all original
documents relating thereto), at the addresses referred to in Schedule
7.01 (h). NAFCO will at all times maintain its chief executive offices
within the United States of America, and will cause any sub-Servicer to
maintain at all times each office from which any sub-Servicer services or
collects Receivables and Related Transferred Assets and any sub-Servicer's
chief executive offices within the United States of America.
(d) Reporting Requirements of NAFCO. Furnish to the Trustee, the
Certificateholders and to the Applicable Rating Agencies:
(i) Amortization Events. As soon as possible, and in any event
within one Business Day after an Authorized Officer of NAFCO has
obtained knowledge of the occurrence of any Amortization Event or any
Unmatured Amortization Event, a written statement of an Authorized
Officer of NAFCO describing such event and the action that NAFCO
proposes to take with respect thereto, in each case in reasonable
detail;
(ii) Material Adverse Effect. As soon as possible and in any
event within one Business Day after an Authorized Officer of NAFCO has
knowledge thereof, written notice that describes in reasonable detail
any Adverse Claim against the Trust Assets or any other event or
occurrence which, individually or in the aggregate for all such events
or occurrences, has had, or could have, in the reasonable, good faith
judgment of NAFCO, a Material Adverse Effect;
(iii) Proceedings. As soon as possible and in any event within
three Business Days after an Authorized Officer of NAFCO has knowledge
thereof, written notice of (A) any litigation, investigation or
proceeding of the type described in Section 7.01(f) or Section
8.01(g) not previously disclosed to the Trustee and (B) any material
adverse development that has occurred with respect to any such
previously disclosed litigation, investigation or proceeding; and
(iv) Other. Promptly, from time to time, such other information,
documents, records or reports respecting the Receivables or the
Related Transferred Assets or such other information respecting the
condition or operations, financial or otherwise, of NAFCO, in each
case as the Trustee may from time to time reasonably request in order
to protect the interests of the Trustee, the Trust or the
Certificateholders under or as contemplated by this Agreement.
(e) Sales, Liens, Etc. Except for the conveyances hereunder and under
the other Transaction Documents, NAFCO will not (i)(A) sell, assign (by
operation of law or otherwise) or otherwise transfer to any Person, (B)
pledge any interest in, (C) grant, create, incur, assume or permit to
exist any Adverse Claim to or in favor of any Person upon or with respect
to, or (D) cause to be filed any financing statement or equivalent
document relating
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to perfection that covers. any Receivable, related Contract, Related
Transferred Asset or other Trust Asset, or any interest therein, or (ii)
assign to any Person any right to receive income from or in respect of any
of the foregoing. NAFCO shall defend the right, title and interest of the
Trust in, to and under the Trust Assets, whether now existing or hereafter
created, against all claims of third parties claiming through or under
NAFCO or National Auto.
In the event that NAFCO falls to keep any Trust Assets free and clear
of any Adverse Claim (other than the Adverse Claim of the Trustee arising
hereunder and other Adverse Claims permitted by any other Transaction Document),
the Trustee may (without limiting its other rights with respect to NAFCO's
breach of its obligations hereunder) make reasonable expenditures necessary to
release such Adverse Claim. The Trustee shall be entitled to indemnification for
any such expenditures pursuant to the indemnification provisions of Section
7.03. Alternatively. the Trustee may deduct such expenditures as an offset to
any amounts owed to NAFCO hereunder.
(f) Mergers, Acquisitions, Sales. Etc. NAFCO shall not
(i) (A) be a party to any merger or consolidation, or directly
or indirectly purchase or other wise acquire all or substantially all
of the assets or any stock of any class of, or any partnership or
joint venture interest in, any other Person, or (B) except pursuant to
the Transaction Documents, directly or indirectly, sell, transfer,
assign, convey or lease, whether in one transaction or in a series of
transactions, all or substantially all of its assets, or sell or
assign with or without recourse any Receivables or Related Transferred
Assets (other than pursuant hereto);
(ii) except as contemplated in the Purchase Agreement in
connection with NAFCO's purchases of Receivables and Related Assets
from the Sellers, (A) make, incur or suffer to exist an investment
in, equity contribution to, or payment obligation in respect of the
deferred purchase price of property or services from, any Person, or
(B) make any loan or advance to any Person other than for reasonable
and customary operating expenses; or
(iii) create any direct or indirect Subsidiary or otherwise
acquire direct or indirect ownership of any equity interests in any
other Person (other than the Trust).
(g) Change in Name. NAFCO will not change its name or the name under
or by which it does business unless NAFCO shall have given the
Administrator and the Trustee 30 days' prior written notice thereof and
unless, prior to any such change in name, NAFCO shall have filed (or shall
have caused to be filed) such financing statements or amendments as the
Administrator or the Trustee determines may be necessary to continue the
perfection of the Trust's interest in the Receivables, the Related
Transferred Assets and the proceeds thereof.
(h) Change in Business. NAFCO will not engage in any business other
than as contemplated by the Transaction Documents, unless the Required
Certificateholders consent
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and the Rating Agency Condition has been satisfied in connection with such
amendment or such change in NAFCO's business.
(i) Amendments to Purchase Agreement. Except as expressly provided
otherwise in this Agreement, no amendment, waiver, modification to or
consent under the Purchase Agreement shall be made that would adversely
affect in any material respect the interests of the Certificateholders or
any Enhancement Provider unless there shall have been obtained the prior
written consent of the Required Certificateholders and any such
Enhancement Provider.
(j) Enforcement of Purchase Agreement. NAFCO will perform all its
obligations under and otherwise comply with the Purchase Agreement and
will enforce, for the benefit of the Trust, the covenants and agreements
of the Seller in the Purchase Agreement.
(k) Other Indebtedness. NAFCO shall not (i) create, incur or permit to
exist any Indebtedness, Guaranty or liability or (ii) cause or permit to
be issued for its account any letters of credit or bankers' acceptances,
except for (A) Indebtedness incurred pursuant to NAFCO Notes, (B) other
liabilities specifically permitted to be created, incurred or owed by
NAFCO pursuant to or in connection with the Transaction Documents and (C)
reasonable and customary operating expenses.
(1) Separate Existence. NAFCO hereby acknowledges that the Trustee and
the Certificateholders are, and will be, entering into the transactions
contemplated by the Transaction Documents in reliance upon NAFCO's
identity as a legal entity separate from National Auto and any other
Person. Therefore, from and after the Closing Date, NAFCO shall take all
reasonable steps to continue its identity as a separate legal entity and
to make it apparent to third Persons that NAFCO is an entity with assets
and liabilities distinct from those of National Auto and any other Person,
and that NAFCO is not a division of National Auto or any other Person.
(m) Acquisition of Receivables. NAFCO will acquire Receivables only
(i) through its purchase of such Receivables pursuant to the Purchase
Agreement or (ii) as a contribution by National Auto to NAFCO in
accordance with the NAFCO Trust Agreement.
(n) Extension or Amendment of Receivables; Change in Credit and
Collection Policy or Contracts. The Administrator will not extend, amend
or otherwise modify the terms of any Receivable or Contract in a manner
that could have a Material Adverse Effect other than in accordance With
the Credit and Collection Policy. The Administrator shall not amend or
otherwise modify the Credit and Collection Policy, except as permitted
herein.
(o) Amendment of Certificate of Trust. NAFCO will not amend, modify,
restate or change in any manner its certificate of trust or the NAFCO
Trust Agreement, unless the Rating Agency Condition has been satisfied in
connection with, and the Required Certificateholders have consented to,
such amendment, modification, restatement or change.
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The covenants set forth in this Section 7.02 shall survive
the transfer and assignment of the Receivables and the other Trust Assets to the
Trust. Upon discovery by NAFCO, the Administrator or a Responsible Officer of
the Trustee of a breach of any of the foregoing covenants, the party discovering
such breach shall give written notice to the other parties to this Agreement
within three Business Days following such discovery. The Trustee's obligations
in respect of discovering any such breach are limited as provided in Section
11.02(g)
Section 7.03 Indemnification by the Class C
Certificateholders.
(a) Without limiting any other rights which any Indemnified
Party may have hereunder or under applicable law, the Class C
Certificateholders hereby agree to indemnify the Trust, the Trustee,
each Certificateholder and each of the successors, permitted
transferees and assigns of any such Person and all officers.
directors, shareholders, controlling Persons, employees and agents of
any of the foregoing (each of the foregoing Persons being individually
called an "Indemnified Party"), forthwith on demand, from and against
any and all damages, losses, claims (whether on account of settlements
or otherwise, and whether or not the relevant Indemnified Party is a
party to any action or proceeding that gives rise to any Indemnified
Losses (as defined below)), judgments, liabilities and related
reasonable costs and expenses (including reasonable attorneys' fees
and disbursements) (all of the foregoing being collectively called
"Indemnified Losses") awarded against or incurred by any of them that
arise out of or relate to this Agreement, any other Transaction
Document or any of the transactions contemplated herein or therein or
the use of proceeds herefrom or therefrom. Payments to be made
pursuant to this Section 7.03 shall be paid to the extent that funds
are available to make such payments after all amounts to be paid to
the Certificateholders pursuant to Section 4.03 shall have been paid,
and there shall be no recourse to the Class C Certificateholders for
all or any part of any amounts payable pursuant to this Section 7.03
if such funds are at any time insufficient to make all or part of any
such payments.
Notwithstanding the foregoing (and with respect to clause (b)
below, without prejudice to the rights that the Trustee may have pursuant to the
other provisions of this Agreement or the provisions of any of the other
Transaction Documents), in no event shall any Indemnified Party be indemnified
for any Indemnified Losses (a) resulting from gross negligence or willful
misconduct on the part of such Indemnified Party (or the gross negligence or
willful misconduct on the part of any of such Indemnified Party's officers,
directors, employees or agents), (b) to the extent the same includes Indemnified
Losses in respect of Receivables and reimbursement therefor that would
constitute credit recourse to the Class C Certificateholders for the amount of
any Receivable or Related Transferred Asset not paid by the related Obligor, (c)
to the extent such Indemnified Losses are or result from lost profits, (d) to
the extent such Indemnified Losses are or result from taxes (including interest
and penalties thereon) asserted with respect to (i) distributions on the
Certificates, (ii) franchise or withholding taxes imposed on any Indemnified
Party other than the Trust or the Trustee in its capacity as Trustee, or (iii)
federal or other income taxes on or measured by the net income of such
Indemnified Party and costs and expenses in defending against the same, or (e)
to the extent such Indemnified Losses constitute consequential, or punitive
damages.
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If for any reason the indemnification provided above in this
Section 7.03 is unavailable to an Indemnified Party or is insufficient to hold
an Indemnified Party harmless, then the Class C Certificateholders shall
contribute to the amount paid by such Indemnified Party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to reflect
not only the relative benefits received by such Indemnified Party on the one
hand and the Class C Certificateholders on the other hand, but also the relative
fault (if any) of such Indemnified Party and the Class C Certificateholders and
any other relevant equitable considerations.
(b) Notwithstanding anything to the contrary herein, the
Class C Certificateholders shall be liable to all creditors of the
Trust (but not to Holders of the Certificates) for all liabilities of
the Trust to the same extent as it would be if the Trust constituted
a partnership under the Delaware Revised Uniform Limited Partnership
Act and the Class C Certificateholders were a general partner thereof.
Notwithstanding anything to the contrary herein, any such creditor
shall be a third party beneficiary of this clause (b).
ARTICLE VIII
THE ADMINISTRATOR
Section 8.01 Representations and Warranties of the
Administrator. On the date hereof, on each date Receivables are transferred and
on each Subsequent Issuance Date, the Administrator hereby makes, and any
Successor Administrator also shall be deemed to make by its acceptance of its
appointment hereunder, the following representations and warranties for the
benefit of the Trustee and the Certificateholders:
(a) Organization and Good Standing. The Administrator is a
corporation duly organized and validly existing in good standing under
the laws of its jurisdiction of incorporation and has full power and
authority to own its properties and to conduct its business as such
properties are presently owned and as such business is presently
conducted.
(b) Due Qualification. The Administrator is duly qualified to
do business and is in good standing (or is exempt from such
requirements), and has obtained all necessary licenses and approvals,
in all jurisdictions in which the administration of the Receivables
and the Related Transferred Assets as required by this Agreement
requires such qualification, licenses or approvals and where the
failure so to qualify, to obtain such licenses and approvals or to
preserve and maintain such qualification, licenses or approvals would
have a reasonable likelihood of having a material adverse effect on
its ability to perform its obligations as Administrator under this
Agreement or a Material Adverse Effect.
(c) Power and Authority; Due Authorization. The
Administrator has (i) all necessary power and authority to (A) execute
and deliver this Agreement and the other Transaction Documents to
which it is a party, and (B) perform its obligations under this
Agreement and the other Transaction Documents to which it is a party,
and (ii) duly authorized by all necessary action the execution,
delivery, and performance of this Agreement and the other Transaction
Documents to which it is a party and the consummation
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of the transactions provided for in this Agreement and the other
Transaction Documents to which it is a party.
(d) Binding Obligations. This Agreement constitutes, and each
other Transaction Document to which the Administrator is party when
executed and delivered will constitute, a legal, valid and binding
obligation of the Administrator, enforceable against the Administrator
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 generally and by
general principles of equity, regardless of whether such
enforceability is considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The execution and delivery by
the Administrator of this Agreement and the other Transaction
Documents to which it is a party, the performance by the Administrator
of its obligations hereunder and thereunder and the fulfillment by the
Administrator of the terms hereof and thereof that are applicable to
it will not (i) conflict with, violate, result in any breach of any of
the terms and provisions of, or constitute (with or without notice or
lapse of time or both) a default under, (A) the organizational
documents of the Administrator or (B) any indenture, loan agreement,
mortgage, deed of trust, or other agreement or instrument to which
the Administrator is a party or by which it or any of its properties
is bound or (ii) conflict with or violate any federal, state, local or
foreign law or any decision, decree, order, rule, or regulation
applicable to the Administrator or any of its properties of any court
or of any federal, state, local or foreign regulatory body,
administrative agency, or other governmental instrumentality having
jurisdiction over the Administrator or any of its properties, which
conflict, violation, breach or default described in clause (i) or
clause (ii), individually or in the aggregate, would have a reasonable
likelihood of having a Material Adverse Effect.
(f) Governmental Approvals. All authorizations, consents,
orders and approvals of, or other action by, any Governmental
Authority that are required to be obtained by the Administrator, and
all notices to and filings with any Governmental Authority that are
required to be made by the Administrator, in the case of each of the
foregoing in connection with the execution, delivery and performance
by the Administrator of this Agreement and any other Transaction
Documents to which it is a party and the consummation of the
transactions contemplated by this Agreement, have been obtained or
made and are in full force and effect (other than the filing of the
UCC financing statements referred to in Section 2.03(a), all of
which, at the time required in Section 2.03(a), will be duly made),
except where the failure to obtain or make such authorization,
consent, order, approval, notice or filing would not reasonably be
expected to have a Material Adverse Effect.
(g) No Proceedings. Except as otherwise disclosed on Schedule
8.01(g), (i) there is no action, suit, proceeding or investigation
pending or, to the best knowledge of the Administrator, threatened
against the Administrator before any court, regulatory body,
arbitrator, administrative agency, or other tribunal or governmental
instrumentality and (ii) the Administrator is not subject to any
order, judgment, decree, injunction, stipulation or consent order of
or with any court or other government authority, that, in the case of
foregoing clauses (i) and (ii), (A) seeks to affect adversely the
income tax attributes of the
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transfers hereunder or the Trust under the United States federal
income tax system or any state income tax system, or (B) individually
or in the aggregate for all such actions, suits, proceedings and
investigations, would have a reasonable likelihood of having a
Material Adverse Effect.
The representations and warranties set forth in this Section
8.01 shall survive the transfer and assignment of the Trust Assets to the Trust.
Upon discovery by NAFCO, the Administrator or a Responsible Officer of the
Trustee of a breach of any of the foregoing representations and warranties, the
party discovering such breach shall give written notice to the other parties to
this Agreement within three Business Days following such discovery. The
Trustee's obligations in respect of discovering any such breach are limited as
provided in Section 11.02(g).
Section 8.02 Covenants of the Administrator. From the Closing
Date until the day following the Amortization Commencement Date on which the
Certificate Invested Amount shall be reduced to zero and all Obligations of
NAFCO and the Administrator to the Certificateholders that have ever been
outstanding under this Agreement shall have been finally and fully paid and
performed, the Administrator hereby covenants and agrees, and any Successor
Administrator by its acceptance of its appointment hereunder shall be deemed to
covenant and agree, as follows for the benefit of the Trust and the
Certificateholders:
(a) Compliance with Laws, Etc. The Administrator shall
maintain in effect all qualifications required under applicable law in
order to service properly the Receivables and shall comply in all
material respects with all applicable laws, rules, regulations,
judgments, decrees and orders, in each case to the extent the failure
to comply with which, individually or in the aggregate for all such
failures, would have a reasonable likelihood of having a Material
Adverse Effect.
(b) Preservation of Existence. The Administrator shall
preserve and maintain its existence, rights, franchises and
privileges in the jurisdiction of its incorporation, and qualify and
remain qualified in good standing as a foreign corporation in each
jurisdiction where the failure to preserve and maintain such
existence, rights, franchises, privileges and qualification would have
a reasonable likelihood of having a Material Adverse Effect.
(c) Compliance with Transaction Documents. The Administrator
will comply with the terms and provisions of each of the Transaction
Documents to which it is a party.
(d) Adequate Collection System. (i) The Administrator shall
maintain and implement, or cause to be maintained or implemented,
administrative and operating procedures reasonably necessary or
advisable for the administration, servicing and collection of amounts
owing on all Receivables.
(ii) The Administrator has reviewed, or will complete its
review (within three months of the Effective Date, but in
no event later than May 30, 1999) of its operations and
those of its subsidiaries to assess whether the
Administrator or any of its subsidiaries will have any
Year 2000 Problems or will be affected by Year 2000
Problems suffered by any of the
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Administrator's or its subsidiaries' commercial
counter-parties. The Administrator shall develop a
written plan, commit adequate resources, and take all
other action necessary to assure that its Essential
Information Technology (and those of all subsidiaries)
functions properly, without experiencing any Year 2000
Problem or causing a Y2KMAE. At the request of the
Required Certificateholders, the Administrator will
provide the Certificateholders with assurances and
substantiations (including, but not limited to, the
results of internal and external Audits prepared in the
ordinary course of business, and any other third party
assessments of the Administrator's year 2000 efforts)
acceptable to the Class B Certificateholders as to the
capability of the Administrator and its subsidiaries to
conduct its and their businesses and operations without
experiencing a Year 2000 Problem causing a Y2KMAE.
The Administrator has developed, or will develop (within three months
of the Effective Date, but in no event later than May 30, 1999) a feasible
contingency plan to adequately ensure the uninterrupted and unimpaired business
operation of the Administrator and its subsidiaries in the event of failure of
its own or a third party's system or equipment due to a Year 2000 Problem,
including those of vendors, customers, and suppliers, as well as a general
failure of or interruption in its communication and delivery infrastructure.
The covenants set forth in this Section 8.02 shall survive the transfer and
assignment of the Trust Assets to the Trust. Upon discovery by NAFCO, the
Administrator or a Responsible Officer of the Trustee of a breach of any of the
foregoing covenants, the party discovering such breach shall give written notice
to the other parties to this Agreement within three Business Days following such
discovery. The Trustee's obligations in respect of discovering any such breach
are limited as provided in Section 11.02(g).
Section 8.03 Merger or Consolidation of, or Assumption of the
Obligations of, the Administrator. The Administrator shall not consolidate with
or merge into any other Person or convey, transfer or sell all or substantially
all of its properties and assets to any Person, unless:
(a) (i) the Administrator is the surviving entity or, if the
Administrator is not the surviving entity, the Person formed by such
consolidation or into which the Administrator is merged or the Person
which acquires by conveyance, transfer or sale all or substantially all
of the properties and assets of the Administrator shall be organized
and existing under the laws of the United States of America or any
State thereof or the District of Columbia and, if the Administrator is
not the surviving entity, such entity shall expressly assume, by an
agreement supplemental hereto, executed and delivered to the Trustee
and in form and substance satisfactory to the Trustee, the performance
of every covenant and obligation of the Administrator hereunder and
under the other Transaction Documents to which the Administrator is a
party; and (ii) the Administrator shall have delivered to the Trustee
an Officer's Certificate and an Opinion of Counsel for the
Administrator each stating that such consolidation, merger, conveyance,
transfer or sale and such supplemental agreement comply with this
Section 8.03(a) that such supplemental agreement is a valid and binding
obligation of such surviving entity enforceable against such surviving
entity in accordance
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with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting creditors' rights generally and by general
principles of equity, and that all conditions precedent in Section
8.03(a)(i) that relate to such transaction have been complied with;
(b) the Rating Agency Condition shall have been satisfied in
connection with such merger, consolidation or succession; and
(c) the Trustee shall have received an officer's Certificate
of the Administrator to the effect that the conditions set forth in
clauses (a) and (b) have been satisfied.
Section 8.04 Administrator Liability. The Administrator shall
be liable in accordance with this Agreement only to the extent of the
obligations specifically undertaken by the Administrator in such capacity herein
and as set forth herein.
Section 8.05 Limitation on Liability of the Administrator and
Others. No recourse under or upon any obligation or covenant of this Agreement,
any Supplement, any Certificate or any other Transaction Document, or for any
claim based thereon or otherwise in respect thereof, shall be had against any
partner, limited partner, shareholder. officer or director, as such, past,
present or future, of the Administrator or of any successor entity, either
directly or through the Administrator, whether by virtue of any constitution,
statute or rule of law, or by the enforcement of any assessment or penalty or
otherwise; it being expressly understood that this Agreement any Supplement, all
other relevant Transaction Documents and the obligations incurred hereunder or
thereunder are solely partnership or corporate obligations, and that no such
personal liability whatsoever shall attach to, or is or shall be incurred by the
general and limited partners, shareholders, officers or directors, as such, of
the Administrator or of any successor entity, or any of them, by reason of the
obligations, covenants or agreements contained in this Agreement, any
Supplement, any of the Certificates or any other Transaction Documents, or
implied therefrom; and that any and all such personal liability of, either at
common law or in equity or by constitution or statute, and any and all such
rights and claims against, every such partner, limited partner, shareholder,
officer or director, as such, because of the creation of the indebtedness hereby
authorized, or under or by reason of the obligations or covenants contained in
this Agreement, any Supplement, any of the Certificates or any other Transaction
Documents, or implied therefrom, are hereby expressly waived and released as a
condition of, and as a consideration for, the execution of this Agreement and
any Supplement. The Administrator and any director, officer, employee or agent
of the Administrator 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 Administrator shall not be under any obligation to appear
in, prosecute or defend any legal action which is not incidental to its duties
to administer the Receivables in accordance with this Agreement or any
Supplement which in its reasonable opinion may involve it in any expense or
liability. The Administrator may, in its sole discretion, undertake any such
legal action relating to the administration of Receivables and Related
Transferred Assets that it may reasonably deem necessary or appropriate for the
benefit of the Certificateholders with respect to this Agreement and the rights
and duties of the parties hereto and the interests of the Certificateholders
hereunder.
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ARTICLE IX
AMORTIZATION EVENTS
Section 9.01 Amortization Events. Any of the following events shall
constitute a "Amortization Event."
(a) (i) failure on the part of NAFCO or the Administrator to make or
cause to be made any payment or deposit, or any delivery of any report,
required by the terms of this Agreement, any Supplement, any Certificate
Purchase Agreement or the Purchase Agreement on or before five Business Days
after date such payment, deposit or delivery is required to be made herein;
(ii) failure on the part of the Seller to duly observe or perform Sections
6.1(g) and 6.3(a) of the Purchase Agreement or NAFCO to duly observe or
perform Sections 7.02(e) or 7.02(n) or clause (i) or (ii) of Section 7.02(d)
of this Agreement, or the Trustee to duly observe or perform Section 5.01 of
this Agreement, which failure has a Material Adverse Effect and continues
unremedied for a period of five Business Days after the date on which
written notice of such failure, requiring same to be remedied, shall have
been given to NAFCO by the Trustee or to NAFCO and the Trustee by any
Certificateholder; or (iii) failure on the part of NAFCO to duly observe or
perform any other covenant or agreement of NAFCO set forth in any
Transaction Document, which failure has a Material Adverse Effect and
continues 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 to NAFCO by the Trustee or to NAFCO and the Trustee by any
Certificateholder;
(b) any representation or warranty made by the Seller in Sections
5.1(d) or 5.1(i) (i), (ii) or (iii) of the Purchase Agreement or by NAFCO
in Sections 7.01(k)(i), (ii), or (iii) or 7.0.1(n) of this Agreement shall
prove to have been incorrect in any material respect when made, and
continues to be incorrect in any material respect for a period of five
Business Days after the date on which written notice of such breach,
requiring the same to be remedied, shall have been given to NAFCO by the
Trustee or to NAFCO and the Trustee by any Certificateholder, or any other
representation or warranty made by the Seller in the Purchase Agreement or
by NAFCO in this Agreement shall prove to have been incorrect in any
material respect when made, and continues to be incorrect in any material
respect for a period of 30 days after the date on which written notice of
such breach, requiring the same to be remedied, shall have been given to
NAFCO by the Trustee, or to NAFCO and the Trustee by any Certificateholder;
provided, however, that a mistake in representation of a Receivable as an
Eligible Receivable shall not constitute a Liquidation Event unless and
until the Seller or NAFCO, as the case may be, has failed to make any cash
payments owed under the Purchase Agreement or this Agreement in respect of
the Noncomplying Receivables arising from such misrepresentation;
(c) an Event of Bankruptcy shall occur with respect to National Auto or
NAFCO, or NAFCO shall become unable for any reason to transfer Receivables
or Related Transferred Assets to the Trust in accordance with the provisions
of this Agreement;
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(d) the Trust shall become an "investment company" within the meaning
of the Investment Company Act of 1940, as amended;
(e) the occurrence and continuance of an Administrator Default;
(f) the Net Loss Ratio for any Distribution Date exceeds 11% for any
Calculation Period;
(g) the Net Loss Ratio for any Distribution Date exceeds 13% for any
Calculation Period;
(h) the Delinquency Ratio exceeds 11% for any Calculation Period;
(i) the Delinquency Ratio exceeds 13% for any Calculation Period;
(j) the Gross Default Ratio for any Calculation Period exceeds 22%;
(k) the Gross Default Ratio for any Calculation Period exceeds 24%;
(1) a requirement set forth in clauses (iii) and (iv) of the definition
of "Portfolio Requirements" shall not have been satisfied for two
consecutive Calculation Periods;
(m) a requirement set forth in clauses (i) and (ii) of the definition
of "Portfolio Requirements" shall not have been satisfied for three
consecutive Calculation Periods;
(n) the Seller shall have ceased selling Receivables to NAFCO pursuant
to Section 8.1 of the Purchase Agreement; or
(o) the hedging requirement set forth in Section 13.24 shall not have
been complied with.
Upon the occurrence and continuance of any event described in subsection (c),
(d), (e) or (n) above, subject to the applicable grace period, if any, set forth
in such subsection, and to waiver thereof by the Class B Certificateholders,
given in each case in their sole discretion, the Liquidation Commencement Date
shall occur without any notice or other action on the part of the Trustee or the
Certificateholders, immediately upon the occurrence of such event. Upon the
occurrence and continuance of any event described in subsections (a)(i), (b),
(g), (i), (k), or (l) above (each such event, and the events described in
subsections (c) and (d), a "Liquidation Event"), subject to the applicable grace
period, if any, set forth in such subsection, the Trustee may (and, at the
direction of the Majority Certificateholders shall) by notice then given in
writing to NAFCO and the Administrator, declare that the Liquidation
Commencement Date shall have occurred as of the date of NAFCO's receipt of such
notice. Upon the occurrence and continuance of any event described in any
subsection above other than a Liquidation Event, after the applicable grace
period, if any, set forth in such subsection (each, an "Early Amortization
Event"), the Trustee may (and, at the direction of the Required
Certificateholders shall) by notice then given in writing to NAFCO and the
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Administrator, declare that the Early Amortization Commencement Date shall have
occurred as of the date of NAFCO's receipt of such notice.
Notwithstanding the foregoing, a delay in or failure in performance
referred to in subsection (a)(i) above for a period of 10 Business Days after
the applicable grace period, or in subsections a(ii), a(iii) or (b) above for
a period of 30 Business Days after the applicable grace period, shall not
constitute an Amortization Event if such delay or failure could not have been
prevented by the exercise of reasonable diligence by NAFCO or the Administrator
and such delay or failure was caused by an act of God or the public enemy,
riots, acts of war, acts of terrorism, epidemics, flood, embargoes, weather,
landslides, fire, earthquakes or similar causes. The preceding sentence shall
not relieve NAFCO or the Administrator from using its best efforts to perform
its obligations in a timely manner in accordance with the terms of the
Transaction Documents, and NAFCO and/or the Administrator, as applicable, shall
promptly give the Trustee and, in the case of such delay or failure in
performance by the Administrator, NAFCO, an Officer's Certificate notifying them
of such failure or delay by it.
Section 9.02 Remedies. Upon the occurrence of an Amortization Event,
the Trustee shall have, in addition to all other rights and remedies available
to the Trustee under this Agreement or otherwise, (a) the right to apply
Collections to the payment of the Obligations of NAFCO and the Administrator
under this Agreement or under any of the other Transaction Documents, as
provided herein, and, (b) all rights and remedies provided under all other
applicable laws, which rights, in the case of each and all of the foregoing,
shall be cumulative. The Trustee shall exercise such rights at the direction of
the Certificateholders pursuant to (and subject to the limitations specified in)
Section 11.14.
Section 9.03 Additional Rights Upon the Occurrence of Certain Events.
(a) If an Event of Bankruptcy shall occur with respect to any of the
Class C Certificateholders in this Agreement and the Trust shall be deemed
to have terminated on the day of such Event of Bankruptcy; and within 7
Business Days of the date of written notice to the Trustee of such Event of
Bankruptcy, the Trustee shall:
(i) publish a notice in an Authorized Newspaper that an Event of
Bankruptcy has occurred with respect to any of the Class C
Certificateholders, that the Trust has terminated, and that the Trustee
intends to sell, dispose of or otherwise liquidate the Receivables and
the Related Transferred Assets pursuant to this Agreement in a
commercially reasonable manner and on commercially reasonable terms,
which shall include the solicitation of competitive bids (a
"Disposition"); and
(ii) send written notice to the Certificateholders describing the
provisions of this Section 9.03 and requesting each Certificateholder
to advise the Trustee in writing whether (A) it wishes the Trustee to
instruct the Administrator not to effectuate a Disposition, (B) it
refuses to advise the Trustee as to the specific action the Trustee
shall instruct the Administrator to take or (C) it wishes the
Administrator to effect a Disposition.
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If, after 60 days from the day notice pursuant to clause (a)(i) is
first published (the "Publication Date") the Trustee shall not have received the
written instruction described in sub-clause (A) of clause (a)(ii) from Holders
of the Certificates representing in excess of 50% of the outstanding principal
amount of each of the Certificates, the Trustee shall instruct the Administrator
to effectuate a Disposition, and the Administrator shall proceed to consummate a
Disposition. If, however, Holders of the Certificates representing in excess of
50% of the outstanding principal amount of each Class of the Certificates
instruct the Trustee not to effectuate a Disposition, the Trustee shall consent
to the formation of a new trust, transfer the Trust Assets to such trust,
exchange new certificates for the existing Certificates and otherwise continue
pursuant to the terms of this Agreement.
(b) Notwithstanding the termination of this Agreement and the Trust
pursuant to clause (a) the proceeds from any Disposition of the Receivables
and the Related Transferred Assets pursuant to clause (a) shall be treated
as Collections on the Receivables and shall be allocated and deposited in
accordance with the provisions of Article IV.
(c) The Trustee may appoint an agent or agents to assist with its
responsibilities pursuant to this Section 9.03 with respect to competitive
bids.
(d) NAFCO or any of its Affiliates shall be permitted to bid for the
Receivables and the Related Transferred Assets. The Trustee may obtain a
prior determination from any bankruptcy trustee, receiver or liquidator that
the terms and manner of any proposed Disposition are commercially
reasonable.
(e) Notwithstanding the termination of this Agreement and the Trust
pursuant to clause (a), the Trustee shall continue to have the rights
described in Section 9.2 and Article XI, and be subject to direction on
terms consistent with those set out in Section 11.14, pending the completion
of any Disposition and/or the reconstitution of the Trust.
ARTICLE X
ADMINISTRATOR DEFAULTS
Section 10.01 Administrator Defaults. Any of the following events
shall constitute an "Administrator Default":
(a) any failure by the Administrator in its capacity as Administrator
to make any payment, transfer or deposit, or deliver any report, required by
any Transaction Document to be made by it or to give instructions or to give
notice to the Trustee to make such payment, transfer or deposit, which
failure continues unremedied (A) in the case of distributions of interest to
the Certificateholders or the delivery of such reports, for three Business
Days and (B) in the payments not included in clause (A) above, for five
Business Days after the date on which an Authorized Officer of the
Administrator has actual knowledge of such failure;
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(b) failure on the part of the Administrator duly to observe or perform
in any material respect any other covenants or agreements of the
Administrator set forth in this Agreement or any other Transaction Document,
which failure has a Material Adverse Effect and continues unremedied for a
period of 30 days after the earlier to occur of (i) the date on which the
Administrator has knowledge thereof and (ii) the date on which written
notice of such failure, requiring the same to be remedied, shall have been
given to the Administrator by the Trustee, or to the Administrator and the
Trustee by any Certificateholder;
(c) the Administrator shall assign its duties under this Agreement,
except as permitted by Sections 3.01(b) and 8.03;
(d) any representation, warranty or certification made by the
Administrator in any Transaction Document or in any certificate or other
document or instrument delivered pursuant to any Transaction Document
shall prove to have been incorrect in any material respect when made or
delivered, which has a material adverse effect on the Certificateholders of
any Series and which material adverse effect continues 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 to the
Administrator by the Trustee, or to the Administrator and the Trustee by any
Certificateholder; or
(e) any Event of Bankruptcy shall occur with respect to the
Administrator.
(f) the Administrator, Master Servicer or Servicer or any Affiliate
thereof or any other Person (as such terms are defined in the applicable
Transaction Documents and Trust Documents) is terminated or not continued as
administrator, servicer or master servicer under any of the Trust Documents
or under any securitization or warehouse transaction or any other
transaction to which First Union National Bank, or any of its affiliates or
subsidiaries is a party;
(g) any Servicer Default, Servicer Termination Event or any other
breach of servicing or administration obligations (which has not been duly
waived or cured) under any of the Trust Documents or under any
securitization or warehouse transaction or any other transaction to which
First Union National Bank, or any of its affiliates or subsidiaries is a
party shall occur;
(h) a Liquidation Event shall occur hereunder (provided, however, that
noncompliance with the Portfolio Requirements shall not constitute an
Administrator Default hereunder); or
(i) the Administrator shall fail to have developed a plan to avoid any
Year 2000 Problems or a Y2KMAE as required by Section 8.02(d) hereof.
Notwithstanding the foregoing, in the event of an Administrator Default
described in Section 10.01(a) through and including (i) above, then (unless
all Class B Certificateholders shall have directed the Trustee and the
Administrator otherwise in writing), all (but not less than all) the rights
and obligations of the Administrator as Administrator under this Agreement,
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and to the Receivables, the Related Transferred Assets and the proceeds
thereof, shall terminate.
In the event of any Administrator Default described in (a)-(i), so long
as the Administrator Default shall not have been remedied, the Trustee may
(and, at the direction of the Required Certificateholders, shall), deliver
to National Financial Auto Receivables Master Trust, written confirmation of
such termination (a "Termination Notice") indicating the date thereof and
the reasons therefor with a copy of such Termination Notice to the
Administrator.
As soon as possible, and in any event within five Business Days, after
an Authorized Officer of the Administrator has obtained knowledge of the
occurrence of any Administrator Default, the Administrator shall furnish the
Trustee, and the Applicable Rating Agencies, and the Trustee shall promptly
furnish each Certificateholder, notice of such Administrator Default.
Notwithstanding the foregoing, a delay in or failure in performance
referred to in Subsection (a) above for a period of 10 Business Days after the
applicable grace period, or in subsection (b) or (d) above for a period of 30
Business Days after the applicable grace period, shall not constitute an
Administrator Default if such delay or failure could not have been prevented by
the exercise of reasonable diligence by the Administrator and such delay or
failure was caused by an act of God or the public enemy, riots, acts of war,
acts of terrorism, epidemics, flood, embargoes, weather, landslides, fire,
earthquakes or similar causes. The preceding sentence shall not relieve the
Administrator from using its best efforts to perform its obligations in a timely
manner in accordance with the terms of the Transaction Documents, and the
Administrator shall promptly give the Trustee, and NAFCO an Officer's
Certificate notifying them of such failure or delay by it.
Section 10.02 Trustee to Act; Appointment of Successor.
(a) On and after the Administrator's receipt of a Termination Notice
pursuant to Section 10.01, the Administrator shall continue to perform
all administration functions under this Agreement until the date specified
in the Termination Notice or otherwise specified by the Trustee in writing
or, if no such date is specified in such Termination Notice, until a date
mutually agreed upon by the Administrator and the Trustee. The Trustee
shall, at the direction of the Required Certificateholders, as promptly as
possible after the giving of a Termination Notice, nominate such successor
administrator as the Required Certificateholders shall direct (the
"Successor Administrator"); provided, however, that such Successor
Administrator shall accept its appointment by a written assumption in a form
acceptable to the Required Certificateholders. Any Person who is nominated
to be a Successor Administrator shall accept its appointment by a written,
assumption in form and substance acceptable to the Trustee. In the event
that a Successor Administrator has not been appointed or has not accepted
its appointment at the time when the Administrator ceases to act as
Administrator, the Trustee without further action shall automatically be
appointed the Successor Administrator. The Trustee may delegate any of its
administration obligations to an affiliate or agent in accordance with
Section 3.01(b). If the Trustee is prohibited by applicable law from
performing the duties of the Administrator hereunder, the Trustee may
appoint, or may petition a court of competent jurisdiction to appoint, a
Successor
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Administrator hereunder. The Trustee shall give prompt notice to the
Applicable Rating Agencies and each Certificateholder upon the appointment
of a Successor Administrator.
(b) After the Administrator's termination, and on the date that a
Successor Administrator shall have been appointed by the Trustee and shall
have accepted such appointment pursuant to Section 10.02(a) or the date when
the Trustee shall have become the Successor Administrator, all authority and
power of the Administrator under this Agreement shall pass to and be vested
in the Successor Administrator (an "Administration Transfer"); and, without
limitation, the Trustee is hereby authorized and empowered to execute and
deliver, on behalf of the Administrator, as attorney-in-fact or otherwise,
all documents and instruments, and to do and accomplish all other acts or
things that the Trustee reasonably determines are necessary or appropriate
to effect the purposes of such Administration Transfer. Upon the appointment
of such Successor Administrator and its acceptance thereof, the
Administrator agrees that it will terminate its activities as Administrator
hereunder in a manner that the Trustee indicates will facilitate the
transition of the performance of such activities to the Successor
Administrator. The Administrator agrees that it shall use reasonable efforts
to assist the Successor Administrator in assuming the obligations to
administer the Receivables and the Related Transferred Assets, on the terms
and subject to the conditions set forth herein, and to effect the
termination of the responsibilities and rights of the Administrator to
conduct administration hereunder, including the transfer to such Successor
Administrator of all authority of the Administrator to service the
Receivables and Related Transferred Assets provided for under this Agreement
and all authority over all cash amounts which shall thereafter be received
with respect to the Receivables or the Related Transferred Assets. The
Administrator shall, within five Business Days after the designation of a
Successor Administrator, transfer its electronic records (including
software) relating to the Receivables, the related Contracts and the Related
Transferred Assets to the Successor Administrator in such electronic form as
the Successor Administrator may reasonably request and shall promptly
transfer to the Successor Administrator all other records, correspondence
and documents necessary for the continued administration of the Receivables
and the Related Transferred Assets in the manner and at such times as the
Successor Administrator shall request. To the extent that compliance with
this Section 10.02(b) shall require the Administrator to disclose to the
Successor Administrator information of any kind which the Administrator
reasonably deems to be confidential, prior to the transfer contemplated by
the preceding sentence the Successor Administrator shall be required to
enter into such customary licensing and confidentiality agreements as the
Administrator shall reasonably deem necessary to protect its interest. All
reasonable costs and expenses (including attorneys' fees and disbursements)
incurred in connection with transferring the Receivables, the Related
Transferred Assets and all related Records (including the related Contracts)
to the Successor Administrator and amending this Agreement and the other
Transaction Documents to reflect such succession as Administrator pursuant
to this Section 10.02(b) shall be paid by the predecessor Administrator (or,
if the Trustee serves as Successor Administrator on an interim basis, the
initial Administrator) within 15 days after presentation of reasonable
documentation of such costs and expenses.
(c) Upon its appointment and acceptance thereof, the Successor
Administrator shall be the successor in all respects to the Administrator
with respect to administration
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functions under this Agreement and shall be subject to all the
responsibilities and duties relating thereto placed on the Administrator by
the terms and provisions hereof, and all references in this Agreement to the
Administrator shall be deemed to refer to the Successor Administrator.
(d) All authority and power granted to the Administrator or the
Successor Administrator under this Agreement shall automatically cease and
terminate upon termination of the Trust pursuant to Section 12.01, and shall
pass to and be vested in NAFCO and, without limitation, NAFCO is hereby
authorized and empowered, on and after the effective date of such
termination, to execute and deliver, on behalf of the Successor
Administrator, as attorney-in-fact or otherwise, all documents and other
instruments and to do and accomplish all other acts or things that NAFCO
reasonably determines are necessary or appropriate to effect the purposes of
such transfer of administration rights. The Successor Administrator agrees
to cooperate with NAFCO in effecting the termination of the responsibilities
and rights of the Successor Administrator to conduct administration of the
Receivables and the Related Transferred Assets. The Successor Administrator
shall, within five Business Days after such termination, transfer its
electronic records relating to the Receivables and the Related Transferred
Assets to NAFCO in such electronic form as NAFCO may reasonably request and
shall transfer all other records, correspondence and documents relating to
the Receivables and the Related Transferred Assets to NAFCO in the manner
and at such times as NAFCO shall reasonably request. To the extent that
compliance with this Section 10.02(d) shall require the Successor
Administrator to disclose to NAFCO information of any kind which the
Successor Administrator deems to be confidential. NAFCO shall be required to
enter into such customary licensing and confidentiality agreements as the
Successor Administrator shall reasonably deem necessary to protect its
interests. All reasonable costs and expenses (including attorneys, fees and
disbursements) incurred by the Trustee, in its capacity as Successor
Administrator, in connection with such termination shall be paid by NAFCO
within 15 days after presentation of reasonable documentation of such costs
and expenses.
Section 10.03 Notification Of Administrator Default; Notification of
Appointment of Successor Administrator. Within three Business Days after an
Authorized Officer of the Administrator becomes aware of any Administrator
Default, the Administrator shall give written notice thereof to the Trustee and
the Applicable Rating Agencies, and the Trustee shall, promptly upon receipt of
such written notice (and in any event within two days), give notice to the
Certificateholders at their respective addresses appearing in the Certificate
Register. Upon any termination or appointment of a Successor Administrator
pursuant to this Article X, the Trustee shall give prompt written notice thereof
to the Certificateholders at their respective addresses appearing in the
Certificate Register and to the Applicable Rating Agencies.
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ARTICLE XI
THE TRUSTEE
Section 11.01 Duties of Trustee.
(a) The Trustee undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. The provisions of this
Article XI shall apply to the Trustee solely in its capacity as Trustee, and
not to the Trustee in its capacity as Administrator if it is acting as the
Administrator. Following the occurrence of an Administrator Default of which
a Responsible Officer has knowledge, the Trustee shall exercise such of the
rights and powers vested in it by this Agreement and use the same degree of
care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; provided,
however, that if the Trustee shall assume the duties of the Administrator
pursuant to Section 10.02, the Trustee in performing such duties shall use
the degree of skill and attention customarily exercised by a servicer or
administrator with respect to auto receivables that it services or
administers for itself or others. The Trustee shall have no power to create,
assume or incur indebtedness or other liabilities in the name of the Trust
other than as contemplated in, or incidental to the performance of its
duties under, this Agreement.
(b) The Trustee, upon receipt of all resolutions, certificates,
statements, opinions, reports, documents, orders or other instruments
furnished to the Trustee which are specifically required to be furnished
pursuant to any provision of this Agreement, shall examine them to determine
whether they are complete and reasonably in the form required by this
Agreement. The Trustee shall give prompt written notice to the Person who
furnished any item of the type listed in the preceding sentence of any lack
of completeness or conformity of any such item to the applicable
requirements of this Agreement. In addition, the Trustee shall give prompt
written notice to the Certificateholders of any material lack of
completeness or conformity of any such instrument to the applicable
requirements of this Agreement discovered by the Trustee which would entitle
a specified percentage of the Certificateholders to take any action pursuant
to this Agreement.
(c) Subject to Section 11.01(a), no provision of this Agreement shall
be construed to relieve the Trustee from liability for its own negligent
action, its own negligent failure to act or its own willful misconduct;
provided, however, that:
(i) the Trustee shall not be liable for an error of judgment made
in good faith by a Responsible Officer or Responsible Officers of the
Trustee, unless it shall be proved that the Trustee was negligent in
ascertaining the pertinent facts;
(ii) the Trustee shall not be liable with respect to any action
taken, suffered or omitted to be taken by it in good faith in
accordance with the direction (as applicable) of the Majority
Certificateholders or the Required Certificateholders relating to the
time, method and place of conducting any proceeding for any remedy
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available the Trustee, or exercising any trust or power conferred upon
the Trustee, under this Agreement;
(iii) the Trustee shall not be charged with knowledge of (A) any
failure by the Administrator to comply with the obligations of the
Administrator referred to in subsections (a) through (i) of Section
10.01, (B) any breach of the representations and warranties of NAFCO or
the representations and warranties of the Administrator set forth in
Section 8.01 or (C) any breach of the covenants of NAFCO or the
covenants of the Administrator in each case unless a Responsible
Officer of the Trustee obtains actual knowledge of such matter or the
Trustee receives written notice of such matter from the Administrator
or from any Holder;
(iv) the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall
not be liable except for the performance of such duties and obligations
as shall be specifically set forth in this Agreement, no implied
covenants or obligations shall be read into this Agreement against the
Trustee and, in the absence of bad faith on the part of the Trustee,
the Trustee may conclusively rely on the truth of the statements and
the correctness of the opinions expressed in any certificates or
opinions that are furnished to the Trustee and that conform to the
requirements of this Agreement; and
(v) without limiting the generality of this Section 11.01 or
Section 11.02, the Trustee shall have no duty (A) to see to any
recording, filing, or depositing of this Agreement or any agreement
referred to herein or any financing statement or continuation statement
evidencing a security interest in the Receivables or the Related
Transferred Assets, or to see to the maintenance of any such recording
or filing or depositing or to any rerecording, refiling or redepositing
of any thereof, (B) to see to the payment or discharge, of any tax,
assessment, or other governmental charge or any Adverse Claim or
encumbrance of any kind owing with respect to, assessed or levied
against, any part of the Trust, (C) to confirm or verify the contents
of any reports or certificates of the Administrator delivered to the
Trustee pursuant to this Agreement that are believed by the Trustee to
be genuine and to have been signed or presented by the proper party or
parties or (D) to ascertain or inquire as to the performance or
observance of any of NAFCO's or the Administrator's representations,
warranties or covenants or the Administrator's duties and obligations
as Administrator.
(d) The Trustee shall not be required to expend or risk its own funds
or otherwise incur financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers, if the
Trustee reasonably believes that the repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Administrator under this Agreement
except during such time, if any, as the Trustee shall be the successor to,
and be vested with the rights, duties, powers and privileges of, the
Administrator in accordance with the terms, of this Agreement.
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(e) Except for actions expressly authorized by this Agreement, the
Trustee shall take no action reasonably likely to impair the interests of
the Trust in any Trust Asset now existing or hereafter created or to impair
the value of any Trust Asset now existing or hereafter created.
(f) Except to the extent expressly provided otherwise in this
Agreement, the Trustee shall have no power to vary the corpus of the Trust,
including the power to (i) accept any substitute obligation for a Receivable
initially transferred to the Trust under Section 2.01 hereof, (ii) add any
other investment, obligation or security to the Trust, (iii) withdraw from
the Trust any Trust Asset, except for a withdrawal permitted under Section
12.01 or a withdrawal that has been consented to by all of the
Certificateholders.
(g) In the event that the Paying Agent or the Transfer Agent and
Registrar shall fail to perform any obligation, duty or agreement in the
manner or on the day on which such obligation, duty or agreement is required
to be performed by the Paying Agent or the Transfer Agent and Registrar, as
the case may be, under this Agreement, the Trustee shall be obligated,
promptly upon the actual knowledge thereof by a Responsible Officer, to
perform such obligation, duty or agreement in the manner so required.
Section 11.02 Certain Matters Affecting the Trustee. Except as
otherwise provided in Section 11.01:
(a) the Trustee may rely on and shall be protected in acting on, or in
refraining from acting in accordance with, any resolution, Officer's
Certificate, opinion of counsel, certificate of auditors or any other
certificate, statement, instrument, instruction, opinion, report, notice,
request, consent, order, appraisal, bond or other paper or document and any
information contained therein believed by it to be genuine and to have been
signed or presented to it pursuant to this Agreement by the proper party or
parties including, but not limited to, reports and records required by
Article III;
(b) the Trustee may consult with counsel and any advice or Opinion of
Counsel shall be full and complete authorization and protection in respect
of any action taken or permitted or omitted by it hereunder in good faith
and in accordance with such advice or Opinion of Counsel;
(c) the Trustee including in its role as Successor Administrator, if it
ever acts in that capacity, shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement, or to institute,
conduct or defend any litigation or other proceeding hereunder or in
relation hereto, at the request, order or direction of any of the
Certificateholders pursuant to the provisions of this Agreement, unless such
Certificateholders shall have offered to the Trustee security or indemnity
reasonably satisfactory to it against the costs, expenses and liabilities
which may be incurred therein or thereby; provided, however, that nothing
contained herein shall relieve the Trustee of the obligations, upon the
occurrence and continuance of an Administrator Default which has not been
cured, to exercise such of the rights and powers vested in it by this
Agreement and to
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use the same degree of care and skill in their exercise as a prudent person
would exercise or use under the circumstances in the conduct of his or her
own affairs;
(d) the Trustee shall not be personally liable for any action taken,
permitted or omitted by it in good faith and believed by it to be authorized
or within the discretion or rights or powers conferred upon it by this
Agreement;
(e) the Trustee shall not be bound to make any investigation into the
facts of matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, consent, order, approval, bond
or other paper or document, unless requested in writing to do so by the
Required Certificateholders; provided, however, that if the payment within a
reasonable time to the Trustee of the costs, expenses, or liabilities likely
to be incurred by it in connection with making such investigation shall be,
in the opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Agreement, the Trustee may
require reasonable indemnity against such cost, expense, or liability as a
condition to proceeding with such investigation. The reasonable expense of
every such examination shall be paid by the Administrator or, if paid by the
Trustee, shall be reimbursed by the Administrator upon demand;
(f) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents,
representatives, attorneys or a custodian, and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such agent,
representative, attorney or custodian appointed with due care by it
hereunder;
(g) except as may be required by Section 11.01(b) hereof, the Trustee
shall not be required to make any initial or periodic examination of any
documents or records related to the Trust Assets for the purpose of
establishing the presence or absence of defects or for any other purpose;
(h) whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Trustee shall be subject to the provisions of
this Section 11.02;
(i) the Trustee shall have no liability with respect to the acts or
omissions of the Administrator (except and to the extent the Administrator
is the Trustee), including, but not limited to, acts or omissions in
connection with: the management or administration of the Receivables or the
Related Transferred Assets, calculations made by the Administrator whether
or not reported to the Trustee, and deposits into or withdrawals from any
Trust Accounts established pursuant to the terms of this Agreement; and
(j) in the event that the Trustee is also acting as Paying Agent or
Transfer Agent and Registrar hereunder, the rights and protections afforded
to the Trustee pursuant to this Article XI shall also be afforded to the
Trustee acting as Paying Agent or as Transfer Agent and Registrar.
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Section 11.03 Limitation on Liability of Trustee. The Trustee shall at
no time have any responsibility or liability for or with respect to the
correctness of the recitals contained herein or in the Certificates (other than
the certificate of authentication on the Certificates). Except as set forth in
Section 11.15, the Trustee makes no representations as to the validity or
sufficiency of this Agreement, any Supplement, the Certificates (other than the
certificate of authentication on the Certificates) or any other Transaction
Document or any Trust Asset or related document. The Trustee shall not be
accountable for the use or application by NAFCO of any of the Certificates or of
the proceeds of such Certificates, or for the use or application of any funds
paid to NAFCO or the Administrator in respect of the Trust Assets or deposited
by the Administrator in or withdrawn by the Administrator from the Trust
Accounts or any other accounts hereafter established to effectuate the
transactions contemplated herein or in the other Transaction Documents and in
accordance with the terms hereof or thereof.
The Trustee shall at no time have any responsibility or liability for
or with respect to the legality, validity, or enforceability of any ownership or
security interest in any Trust Asset, or the perfection or priority of such a
security interest or the maintenance of any such perfection or priority, or for
or with respect to the efficacy of the Trust or its ability to generate the
payments to be distributed to Certificateholders under this Agreement,
including: the existence and substance of any Trust Asset or any related Record
or any computer or other record thereof; the validity of the transfer of any
Trust Asset to the Trust or of any preceding or intervening transfer; the
performance or enforcement of any Trust Asset; the compliance by NAFCO or the
Administrator with any warranty or representation made under this Agreement or
in any other Transaction Document and the accuracy of any such warranty or
representation prior to the Trustee's receipt of actual notice of any
noncompliance therewith or any breach thereof; any investment of monies pursuant
to Section 4.04 or any loss resulting therefrom; the acts or omissions of NAFCO,
the Administrator, or any Obligor; any action of the Administrator taken in the
name of the Trustee; or any action by the Trustee taken at the instruction of
the Administrator or any action in connection with any of the Trust Documents;
provided, however, that the foregoing shall not relieve the Trustee of its
obligation to perform its duties under the Agreement in accordance with the
terms hereof.
Except with respect to a claim based on the failure of the Trustee to
perform its duties under this Agreement or based on the Trustee's negligence or
willful misconduct, no recourse shall be had against the Trustee in its
individual capacity for any claim based on any provision of this Agreement, any
other Transaction Document, the Certificates, any Trust Asset or any assignment
thereof. The Trustee shall not have any personal obligation, liability, or duty
whatsoever to any Certificateholder or any other Person with respect to any such
claim, and any such claim shall be asserted solely against the Trust or any
indemnitor who shall furnish indemnity to the Trust or the Trustee as provided
in this Agreement. Any obligation of the Trustee to give any notice or statement
to any rating agency hereunder shall constitute only a best efforts obligation
and such notice or statement shall be so provided only as a matter of courtesy
and accommodation, the Trustee having no liability to any rating agency or any
other Person for any failure to so provide such notice or statement.
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Section 11.04 Trustee May Deal with Other Parties. Subject to any
restrictions that may otherwise be imposed by Section 406 of ERISA or Section
4975(e) of the Internal Revenue Code, the Trustee in its individual or any other
capacity may deal with the other parties hereto (other than NAFCO) and their
respective affiliates, with the same rights as it would have if it were not the
Trustee.
Section 11.05 Administrator To Pay Trustee's Fees and Expenses and Fees
and Expenses under the Custodian Agreement.
(a) To the extent not paid by the Administrator to the Trustee from
funds constituting the Administration Fee, the Administrator covenants and
agrees to pay to the Trustee from time to time, and the Trustee shall be
entitled to receive, such reasonable compensation as is agreed upon in
writing between the Trustee and the Administrator (which shall not be
limited by any provision of law in regard to the compensation of a trustee
of an express trust) for all services rendered by it in the execution of the
trust hereby created and in the exercise and performance of any of the
powers and duties hereunder of the Trustee, and the Administrator will pay
or reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Trustee in accordance
with any of the provisions of this Agreement and the other Transaction
Documents to which it is a party (including the reasonable fees and expenses
of its agents, any co-trustee and counsel) except any such expense,
disbursement or advance as may arise from the Trustee's negligence or bad
faith and except as provided in the following sentence. Notwithstanding
anything to the contrary contained in this Agreement, for so long as
National Auto Finance Company, Inc. shall be serving as Administrator, the
items referred to in Section 4.03(a)(ii) hereof shall be paid by National
Auto Finance Company, Inc. directly and shall not be paid from Section
4.03(a)(ii) hereof.
(b) In addition, the Administrator agrees to indemnify the Trustee (and
its officers, employees, directors and agents) from, and hold it harmless
against, any and all losses, liabilities, damages, claims or expenses
incurred by the Trustee in the execution of the Trust or in the exercise or
performance of any of the powers or duties of the Trustee hereunder, other
than those resulting from the gross negligence or willfull misconduct of the
Trustee.
(c) If the Trustee is appointed Successor Administrator pursuant to
Section 10.02, the provisions of this Section 11.05 shall not apply to
expenses, disbursements and advances made or incurred by the Trustee in its
capacity as Successor Administrator, which shall be paid out of the
Administration Fee. The Administrator's covenant to pay the fees, expenses,
disbursements and advances provided for in this Section 11.05 shall survive
the resignation or removal of the Trustee and the termination of this
Agreement.
Section 11.06 Eligibility Requirements for Trustee. The Trustee
hereunder shall at all times
(a) be (i) a banking institution organized under the laws of the United
States, (ii) a member bank of the Federal Reserve System or (iii) any other
banking institution or trust company,
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incorporated and business under the laws of any State or of the United States, a
substantial portion of the business of which consists of receiving deposits or
exercising fiduciary powers similar to those permitted to national banks under
the authority of the Comptroller of the Currency, and which is supervised and
examined by a state or federal authority having supervision over banks; (b) not
be an Enhancement Provider or an Affiliate of First Union National Bank; (c)
have, in the case of an entity that is subject to risk-based capital adequacy
requirements, risk-based capital of at least $50,000,000 or, in the case of an
entity that is not subject to risk-based capital adequacy requirements, a
combined capital and surplus of at least $50,000,000 and (d) a long-term
unsecured debt rating of at least A or its equivalent by each Applicable Rating
Agency. If such corporation or association publishes reports of condition at
least annually, pursuant to law or to the requirements of the aforesaid
supervising or examining authority, then, for the purpose of this Section 11.06,
the combined capital and surplus of such corporation or association shall be
deemed to be its combined capital and surplus as set forth in its most recent
report of condition so published. If at any time the Trustee shall cease to be
eligible in accordance with the provisions of this Section 11.06, the Trustee
shall resign immediately in the manner and with the effect specified in Section
11.07.
Section 11.07 Resignation or Removal of Trustee.
(a) The Trustee may at any time resign and be discharged from the trust
hereby created by giving 30 days prior written notice thereof to NAFCO, the
Administrator, the Applicable Rating Agencies, the Certificateholders and
the Purchaser Agents. Upon receiving such notice of resignation, NAFCO shall
promptly appoint a successor trustee who meets the eligibility requirements
set forth in Section 11.06 by written instrument, in duplicate, one copy of
which instrument shall be delivered to the resigning Trustee and one copy to
the successor trustee. If no successor trustee shall have been so appointed
and shall have accepted appointment within 30 days after the giving of such
notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction to appoint a successor trustee.
(b) If at any time the Trustee shall cease to be eligible to be the
Trustee hereunder in accordance with the provisions of Section 11.06 hereof
and shall fail to resign promptly after its receipt of a written request
therefor by the Administrator, or if at any time the Trustee shall be
legally unable to act, or shall be adjudged bankrupt or insolvent, or if a
receiver for the Trustee or of its property shall be appointed, or any
public officer shall take charge or control of the Trustee or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation, then the Administrator may remove the Trustee and promptly
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee.
(c) Any resignation or removal of the Trustee and appointment of a
successor trustee Pursuant to any of the provisions of this Section 11.07
shall not become effective until acceptance of appointment by the successor
trustee as provided in Section 11.08 hereof
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Section 11.08 Successor Trustee.
(a) Any successor trustee appointed as provided in Section 11.07 hereof
shall execute, acknowledge and deliver to NAFCO, the Administrator, the
Certificateholders and the predecessor Trustee an instrument accepting such
appointment hereunder, and thereupon the resignation or removal of the
predecessor Trustee shall, upon payment of its fees and expenses and other
amounts owed to it pursuant to Section 11.05, become effective and such
successor trustee, without any further act, deed or conveyance, shall become
fully vested with all the rights, powers, duties and obligations of its
predecessor hereunder, with like effect as if originally named as Trustee
herein. The predecessor Trustee shall deliver to the successor trustee, at
the expense of the Administrator, all documents or copies thereof and
statements held by it hereunder; and NAFCO and the predecessor Trustee shall
execute and deliver such instruments and do such other things as may
reasonably be required for fully vesting and confirming in the successor
trustee all such rights, powers, duties and obligations. The Administrator
shall promptly give notice to the Applicable Rating Agencies upon the
appointment of a successor trustee.
(b) No successor trustee shall accept appointment as provided in this
Section 11.08 unless at the time of such acceptance such successor trustee
shall be eligible to become the Trustee under the provisions of Section
11.06 hereof.
(c) Upon acceptance of appointment by a successor trustee as provided
in this Section 11.08, such successor trustee shall mail notice of such
succession hereunder to all Certificateholders at their addresses as shown
in the Certificate Register.
(d) The retiring Trustee shall not be liable for any acts or omissions
of any successor trustee.
Section 11.09 Merger or Consolidation of Trustee. Any Person into which
the Trustee may be merged or converted or with which it may be consolidated, or
any Person resulting from any merger, conversion or consolidation to which the
Trustee shall be a party, or any Person succeeding to all or substantially all
of the corporate trust business of the Trustee, shall be the successor of the
Trustee hereunder, if such Person meets the requirements of Section 11.06,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto, anything herein to the contrary notwithstanding. The
Administrator shall promptly give notice to the Applicable Rating Agencies upon
any such merger or consolidation of the Trustee.
Section 11.10 Appointment of Co-Trustee or Separate Trustee.
(a) Notwithstanding any other provisions of this Agreement, at any
time, for the purpose of meeting any legal requirements of any jurisdiction
in which any part of the Trust may at the time be located, the Trustee shall
have the power and may execute and deliver all instruments to appoint one or
more Persons (which may be an employee or employees of the Trustee) to act
as a co-trustee or co-trustees, or separate trustee or separate trustees, of
all or any part of the Trust, and to vest in such Person or Persons, in such
capacity and for the benefit of the Certificateholders and the Purchasers,
such title to the Trust, or any part
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thereof, and, subject to the other provisions of this Section 11.10, such
powers, duties, obligations, rights and trusts as the Trustee may consider
necessary or appropriate. No co-trustee or separate trustee hereunder shall
be required to meet the terms of eligibility as a successor trustee under
Section 11.06 and no notice to Certificateholders of the appointment of any
such co-trustee or separate trustee shall be required under Section 11.08;
provided, however, that the Trustee shall give the Administrator and NAFCO
notice of any such appointment as promptly as practicable.
(b) Every separate trustee and co-trustee shall, to the extent
permitted by law, be appointed and act subject to the following provisions
and conditions:
(i) all rights, powers, duties and obligations conferred or imposed
upon the Trustee shall be conferred or imposed upon and exercised or
performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood that such separate trustee or co-trustee
is not authorized to act separately without the Trustee joining in such
act), except to the extent that under any law of any jurisdiction in
which any particular act or acts are to be performed (whether as the
Trustee hereunder or as successor to the Administrator hereunder), the
Trustee shall be incompetent or unqualified to perform such act or
acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust or any portion thereof in
any such jurisdiction) shall be exercised and performed singly by such
separate trustee or co-trustee, but solely at the direction of the
Trustee;
(ii) no trustee hereunder shall be personally liable by reason of
any act or omission of any other trustee hereunder; and
(iii) the Trustee may at any time accept the resignation of or
remove any separate trustee or co-trustee.
(c) Any notice, request or other writing given to the Trustee shall be
deemed to have been given to each of the then separate trustees and
co-trustees, as effectively as if given to each of them. Every instrument
appointing any separate trustee or co-trustee shall refer to this Agreement
and the conditions of this Article XI. Each separate trustee and co-trustee,
upon its acceptance of the trusts conferred, shall be vested with the
estates or property specified in its instrument of appointment, either
jointly with the Trustee or separately, as may be provided therein, subject
to all the provisions of this Agreement, specifically including every
provision of this Agreement relating to the conduct of affecting the
liability of, or affording protection or indemnity to, the Trustee. Every
such instrument shall be filed with the Trustee and a copy thereof given to
the Administrator.
(d) Any separate trustee or co-trustee may at any time constitute the
Trustee, its agent or attorney-in-fact with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect to
this Agreement or any other Transaction Document on its behalf and in its
name. If any separate trustee or co-trustee shall die, become incapable of
acting, resign or be removed, all its estates, properties, rights, remedies
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and trusts shall vest in and be exercised by the Trustee, to the extent
permitted by law, without the appointment of a new or successor trustee.
Section 11.11 Tax Returns. In the event the Trust shall be required
to file tax returns, the Administrator shall prepare or shall cause to be
prepared any tax returns required to be filed by the Trust and shall remit such
returns to the Trustee for signature at least five Business Days before such
returns are due to be filed. The Administrator shall also prepare or shall cause
to be prepared all tax information required by law to be made available to
Certificateholders and shall deliver such information to the Trustee at least
five Business Days prior to the date it is required by law to be made available
to the Certificateholders. The Trustee, upon request, will furnish the
Administrator with all such information known to the Trustee as may be
reasonably required in connection with the preparation of all tax returns of the
Trust and shall, upon request, execute such returns as the Trustee determines
are appropriate.
Section 11.12 Trustee May Enforce Claims Without Possession of
Certificates. All rights of action and claims under this Agreement, the
Certificates or the other Transaction Documents may be prosecuted and enforced
by the Trustee without the possession of any of the Certificates or the
production thereof in any proceeding relating thereto, and any such proceeding
instituted by the Trustee shall be brought in its own name as trustee. Any
recovery of judgment shall, after provision for the payment of the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel, be distributed to the Certificateholders in respect of which such
judgment has been obtained in the manner specified in Section 4.03(h).
Section 11.13 Suits for Enforcement. If an Amortization Event or an
Administrator Default shall occur and be continuing, the Trustee, in its
discretion may, subject to the provisions of Sections 11.01 and 11.14 (and shall
at the written direction of the Required Certificateholders), proceed to protect
and enforce its rights and the rights, of the Certificateholders under this
Agreement by suit, action or proceeding in equity or at law or otherwise,
whether for the specific performance of any covenant or agreement contained in
this Agreement or any other Transaction Document or in aid of the execution of
any power granted in this Agreement or any other Transaction Document or for the
enforcement of any other legal, equitable or other remedy as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Certificateholders. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Certificateholder any plan of reorganization, arrangement,
adjustment or composition affecting the Certificates or the rights of any Holder
thereof or to authorize the Trustee to vote in respect of the claim of any
Certificateholder in any such proceeding.
Section 11.14 Rights of Certificateholders to Direct Trustee. The
Required Certificateholders shall have the right to direct the time, method, and
place of conducting any proceeding for any remedy available to the Trustee, or
exercising any trust or power conferred on the Trustee; provided, however, that,
subject to Section 11.01 the Trustee may decline to follow any such direction if
the Trustee, being advised by counsel, determines that the action so directed
may not lawfully be taken, or if a Responsible Officer or Responsible Officers
of the Trustee shall determine, in good faith, that the proceedings so directed
would be illegal or involve the Trustee in personal liability or be unduly
prejudicial to the rights of the Certificateholders not giving such
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direction; and, provided further that nothing in this Agreement shall impair the
right of the Trustee to take any action deemed proper by the Trustee and which
is not inconsistent with such direction of the Required Certificateholders.
Section 11.15 Representations and Warranties of Trustee. The Trustee
represents and warrants that:
(a) the Trustee is a New York banking corporation organized, existing
and in good standing under the laws of the State of New York;
(b) the Trustee has full power, authority and right to execute, deliver
and perform this Agreement executed by it on the date hereof, and has taken
all necessary action to authorize the execution, delivery and performance by
it of this Agreement; and
(c) this Agreement and the other Transaction Documents executed by it
on the date hereof have been duly executed and delivered by the Trustee and,
in the case of all such Transaction Documents, are legal, valid and binding
obligations of the Trustee, enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement
Of creditors' rights generally and by general principles of equity,
regardless of whether such enforceability is considered in a proceeding in
equity or at law.
Section 11.16 Maintenance of Office or Agency. Trustee will maintain,
at its address designated pursuant to Section 13.06, an office or offices or
agency or agencies where notices and demands to or upon the Trustee in respect
of the Certificates, this Agreement and the other Transaction Documents to which
it is a party may be served. The Trustee will give prompt written notice to the
Administrator and to the Certificateholders of any change in the location of the
Certificate Register or any such office or agency.
Section 11.17 No Bond. The Trustee and each co-trustee and separate
trustee from time to time appointed pursuant to this Agreement are relieved from
giving any bond, surety or security, and from making any inventories, appraisals
or accountings of the Trust Assets, in each case that would otherwise have been
required under the laws of the State of Florida merely on account of their
acting in such capacities.
Section 11.18 Statements, Certificates and Reports. A copy of each
statement, certificate and report furnished to the Trustee pursuant to this
Agreement shall be provided to any Certificateholder or the Applicable Rating
Agencies requesting the same in a writing to the Trustee addressed to the
Corporate Trust Office.
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ARTICLE XII
TERMINATION
Section 12.01 Termination of Trust. The Trust and the
respective obligations and responsibilities of NAFCO, the Administrator and the
Trustee created hereby (other than the obligation of the Trustee to make
payments to Certificateholders as hereinafter set forth) shall terminate, except
with respect to the duties and obligations described in Sections 7.03, 8.04,
11.05, 11.11, 12.02(b), 13.10, 13.13, 13.15, 13.16 and 13.17 and any other
provision which by its terms is stated to survive, upon the day on which the
Certificateholders and the Trustee shall have been paid all amounts required to
be paid to them pursuant to this Agreement and the Trustee has disposed of all
property held as part of the Trust (including pursuant to Section 12.03).
Section 12.02 Final Distribution.
(a) The Administrator shall give the Trustee at least ten
days, prior written notice of the date on which the Trust is expected
to terminate in accordance with Section 12.01(a). Upon receiving such
notification from the Administrator, the Trustee shall give the
Certificateholders written notice as soon as practicable after the
Trustee's receipt of notice from the Administrator, which notice shall
specify (i) the Distribution Date upon which final payment with respect
to the Certificates is expected to be made and (ii) the amount of any
such final payment. The Trustee shall give such notice to the Transfer
Agent and Registrar and the Paying Agent at the time such notice is
given to the Certificateholders. On the Distribution Date specified in
such notice, the Trustee shall, based upon the Distribution Date
statement relating to such Distribution Date, cause to be distributed
to the Certificateholders the amounts distributable to them on such
Distribution Date pursuant to Article IV and Article V. Each
Certificateholder shall present the Certificates owned by them to the
Trustee and surrender such Certificates for cancellation at the address
of the Trustee set forth in Section 13.06 not more than ten Business
Days after the Distribution Date upon which final payment with respect
to the Certificates has been made.
(b) Notwithstanding the termination of the Trust pursuant to
Section 12.01(a), all funds then on deposit in the Certificate Account
shall continue to be held in trust for the benefit of the
Certificateholders and the Paying Agent or the Trustee shall pay such
funds to the Certificateholders at the time set forth in Section
12.01(a). In the event that any of the Certificateholders shall not
have surrendered their Certificates for cancellation within six months
after the date specified in the above-mentioned written notice from the
Trustee, the Trustee shall give a second written notice to the
remaining Certificateholders concerning the final distribution and
surrender of their Certificates for cancellation. The Trustee and the
Paying Agent shall pay to the Class C Certificateholder any monies held
by them for the payment of principal of or interest on the Certificates
that remains unclaimed for two years after the termination of the Trust
pursuant to Section 12.01(a). After payment of such monies to the
Class C Certificateholder, Certificateholders entitled to the money
must look to the Class C Certificateholder for payment as general
creditors unless an applicable abandoned property law designates
another Person.
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Section 12.03 Rights Upon Termination of the Trust. Upon the
termination of the Trust pursuant to Section 12.01 and the surrender of the
Class C Certificate by NAFCO to the Trustee, the Trustee shall transfer, assign,
set over and otherwise convey to NAFCO (without recourse, representation or
warranty), all right, title and interest of the Trust in the Receivables,
whether then existing or thereafter created, the Related Transferred Assets and
all of the other property previously conveyed to the Trust pursuant to Section
2.01(b), except for amounts held by the Trustee pursuant to Section 2.02(b) and
except for the rights of RPA indemnified Parties (other than NAFCO and its
officers, directors, shareholders, controlling Persons, employees and agents) to
indemnification and contribution under Section 9.1 of the Purchase Agreement.
The Trustee shall execute and deliver such instruments of transfer and
assignment (including any document necessary to release the security interest in
favor of the Trustee (for the benefit of the Certificateholders) in such
Receivables and Related Transferred Assets and to release any filing evidencing
or perfecting such security interest), in each case without recourse,
representation or warranty, as shall be reasonably requested by NAFCO to vest in
NAFCO all right, title and interest which the Trust had in the Trust Assets.
Section 12.04 Optional Repurchase of Investor Interests. On
any Distribution Date, NAFCO shall have the option, upon the giving of 10 days'
prior written notice by NAFCO to the Administrator, the Class B
Certificateholder, the Trustee and the Applicable Rating Agencies, to repurchase
the undivided interest in the Trust by depositing into the Certificate Account,
on such Distribution Date, an amount equal to the unpaid Certificate Principal
Amount plus accrued and unpaid interest on the unpaid principal amount of such
Certificates (and accrued and unpaid interest with respect to interest amounts
that were due but not paid on a prior Distribution Date) through the day
preceding such Distribution Date at the Certificate Rate applicable to such
Certificates. Upon tender of all outstanding Certificates by the
Certificateholders, the Trustee shall then distribute such amounts, together
with all other amounts on deposit in the Certificate Account to the
Certificateholders on the next Distribution Date in repayment of the principal
amount and all accrued and unpaid interest owing to such Certificateholders.
Following any such repurchase, the Certificateholders shall have no further
rights with respect to the Receivables and the Trustee shall execute and deliver
such instruments of transfer and assignment (including any document necessary to
release the security interest in favor of the Trustee (for the benefit of the
Certificateholders) in such Receivables and Related Transferred Assets and to
release any filing evidencing or perfecting such security interest), in each
case without recourse, representation or warranty, as shall be reasonably
requested by NAFCO to vest in NAFCO all right, title and interest which the
Trust had in the Trust Assets. In the event that NAFCO falls for any reason to
deposit the aggregate purchase price for the Certificate Principal Amount,
payments shall continue to be made to the Certificateholders in accordance with
the terms of this Agreement.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
Section 13.01 Amendment, Waiver, Etc.
(a) This Agreement and any Supplement may be amended from time
to time by the Administrator, NAFCO and the Trustee (acting at the
written direction of the Required Certificateholders) by a written
instrument signed by each of them, without the consent of any of the
Certificateholders but only to cure any ambiguities, or to cure,
correct or supplement any provisions contained in this Agreement that
may be defective or inconsistent with any other provision contained in
this Agreement; provided, however, that such action shall not adversely
affect in any material respect the interests of any Certificateholder
(as evidenced by an Officer's Certificate of NAFCO). This Agreement and
any Supplement may not be amended unless NAFCO shall have delivered the
proposed amendment to the Applicable Rating Agencies at least ten
Business Days (or such shorter period as shall be acceptable to each of
them) prior to the execution and delivery thereof and the Rating Agency
Condition has been satisfied with respect to such amendment.
(b) The provisions of this Agreement and any Supplement may
also be amended, modified or waived from time to time by the
Administrator, NAFCO and the Trustee with the consent of the Required
Certificateholders for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this
Agreement or any Supplement or of modifying in any manner the rights of
the Certificateholders; provided, however, that no such amendment shall
(i) result in the Trust becoming an association taxable as a
corporation or a "publicly traded partnership" within the meaning of
the Internal Revenue Code, (ii) reduce in any manner the amount of or
delay the timing of any distributions to be made to Certificateholders
or deposits of amounts to be so distributed or the amount available
under any Enhancement without the consent of each affected
Certificateholder, (iii) change the definition of or the manner of
calculating the interest of any Certificateholder without the consent
of each affected Certificateholder, (iv) reduce the aforesaid
percentage required to consent to any such amendment without the
consent of each Certificateholder or (v) adversely affect the rating of
any Series or Class by any Applicable Rating Agency without the consent
of the Holders of the Certificates of such Series or Class evidencing
not less than 66 2/3% of the aggregate unpaid principal amount of the
Certificates of such Series or Class.
NAFCO or the Trustee shall establish a record date for
determining which Certificateholders may give such waivers and consents. No
waiver of any Amortization Event or other default hereunder given at any time
shall apply to any other prior or subsequent Amortization Event or default.
(c) Promptly after the execution of any amendment, consent or
waiver described in clause (a), or (b), the Trustee shall furnish
written notification of the substance of such amendment or consent to
each Certificateholder, and the Administrator shall furnish written
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notification of the substance of such amendment or consent to the
Applicable Rating Agencies and each Enhancement Provider.
(d) It shall not be necessary for any waiver or consent given
by the Certificateholders under this Section 13.01 to approve the
particular form of any proposed amendment, but it shall be sufficient
if such consent shall approve the substance thereof. The manner of
obtaining such waivers and consents and of evidencing the authorization
of the execution thereof by the Certificateholders shall be subject to
such reasonable requirements as the Trustee may prescribe.
(e) Notwithstanding anything in this Section to the contrary,
no amendment may be made to this Agreement or any Supplement which
would adversely affect in any material respect the interests of any
Enhancement Provider without the consent of such Enhancement Provider.
(f) Any Supplement executed in accordance with the provisions
of Section 6.10 shall not be considered an amendment to this Agreement
for the purposes of this Section 13.01.
(g) Prior to the execution of any amendment to this Agreement,
the Trustee shall be entitled to receive and rely upon an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to such
execution and delivery have been satisfied. The Trustee may, but shall
not be obligated to, enter into any such amendment which affects the
Trustee's own rights, duties or immunities under this Agreement.
Section 13.02 Actions by Certificateholders.
(a) By its acceptance of Certificates pursuant to this
Agreement and the applicable Supplement, each Certificateholder
acknowledges and agrees that, wherever in this Agreement a provision
states that an action may be taken or a notice, demand or instruction
given by any Series of Certificateholders, any Class of
Certificateholders or the Certificateholders, such action, notice or
instruction may be taken or given by any Holder of any Certificate of
such Series or Class or by any Certificateholder, respectively, unless
such provision requires a specific percentage of such Series or Class
of Certificateholders or of all Certificateholders.
(b) By its acceptance of Certificates pursuant to this
Agreement and the applicable Supplement, each Certificateholder
acknowledges and agrees that any request, demand, authorization,
direction, notice, consent, waiver or other act by the Holder of a
Certificate shall bind such Holder and every subsequent Holder of such
Certificate and of any Certificate issued upon the registration of
transfer thereof or in exchange therefor or in lieu thereof in respect
of anything done or omitted to be done by the Trustee or the
Administrator in reliance thereon, whether or not notation of such
action is made upon such Certificate.
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(c) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement or any
Supplement to be given or taken by Certificateholders may be embodied
in and evidenced by one or more instruments of substantially similar
tenor signed by such Certificateholders in person or by agent duly
appointed in writing; and except as herein otherwise expressly
provided, such action shall become effective when such instrument or
instruments are delivered to the Trustee and, when required, to
Administrator. Proof of execution of any such instrument or of a
writing appointing any such agent shall be sufficient for any purpose
of this Agreement or any Supplement and conclusive in favor of the
Trustee and the Administrator, if made in the manner provided in this
Section.
(d) The fact and date of the execution by any
Certificateholder of any such instrument or writing may be proved in
any reasonable manner which the Trustee deems sufficient.
Section 13.03 Limitation on Rights of Certificateholders.
(a) The death or incapacity of any Certificateholder shall not
operate to terminate this Agreement or the Trust, nor shall such death
or incapacity entitle such Certificateholder's legal representatives or
heirs to claim an accounting or to take any action or commence any
proceeding in any court for a partition or winding up of the Trust, nor
otherwise affect the rights, obligations and liabilities of the parties
hereto or any of them.
(b) No Certificateholder shall have any right to vote (except
as expressly provided otherwise in this Agreement) or in any manner
otherwise to control the operation and management of the Trust, or the
obligations of the parties hereto, nor shall anything herein set forth,
or contained in the terms of the Certificates, be construed so as to
constitute the Certificateholders from time to time as partners or
members of an association, nor shall any Certificateholder be under any
liability to any third Person by reason of any action taken by the
parties to this Agreement pursuant to any provision hereof.
(c) No Certificateholder shall have any right by virtue of any
provisions of this Agreement to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Agreement, unless such Certificateholder previously shall have given to
the Trustee, and unless the Required Certificateholders shall have
made, written request upon the Trustee to institute such action, suit
or proceeding in its own name as Trustee hereunder and shall have
offered to the Trustee such reasonable indemnity as it may require
against the costs, expenses and liabilities to be incurred therein or
thereby, and the Trustee, for 10 days after its receipt of such notice,
request and offer of indemnity, shall have neglected or refused to
institute any such action, suit or proceeding; it being understood and
intended, and being expressly covenanted by each Certificateholder with
every other Certificateholder and the Trustee, that no one or more
Certificateholders shall have any night in any manner whatever by
virtue of, or by availing itself or themselves of any provisions of
this Agreement to affect, disturb or prejudice the rights of any other
Certificateholder or any Holder of any other Series of Certificates, or
to obtain or seek to obtain priority over or preference to any such
other Certificateholder or any such Holder of any other Series of
Certificates, or to enforce any
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right under this Agreement, except in the manner herein provided and
for the equal, ratable and common benefit of, in the case of actions
affecting the Certificateholders as a class, all Certificateholders or,
in the case of actions affecting the Holders of any Certificates, the
Holders of the Certificates. For the protection and enforcement of the
provisions of this Section 13.03, each and every Certificateholder and
the Trustee shall be entitled to such relief as can be given either at
law or in equity.
(d) By their acceptance of Certificates pursuant to this
Agreement and the applicable Supplement, the Certificateholders agree
to the provisions of this Section 13.03.
Section 13.04 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
CONFLICT OF LAW PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF NEW YORK.
Section 13.05 Notices. All demands, notices, directions,
orders, requests, instructions and communications hereunder shall be in writing
and shall be deemed to have been duly given if personally delivered, four
Business Days after mailing if mailed by registered mail, return receipt
requested, or sent by facsimile transmission (a) in the case of NAFCO, to its
address set forth below its signature hereto; (b) in the case of National Auto,
to its address set forth below its signature hereto; and (c) in the case of the
Trustee, the Paying Agent or the Transfer Agent and Registrar, to the address of
the Trustee set forth on the signature pages hereof; or, as to each party, at
such other address or facsimile number as shall be designated by such party in a
written notice to each other party given in accordance with this Section 13.05.
Except to the extent expressly provided otherwise in an applicable Supplement,
any notice required or permitted to be mailed to a Certificateholder shall be
sent by first-class mail, postage prepaid, to the address of such
Certificateholder as shown in the Certificate Register. Except to the extent
expressly provided otherwise in an applicable Supplement, any notice so mailed
within the time prescribed in this Agreement shall be conclusively presumed to
have been duly given on the fourth Business Day after such notice is so mailed,
whether or not the Certificateholder receives such notice.
Section 13.06 Severability of Provisions. If any one or more
of the covenants, agreements, provisions or terms of this Agreement or any of
the other Transaction Documents shall for any reason whatsoever be held invalid,
then such covenants, agreements, provisions or terms shall be deemed severable
from the remaining covenants, agreements, provisions or terms of this Agreement
or such other Transaction Document (as applicable) and shall in no way affect
the validity or enforceability of the other provisions of this Agreement, the
Certificates or any of the other Transaction Documents or the rights of the
Certificateholders or the Purchasers.
Section 13.07 Certificates Nonassessable and Fully Paid.
Except to the extent otherwise expressly provided in Section 7.03 with respect
to NAFCO, it is the intention of the parties to this Agreement that the
Certificateholders shall not be personally liable for obligations of the Trust,
that the interests in the Trust represented by the Certificates shall be
nonassessable for any losses or expenses of the Trust or for any reason
whatsoever and that Certificates upon authentication thereof by the Trustee
pursuant to Section 6.02 are and shall be deemed fully paid.
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Section 13.08 Further Assurances. NAFCO and the Administrator
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments required or reasonably requested by the Trustee more
fully to effect the purposes of this Agreement, including the execution of any
financing statements or continuation statements relating to the Receivables for
filing under the provisions of the UCC or other applicable law of any applicable
jurisdiction.
Section 13.09 Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the Trustee, the Administrator, NAFCO,
the Paying Agent, the Authenticating Agent and the Transfer Agent and Registrar
(but not any Certificateholder) agrees that it shall not, with respect to the
Trust or NAFCO, institute or join any other Person in instituting any proceeding
of the type referred to in the definition of "Event of Bankruptcy" so long as
any Certificates issued by the Trust shall be outstanding or there shall not
have elapsed one year plus one day since the last day on which any such
Certificates shall have been outstanding. The foregoing shall not limit the
right of the Trustee, the Administrator, NAFCO, the Paying Agent, the
Authenticating Agent and the Transfer Agent and Registrar to file any claim in
or otherwise take any action with respect to any such insolvency proceeding that
was instituted against NAFCO or the Trust by any Person other than the Trustee,
the Administrator, NAFCO, the Paying Agent, the Authenticating Agent or the
Transfer Agent and Registrar. In addition, each of the Administrator, the Paying
Agent, the Authenticating Agent, the Transfer Agent and Registrar and (as to the
Trust) NAFCO agree that all amounts owed to them by the Trust or NAFCO shall be
payable solely from amounts that become available for such payment pursuant to
this Agreement and the Receivables Purchase Agreement, and no such amounts shall
constitute a claim against the Trust or NAFCO to the extent that they are in
excess of the amounts available for their payment.
Section 13.10. No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Trustee, the
Certificateholders or the Holders of any Series of Certificates, any right,
remedy, power or privilege hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. The rights, remedies, powers and
privileges herein provided are cumulative and are not exhaustive of any rights,
remedies, powers and privileges provided by law.
Section 13.11 Counterparts. This Agreement may be executed in
any number of counterparts and by the different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original,
and all of which together shall constitute one and the same instrument.
Section 13.12 Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and the
Certificateholders and their respective successors and permitted assigns. Except
as otherwise expressly provided in this Agreement, nothing contained in this
Agreement shall confer any rights upon any Person which is not a party to, or a
permitted assignee of a party to, this Agreement.
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Section 13.13 Integration. This Agreement and the other
Transaction Documents contain a final and complete integration of all prior
expressions by the parties hereto with respect to the subject matter hereof and
thereof and shall together constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and thereof, superseding all
prior oral or written understandings.
Section 13.14 Binding Effect; Assignability; Survival of
Provisions. This Agreement shall be binding upon and inure to the benefit of
NAFCO, the Administrator and the Trustee and their respective successors and
permitted assigns; provided that NAFCO shall not delegate any of its obligations
hereunder. This Agreement shall create and constitute the continuing obligations
of the parties hereto in accordance with its terms, and shall remain in full
force and effect until the termination of the Trust pursuant to Section 12.01.
Section 13.15 Recourse to NAFCO. Except to the extent
expressly provided otherwise in the Transaction Documents, the obligations of
NAFCO under this Agreement and the other Transaction Documents to which it is a
party are solely the obligations of NAFCO. No recourse shall be had for payment
of any fee payable by or other obligation of or claim against NAFCO that arises
out of this Agreement or any other Transaction Document to which NAFCO is a
party against any trustee, director, officer or employee of NAFCO. Payments to
be made by NAFCO pursuant to this Agreement shall be paid to the extent that
funds are available to make such payments after all amounts to be paid to the
Certificateholders pursuant to Section 4.03(a) or 4.03(b) (as applicable) shall
have been paid, and there shall be no recourse to NAFCO for all or any part of
any amounts payable pursuant to this Agreement if such funds are at any time
insufficient to make all or part of any such payments. The provisions of this
Section 13.15 shall survive the termination of this Agreement.
Section 13.16 Recourse to Trust Assets. The Certificates do
not represent an obligation of, or an interest in, NAFCO, National Auto, the
Administrator, the Trustee or any Affiliate of any of them. Except as expressly
provided otherwise in this Agreement, the Certificates are limited in right of
payment to the Trust Assets.
Section 13.17 Submission to Jurisdiction. EACH PARTY HERETO
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK
STATE OR FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK, NEW YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND HEREBY (A) IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND
DETERMINED IN SUCH NEW YORK STATE OR FEDERAL COURT; (B) IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT
FORUM TO THE MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (C) IN THE CASE OF
NAFCO, IRREVOCABLY APPOINTS NATIONAL AUTO (THE "PROCESS AGENT"), WITH AN OFFICE
ON THE DATE HEREOF AT 10302 DEERWOOD PARK BOULEVARD, SUITE 100, JACKSONVILLE,
FLORIDA 32256, UNITED STATES OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT
AND ITS PROPERTY SERVICE OF COPIES OF THE
68
<PAGE> 75
SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH
ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING OR DELIVERING A COPY
OF SUCH PROCESS TO NAFCO IN CARE OF THE PROCESS AGENT AT THE PROCESS AGENT'S
ABOVE ADDRESS, AND NAFCO HEREBY IRREVOCABLY AUTHORIZES AND DIRECTS THE PROCESS
AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF. AS AN ALTERNATIVE METHOD OF SERVICE,
EACH OF NAFCO AND THE ADMINISTRATOR ALSO IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF
SUCH PROCESS TO NAFCO OR THE ADMINISTRATOR (AS APPLICABLE) AT ITS ADDRESS
SPECIFIED HEREIN. NOTHING IN THIS SECTION 13.17 SHALL AFFECT THE RIGHT OF ANY
PARTY HERETO TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR
AFFECT THE RIGHT OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST
ANY OR ALL OF THE OTHER PARTIES HERETO OR ANY OF THEIR RESPECTIVE PROPERTIES IN
THE COURTS OF ANY OTHER JURISDICTION.
Section 13.18 Waiver of Jury Trial. EACH PARTY HERETO WAIVES
ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEPEND
ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT,
OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN
THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
ACTIONS OF ANY OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
Section 13.19 Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) this Agreement is executed
and delivered by Chase Manhattan Bank Delaware (as successor to Chase Manhattan
Bank USA, N.A.), not individually or personally but solely as trustee of NAFCO,
in the exercise of the powers and authority conferred and vested in it, (b) each
of the representations, undertakings and agreements herein made on the part of
NAFCO is made and intended not as personal representations, undertakings and
agreements by Chase Manhattan Bank Delaware (as successor to Chase Manhattan
Bank USA, N.A.) but is made and intended for the purpose of binding only NAFCO
and (c) under no circumstances shall Chase Manhattan Bank Delaware (as successor
to Chase Manhattan Bank USA, N.A.) be personally liable for the payment of any
indebtedness or expenses of NAFCO or be liable for the breach or failure of any
obligation, representation, warranty or covenant made or undertaken by NAFCO
under this Agreement or the other Transaction Documents.
Section 13.20 Covenants of National Auto Receivables Master
Trust. The Trust will not (i)(A) sell, assign (by operation of law or otherwise)
or otherwise transfer to any Person, (B) pledge an interest in, (C) grant,
create, incur, assume or permit to exist an Adverse Claim to or in favor of any
Person upon or with respect to, or (D) cause to be filed any financing statement
or
69
<PAGE> 76
equivalent document relating to perfection that covers any Receivable related
Contract, Related Transferred Asset or other Trust Asset, or any interest
therein, or (ii) assign to any Person any right to receive income from or in
respect of any of the foregoing. The Trust shall defend the right title and
interest of the Trust in, to and under the Trust Assets. whether now existing or
hereafter created, against all claims of third parties claiming through or under
the Trust.
Section 13.21 Class A Certificates. No Class A Certificates
shall be issued on or after the date hereof without the prior written consent of
the Class B Certificateholders.
Section 13.22 Conditions Precedent. As a condition precedent
to the effectiveness of this amendment, the Class B Certificateholders shall
have received (1) waivers by National Auto Finance Company Inc.'s subordinated
noteholders and Financial Security Assurance Inc. relative to any events of
default or similar events that may exist, (2) a copy of a definitive agreement
between National Financial Auto Finance Company, Inc. and its subordinated
noteholders with respect to the financial restructuring and recapitalization of
National Financial Auto Finance Company, Inc. Notwithstanding the satisfaction
of the conditions precedent, upon execution hereof, all of the Trustee's nights
under this Agreement (and by operation of law) shall vest in Trustee, whether or
not the conditions precedent were, in fact, satisfied, (3) a representation and
warranty from an officer of the Administrator that no Amortization Event or
Liquidation Event has occurred or that with the passage of time would occur and
that no other event of default has occurred hereunder, (4) Amendment One to the
Backup Servicing Agreement shall have been fully executed and delivered and (5)
payment or reimbursement for (a) its reasonable out-of-pocket costs and expenses
incurred in connection with the development, preparation and attention to the
execution of the amendment to this Agreement, the commitment letter with respect
to the purchase of the Subordinated Asset-Backed Notes, the residual financing
facility, and the documents and transactions contemplated hereby and thereby up
to an aggregate limitation of $5,000 for all three facilities; provided,
however, that its reasonable out of pocket costs and expenses incurred in
connection with the documents embodying or relating to amendments, waivers or
consents with respect to any of the foregoing shall not be subject to such
limitation and (b) the reasonable fees and out-of-pocket costs and expenses of
Thacher Proffitt & Wood and any other counsel, who are acting as external legal
advisers to First Union National Bank in connection with the foregoing.
Section 13.23 Non-Dealer Originations, Balloon Receivable.
(a) Receivables that constitute Non-Dealer Originations that
are transferred to the Trust on or after the Effective Date shall not
be deemed to be Eligible Receivables until such time as the aggregate
principal balance of all Receivables that constitute Non-Dealer
Originations is less than the Non-Dealer Originations Allowance Amount
as of any date of determination.
(b) Balloon Receivables transferred to the Trust on or after
the Effective Date shall not be deemed to be Eligible Receivables until
such time as the aggregate principal balance of all Balloon Receivables
is less than the Balloon Receivables Allowance Amount as of any date of
determination.
70
<PAGE> 77
Section 13.24 Release. In consideration of the amendment and
restatement contemplated hereby, which amendment and restatement will be of
material benefit to National Auto and the holders of the securities of National
Auto, National Auto, on behalf of itself and its parent, subsidiaries,
affiliates, partners, officers, directors, employees, agents, (stockholders to
the fullest extent permitted by applicable law), successors and assigns, hereby
release and forever discharge First Union National Bank, First Union Capital
Markets, a division of Wheat First Securities, Inc., First Union Capital Markets
Corp., and their respective parent, subsidiary and affiliated corporations, and
its and their respective officers, directors, employees, representatives,
professionals, agents, successors and assigns (all such entities being
hereinafter referred to as the "First Union Released Parties"), of and from any
and all claims or causes of action, legal or equitable, known or unknown which
it (or any shareholders to the fullest extent permitted by applicable law) has
or may have against the First Union Released Parties, or any one or more of
them, arising from or in any way connected with any act or omission of the First
Union Released Parties prior to the date hereof, whether as underwriter,
placement agent, lender or advisor to National Auto, as an equity holder of
National Auto or in any other capacity or relationship with National Auto of
whatever kind or nature. The claims or causes of action released hereby shall
include but not be limited to any claim or cause of action arising from the
Securities Act of 1933, as amended, the rules and regulations of the Securities
and Exchange Commission promulgated thereunder, and any analogous state law,
rules or regulations; the Securities Exchange Act of 1934, as amended, the rules
and regulations of the Securities and Exchange Commission promulgated
thereunder, and any analogous state law, rules or regulations; and the doctrines
of common law fraud and/or intentional or negligent misrepresentation. National
Auto further acknowledges and agrees that neither this release nor the
circumstances under which it is being executed shall be construed as an
acknowledgment on the part of the First Union Released Parties of any liability
whatsoever to National Auto with respect to any claim or cause of action which
National Auto has or may have against the First Union Released Parties, it being
expressly understood that the First Union Released Parties deny any such
liability.
Section 13.25 Post Closing Covenants. Within ten (10) Business
Days following the Effective Date, the Administrator shall cause the Trustee to
enter into such hedging agreements and in the notional amount required by clause
(iv) of the definition of "Portfolio Requirements". In the event such hedging
agreements in such notional amounts have not been entered into as required by
the preceding sentence, the Required Certificateholders shall have the right to
direct the Trustee to enter into such agreements and such Certificateholders
shall, if the Trustee has not entered into such agreement, have the right to
enter into such hedging agreements in such notional amounts.
Section 13.26 Waiver of Prior Amortization Events and
Administrator Defaults. All Amortization Events and Administrator Defaults
occurring prior to the Effective Date are hereby waived; provided, however, that
such waiver shall not be deemed to waive performance of any of the
Administrator's or the Trust's contractual obligations hereunder.
71
<PAGE> 78
IN WITNESS WHEREOF, NAFCO, the Administrator and the Trustee have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the day and year first above written.
NATIONAL FINANCIAL AUTO FUNDING TRUST II
(as successor to National Financial
Auto Funding Trust, f/k/a NAFCO
Funding Trust)
as the transferor
By: Chase Manhattan Bank Delaware
(as successor to Chase Manhattan Bank
USA, N.A.), not in its individual capacity
but solely as 0wner Trustee of the National
Financial Auto Funding Trust 11)
By: /s/ DENIS KELLY
----------------------------------------------
Name: Denis Kelly
Title: Trust Officer
Address: 1201 North Market Street, 9th Floor
Wilmington, Delaware 19801
Attention: Corporate Trust Department
Telephone: (302) 428-3375
Facsimile: (302) 984-4903
NATIONAL AUTO FINANCE COMPANY, INC.
(f/k/a National Auto Finance Company L.P.)
as Administrator
By: /s/ KEITH B. STEIN
----------------------------------------------
Name: Keith B. Stein
Title: Vice Chairman and Chief Executive Officer
Address: 10302 Deerwood Park Boulevard
Suite 100
Jacksonville, Florida 32256
Attention: General Counsel
Telephone: (904) 996-2551
Facsimile: (904) 996-2557
<PAGE> 79
BANKERS TRUST COMPANY,
not in its individual capacity but solely as
Trustee of National Financial Auto Receivables
Master Trust (f/k/a NAFCO Auto Receivables
Master Trust)
By: /s/ ROBERT FRIER
----------------------------------------
Name: Robert Frier
Title: Vice President
Address: Four Albany Street
New York, New York 10006
Attention: Corporate Trust and Agency Group
Telephone: (212) 250-8360
Facsimile: (212) 250-6439
<PAGE> 80
EXHIBIT A to Pooling and
Administration Agreement
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR "BLUE SKY" LAWS OF
ANY STATE OR THE LAWS OF ANY FOREIGN COUNTRY. THIS CERTIFICATE MAY NOT BE
RESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR
DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS AND FOREIGN LAWS. IN ADDITION TO THE
RESTRICTIONS SET FORTH ABOVE, RESALE, TRANSFER OR DISPOSITION OF THIS
CERTIFICATE IS PROHIBITED TO THE EXTENT SET FORTH IN THE POOLING AND
ADMINISTRATION AGREEMENT (AS DEFINED BELOW).
NAFCO AUTO RECEIVABLES MASTER TRUST
SERIES 1994-R, CLASS B CERTIFICATE
CUSIP Number: Initial Stated Amount: $
--------- ----------
Percentage Interest evidenced
by this Certificate: %
------
Initial Cut-Off Date: December , 1994
-----
First Distribution Date: January , 1995
-----
THIS CERTIFIES THAT __________________ is the registered owner of a
fractional undivided interest in NAFCO Auto Receivables Master Trust (the
"Trust"), which was created pursuant to the Pooling and Administration
Agreement, dated as of December _, 1994 (as the same may be amended,
supplemented, amended and restated or otherwise modified from time to time, the
"Pooling and Administration Agreement"), by and among NAFCO Funding Trust, a
Delaware business trust, as transferor ("NAFCO"), National Auto Finance Company
L.P. (in such capacity, the "Administrator"), and Bankers Trust Company, as
trustee (together with its successors and assigns in such capacity, the
"Trustee"). This Certificate is one of the duly authorized Series 1994-R, Class
B Certificates designated and issued under the Pooling and Administration
Agreement. To the extent not otherwise defined herein, the capitalized terms
used herein have the meanings assigned to them in Appendix A to the Pooling and
Administration Agreement.
<PAGE> 81
This Certificate is subject to the terms, provisions and conditions of, and is
entitled to the benefits afforded by, the Pooling and Administration Agreement,
to which terms, provisions and conditions the Holder of this Certificate by
virtue of the acceptance hereof assents and by which such Holder is bound. The
Series 1994-R, Class B Certificates are a subordinated class and are
subordinated to the extent set forth in the Pooling and Administration
Agreement.
The Class B Interest Distributable Amount shall accrue on this
Certificate as set forth in the Pooling and Administration Agreement. This
Certificate is subject to prepayment prior to the maturity hereof to the extent
set forth in the Pooling and Administration Agreement.
The Pooling and Administration Agreement may be amended and the rights
and obligations of the parties thereto and of the Holder of this Certificate
modified as set forth in such Agreement.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not entitle the Holder hereof to
any benefit under the Pooling and Administration Agreement or under any other
Transaction Document or be valid for any purpose.
This Certificate does not represent an obligation of, or an interest
in, NAFCO, National Auto, the Administrator, the Servicer, the Trustee, the
NAFCO Trustee or any Affiliate of any of them. This Certificate is limited in
right of payment to the Trust Assets.
As provided in the Pooling and Administration Agreement, and subject
to the restrictions on sale, transfer and disposition set forth therein and in
the other Transaction Documents, upon surrender for registration of transfer of
this Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose,
2
<PAGE> 82
NAFCO shall execute and the Trustee shall authenticate and deliver, in the name
of the designated transferee or transferees, one or more new Certificates of
the same Class and Series which are in authorized denominations of like
aggregate fractional interests in the Certificate Interest and which bears a
number that is not contemporaneously outstanding.
As provided in the Pooling and Administration Agreement, and subject
to the restrictions on exchange set forth therein and in the other Transaction
Documents, at the option of the Holder, this Certificate may be exchanged for
other Certificates of the same Class and Series of authorized denominations of
like aggregate fractional interests in the Certificate Interest and bearing
numbers that are not contemporaneously outstanding, upon surrender of this
Certificate to be exchanged at any such office or agency. If this Certificate
is so surrendered for exchange, NAFCO shall execute, and the Trustee shall
authenticate and deliver, the appropriate number of Certificates of the same
Class and Series.
If this Certificate is presented or surrendered for registration of
transfer or exchange, it shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Holder hereof or his attorney-in-fact duly
authorized in a writing delivered to the Transfer Agent and Registrar in
addition to such additional instruments or opinions of counsel as may be
required pursuant to Section 6.03(b)(i) or (ii) of the Pooling and
Administration Agreement.
By its acceptance of this Certificate, each Holder hereof (a)
acknowledges that it is the intent of NAFCO, and agrees that it is the intent
of such Holder that, for federal, state and local income and franchise tax
purposes, the Certificates (including this Certificate) will be treated as
evidence of indebtedness secured by the Trust Assets and the Trust not be
characterized as an association
3
<PAGE> 83
taxable as a corporation, (b) agrees to treat this Certificate for federal,
state and local income and franchise tax purposes as indebtedness, and (c)
agrees that the provisions of the Pooling and Administration Agreement and all
related Transaction Documents shall be construed to further these intentions of
the parties.
This Certificate shall be construed in accordance with the laws of the
State of New York, without reference to its conflict of laws principles, and
all obligations, rights and remedies under, or arising in connection with, this
Certificate shall be determined in accordance with the laws of the State of New
York.
This Certificate is executed and delivered by The Chase Manhattan Bank
(USA), not individually or personally but solely as owner trustee of NAFCO, in
the exercise of the powers and authority conferred and vested in it, (b) each
of the undertakings and agreements herein made on the part of NAFCO is made and
intended not as personal undertakings and agreements by The Chase Manhattan
Bank (USA) but is made and intended for the purpose for binding only NAFCO and
(c) under no circumstances shall The Chase Manhattan Bank (USA) be personally
liable for the payment of any indebtedness or expenses of NAFCO or be liable
for the breach or failure of any obligation, representation, warranty or
covenant made or undertaken by NAFCO under this Certificate.
4
<PAGE> 84
IN WITNESS WHEREOF, NAFCO has caused this Certificate to be executed
by its officer thereunto duly authorized.
NAFCO FUNDING TRUST
By: THE CHASE MANHATTAN BANK
(USA), not in its individual
capacity, but solely as Owner
Trustee under the First
Amended and Restated Trust
Agreement dated as of December
, 1994
------
By: /s/ EXECUTED BY AUTHORIZED OFFICER
-------------------------------------
Name: Executed by Authorized Officer
Title:
5
<PAGE> 85
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1994-R, Class B Certificates referred to in
the Pooling and Administration Agreement.
BANKERS TRUST COMPANY
as Trustee
By: /s/ Executed by Authorized Officer
------------------------------------
Name: Executed by Authorized Officer
Title:
Dated: December , 1994
-----
6
<PAGE> 86
LOANS AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
Amount Type and Amount of Unpaid
Date of of Interest Principal Principal Notation
Borrowing Advance Rate Paid Balance Made by
- --------- ------- -------- --------- --------- --------
<S> <C> <C> <C> <C> <C>
</TABLE>
7
<PAGE> 87
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR "BLUE SKY" LAWS
OF ANY STATE OR THE LAWS OF ANY FOREIGN COUNTRY. THIS CERTIFICATE MAY NOT BE
RESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR
DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS AND FOREIGN LAWS. IN ADDITION TO THE
RESTRICTIONS SET FORTH ABOVE, RESALE , TRANSFER OR DISPOSITION OF THIS
CERTIFICATE IS PROHIBITED TO THE EXTENT SET FORTH IN THE POOLING AND
ADMINISTRATION AGREEMENT (AS DEFINED BELOW).
NAFCO AUTO RECEIVABLES MASTER TRUST
SERIES 1994-R, CLASS C CERTIFICATE
THIS CERTIFIES THAT NATIONAL AUTO CHARTERED CORPORATION is the
registered owner of a 1% remainder interest in NAFCO Auto Receivables Master
Trust (the "Trust"), which was created pursuant to the Pooling and
Administration Agreement, dated as of December 8, 1994 (as the same may be
amended, supplemented, amended and restated or otherwise modified from time to
time, the "Pooling and Administration Agreement"), by and among NAFCO Funding
Trust ("NAFCO"), as transferor, National Auto Finance Company L.P., as the
administrator, and Bankers Trust Company, as trustee (in such capacity, together
with its successors and assigns in such capacity, the "Trustee"). This
certificate (the "Certificate") is one of the duly authorized Class C
Certificates designated and issued under the Pooling and Administration
Agreement. To the extent not otherwise defined herein, capitalized terms used
herein have the meanings assigned to them in Appendix A to the Pooling and
Administration Agreement. This Certificate is subject to the terms, provisions
and conditions of, and is entitled to the benefits afforded by, the Pooling and
Administration Agreement, to which terms provisions and conditions the
<PAGE> 88
holder of this Certificate, by virtue of the acceptance hereof, assents and by
which such holder is bound.
This Certificate represents the ownership interest in the remainder of
the Trust Assets not allocated pursuant to the Pooling and Administration
Agreement to the Certificate Interest, including the right to receive payments
at the times and in the amounts specified in the Pooling and Administration
Agreement.
This Certificate shall not bear interest.
The Pooling and Administration Agreement may be amended and the rights
and obligations of the parties thereto and of the holder of this Certificate
modified as set forth in the Pooling and Administration Agreement.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not entitle the holder hereof to
any benefit under the Pooling and Administration Agreement or under any other
Transaction Document or be valid for any purpose.
This Certificate does not represent an obligation of, or an interest
in NAFCO, the Seller, the Administrator, the Trustee or any Affiliate of any of
them. This Certificate is limited in right of payment to the Trust Assets.
NAFCO may not transfer, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in this Certificate
or any interest represented hereby except in compliance with the terms,
conditions and restrictions set forth in the Pooling and Administration
Agreement.
This Certificate shall be construed in accordance with the laws of the
State of New York, without reference to its conflict of laws principles, and
all obligations, rights and
<PAGE> 89
remedies under, or arising in connection with, this Certificate shall be
determined in accordance with the laws of the State of New York.
This Certificate is executed and delivered by The Chase Manhattan Bank
(USA), not individually or personally but solely as owner trustee of NAFCO, in
the exercise of the powers and authority conferred and vested in it, (b) each
of the undertakings and agreements herein made on the part of NAFCO is made and
intended not as personal undertakings and agreements by The Chase Manhattan
Bank (USA) but is made and intended for the purpose for binding only NAFCO and
(c) under no circumstances shall The Chase Manhattan Bank (USA) be personally
liable for the payment of any indebtedness or expenses of NAFCO or be liable
for the breach or failure of any obligation representation, warranty or
covenant made or undertaken by NAFCO under this certificate.
<PAGE> 90
IN WITNESS WHEREOF, NAFCO has caused this Certificate to be executed
by its officer thereunto duly authorized.
NAFCO FUNDING TRUST
By: THE CHASE MANHATTAN BANK (USA)
not in its individual
capacity, but solely as Owner
Trustee under the First
Amended and Restated Trust
Agreement dated as of December
, 1994
------
By: /s/ EXECUTED BY AUTHORIZED USER
----------------------------------
Name: Executed by Authorized User
Title:
<PAGE> 91
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is the Series 1994-R, Class C Certificate referred to in the
Pooling and Administration Agreement.
BANKERS TRUST COMPANY
as Trustee
By: /s/ EXECUTED BY AUTHORIZED USER
-----------------------------------
Title:
-----------------------------
DATED: December , 1994
----
<PAGE> 92
EXHIBIT D
LIST OF TRUST ACCOUNTS MAINTAINED AT BANKERS TRUST COMPANY
<TABLE>
<CAPTION>
Account Account Number
------- --------------
<S> <C>
Certificate Account 13880
Reserve Fund 13888
Accrued Interest Account 13942
</TABLE>
TRUST ACCOUNT MAINTAINED AT
FIRST UNION NATIONAL BANK OF
NORTH CAROLINA
Excess Funding Account 2000000717566
(Routing Number) 053000219
3
<PAGE> 93
EXHIBIT E to Pooling and
Administration Agreement
FORM OF INVESTOR LETTER (RULE 144A)
[Trustee]
[Address]
NAFCO Funding Trust
[Address]
Re: NAFCO Auto Receivables Master Trust
Ladies/Gentlemen:
The undersigned,_____________________(the "Purchaser"), intends to
purchase from (insert name of certificate seller] in a private resale of
[insert Series of Certificate] issued in the original [principal amount]
[Stated Amount] of $_______________ (the "Certificate[s]") and evidencing a
fractional undivided interest in NAFCO Auto Receivables Master Trust, which was
formed pursuant to a Pooling and Administration Agreement dated as of December
8, 1994 (as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time, the "Agreement"), among NAFCO Funding
Trust, as transferor ("NAFCO"), National Auto Finance Company L.P., as the
administrator (the "Administrator") and Bankers Trust Company, as the Trustee
(the "Trustee"). All capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in Appendix A to the Agreement.
The Purchaser hereby represents and warrants to NAFCO and the Trustee
that:
1. The Purchaser is a "qualified institutional buyer" within
the meaning of Rule 144A of the Rules and Regulations promulgated
under the Securities Act of 1933, as amended ("Rule 144A") and is
purchasing the Certificate[s] for its own account or for the account
of another "qualified institutional buyer" within the meaning of Rule
144A.
<PAGE> 94
2. The Purchaser is aware that the sale of the Certificate[s]
to the Purchaser is being made in reliance on the exemption under Rule
144A from the registration requirements of the Securities Act.
3. The purchase of the Certificate[s] is being made pursuant
to an available exemption from the registration requirements of
applicable state securities laws.
4. The Purchaser has received all information that it has
requested regarding the Trust and the Certificates.
The Purchaser also agrees for the benefit of NAFCO and the Trustee to
comply with all applicable federal and state securities laws and the
requirements of Section 6.03(b) of the Agreement in connection with any
subsequent resale of the Certificate[s] (or any Certificate[s] issued in
exchange therefor) by the Purchaser.
Very truly yours,
[NAME OF PURCHASER]
By: /s/ EXECUTED BY AUTHORIZED USER
------------------------------------
Name: Executed by Authorized User
Title:
2
<PAGE> 95
EXHIBIT F: FORM OF ACCOUNTANT'S AGREED UPON PROCEDURES
[To be Furnished following the Closing]
<PAGE> 96
Exhibit G
[LOGO]
Friday, January 06, 1995
Number of New Accounts:
Gross Receivable:
Less: Deferred Interest
----------
Obligors Principal Balance
Loss: Misc Deductions
Less: Payments
Less: Dealer Discount
----------
Amount Advanced:
Less: Chargeoff CPB
----------
Net Advance Requested from Trust
==========
- ------------------------------------------------
Kevin G. Adams, Chief Financial Officer
Schedule of Sold Accounts
<TABLE>
<CAPTION>
Account Name Collateral Description Advance Date Term APR Acc. T
Account Number VIN State Mature Date Pmt Yield Advan
-------------- ------------------------------------ ------------ ---- ----- ------
<S> <C> <C> <C> <C> <C>
------
Total Contracts: Total Advanced:
======
</TABLE>
<PAGE> 97
SCHEDULE 7.01 (h)
National Auto Financial Company L.P.
Suites 340 and 320
621 N.W. 53rd Street
Boca Raton, Florida 33487
World Omni Financial Corp.
120 NW 12th Avenue
PO Box 8544
Deerfield Beach, Florida 33433
World Omni Financial Corp.
6150 Omni Park Drive
Mobile, Alabama 36609
<PAGE> 1
EXHIBIT 10.94
AMENDMENT ONE
Amendment One to Back-up Servicing Agreement (the "Amendment") is made
as of the 26th day of March, 1999, by and among CSC Logic/MSA LLP d/b/a Loan
Servicing Enterprise, a Texas limited liability partnership ("LSE", or, "the
Back-up Servicer"), National Auto Finance Company, Inc. (as "Servicer"), First
Union National Bank (as "Lender" and as "Class B Certificateholder"), and
acknowledged and agreed by Bankers Trust Company (as "Trustee" of National
Financial Auto Receivables Master Trust) and National Financial Auto Funding
Trust II (as "Class C Certificateholder") (collectively, the "Parties").
WHEREAS, LSE and the Parties have entered into that certain Back-up
Servicing Agreement dated as of June 16, 1998 (the "Agreement") by which the
Parties requested LSE to perform certain back-up servicing duties related to
motor vehicle contracts owned or to be acquired by the Parties; and
WHEREAS, LSE and the Parties now desire to amend the Agreement to
conform to modified services and/or procedures mutually agreed to by such
parties; and
WHEREAS, the Back-up Servicing Agreement may be amended or modified by
mutual written consent of the parties thereof, without the consent of third
parties; and
NOW THEREFORE, in consideration of the covenants and conditions
contained in this Amendment, the parties hereto, intending to legally bound,
hereby agree to the changes and additions as follow (capitalized terms not
defined herein shall have the meanings ascribed thereto in the Agreement):
1. EXHIBIT A IS DELETED IN ITS ENTIRETY AND REPLACED WITH AMENDED
AND RESTATED EXHIBIT A, ATTACHED HERETO AS ATTACHMENT 1.
2. THE FIRST AND SECOND SENTENCES OF SECTION 2.05 (e) ARE DELETED
IN THEIR ENTIRETY AND REPLACED WITH THE FOLLOWING SENTENCE:
The Back-up Servicing Fee for the services specified in
Amended and Restated Exhibit A shall be $6,500.00 per month.
The Parties hereto hereby confirm that each of the representations and
warranties set forth in the Agreement are true and correct as of the date first
written above with the same effect as though each had been made as of such date,
except to the extent that any of such representations and warranties expressly
relate to earlier dates.
Except as expressly amended by the terms of this Amendment, all terms
and conditions of the Agreement shall remain in full force and effect.
This Amendment may be executed by the Parties hereto in several
counterparts, each of which shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.
NAFI/1st Union/LSE 04/06/99
Back-Up Servicing Agreement
1
<PAGE> 2
THIS AMENDMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF TEXAS, WITHOUT REFERENCE TO ITS CONFLICTS OF LAW PROVISIONS, AND THE
OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED
IN ACCORDANCE WITH SUCH LAWS.
National Auto Finance Company, Inc., by its executing this Amendment,
hereby directs Chase Manhattan Bank Delaware, as Owner Trustee of National
Financial Auto Funding Trust II to acknowledge, agree to, execute and deliver
this Amendment on behalf of National Financial Auto Funding Trust II.
First Union National Bank and National Financial Auto Funding Trust II,
representing 100% of all Class B Certificateholders of the Trust and 99% of
all Class C Certificateholders of the Trust, respectively, hereby authorize,
empower and direct the Trustee to execute and deliver on behalf of the Trust,
this Amendment.
IN WITNESS WHEREOF, LSE and the Parties have caused this Amendment to be duly
executed by their respective authorized officers to become effective as of March
26th, 1999.
<TABLE>
<S> <C>
CSC Logic/MSA LLP First Union National Bank,
d/b/a Loan Servicing Enterprise, as Lender and as Class B
as Back-up Servicer Certificateholder
By: /s/ JOHN F. KILGORE By: /s/ REGINALD H. IMAMURA
------------------------------- --------------------------
Name: John F. Kilgore Name: Reginald H. Imamura
Title: Executive Director Title: Director
National Auto Finance Company, Inc.,
as Servicer
By: /s/ KEITH B. STEIN
-------------------------------
Name: Keith B. Stein
Title: Vice Chairman and Chief
Executive Officer
ACKNOWLEDGED AND AGREED:
Bankers Trust Company, National Financial Auto Funding
not in its individual capacity, Trust II, as Class C Certificateholder
but solely as Trustee of By: Chase Manhattan Bank Delaware,
National Financial Auto not in its individual capacity,
Receivables Master Trust but solely as Owner Trustee
By: /s/ ROBERT F. FRIER By: /s/ DENIS KELLY
------------------------------- --------------------------
Name: ROBERT F. FRIER Name: DENIS KELLY
Title: VICE PRESIDENT Title: TRUST OFFICER
</TABLE>
NAFI/1st Union/LSE 03/26/99
Back-Up Servicing Agreement
2
<PAGE> 3
AMENDED AND RESTATED EXHIBIT A
MONTHLY BACK-UP SERVICING DUTIES
MONTHLY BACK-UP SERVICING FEES
Monthly Duties:
o Upon completion of data mapping as referenced in Section 2.03(a) of
this Agreement, the Back-up Servicer will load the information from the
Monthly Extract Files ("Monthly Files") onto LSE's system within 7 days
of receipt of the complete files.
Monthly Files:
Loan File
Name and Address File;
o On the date on which the Servicer's Certificate is due to Lender, the
Back-up Servicer shall receive from the Servicer the following reports
in order to balance such reports to the Monthly Files:
Trial Balance (derived from the BNI System)
Suspense Account
Insurance Tracking Status (once available)
Aged Delinquency Summary
Servicer's Certificate (Month-End Investor Report)
Repossession Report
Inventory Report
Within ten (10) days of receipt of complete Monthly Files and reports specified
above, Back-up Servicer will run a conversion program which will load the latest
Monthly Files received from the Servicer onto the LSE test system.
o The Back-up Servicer will produce reports from the conversion and will
compare the resulting information to the reports received from the
Servicer. In the event of any discrepancy between the Monthly Files
provided by Servicer and the reports, the Back-up Servicer shall
promptly notify the Servicer and Lender of such discrepancy. If, within
15 days of such notice being provided to the Servicer and Lender, the
Back-up Servicer and the Servicer are unable to resolve such
discrepancy, the Back-up Servicer shall promptly notify the Servicer
and Lender in writing. Following receipt of the notice provided in the
foregoing sentence, the Servicer shall deliver to the Lender no later
than the related Distribution Date (as such term is defined in the
Pooling Agreement) a certificate describing the nature and amount of
such discrepancies and the actions the Servicer proposes to take with
respect thereto.
o Collections: With regard to Collections, Back-up Servicer shall
identify collection account stratification, identify collection
policies and determine collection abbreviations.
o Post Collections: With regard to Post-Collections, Back-up Servicer
shall identify assignment inventory and location, identify location of
vehicles and identify auction personnel and procedures.
Site visits:
Back-up Servicer shall conduct visits at the Servicer's site as frequently as
the Lender or Servicer determine appropriate, provided that any such visits have
been approved in advance
NAFI/1st Union/LSE 04/06/99
Back-Up Servicing Agreement
3
<PAGE> 4
by Lender or Servicer. The fees for such visits shall be charged to the Servicer
at a mutually agreed upon rate (and within CSC corporate guidelines), plus
actual, reasonable travel expenses of LSE personnel.
NAFI/1st Union/LSE 04/06/99
Back-Up Servicing Agreement
4
<PAGE> 1
EXHIBIT 10.95
CONSENT AND AMENDMENT
THIS CONSENT AND AMENDMENT is made as of March , 1999 (this "Agreement"),
between NATIONAL FINANCIAL AUTO FUNDING TRUST II (as successor to National
Financial Auto Funding Trust, f/k/a/ NAFCO Funding Trust), a Delaware business
trust ("Funding Trust"), NATIONAL AUTO FINANCE COMPANY, INC., a Delaware
corporation ("NAFI"), FIRST UNION NATIONAL BANK ("FUNB"), and BANKERS TRUST
COMPANY, as Trustee of the National Financial Auto Receivables Master Trust (the
"Trustee"), pursuant to Section 6.10 of the Pooling and Administration
Agreement, dated as of December 8, 1994, among Funding Trust, NAFI and the
Trustee, as supplemented by the Series 1994-R, Class B Supplement (the
"Supplement", as amended and, together with the Pooling and Administration
Agreement, as amended, and as so supplemented, the "Pooling Agreement") and
Section 13.01(b) of the Pooling Agreement.
In consideration of the mutual agreements herein contained, each partly
agrees as follows for the benefit of the other parties and the Class B
Certificateholders to the extent provided herein:
1. On and after March, 1999, the Stated Amount of the Class B Certificates
under the Pooling Agreement shall equal $85,000,000 (eighty five million
dollars).
2. Funding Trust, as holder of 99% of the Class C Certificates, and FUNB,
as holder of 100% of the Class B Certificates, hereby waive the conditions to
effectiveness of this Consent set forth in Section 6.10(a)(i) and Section
13.01 of the Pooling Agreement.
3. NAFI, by its execution of this Agreement, hereby directs Chase Manhattan
Bank Delaware, as Owner Trustee of Funding Trust, to execute and deliver this
Agreement on behalf of Funding Trust.
4. NAFI and FUNB, as Certificateholders of National Financial Auto
Receivables Master Trust, by their execution of this Agreement, hereby direct
Bankers Trust Company, as Trustee of National Financial Auto Receivables Master
Trust, to execute and deliver this Agreement.
5. The definition of "Class B Principal Distributable Amount" is hereby
amended to read as follows:
"Class B Principal Distributable Amount" means, with respect to
any Distribution Date, the lesser of (a) the outstanding
principal balance of the Class B Certificates as of such
Distribution Date (prior to giving effect to any distributions in
reduction of the outstanding principal amount of the Class B
Certificates made on such Distribution Date) and (b)(i) in the
case of any Distribution Date that occurs prior to the
Liquidation Commencement Date, the greater of (1) the product of
(A) the Overcollateralization Deficit and (B) the Class B
Percentage and (2) the product of (A) the Class B Percentage and
(B) the Certificate Amortized Pool Balance for such Distribution
Date, and (ii) in the case of any
<PAGE> 2
Distribution Date that occurs on or after the Liquidation
Commencement Date, an amount equal to all remaining amounts in
the Certificate Account after application of clauses (i) through
(vi) inclusive of Section 4.03(a).
6. Capitalized terms used but not defined herein shall have the respective
meanings assigned to such terms in the Pooling Agreement.
7. This Agreement may be executed by facsimile signatures and in two or
more counterparts with the same effect as if all parties had signed the same
document. All such counterparts shall be deemed an original, shall be construed
together and shall constitute one and the same instrument.
2
<PAGE> 3
IN WITNESS WHEREOF, Funding Trust, FUNB, NAFI and the Trustee have caused
this Agreement to be executed by their respective officers thereunto duly
authorized as of the day and year first above written.
<TABLE>
<S> <C>
Agreed and Consented to by: Agreed and Consented to by:
FIRST UNION NATIONAL BANK NATIONAL FINANCIAL AUTO FUNDING
TRUST II (as successor to National Financial
Auto Funding Trust, f/k/a/ NAFCO Funding
Trust)
By: CHASE MANHATTAN BANK DELAWARE
(as successor to Chase Manhattan Bank
By: /s/ EXECUTED BY AUTHORIZED OFFICER USA, N.A.), not in its individual capacity
--------------------------------------- but solely as Owner Trustee of National
Name: Executed by Authorized Officer Financial Auto Funding Trust II
Title:
By: /s/ DENIS KELLY
---------------------------------------------
Name: Denis Kelly
Title: Trust Officer
Agreed and Consented to by: Agreed and Consented to by:
NATIONAL AUTO FINANCE COMPANY, INC. BANKERS TRUST COMPANY, not in its
individual capacity but solely as Trustee of
National Financial Auto Receivables Master
Trust
By: /s/ KEITH B. STEIN By: /s/ EXECUTED BY AUTHORIZED OFFICER
--------------------------------------- ---------------------------------------------
Name: Keith B. Stein Name: Executed by Authorized Officer
Title: Vice Chairman and Chief Executive Title:
Officer
</TABLE>
<PAGE> 1
EXHIBIT 10.96
THIS CERTIFICATE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), THE SECURITIES OR "BLUE SKY" LAWS OF
ANY STATE OR THE LAWS OF ANY FOREIGN COUNTRY. THIS CERTIFICATE MAY NOT BE
RESOLD, TRANSFERRED OR OTHERWISE DISPOSED OF UNLESS SUCH RESALE, TRANSFER OR
DISPOSITION IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND APPLICABLE STATE SECURITIES LAWS AND FOREIGN LAWS. IN ADDITION TO THE
RESTRICTIONS SET FORTH ABOVE, RESALE, TRANSFER OR DISPOSITION OF THIS
CERTIFICATE IS PROHIBITED TO THE EXTENT SET FORTH IN THE POOLING AND
ADMINISTRATION AGREEMENT (AS DEFINED BELOW).
NATIONAL FINANCIAL AUTO RECEIVABLES MASTER TRUST
(f/k/a NAFCO Auto Receivables Master Trust)
SERIES 1994-R CLASS B CERTIFICATE
Stated Amount: $85,000,000
Percentage Interest evidenced
by this Certificate: 100%
First Distribution Date: January 16, 1995
THIS CERTIFIES THAT FIRST UNION NATIONAL BANK is the registered owner
of a fractional undivided interest in National Financial Auto Receivables Master
Trust (f/k/a NAFCO Auto Receivables Master Trust) (the "Trust"), which was
created pursuant to the Pooling and Administration Agreement, dated as of
December 8, 1994 (as the same may be amended, supplemented, amended and restated
or otherwise modified from time to time, the "Pooling and Administration
Agreement"), and as was amended and restated pursuant to the Amended and
Restated Pooling and Administration Agreement dated as of December 5, 1994 by
and among National Financial Auto Funding Trust II, as successor to National
Financial Auto Funding Trust (f/k/a NAFCO Funding Trust), a Delaware business
trust, as transferor ("NAFCO"), National Auto Finance Company, Inc. (f/k/a
National Auto Finance Company L.P.) (in such capacity, the "Administrator"), and
Bankers Trust Company, as trustee (together with its successors and assigns in
such capacity, the "Trustee"). This Certificate is one of the duly authorized
1994-R, Series Class B Certificates designated and issued under the Pooling and
Administration Agreement. To the extent not otherwise defined herein, the
capitalized terms used herein have the meanings assigned to them in Appendix A
to the Pooling and Administration Agreement. This Certificate is subject to the
terms, provisions and conditions of, and is entitled to the benefits afforded
by, the Pooling and Administration Agreement, to which terms, provisions and
conditions the Holder of this Certificate by virtue of the acceptance hereof
assents and by which such Holder is bound. The Series 1994-R, Class B
Certificates are a subordinated class and are subordinated to the extent set
forth in the Pooling and Administration Agreement.
The Class B Interest Distributable Amount shall accrue on this
Certificate as set forth in the Pooling and Administration Agreement. This
Certificate is subject to prepayment
<PAGE> 2
prior to the maturity hereof to the extent set forth in the Pooling and
Administration Agreement.
The Pooling and Administration Agreement may be amended and the rights
and obligations of the parties thereto and of the Holder of this Certificate
modified as set forth in such Agreement.
Unless the certificate of authentication hereon shall have been
executed by or on behalf of the Trustee by the manual signature of a duly
authorized signatory, this Certificate shall not entitle the Holder hereof to
any benefit under the Pooling and Administration Agreement or under any other
Transaction Document or be valid for any purpose.
This Certificate does not represent an obligation of, or an interest
in, NAFCO, National Auto, the Administrator, the Servicer, the Trustee, the
NAFCO Trustee or any Affiliate of any of them. This Certificate is limited in
right of payment to the Trust Assets.
As provided in the Pooling and Administration Agreement, and subject to
the restrictions on sale, transfer and disposition set forth therein and in the
other Transaction Documents, upon surrender for registration of transfer of this
Certificate at any office or agency of the Transfer Agent and Registrar
maintained for such purpose, NAFCO shall execute and the Trustee shall
authenticate and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of the same Class and Series which are
in authorized denominations of like aggregate fractional interests in the
Certificate Interest and which bears a number that is not contemporaneously
outstanding.
As provided in the Pooling and Administration Agreement, and subject to
the restrictions on exchange set forth therein and in the other Transaction
Documents, at the option of the Holder, this Certificate may be exchanged for
other Certificates of the same Class and Series of authorized denominations of
like aggregate fractional interests in the Certificate Interest and bearing
numbers that are not contemporaneously outstanding, upon surrender of this
Certificate to be exchanged at any such office or agency. If this Certificate is
so surrendered for exchange, NAFCO shall execute, and the Trustee shall
authenticate and deliver, the appropriate number of Certificates of the same
Class and Series.
If this Certificate is presented or surrendered for registration of
transfer or exchange, it shall be accompanied by a written instrument of
transfer in a form satisfactory to the Trustee and the Transfer Agent and
Registrar duly executed by the Holder hereof or his attorney-in-fact duly
authorized in a writing delivered to the Transfer Agent and Registrar in
addition to such additional instruments or opinions of counsel as may be
required pursuant to Section 6.03(b)(i) or (ii) of the Pooling and
Administration Agreement.
By its acceptance of this Certificate, each Holder hereof (a)
acknowledges that it is the intent of NAFCO, and agrees that it is the intent of
such Holder that, for federal, state and
2
<PAGE> 3
local income and franchise tax purposes, the Certificates (including this
Certificate) will be treated as evidence of indebtedness secured by the Trust
Assets and the Trust not be characterized as an association taxable as a
corporation, (b) agrees to treat this Certificate for federal, state and local
income and franchise tax purposes as indebtedness, and (c) agrees that the
provisions of the Pooling and Administration Agreement and all related
Transaction Documents shall be construed to further these intentions of the
parties.
This Certificate shall be construed in accordance with the laws of the
State of New York, without reference to its conflict of laws principles, and all
obligations, rights and remedies under, or arising in connection with, this
Certificate shall be determined in accordance with the laws of the State of New
York.
This Certificate is executed and delivered by Chase Manhattan Bank
Delaware (as successor to Chase Manhattan Bank USA, N.A.), not individually or
personally but solely as owner trustee of NAFCO, in the exercise of the powers
and authority conferred and vested in it, (b) each of the undertakings and
agreements herein made on the part of NAFCO is made and intended not as personal
undertakings and agreements by Chase Manhattan Bank Delaware (as successor to
Chase Manhattan Bank USA, N.A.) but is made and intended for the purpose for
binding only NAFCO and (c) under no circumstances shall Chase Manhattan Bank
Delaware (as successor to Chase Manhattan Bank USA, N.A.) be personally liable
for the payment of any indebtedness or expenses of NAFCO or be liable for the
breach or failure of any obligation, representation, warranty or covenant made
or undertaken by NAFCO under this Certificate.
3
<PAGE> 4
IN WITNESS WHEREOF, NAFCO has caused this Certificate to be executed by
its officer therunto duly authorized.
NATIONAL FINANCIAL AUTO FUNDING TRUST II
(as successor to National Financial Auto
Funding Trust f/k/a NAFCO Funding Trust)
By: CHASE MANHATTAN BANK DELAWARE
(as successor to Chase Manhattan
Bank USA, N.A.), not in its individual
capacity, but solely as Owner
Trustee under the First Amended and Restated
Trust Agreement dated as of December 8, 1994
By: /s/ DENIS KELLY
-------------------------------------------
Name: Denis Kelly
Title: TRUST OFFICER
4
<PAGE> 5
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Series 1994-R, Class B Certificates referred to in
the Pooling and Administration Agreement.
BANKERS TRUST COMPANY
as Trustee
By: /s/ ROBERT F. FRIER
----------------------------
Name: Robert F. Frier
Title: VICE PRESIDENT
Dated:
5
<PAGE> 1
EXHIBIT 10.97
CERTIFICATE SALE AGREEMENT
CERTIFICATE AGREEMENT, dated as of March 31, 1999, between NATIONAL
CHARTERED AUTO CORPORATION, a Delaware corporation ("NCAC"), and NATIONAL AUTO
FINANCE COMPANY, INC., a Delaware corporation ("NAFF").
RECITALS
WHEREAS, NCAC desires to sell, and NAFI desires to purchase, the Class
C Certificate owned by, and registered in the name of, NCAC, evidencing 1% of
the beneficial ownership interest in the NATIONAL FINANCIAL AUTO RECEIVABLES
MASTER TRUST (the "Master Trust"), a Delaware business trust formed pursuant to
the Pooling and Administration Agreement, dated as of December 5, 1994, between
National Financial Auto Funding Trust II ("Funding Trust II"), NAFI and Bankers
Trust Company, as trustee (as the same shall have been amended and restated as
of March 26, 1999, the "Pooling Agreement");
NOW THEREFORE, in consideration of the mutual agreements herein
contained, each party agrees as follows:
SECTION 1. Definitions. Capitalized terms used and not otherwise
defined herein shall have the meanings ascribed to them in the Pooling
Agreement.
SECTION 2. Sale of Certificate. In consideration of the receipt of the
Purchase Price (as hereinafter defined), NCAC, upon delivery to NAFI of the
Certificate, and execution and delivery to NAFI of the Assignment attached
hereto as Exhibit A (or such other written instrument of transfer in a form
satisfactory to the Transfer Agent and Registrar) duly executed by the
Certificateholder thereof or his attorney-in-fact duly authorized in a writing
delivered to the Transfer Agent and Registrar, endorsed in blank, hereby and
thereby sells, assigns and transfers to NAFI its entire right, title and
interest in the Certificate and the beneficial ownership interest in the Master
Trust evidenced thereby.
SECTION 3. Purchase Price. In consideration of the sale, assignment
and transfer of the Certificate by NCAC to NAFI, NAFI hereby agrees to pay to
NCAC the sum of $25,000.00 (the "Purchase Price"), by wire transfer of
immediately available funds to the following account designated by NCAC:
Bank Name: First Union National Bank
Bank Address: Charlotte, N.C.
Bank ABA Routing Number: 0530-0021-9
For Credit To: National Chartered Auto Corporation
Bank Account Number: 2000000717919
SECTION 4. Representations. (a) Neither NCAC nor any other party acting
on behalf of NCAC has used any means of general solicitation or distribution in
connection with the marketing, sale, transfer or other disposition of the
Certificate or any other certificate or other
<PAGE> 2
evidence beneficial ownership interest in the Master Trust, or taken any other
action that would require registration of the transfer of the Certificate
pursuant hereto under the Securities Act of 1933, as amended, or any state
securities laws.
(b) Neither NAFI nor any other party acting on behalf of NAFI has
sold, offered to sell, or solicited offers for the purchase of, the Certificate
by means of general solicitation or distribution in connection with the
marketing, sale, transfer or other disposition of the Certificate or any other
certificate or other evidence beneficial ownership interest in the Master Trust,
or taken any other action that would require registration of the transfer of the
Certificate pursuant hereto under the Securities Act of 1933, as amended, or any
state securities laws.
SECTION 5. NCAC hereby irrevocably disclaims and surrenders any
interest in any certificate, note, security or other interest evidencing
beneficial ownership of, or secured by, pools of motor vehicle retail
installment sale contracts owned by NAFI or any affiliate of NAFI, or any trust
or other entity formed by NAFI, including but not limited to National Financial
Auto Funding Trust and Funding Trust II.
SECTION 6. Counterparts. This Agreement may be executed by facsimile
signature and in any number of counterparts and by the different parties hereto
in separate counterparts, each of which when so executed shall be deemed to be
an original, and all of which together shall constitute one and the same
instrument.
SECTION 7. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO CONFLICT
OF LAW PRINCIPLES, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
<PAGE> 3
IN WITNESS WHEREOF, NAFI and NCAC have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
------------------------------------
Name: Keith B. Stein
Title: Vice Chairman and Chief Executive
Officer
NATIONAL CHARTERED AUTO CORPORATION
By: /s/ GARY L. SHAPIRO
------------------------------------
Name: Gary L. Shapiro
Title: President
By: /s/ EDGAR A. OTTO
------------------------------------
Name: Edgar A. Otto
Title: Vice President
<PAGE> 4
Exhibit A
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto National Auto Financial Corporation, Inc. the attached Class C Certificate,
and does hereby irrevocably constitute and appoint ___________, Attorney to
transfer the said certificate on the Certificate Register maintained by the
Trustee.
NATIONAL CHARTERED AUTO CORPORATION
By: /s/ GARY L. SHAPIRO
------------------------------------
Name: Gary L. Shapiro
Title: President
By: /s/ EDGAR A. OTTO
------------------------------------
Name: Edgar A. Otto
Title: Vice President
Dated: March _, 1999
<PAGE> 1
EXHIBIT 10.98
CONSENT AND AMENDMENT TO
POOLING AND SERVICING AGREEMENTS
THIS CONSENT AND AMENDMENT, dated as of March 31, 1999 (the
"Amendment") to the Pooling and Servicing Agreement, dated as October 1, 1995,
and the Pooling and Servicing Agreement, dated as of October 21, 1996 (each, as
such agreement may be amended, supplemented, amended and restated or otherwise
modified in accordance with the terms thereof, a "Pooling Agreement" and
together, the "Pooling Agreements"), each among National Financial Auto Funding
Trust (f/k/a NAFCO Funding Trust) ("Funding Trust"), National Auto Finance
Company, Inc. ("NAFI"), as successor to National Auto Finance Company L.P., and
Harris Trust and Savings Bank, as trustee (the "Trustee").
WITNESSETH:
WHEREAS, the parties hereto desire to amend certain terms of the
Pooling Agreements;
NOW THEREFORE, in consideration of the premises and mutual covenants
herein contained, the parties hereto agree as follows:
SECTION 1. Defined Terms. Capitalized terms used but not defined herein
shall have the respective meanings assigned to them as set forth in the Pooling
Agreements.
SECTION 2. Amendments to the Pooling Agreements. (a) Section 3.06(a) of
each of the Pooling Agreements is hereby amended by deleting the text set forth
in each of such clauses and substituting therefor the following:
(a) The Servicer shall proceed diligently to collect all
payments called for under the terms and provisions of the
Contracts, and shall service the Contracts in a manner
consistent with the servicing standards and procedures
generally accepted in the financial services industry for
similar Contracts, and as otherwise expressly provided by
this Agreement. Consistent with the foregoing, the Servicer
may in its discretion (i) waive any late payment charge and
(ii) extend the then current maturity date of a Contract by
two months, once during each calendar year at the request of
the related Obligor on account of the Obligor's adverse
financial circumstances that affect the Obligor's ability to
make payments under such Contract; provided, however, that the
Servicer may not so extend the then current maturity date of
Contract more than twice during the life of such Contract;
provided further, that the Average Extension Ratio for any
calendar month, commencing May 1999, shall not exceed 2.5% for
each January, August, September and December and 2.0% for any
other calendar month. The Average Extension Ratio for any Due
<PAGE> 2
Period shall equal the arithmetic average of the Extension
Ratios for such Due Period and the two preceding Due Periods
(for example, the Average Extension Ratio for May 1999 will
equal the arithmetic average of the Extension Ratios for the
months February 1999, March 1999 and April 1999 and will be
included in the report delivered by the Servicer pursuant to
Section 3.17 on or before the June 1999 Reporting Date). The
Extension Ratio for any calendar month shall equal the
percentage equivalent of a fraction the numerator of which is
the aggregate number of Contracts that have been extended
during such calendar month and the denominator of which is the
aggregate number of Contracts outstanding as of the first day
of such calendar month.
SECTION 3.
(a) Waiver of Average Extension Ratio Violations and the March
1999 and April 1999 Due Periods. Notwithstanding anything to the contrary set
forth herein, Financial Security Assurance, Inc., by signature hereto, hereby
permanently waives any default under Section 3.06 of the Pooling Agreements with
regard to any month prior to March 1999 where the Average Extension Ratio is
higher than permitted levels.
(b) Notwithstanding anything to the contrary set forth herein,
with regard to the March 1999 Due Period, the Average Extension Ratio shall be
equal to the March 1999 Extension Ratio and shall not exceed 2.5%.
(c) Notwithstanding anything to the contrary set forth herein,
with regard to the April 1999 Due Period, the Average Extension Ratio shall be
equal to the arithmetic average of the April 1999 Extension Ratio and March 1999
Extension Ratio and shall not exceed 2.25%.
SECTION 4. Effectiveness of Agreement. Except as expressly set forth
herein, this Amendment shall not by implication or otherwise limit, impair,
constitute a waiver of, or otherwise affect the rights and remedies of any of
the parties to the Pooling Agreements under the Pooling Agreements, nor alter,
modify, amend or in any way affect any of the terms, conditions, obligations,
covenants or agreements contained in the Pooling Agreements, all of which are
hereby ratified and affirmed in all respects by the parties hereto and shall
continue in full force and effect. This Amendment shall apply and be effective
only with respect to the provisions of the Pooling Agreements specifically
referred to herein and any references in the Pooling Agreements to the
provisions of the Pooling Agreements specifically referred to herein shall be to
such provisions as amended by this Amendment.
SECTION 5. Effectiveness of Amendment. This Consent and Amendment
shall become effective when counterparts hereof executed and delivered on behalf
of each party hereto shall have been received by the Certificate Insurer and the
Certificate Insurer shall
2
<PAGE> 3
have executed a written consent to this Amendment pursuant to Section 10.01 of
each of the Pooling Agreements.
SECTION 6. Instruction to the Trustee. NAFI by its execution of this
Consent and Agreement hereby directs Chase Manhattan Bank Delaware, as Owner
Trustee of Funding Trust, to execute and deliver this agreement on behalf of
Funding Trust.
SECTION 7. Execution in Counterparts. This Consent and Amendment may be
executed by the parties hereto in several counterparts and be deemed to be an
original and all of which shall constitute together but one and the same
agreement.
SECTION 8. Governing Law. THIS CONSENT AND AMENDMENT SHALL BE DEEMED TO
BE A CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
3
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Amendment to be duly executed and delivered as of the date first above
written.
HARRIS TRUST AND SAVINGS BANK, as trustee
By: /s/ EXECUTED BY AUTHORIZED OFFICER
--------------------------------------
Name: Executed by Authorized Officer
------------------------------------
Title:
-----------------------------------
NATIONAL FINANCIAL AUTO FUNDING TRUST
(f/k/a NAFCO Funding Trust)
By: CHASE MANHATTAN BANK DELAWARE
(as successor to Chase Manhattan
Bank USA, N.A.), not in its
individual capacity but solely as
Owner Trustee
By: /s/ DENIS KELLY
--------------------------------------
Name: Denis Kelly
------------------------------------
Title: Trust Officer
-----------------------------------
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
--------------------------------------
Name: Keith B. Stein
------------------------------------
Title: Vice Chairman and Chief Executive
Officer
-----------------------------------
Consented and Agreed:
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ EXECUTED BY AUTHORIZED OFFICER
-------------------------------------------
Name: Executed by Authorized Officer
-----------------------------------------
Title:
----------------------------------------
4
<PAGE> 1
EXHIBIT 10.99
NAFI OWNER TRUSTEE AND NFAFT
INDENTURE TRUSTEE
IRREVOCABLE INSTRUCTION LETTER
As of March 31, 1999
Wilmington Trust Company, as Owner Trustee
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
Harris Trust and Savings Bank, as Trustee, Chase Manhattan Bank Delaware,
Collateral Agent and Back-up Servicer as Trustee
311 West Monroe Street, 12th Floor 1201 Market Street 9th Floor
Chicago, IL 60606 Wilmington, DE 19801
Attn: Indenture Trust Division Attn: Corporate Trust Administration
Re: (1) First Amended and Restated Trust Agreement, dated as of December
8, 1994, together with the Amendment thereto, dated as of
November 21, 1995, and as amended October 1, 1997 and March 31,
1997 among National Auto Finance Company L.P. ("NAFCO"), Chase
Manhattan Bank Delaware (as successor to Chase Manhattan Bank
USA, N.A.) ("Chase"), as Trustee (not in its individual capacity
but solely as trustee, the "NFAFT Owner Trustee") ("NFAFT Trust
Agreement").
(2) The Pooling and Servicing Agreement, dated as of October 1, 1995
(the "95-1 Pooling and Servicing Agreement"), among National
Financial Auto Funding Trust ("NFAFT"), as Transferor, NAFCO, as
Master Servicer, and Harris Trust and Savings Bank, as Trustee
and Collateral Agent ("Harris").
(3) The Pooling and Servicing Agreement, dated as of October 21, 1996
(the "96-1 Pooling and Servicing Agreement"), among NFAFT, NAFCO,
as Servicer, and Harris, as Trustee and Collateral Agent.
(4) Sale and Servicing Agreement, dated as of June 29, 1997 (the
"97-1 Sale and Servicing Agreement"), among National Auto Finance
1997-1 Trust, as Issuer (the "1997-1 Owner Trust"), NFAFT, as
Seller, National Auto Finance Company, Inc., ("NAFI") as
Servicer, and Harris, as Trust Collateral Agent and Back-up
Servicer.
(5) Indenture, dated as of June 29, 1997, between National Auto
Finance 1997-1 Trust and Harris, as Indenture Trustee ("97-1
Indenture").
<PAGE> 2
(6) Trust Agreement, dated as of July 21, 1997, between NFAFT and
Wilmington Trust Company ("Wilmington"), as Owner Trustee (not
in its individual capacity but solely as trustee, the "1997-1
Owner Trustee") ("1997-1 Trust Agreement").
(7) Sale and Servicing Agreement, dated as of December 15, 1997 (the
"98-1 Sale and Servicing Agreement"), among National Auto Finance
1998-1 Trust, as Issuer (the "1998-1 Owner Trust"), NFAFT, as
Seller, NAFI, as Servicer, and Harris, as Trust Collateral Agent
and Back-up Servicer.
(8) Indenture, dated as of December 15, 1997, between National Auto
Finance 1998-1 Trust, as Issuer, and Harris, as Indenture Trustee
("98-1 Indenture").
(9) Trust Agreement, dated as of December 15, 1997, between NFAFT and
Wilmington, as Owner Trustee (not in its individual capacity but
solely as trustee, the "1998-1 Owner Trustee") ("1998-1 Trust
Agreement").
(10) Custodian Agreement, dated as of October 15, 1998, together with
the Amendment to the Custodian Agreement dated as of the date
hereof, among Harris, as Custodian, NAFI, and Harris, as Trustee
pursuant to the 95-1 Pooling and Servicing Agreement and the 96-1
Pooling and Servicing Agreement, Trust Collateral Agent pursuant
to the 97-1 Sale and Servicing Agreement, the 98-1 Sale and
Servicing Agreement, the 97-1 Indenture and the 98-1 Indenture.
(11) First Amended and Restated Master Spread Account Agreement, dated
as of March 31, 1998 among Harris, NFAFT and FSA, and the
supplements thereto (the "Master Spread Account Agreement").
Ladies and Gentlemen:
Reference is made to: (a) the NFAFT Trust Agreement, (b) the Subordination
and Intercreditor Agreement, by and among National Auto Finance 1995-1 Trust,
National Auto Finance 1996-1 Trust, National Auto Finance 1997-1 Trust and
National Auto Finance 1998-1 Trust (collectively, the "NAFI Trusts"), NFAFT,
NAFI, First Union National Bank ("FUNB"), Financial Security Assurance Inc.
("FSA") and Harris (the "Intercreditor Agreement") and (c) the other foregoing
agreements listed above in items 1 through 9 together with all amendments,
modifications and supplements thereto (the "Pooling Agreements," and, together
with the other agreements, indentures, documents and instruments related
thereto, the "Underlying Agreements"), pursuant to which the NFAFT Owner Trustee
holds the trust estate, as described in the NFAFT Trust Agreement, for the use
and benefit of the beneficiary(ies) of NFAFT subject to the provisions of the
liens created by the Underlying Agreements; and, pursuant to such Underlying
Agreements, Harris holds the trust estate comprised of the NAFI Trusts for the
benefit of certain securityholders, FSA and NFAFT. The signatories hereto may
execute in counterparts, in which case, each executed copy of this Direction
Letter shall constitute an original, and all of which when taken together shall
constitute one original Direction Letter.
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<PAGE> 3
A. NOTICE AND INSTRUCTIONS FROM NAFI AND BORROWER
1. Notice of Pledge. Each of you is hereby notified that pursuant to
the Revolving Credit, Term Loan and Security Agreement (the "Credit Agreement")
to be entered into by and among the FUNB, NAFI and NFAFT, that (i) NFAFT and
NAFI will pledge all of its right, title and interest in and to payments and
distributions on each Distribution Date (i) to which NFAFT and NAFI would
otherwise be entitled under and pursuant to the following agreements with
respect to the following transactions: (a) in the case of the Trust Property of
the 1995-1 transaction, subsection (xi) of Section 4.01 of the 1995-1 Pooling
and Servicing Agreement; (b) in the case of the Trust Property of the 1996-1
transaction, subsection (xi) of Section 4.01 of the 1996-1 Pooling and Servicing
Agreement; (c) in the case of the Trust Estate of the 1997-1 transaction,
subsection (b)(xi) of Subsection 5.7 of the 1997-1 Sale and Servicing Agreement;
and (d) in the case of the Trust Estate of the 1998-1 Transaction, subsection
(b)(xi) of Section 5.7 of the 1998-1 Sale and Servicing Agreement; and (ii) all
funds otherwise distributable to NFAFT, if any, as Reversionary Holder (as
defined in the Master Spread Account Agreement), including funds distributed
pursuant to Section 3.03 thereof, or as holder of the Series 1997-1 Certificates
(as defined in the Master Spread Account Agreement) or as holder of the Series
1998-1 Certificates (as defined in the Master Spread Account Agreement), in each
case from the Spread Accounts maintained by Harris, as Trustee and Collateral
Agent, pursuant to the Master Spread Account Agreement (the amounts referenced
in the preceding clauses (i) and (ii), collectively, the "Free Cash Flow"), to
FUNB (together with its permitted successors and assigns, the "Lender") to
secure the payment of certain notes issued, and all other amounts payable,
pursuant to the Credit Agreement and subject to the Intercreditor Agreement
(including the Lender's rights to receive and compel payment under Section
1.2(e) thereof)(the "Debt"). Pursuant to this Letter and the Credit Agreement,
any and all Free Cash Flow paid to or distributable by you pursuant to the terms
of the Underlying Agreements or erroneously received by you shall promptly be
remitted to the Lender pursuant to the instructions below.
2. Instruction.
(a) NAFI, in its individual capacity and as the sole
certificateholder of NFAFT, and Keith Stein and Peter Sorensen, each a
Co-trustee of NFAFT, each hereby irrevocably instructs the NFAFT Owner
Trustee, to execute, as Trustee on behalf of NFAFT, the Certificate of an
Officer of the Trust, the Supplement to Backup Servicing Agreement, by and
among NAFI, NFAFT and Harris, the Credit Agreement, any related financing
statement and any other documents related thereto, and hereby irrevocably
instructs Harris, as trustee under the 95-1 Pooling and Servicing Agreement
and the 96-1 Pooling and Servicing Agreement, and as Indenture Trustee
under the 97-1 Indenture and the 98-1 Indenture, the 1997-1 Owner Trustee
and the 1998-1 Owner Trustee of the trusts created by the Underlying
Agreements, to immediately execute the applicable acknowledgment at the end
of this letter, to deliver an original executed copy of the same to FUNB,
and immediately upon receipt of written notice delivered to the Addressees
set forth above from the Lender that NFAFT has borrowed funds pursuant
-3-
<PAGE> 4
to the Credit Agreement, to make all payments and distributions at any time
constituting the Free Cash Flow to the Lender at the following account:
Account Bank: First Union National Bank
301 South College Street/TW-10
Charlotte, North Carolina 08288-0610
Facsimile Number: Fax: 704 374-3254
Telephone Number: Telephone: 704 374-4334
Reference: Contact: Hannah Carmody
Account Party: National Financial Auto Funding Trust -
Trust Account for the benefit of
First Union National Bank
LNB ABA Number: 053000219
Account Number: 2000003817829
The Account described above is referred to herein as the
"Collection Account" and may be changed by the Lender upon five days prior
written notice to each of you.
(b) Immediately upon receipt of written notice delivered to
the addressees set forth above from the Lender that NFAFT has borrowed
funds pursuant to the Credit Agreement, any Free Cash Flow received by you
shall be held by you, as bailee (1) until the Lender has advised you in
writing that no Debt remains due and owing to the Lender, for the sole
benefit of the Lender and shall be paid to the Collection Account for the
Lender as provided in Section A.2(1) above or as otherwise directed by the
Lender, and (2) after notice from the Lender that no Debt remains due and
owing to the Lender, for the sole benefit of NFAFT and NAFI and shall be
paid to NFAFT and NAFI or as otherwise directed by NFAFT in writing. Upon
execution of such Credit Agreement by the parties thereto and the
hereinafter following acknowledgment by the NFAFT Owner Trustee, Harris,
the 1997-1 Owner Trustee and the 1998-1 Owner Trustee and until the Lender
has advised you in writing that no Debt remains due and owing to the
Lender, (i) neither NFAFT, NAFI nor any affiliate of either of them shall
have any right to receive any of the Free Cash Flow, and no portion thereof
shall be delivered to NFAFT, NAFI, any affiliate of either or any other
person except as provided herein and (ii) you shall not accept any
instructions with respect to the payment or distribution of the Free Cash
Flow from any person other than the Lender without the prior written
authorization of the Lender. In addition to the notice requirements
specified in the Underlying Agreements, you are hereby instructed to give
concurrent written notice to the Lender, NFAFT Owner Trustee, 1997-1 Owner
Trustee and 1998-1 Owner Trustee and Harris at the addresses designated
below (x) of a copy of any notice given to or by you pursuant to the
Underlying Agreements or (y) that you are exercising remedies upon the
occurrence of either a default or an event of default under the Underlying
Agreements, but any failure to give such notice shall not in any respect
impede or impair your ability to exercise remedies under
-4-
<PAGE> 5
the Underlying Agreement, you shall have no liability resulting from your
failure to give such notice, other than for your own gross negligence or
willful misconduct and you shall be protected by the indemnification and
reimbursement provided pursuant to the Underlying Agreements in exercising
remedies under the Underlying Agreements notwithstanding any failure to
give such notice, save and except for your own gross negligence or willful
misconduct.
(c) After execution of the following acknowledgment by you
and the execution of the Credit Agreement by the parties thereto, neither
NFAFT nor NAFI may take (unless the Lender shall have given its prior
written consent) any of the following actions or instruct you to take any
of the following actions, and you may not accept (unless the Lender shall
have given its prior written consent) from NFAFT or NAFI any instructions
relating to any of the following actions, until the Lender has advised you
in writing that no Debt remains due and owing to the Lender:
(1) UNTIL the Insurance Termination Date (as defined in the
Credit Agreement) related to the applicable Underlying Transaction (as
defined in the Credit Agreement), any act by either NFAFT or NAFI to remove
you as trustee under the Underlying Agreements unless such act or
instruction is given either (a) by FSA (acting within the scope set forth
in the Waiver and Consent attached hereto as Exhibit A) or (b) a person
other than FSA, NFAFT or NAFI who is authorized to give such instruction
pursuant to the Underlying Agreements; and thereafter, any act by any
person to remove you as trustee under the Underlying Agreements and unless
such act or instruction is given by a person who is (x) not FSA, NFAFT or
NAFI and (y) otherwise authorized to give such instructions pursuant to the
related Underlying Agreements.
(2) Until the Insurance Termination Date (as defined in the
Credit Agreement) related to the applicable Underlying Transaction (as
defined in the Credit Agreement), any act by either NFAFT or NAFI to amend
either the NFAFT Trust Agreement or any other Underlying Agreement unless
such act or instruction is given either (a) by FSA (acting within the scope
set forth in the Waiver and Consent attached hereto as Exhibit A) or (b) a
Person other than FSA, NFAFT or NAFI who is authorized to give such
instruction pursuant to the Underlying Agreements; and thereafter, any act
by any person to amend either the NFAFT Trust Agreement or any other
Underlying Agreement unless such act or instruction is given by a person
who is (x) not FSA, NFAFT or NAFI and (y) otherwise authorized to give such
instructions pursuant to the related Underlying Agreements.
(3) Until the Insurance Termination Date (as defined in the
Credit Agreement) related to the applicable Underlying Transaction (as
defined in the Credit Agreement), any act by either NFAFT or NAFI to
terminate the NFAFT Trust Agreement or Underlying Agreement unless such act
or instruction is given either (a) by FSA (acting within the scope set
forth in the Waiver and Consent attached hereto as Exhibit A) or (b) a
Person other than FSA, NFAFT or NAFI who is authorized to give such
instruction pursuant to the Underlying Agreements; and thereafter, any act
by any
-5-
<PAGE> 6
person to terminate the NFAFT Trust Agreement or any other Underlying
Agreement unless such act or instruction is given by a person who is (x)
not FSA, NFAFT or NAFI and (y) otherwise authorized to give such
instructions pursuant to the related Underlying Agreements.
Notwithstanding the foregoing provisions of this subsection
2(c), Lender acknowledges that, until the Insurance Termination Date (as
defined in the Credit Agreement), FSA may direct you to enter into
amendments in accordance with the terms of the relevant Underlying
Agreements but without the Lender's consent, to make changes to the
Underlying Agreements that FSA believes in good faith and its reasonable
business judgment are necessary, appropriate, or incidental solely to
engage and retain a satisfactory successor servicer in the event of a
servicer succession under the terms of the Underlying Agreements,
including, without limitation, any amendment entered into in accordance
with the terms of the relevant Underlying Agreements that make changes to
either (a) the duties or standard of care of the servicer or (b) the
compensation paid to the servicer even if the change in compensation paid
to the servicer reduces or eliminates the amount of Free Cash Flow.
3. Free Cash Flow Held as Bailee. Immediately upon written notice
from the Lender that NFAFT has borrowed funds pursuant to the Credit Agreement
and until the Lender has advised you in writing that no Debt remains due and
owing to the Lender, NFAFT and NAFI hereby waive and renounce any and all rights
that they may have to the Free Cash Flow. Any Free Cash Flow received by you
shall be held by you, as bailee (1) until such time as the Lender has advised
you in writing that no Debt remains due and owing to the Lender, for the sole
benefit of the Lender and to be paid to the Collection Account for the benefit
of the Lender as provided in Section A.2(1) above or as otherwise directed by
the Lender, and (2) after written notice from the Lender that no Debt remains
due and owing to the Lender, for the sole benefit of NFAFT and NAFI and shall be
paid to NFAFT and NAFI or as otherwise directed by NFAFT in writing.
4. Covenants. By executing the acknowledgment below, you hereby
covenant and agree that you shall not institute any proceedings to adjudicate
any of NFAFT, 97-1 Owner Trust or 98-1 Owner Trust a bankrupt or insolvent,
consent to the institution of bankruptcy or insolvency proceedings against any
of NFAFT, 97-1 Owner Trust or 98-1 Owner Trust, file a petition seeking or
consenting to reorganization or relief under any applicable federal or state law
relating to bankruptcy, consent to the appointment of a receiver, liquidator,
assignee, trustee, sequestrator (or similar official) of any of NFAFT, 97-1
Owner Trust or 98-1 Owner Trust or any part of its property or admit its
inability to pay its debts generally as they become due or authorize any of the
foregoing to be done or taken on behalf of NFAFT, 97-1 Owner Trust or 98-1 Owner
Trust.
5. No Amendment. NAFI hereby covenants that no amendment of the
NFAFT Trust Agreement or any Underlying Agreement shall occur except upon the
prior written consent of the Lender.
6. Beneficiaries. The Lender and FSA shall be third party
beneficiaries of this Direction Letter.
-6-
<PAGE> 7
7. Regarding Chase, Wilmington and Harris. Chase, Wilmington and
Harris shall be afforded all of the rights, protections, immunities and
indemnities provided in the Underlying Agreements as if the same were
specifically set forth herein, provided, however, that this section shall not be
deemed to give Chase, Wilmington and Harris any encumbrance or lien in respect
of the Free Cash Flow.
8. The security interest of the Lender in all Collateral other than
the First Priority Collateral (as defined in the Credit Agreement) is
subordinate to the interests of the Senior Lien Holder (as defined in the
Intercreditor Agreement), FSA and the interest of all noteholders and
certificateholders of the NAFI Trusts until the Insurance Termination Date with
respect to each such NAFI Trust and the Lender shall have no authority to direct
any Collateral Agent prior to such related Insurance Termination Date with
respect to the NAFI Trust to which such Collateral Agent's duties relate, other
than the authority to instruct that payments of Free Cash Flow, if any, be made
or the authority to give required consents as set forth in this letter.
9. In the event of a foreclosure by Harris (as Collateral Agent),
FSA, or any other person entitled to foreclose pursuant to the Underlying
Agreements or the Intercreditor Agreement, you shall dispose of or retain the
Subordinated Collateral (as defined in the Intercreditor Agreement) as directed
by such foreclosing creditor free and clear of the interests of the Lender
hereunder (unless the Lender is a person entitled to foreclose pursuant to the
Intercreditor Agreement and the Underlying Agreements).
10. Nothing contained herein is intended to or should be deemed to
restrict in any manner (i) the authority or discretion of the Controlling Party
under the Underlying Agreements or (ii) any of the rights or remedies available
to FSA or any other Controlling Party (as defined in the Underlying Agreements),
the Senior Lien Holder (as defined in the Intercreditor Agreement), or the
noteholders and certificateholders of the NAFI Trusts that have the benefit of
any Financial Guaranty Insurance Policy issued by FSA, under the Intercreditor
Agreement or the Underlying Agreements, other than, in either case, those
explicit references herein to the Waiver and Consent Letter to the extent an
applicable restriction is contained in the Waiver and Consent Letter.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
-7-
<PAGE> 8
Sincerely,
NATIONAL AUTO FINANCE COMPANY, INC.
(f/k/a/ National Auto Finance Company L.P.)
By: /s/ KEITH B. STEIN
-------------------------------------
Name: Keith B. Stein
-------------------------------------
Title:
-------------------------------------
Keith Stein, as Co-trustee of NFAFT
/s/ KEITH B. STEIN
--------------------------------------------
Keith B. Stein
Peter Sorensen, as Co-trustee of NFAFT
/s/ PETER SORENSON
--------------------------------------------
Peter Sorenson
<PAGE> 9
B. ACKNOWLEDGEMENT FROM NFAFT OWNER TRUSTEE AND INSTRUCTIONS FROM NFAFT
1. Acknowledgment. The foregoing terms and provisions in Section A
above, including the irrevocable instructions from NFAFT, NAFI and the
Co-trustees, as well as the covenants and agreements, are hereby agreed to,
accepted and acknowledged.
2. Instruction to Harris, the 1997-1 Owner Trustee and the 1998-1
Owner Trustee (collectively, the "Underlying Trustees"). Each of the Underlying
Trustees are hereby instructed by NFAFT, immediately upon receipt of written
notice from the Lender that NFAFT has borrowed funds pursuant to the Credit
Agreement, to make all payments and distributions at any time constituting the
Free Cash Flow to the Collection Account in accordance with Section A above.
3. Notice of Default. The Underlying Trustees are hereby instructed
by NFAFT, to give written notice to the party designated below of either the
intended or actual exercise, if any, by Harris or the 1997-1 Owner Trustee or
the 1998-1 Owner Trustee, of remedies under the Underlying Agreements upon the
occurrence of a default or an event of default thereunder, but any failure to
give such notice shall not in any respect impede or impair your ability to
exercise remedies under the Underlying Agreements and you shall be protected by
the indemnification and reimbursement provided for in the Underlying Agreements
in exercising remedies under the Underlying Agreements notwithstanding any
failure to give such notice.
4. Subordination of Lender's Interests. The security interest of the
Lender in all Collateral other than the First Priority Collateral (as defined in
the Credit Agreement) is subordinate to the interests of the Senior Lien Holder
(as defined in the Intercreditor Agreement), FSA and the interest of all
noteholders and certificateholders of the NAFI until the Insurance Termination
Date with respect to each such NAFI Trust and the Lender shall have no authority
to direct any Collateral Agent prior to such Insurance Termination Date with
respect to the NAFI Trust to which such Collateral Agent's duties relate, other
than the authority to instruct that payments of Free Cash Flow, if any, be made
or the authority to give required consents to instructions as set forth in this
letter.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 10
Address of Lender:
First Union National Bank of North Carolina
301 S. College Street (TW-10)
Charlotte, North Carolina 28288-0610
Sincerely,
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: Chase Manhattan Bank Delaware,
not in its individual capacity, but
solely as Owner Trustee of NFAFT
By: /s/ DENIS KELLY
-----------------------------
Name: DENIS KELLY
----------------------------
Title: TRUST OFFICER
---------------------------
Dated: As of March 31, 1999
<PAGE> 11
C. HARRIS ACKNOWLEDGMENT
The foregoing terms and provisions, are hereby agreed to, accepted and
acknowledged by Harris.
The security interest of the Lender in all Collateral other than the Free
Cash Flow (as defined in the Credit Agreement) is subordinate to the interests
of the Senior Lien Holder (as defined in the Intercreditor Agreement), FSA and
the interest of all noteholders and certificateholders of the NAFI Trusts until
the Insurance Termination Date with respect to each such NAFI Trust and the
Lender shall have no authority to direct any Collateral Agent prior to such
Insurance Termination Date with respect to the NAFI Trust to which such
Collateral Agent's duties relate, other than the authority to instruct that
payments of Free Cash Flow, if any, be made or the authority to give required
consents to instructions as set forth in this letter.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK)
<PAGE> 12
HARRIS TRUST AND SAVINGS BANK,
an Illinois banking corporation,
not in its individual capacity, but
solely as Trustee of the National Auto Finance
1995-1 Trust and the National Auto Finance 1996-1 Trust,
as Indenture Trustee of the National Auto Finance 1997-1 Trust,
and the National Auto Finance 1998-1 Trust
and as Custodian and Collateral Agent of
the National Auto Finance 1995-1 Trust,
the National Auto Finance 1996-1 Trust,
the National Auto Finance 1997-1 Trust and
the National Auto Finance 1998-1 Trust
By: /s/ E. KAY LEIDERMAN
-----------------------------------
Name: E. Kay Leiderman
---------------------------------
Title: Vice President
--------------------------------
Dated: March 31, 1999
<PAGE> 13
WILMINGTON ACKNOWLEDGMENT
The foregoing terms and provisions, including the irrevocable instructions
from NFAFT set forth in Sections B.1, B.2 and B.3 above are hereby agreed to,
accepted and acknowledged by 1997-1 Owner Trustee and the 1998-1 Owner Trustee.
The security interest of the Lender in all Collateral other than the Free
Cash Flow (as defined in the Credit Agreement) is subordinate to the interests
of the Senior Lien Holder (as defined in the Intercreditor Agreement), FSA and
the interest of all noteholders and certificateholders of the NAFI Trusts until
the Insurance Termination Date with respect to each such NAFI Trust and the
Lender shall have no authority to direct any Collateral Agent prior to such
Insurance Termination Date with respect to the NAFI Trust to which such
Collateral Agent's duties relate, other than the authority to instruct that
payments of Free Cash Flow, if any, be made or the authority to give required
consents to instructions as set forth in this letter.
[THE REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
<PAGE> 14
WILMINGTON TRUST COMPANY,
not in its individual capacity but solely as Owner Trustee
of the National Auto Finance 1997-1 Trust and
the National Auto Finance 1998-1 Trust,
By: /s/ DENISE M. GERAN
----------------------------------------
Name: Denise M. Geran
---------------------------------------
Title: Senior Financial Services Officer
--------------------------------------
Dated: As of March 31, 1999
<PAGE> 1
EXHIBIT 10.100
AMENDMENT TO TRUST AGREEMENT
THIS AMENDMENT is made as of March , 1999 (this "Amendment"), among
NATIONAL AUTO FINANCE COMPANY, INC., a Delaware corporation ("National Auto"),
CHASE MANHATTAN BANK DELAWARE, as Trustee (not in its individual capacity but as
the "Owner Trustee") of National Financial Auto Funding Trust, a Delaware
business trust ("Funding Trust"), and the undersigned Co-Trustees of Funding
Trust, pursuant to Section 10.03 of the First Amended and Restated Trust
Agreement, dated as of December 8, 1994 (the "Trust Agreement"), among
National Auto, the Trustee and the Co-Trustees identified therein. Each of the
undersigned hereby consents to the execution and delivery of this Amendment
pursuant to the Trust Agreement.
In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties to the extent provided
herein:
1. Amendment to Section 6.04(e) of the Trust Agreement. Paragraph
(e) of Section 6.04 of the Trust Agreement is hereby amended and restated in its
entirety to read as follows:
(e) The Trust shall not create, incur, assume or suffer to exist any
indebtedness, whether current or funded, or any other liability other than any
fees and expenses under this Agreement, the Purchase Agreement, the Pooling and
Administration Agreement and any other Related Agreements, except (i) the NAFCO
Note, (ii) additional debt incurred in accordance with the Pooling and
Administration Agreement or (iii) additional debt, provided that the issuance of
such debt is permitted by the Purchase Agreement or any Pooling and Servicing
Agreement, Sale and Servicing Agreement or similar agreement (as such agreements
may have been amended or otherwise modified, or provisions thereof waived in
accordance with such agreements) pursuant to which the Trust has transferred
trust property in connection with a securitization or financing of such trust
assets as permitted by this Agreement.
2. Directions by National Auto to Trustee. National Auto, by its
execution of this Agreement, hereby directs the Owner Trustee of the National
Financial Auto Funding Trust, to execute and deliver the acceptance of this
Agreement on behalf of Funding Trust.
3. Definitions. Capitalized terms used but not defined herein shall
have the respective meanings assigned to such terms in the Trust Agreement.
4. Conditions to Effectiveness. This Amendment shall become
effective upon (a) the receipt by each party hereto (which, with respect to
Financial Security Assurance Inc. ("Financial Security"), shall be delivered to
the address for Financial Security set forth in paragraph 6 below) of
counterparts hereof executed and delivered on behalf of each of the parties
hereto and (b) the receipt by each of National Auto and the Trustees of an
executed copy (which copy need not be an original executed copy) of that certain
Consent made as of March , 1999, with respect to Financial
<PAGE> 2
Security's consent in writing to this Amendment and certain other actions by
National Auto and Funding Trust set forth therein.
5. Ratification. Except as expressly set forth herein, this
Amendment shall not alter, modify, amend or in any way affect any of the terms,
conditions, obligations, covenants or agreements contained in the Trust
Agreements, all of which are hereby ratified and affirmed in all respects by
each of the parties hereto and shall continue in full force and effect. This
Amendment shall apply and be effective only with respect to the provisions of
the Trust Agreement specifically referred to herein and any references in the
Trust Agreement to the provisions of the Trust Agreement specifically referred
to herein shall be to such provisions as amended by this Amendment.
6. Address for Notices and Other Communications to Financial
Security. All notices and other communications to be given to Financial Security
hereunder shall be in writing (except as otherwise specifically provided herein)
and shall be mailed by registered mail or personally delivered or telecopied to
Financial Security as follows:
Financial Security Assurance Inc.
350 Park Avenue
New York, NY 10022
Attention: Surveillance Department
Re: NAFCO Auto Finance 1995-1, 1996-1, 1997-1 and 1998-1 Trusts,
Automobile Loan Asset Backed Certificates
Confirmation: (212) 826-0100
Telecopy Nos.: (212) 339-3518, (212) 339-3529
7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument. By its execution hereof, each of the parties hereto have consented
to this Amendment.
8. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF DELAWARE (WITHOUT REGARD TO THE
CONFLICTS OF LAW PRINCIPLES THEREOF), AND ALL LAWS OR RULES OF CONSTRUCTION OF
SUCH STATE SHALL GOVERN THE RIGHTS OF THE PARTIES TO THIS AMENDMENT AND THE
INTERPRETATION OF THE PROVISIONS OF THIS AMENDMENT.
9. Headings. The headings of paragraphs contained in this Amendment
are provided for convenience only. They form no part of this Amendment or the
Trust Agreements and shall not affect the construction or interpretation of this
Amendment or the Trust Agreements or any provisions hereof or thereof.
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<PAGE> 3
Agreed and Consented to by:
By: CHASE MANHATTAN BANK DELAWARE
(as successor to Chase Manhattan Bank USA, NA.)
By: /s/ DENIS KELLY
--------------------------------------------
Name: Denis Kelly
Title Trust Officer
Agreed and Consented to by:
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
--------------------------------------------
Name: Keith B. Stein
Title: Vice Chairman and
Chief Executive Officer
Agreed and Consented to by:
By: /s/ KEITH B. STEIN
--------------------------------------------
Name: Keith B. Stein
Title: Co-Trustee of National Financial Auto
Funding Trust
Agreed and Consented to by:
By: /S/ PETER SORENSON
--------------------------------------------
Name: Peter Sorenson
Title: Co-Trustee of National Financial Auto
Funding Trust
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<PAGE> 4
Acknowledged by:
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: Chase Manhattan Bank Delaware,
not in its individual capacity but solely as
owner trustee of the National Financing Auto Funding Trust
By: /s/ DENIS KELLY
---------------------------------------------------
Name: Denis Kelly
Title: Trust Officer
4
<PAGE> 1
EXHIBIT 10.101
EXECUTION COPY
AGREEMENT FOR MONITORING AND BACKUP SERVICING
THIS AGREEMENT FOR MONITORING AND BACKUP SERVICING, dated as of March
31, 1999 (as the same may be amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the terms hereof, this
"Agreement"), among National Auto Finance Company, Inc. ("NAFI" or the
"Servicer," formerly National Auto Finance Company L.P.), CSC Logic/MSA LLP
d/b/a Loan Servicing Enterprise, a Texas limited liability partnership ("LSE",
or the "Backup Servicer"), and FINANCIAL SECURITY ASSURANCE INC., a monoline
insurance company incorporated under the laws of the State of New York, as
certificate insurer or insurer, as applicable ("Insurer" or "FSA").
W I T N E S S E T H
WHEREAS, the parties enter into this Agreement with respect to and in
connection with the Pooling and Servicing Agreement, dated as of October 1,
1995, and the Pooling and Servicing Agreement, dated as of October 21, 1996,
each among National Financial Auto Funding Trust ("Funding Trust"), NAFI, and
Harris Trust and Savings Bank, as Trustee ("Harris") (such agreements, the
"Pooling and Servicing Agreements"), and the Sale and Servicing Agreement, dated
as of June 29, 1997, among Funding Trust, NAFI, Harris and the National Auto
Finance 1997-1 Trust, and the Sale and Servicing Agreement, dated as of December
15, 1997, among Funding Trust, NAFI, Harris, as Trust Collateral Agent and
Backup Servicer, and the National Auto Finance 1998-1 Trust (such agreements,
the "Sale and Servicing Agreements") (each Pooling and Servicing Agreement and
Sale and Servicing Agreement, as such agreement has been amended as of the date
hereof and as may be further amended, supplemented, amended and restated or
otherwise modified from time to time in accordance with the terms thereof, a
"Servicing Agreement" and together, the "Servicing Agreements"); and
WHEREAS, Harris serves as backup servicer under each of the Sale and
Servicing Agreements (in such capacities, the "S&SA Backup Servicer") and as
standby servicer under each of the Pooling and Servicing Agreements (in such
capacities, the "P&SA Standby Servicer"); and
WHEREAS, the parties to this Agreement desire to appoint LSE as backup
servicer with respect to each of the Trusts created pursuant to each Pooling and
Servicing Agreement, the National Auto Finance 1997-1 Trust and the National
Auto Finance 1998-1 Trust (collectively, the "Trusts"); and
WHEREAS, LSE desires to be appointed as backup servicer in accordance
with the terms hereof; and
<PAGE> 2
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the adequacy and sufficiency of which are hereby acknowledged,
the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01 Defined Terms. Capitalized terms used but not defined
herein shall have the respective meanings assigned to them as set forth in the
Servicing Agreements. Wherever used in this Agreement, the following words and
phrases shall have the following meanings:
"Backup Servicer" or "LSE" means CSC Logic/MSA LLP d/b/a Loan Servicing
Enterprise, a Texas registered limited liability partnership, in its capacity as
backup servicer hereunder.
"Collection Records" means all manually prepared or computer generated
records related to collection efforts or payment histories with respect to the
Receivables.
"Controlling Party" means the Insurer, so long as no Insurer Default
shall have occurred and be continuing and, in the event an Insurer Default shall
have occurred and be continuing, the Trustee or Trust Collateral Agent, as
applicable.
"Distribution Date" means with respect to each Due Period, the twenty
first day of the following calendar month, or if such day is not a Business Day,
the immediately following Business Day.
"Draw Date" means with respect to any Distribution Date, the fourth
Business Day immediately preceding such Distribution Date.
"Due Period" means with respect to any Distribution Date, the period
from and including the first day of the calendar month preceding the month in
which such Distribution Date occurs to and including the last day of the
calendar month preceding the month of such Distribution Date.
"Independent Accountants" means a firm of nationally recognized
independent certified public accountants.
"Insurer" means Financial Security Assurance Inc., a monoline insurance
company incorporated under the laws of the State of New York, or any successor
or assign thereto.
"Insurer Default" means an Insurer Default (as defined in the Sale and
Servicing Agreements) or a Certificate Insurer Default (as defined in the
Pooling and Servicing Agreements), as the context may require.
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"Monthly Records" means all records and data maintained by the Servicer
with respect to the Receivables, including the following with respect to each
Receivable: the account number; the originating Dealer; Obligor name; Obligor
address; Obligor home phone number; Obligor business phone number; the name,
address and telephone number of the co-borrower, if any; original Principal
Balance; original term; Annual Percentage Rate; current Principal Balance;
current remaining term; origination date; first payment date; a field
identifying each contract as either a simple interest or Rule-of-78's contract;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description, including vehicle
identification, make, model and year; days currently delinquent; number of
contract extensions to date; amount of Scheduled Payment (as defined in the Sale
and Servicing Agreements); current Insurance Policy (as defined in the Sale and
Servicing Agreements); expiration date; and past due late charges.
"P&SA Standby Servicer" means Harris Trust and Savings Bank in its
capacity as the standby servicer under the Pooling and Servicing Agreements.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint stock company, trust (including any beneficiary
thereof), unincorporated organization or government or any agency or political
subdivision thereof.
"Policy" means a Note Policy (as defined in the Sale and Servicing
Agreements) or a Certificate Policy (as defined in the Pooling and Servicing
Agreements), as the context may require.
"Principal Balance" means Principal Balance (as defined in the Sale and
Servicing Agreements) or Outstanding Principal Balance (as defined in the
Pooling and Servicing Agreements), as the context may require.
"Receivable" means a Receivable (as defined in the Sale and Servicing
Agreements) or a Contract (as defined in the Pooling and Servicing Agreements),
as the context may require.
"S&SA Backup Servicer" means Harris Trust and Savings Bank in its
capacity as the backup servicer under the Sale and Servicing Agreements.
"Servicer" means National Auto Finance Company, Inc., a Delaware
corporation with its corporate headquarters in Jacksonville, Florida.
"Servicer Termination Event" means a Servicer Termination Event (as
defined in the Sale and Servicing Agreements) or Servicer Default (as defined in
the Pooling and Servicing Agreements), as the context may require.
"Servicer's Certificate" means the monthly certificate or report
delivered by the Servicer with respect to the Receivables on or prior to each
Reporting Date substantially
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in the form attached as Exhibit B to the Sale and Servicing Agreements and
Exhibit 3.17 to the Pooling and Servicing Agreements.
"Servicing Transfer Date" means the agreed upon date on which the
Backup Servicer assumes all rights, responsibilities, and duties of the
Servicer.
"Servicing Transfer Notification" shall have the meaning set forth in
Section 3.01 of this Agreement.
"Spread Account Amounts" means those amounts on deposit in each of the
Spread Accounts established in accordance with each of the Servicing Agreements.
"Transaction Documents" shall have the meaning assigned to it in the
respective Servicing Agreements.
"Trust" shall have the meaning set forth in the respective Servicing
Agreements.
"Trustee" or "Trust Collateral Agent" means Harris Trust and Savings
Bank in its capacity as Trustee or Trust Collateral Agent, as applicable, under
the Servicing Agreements.
ARTICLE II
OVERSIGHT OF SERVICING
SECTION 2.01 Requirements of Servicer and Backup Servicer; Monthly
Tape.
(a) On or before the fourth Business Day, but in no event later
than the fifth calendar day, of each month, commencing in April 1999, the
Servicer will deliver to each of the Trustee, the Insurer (upon request) and the
Backup Servicer a computer tape or a diskette (or any other electronic
transmission acceptable to each of the Trustee, the Insurer (if requested by the
Insurer) and the Backup Servicer) in a format acceptable to each of the Trustee,
the Backup Servicer and the Insurer (if requested by the Insurer) containing the
information with respect to the Receivables as of the preceding Determination
Date (the "Monthly File") necessary for preparation of the Servicer's
Certificate relating to the immediately succeeding Reporting Date and necessary
to determine the application of the collections as provided in the applicable
Servicing Agreement. The Backup Servicer shall use the information contained in
the Monthly File to verify the Servicer's Certificate delivered by the Servicer
pursuant to each of the Servicing Agreements, and commencing in April 1999, the
Backup Servicer shall notify the Servicer of any discrepancies within three
Business Days of receipt by the Backup Servicer of such Servicer's Certificate.
In the event that the Backup Servicer reports any discrepancies, the Servicer
and the Backup Servicer shall attempt to reconcile any material discrepancies
prior to the related Distribution Date; provided, however, that in the absence
of a reconciliation prior to the related Draw Date, the Backup Servicer shall
certify to the
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<PAGE> 5
Controlling Party and the Trustee on such Draw Date that such discrepancies
remain unreconciled. In the absence of a reconciliation prior to the related
Distribution Date, the applicable Servicer's Certificate shall control for the
purpose of calculations and distributions with respect to such related
Distribution Date. In the event that the Backup Servicer and the Servicer are
unable to reconcile discrepancies with respect to a Servicer's Certificate by
the related Distribution Date, the Servicer shall cause the Independent
Accountants, at the Servicer's expense, to audit such Servicer's Certificate
and, prior to the Distribution Date for the month following the month in which
such Servicer's Certificate was delivered, reconcile the discrepancies. The
effect, if any, of such reconciliation shall be reflected in the Servicer's
Certificate next succeeding the Servicer's Certificate with respect to which
such discrepancies were noted. In addition, upon the occurrence of a Servicer
Termination Event the Servicer shall, if so requested by the Controlling Party
or the Backup Servicer, deliver to the Controlling Party (if requested by the
Controlling Party) and Backup Servicer (i) within three Business Days of demand
therefore a computer tape or a diskette (or any other electronic transmission
acceptable to the Controlling Party (if requested by the Controlling Party) and
the Backup Servicer) in a format acceptable to the Controlling Party (if
requested by the Controlling Party) and the Backup Servicer containing as of the
close of business on the date of demand all of the data maintained by the
Servicer in computer format in connection with servicing the Receivables and
(ii) within five (5) calendar days true and correct copies of all other
Collection Records and Monthly Records. Other than the duties specifically set
forth in this Agreement, the Backup Servicer shall have no obligations
hereunder, including, without limitation, to supervise, verify, monitor or
administer the performance of the Servicer. The Backup Servicer shall have no
liability for any actions taken or omitted by the Servicer. With respect to
Section 4.15 of the Sale and Servicing Agreements, this section shall apply in
substitution and replacement of such sections for purposes of such Sale and
Servicing Agreements.
(b) The Servicer's performance of its obligations under this
Agreement shall in no way relieve the Servicer of its obligations under the
Servicing Agreements.
(c) The Backup Servicer's performance of its obligations under this
Agreement shall in no way relieve the Servicer of its obligations under the
Servicing Agreements or relieve the S&SA Backup Servicer of its obligations
under the Sale and Servicing Agreements or relieve the P&SA Standby Servicer of
its obligations under the Pooling and Servicing Agreements except as expressly
provided in the Supplement, dated as of March 31, 1999 to the Backup Servicing
Agreement, dated as of March 31, 1998, by and among Funding Trust, NAFI and
Harris.
(d) The Backup Servicer shall consult fully with the Servicer as
may be necessary from time to time to perform or carry out the Backup Servicer's
obligations hereunder and Servicer shall cooperate with the Backup Servicer in
such consultation. The Servicer shall execute, deliver and/or provide to the
Backup Servicer from time to time as requested by the Backup Servicer or
Controlling Party such documents, tapes or materials as shall be reasonably
necessary or desirable for the Backup Servicer to perform
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<PAGE> 6
its duties hereunder and to complete any servicing transaction or transfer
contemplated hereby.
SECTION 2.02 Duties of the Backup Servicer. In addition to, and not in
limitation of, the duties otherwise required by this Agreement, the Backup
Servicer agrees to perform the duties specified in Exhibit A hereto.
SECTION 2.03 Authority of the Backup Servicer. In performing its duties
hereunder, the Backup Servicer shall have full power and authority to do or
cause to be done any and all things in connection with such backup servicing and
administration which it may deem necessary or desirable in the best interest of
the Trustee, Insurer and the Servicer, to the extent that such interest does not
conflict with the interest of the Trustee or the Insurer. In the event that
Backup Servicer, in its sole discretion, determines that there is a conflict of
interest between the Trustee, the Insurer and the Servicer, the Backup Servicer
shall defer to the interests of the Trustee and the Insurer.
SECTION 2.04 Pre-Transfer Standard of Care. In performing its duties
and obligations hereunder pursuant to this Agreement prior to a transfer of
servicing, the Backup Servicer will comply with all applicable state and federal
laws and will exercise that degree of skill and care consistent with the degree
of skill and care that the Backup Servicer exercises in its capacity as backup
servicer in similar transactions and, if more exacting, with prudent industry
standards for backup servicers performing only the functions set forth herein,
and will apply in performing such duties and obligations, those standards,
policies and procedures consistent with the standards, policies and procedures
the Backup Servicer applies in its capacity as backup servicer in similar
transactions and the standards, policies and procedures giving due consideration
and, if more exacting, to the prudent industry standards for backup servicers
performing only the functions set forth herein. In performing its duties and
obligations hereunder, the Backup Servicer shall maintain all state and federal
licenses, permits, qualifications and franchises necessary for it to perform its
servicing responsibilities hereunder, and shall not impair the rights of Trustee
or the Trust in the Receivables.
SECTION 2.05 Reliance; Duty to Examine Liability.
(a) In the absence of bad faith, gross negligence or willful
misconduct on its part, the Backup Servicer may conclusively rely on the written
advice of counsel (and shall be fully protected in such reliance) respecting any
matters arising under this Agreement or any other Transaction Documents and, as
to the truth of the statements in any document of any kind prima facie properly
executed and submitted by any Person respecting any matters arising under this
Agreement or the Servicing Agreements or any other Transaction Documents and the
correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Backup Servicer and conforming to the requirements of this
Agreement (other than the Servicer's Certificate, the Backup Servicer's
obligations with respect to which are set forth in Section 2.01 hereof); but in
the case of any such certificates or opinions, which by any provision hereof are
specifically
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required to be furnished to the Backup Servicer, the Backup Servicer shall be
under a duty to examine the same and to determine whether or not they conform to
the requirements hereof.
(b) The Backup Servicer in its capacity as such shall not be
required to expend or risk its own funds or otherwise incur financial liability
in the performance of any of its duties hereunder or under the Servicing
Agreements, or in the exercise of any of its rights or powers in its capacity as
the Backup Servicer, if the repayment of such funds or adequate written
indemnity against such risk or liability is not reasonably assured to it in
writing prior to the expenditure or risk of such funds or incurrence of
financial liability. Notwithstanding anything in this Agreement to the contrary,
the Backup Servicer in its capacity as such shall not be liable for any
obligation of the Servicer contained in this Agreement or the Servicing
Agreements and the Insurer shall look only to the Servicer to perform such
obligations. The Backup Servicer in its capacity as such shall perform such
duties and only such duties as are specifically set forth in this Agreement and
shall not be bound by the terms of the Servicing Agreements or any other
Transaction Documents.
(c) The Backup Servicer in its capacity as such shall not be under
any obligations to appear in, prosecute or defend any legal action that is not
incidental to its duties hereunder and that in its reasonable opinion may
involve it in any expense or liability; provided, however, that the Backup
Servicer in its capacity as such may, but shall not be obligated to, take any
such action that is reasonable and that may be necessary or desirable in respect
of this Agreement and the rights and duties of the parties hereto. If any such
proposed action is commenced, the legal expenses and costs of such action and
any liabilities resulting therefrom shall be expenses, costs and liabilities of
the Servicer, and the Backup Servicer shall be entitled to be reimbursed
therefor by the Servicer.
(d) Neither the Backup Servicer in its capacity as such nor any of
its officers, directors, employees or agents shall be liable for any action
taken or omitted under this Agreement or in connection therewith except to the
extent caused by the Backup Servicer's gross negligence, bad faith or willful
misconduct. Each party hereto (for itself and any person or entity claiming
through it) hereby releases, waives, discharges, exculpates and covenants not to
sue the Backup Servicer in its capacity as such for any action taken or omitted
under this Agreement except to the extent caused by the Backup Servicer's gross
negligence, bad faith or willful misconduct.
(e) The Backup Servicer in its capacity as such will not be
responsible for delays attributable to the Servicer's failure to deliver
information, defects in the information supplied by the Servicer or other
circumstances beyond the control of the Backup Servicer. The Backup Servicer in
its capacity as such shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer or the Controlling Party or for any inaccuracy or
omission in a notice or communication received by the Backup Servicer from any
third party or (ii) which is due to or results from the invalidity or
unenforceability of any Receivable or
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noncompliance of the underlying contract with applicable law or the breach or
the inaccuracy of any representation or warranty made with respect to any
Receivable.
SECTION 2.06 Backup Servicing Fee.
(a) The Backup Servicer shall be paid a one-time acceptance fee of
$1,000 payable by Servicer on the date hereof.
(b) The Servicer shall be responsible for a data mapping fee of
$1,000, payable to Back-up Servicer on the date hereof.
(c) For initial General Setup, as set forth in Exhibit A, Back-up
Servicer shall be owed a one-time fee of $9,000, payable by Servicer on the date
hereof.
(d) Legal fees of the Backup Servicer associated solely with the
drafting and negotiating of this contract will be charged and paid by Servicer
at the actual cost to the Backup Servicer, a maximum of which shall be
$15,000.00.
(e) The Servicer shall be charged and shall pay to the Backup
Servicer a monthly fee at a rate of $6,500 per month for the first Trust, and
$1,000 per month for each remaining Trust that is, as of that month, extant
pursuant to each of the Servicing Agreements for the services provided by the
Backup Servicer under Section 2.01 above and Exhibit A. If, however, the Back-up
Servicer is asked to perform the duties specified in the Additional Monthly
Services section of Exhibit A on a quarterly (rather than monthly) basis, then
the fee for all services shall be charged to the Servicer at a rate of $2,400
per month for each Trust that is, as of that month, extant pursuant to each of
the Servicing Agreements. Any monthly fee assessed pursuant to this subsection
(e) includes a total of fifteen (15) hours of technical support, per Trust, of
Back-up Servicer's personnel time. For Back-up Servicer personnel time in excess
of such fifteen (15) hours, the Back-up Servicer will be entitled to charge the
Servicer its then prevailing hourly rate; provided, however, that the Back-up
Servicer will notify the Servicer when the Back-up Servicer has performed ten
(10) hours of such work. The Backup Servicing Fee shall be payable monthly by
the 21st day following the Due Period for which the charges relate. In the event
payment is not received within 30 days of the Distribution Date, an interest
charge of 1.5% per month on any outstanding balance will incur.
(f) In the event of a Servicing Transfer Notification in Section
3.01 (as hereinafter defined), from and after the date the Backup Servicer
assumes the servicing duties pursuant to the terms of Section 3.01, the backup
servicing fee will no longer accrue or be owed by Servicer to LSE; provided,
however, that all fees owed to Backup Servicer have been paid current.
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ARTICLE III
TRANSFER OF SERVICING
SECTION 3.01 Backup Servicer Assumption of Servicer Duties.
(a) Upon the occurrence of a Servicer Termination Event and at the
written request of the Insurer and with the reasonable cooperation of the
Servicer, the Backup Servicer will convert the existing Receivables to the
Backup Servicer's systems and commence servicing of the Receivables. The Insurer
and the Backup Servicer shall mutually agree upon a date (the "Servicing
Transfer Date") on which the Servicer will cease all servicing activities and on
which the Backup Servicer shall assume all servicing duties and shall provide
the Trustee with written notification of such Servicing Transfer Date; provided
that, the Backup Servicer shall be required to agree to a date proposed by the
Controlling Party which is within 45 calendar days of the date of receipt of a
Servicing Transfer Notice (the "Maximum Transfer Date"). It is intended that no
later than the Servicing Transfer Date, the Controlling Party and LSE (along
with such other parties as are necessary to effectuate such agreement) shall
enter into a mutually satisfactory servicing agreement under which LSE will
service the existing Receivables; provided however, that if by the Maximum
Transfer Date such parties shall not have entered into such an agreement, then
from the Maximum Transfer Date until such date as such an agreement is entered
into, the Backup Servicer shall service the Loans substantially in accordance
with the terms and conditions with respect to LSE as successor servicer and to
those methods described in the Assumption Agreement, dated as of March 1, 1999,
by and among LSE, OHA Auto Receivables, Inc. ("OHA") and Norwest Bank, National
Association ("Norwest"), relating to the Pooling and Servicing Agreement dated
as of May 26, 1998 by and among OHA, OHA Financial, Inc. and Norwest.
(b) The Servicer agrees to cooperate fully and promptly in
providing the Backup Servicer with such information as is necessary for the
Backup Servicer to assume the servicing duties pursuant to this Section 3.01 and
will provide reasonable access to the Servicer's premises as requested by the
Backup Servicer or the Controlling Party in connection with such conversion. LSE
will promptly notify the Controlling Party and the Trustee of any failure of the
Servicer to cooperate and LSE shall not be liable to any party for a failure to
complete its timely assumption of servicing duties if such failure is the result
of such failure of the Servicer to cooperate.
SECTION 3.02 Indemnity to Backup Servicer. The Backup Servicer will be
indemnified from and against all claims, damages, losses or expenses reasonably
incurred by the Backup Servicer (including reasonable attorneys' fees and
expenses), arising out of claims asserted against the Backup Servicer by third
parties arising out of or based upon any matter related to or arising out of
this Agreement to the extent the act or omission giving rise to the claim occurs
before the Servicing Transfer Date, except for any claims, damages, losses or
expenses arising from the Backup Servicer's own gross negligence, bad faith or
willful misconduct. All amounts due to the Backup Servicer as indemnification
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pursuant to this Section 3.02 shall be payable (i) first, by the Servicer; and
(ii) second, from the Spread Account Amounts.
SECTION 3.03 Indemnity by Backup Servicer. The Backup Servicer will
indemnify the Servicer, the Trustee and the Insurer from and against all claims,
damages, losses or expenses reasonably incurred by the Servicer, the Trustee or
the Insurer (including reasonable attorneys' fees), arising out of claims
asserted against the Servicer, the Trustee or the Insurer by third parties
arising out of or based upon the Backup Servicer's negligence or wrongful acts
only to the extent the act or omission giving rise to the claim occurs before
the Servicing Transfer Date, except for any claims, damages, losses or expenses
arising from the Servicer's or the Trustee's own negligence or the Insurer's own
gross negligence, bad faith or willful misconduct.
SECTION 3.04 Conversion and Post-Conversion Fees. The Backup Servicer
shall be paid on the Servicing Transfer Date a portfolio conversion fee of an
amount per then outstanding active loan to be mutually agreed upon by the
Insurer and the Backup Servicer at the time of such conversion. After the
Servicing Transfer Date and pursuant to any mutually satisfactory servicing
agreement executed pursuant to Section 3.01, LSE shall be paid a monthly ongoing
servicing fee as more fully set forth in such respective servicing agreement.
SECTION 3.05 Limitation of Liability. In conjunction with the
conversion, LSE is authorized to accept and rely (except to the extent that
management personnel of the Backup Servicer have actual knowledge of the
inaccuracy thereof) on all the accounting, records and work of the Servicer, and
LSE shall have no duty, responsibility, obligation, or liability (collectively,
"Liability") for the acts or omissions of Servicer.
SECTION 3.06 Continued Errors. Except as provided in this Agreement,
LSE may accept and reasonably rely on all accounting, records and work of the
Servicer without audit, and LSE shall have no Liability for the acts or
omissions of the Servicer. If any error, inaccuracy or omission (collectively,
"Errors") exists in any information received from the Servicer, and such Errors
should cause or materially contribute to LSE making or continuing any Errors
(collectively, "Continued Errors"), LSE shall have no Liability for such
Continued Errors; provided, however, that this provision shall not protect LSE
against any Liability which would otherwise be imposed by reason of willful
misconduct, bad faith or gross negligence in discovering or correcting any Error
or in the performance of its or their duties hereunder or under this Agreement.
In the event LSE becomes aware of Errors or Continued Errors, LSE shall, with
the prior consent of the Insurer, use its best efforts to reconstruct and
reconcile such data as is commercially reasonable to correct such Errors and
Continued Errors and prevent future Continued Errors. LSE shall be entitled to
recover its costs thereby expended from the Servicer.
SECTION 3.07 Cooperation of the Trustee, the Insurer and the Servicer.
In the event of a servicing transfer pursuant to a Servicing Transfer
Notification, the Servicer agrees to assist LSE in a reasonable manner with the
transfer of servicing, and the Insurer
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agrees to use its reasonable best efforts to obtain the Servicer's assistance
and cooperation to the extent possible and consistent with the Insurer's other
agreements with the Servicer. Except as may be otherwise provided, it is
expressly agreed and understood that LSE is not responsible for any vendor
payments owed by the Servicer which LSE reasonably believes beneficial to the
completion of the systems conversion and portfolio transfer, except that LSE
shall inform the Insurer of any such vendor payments. In the event LSE incurs
any expenses for vendor payments in connection with the systems conversion and
portfolio transfer, such expenses shall constitute servicing transition
expenses.
ARTICLE IV
TERMINATION
SECTION 4.01 Merger or Consolidation or Similar Action by Backup
Servicer. Any person (i) into which the Backup Servicer may be merged or
consolidated, (ii) resulting from any merger or consolidation to which the
Backup Servicer shall be a party, (iii) which acquires by conveyance, transfer
or lease substantially all of the assets of the Backup Servicer, or (iv)
succeeding to the business of the Backup Servicer, in any of the foregoing cases
shall execute and deliver to each of the Servicer and the Insurer an agreement
of assumption to perform every obligation of the Backup Servicer under this
Agreement without the execution or filing of any paper or any further act on the
part of any of the parties to this Agreement, anything in this Agreement to the
contrary notwithstanding. The Backup Servicer or its successor hereunder shall
provide the Servicer, the Trustee and the Insurer with prompt notice of any such
transaction. Nothing contained in this section shall be deemed to release the
Backup Servicer from any obligation under this Agreement.
SECTION 4.02 Backup Servicer Not to Resign.
(a) The Backup Servicer shall not resign from the obligations and
duties imposed on it by this Agreement except (i) upon a determination that by
reason of a change in legal requirements the performance of its duties under
this Agreement would cause it to be in violation of such legal requirements in a
manner which would have a material adverse effect on the Backup Servicer and the
Insurer does not elect to waive the obligations of the Backup Servicer to
perform the duties which render it legally unable to act or to delegate those
duties to another Person or (ii) with the prior written consent of the
Controlling Party in its sole discretion.
(b) Any such determination permitting the resignation of the Backup
Servicer pursuant to clause (i) of subparagraph (a) shall be evidenced by an
Opinion of Counsel to such effect delivered and acceptable to the Trustee or
Trust Collateral Agent, as applicable, and the Insurer. No resignation of the
Backup Servicer under this Agreement shall become effective until an entity
acceptable to the Insurer shall have assumed the responsibilities and
obligations of the Backup Servicer hereunder; provided, however, that in the
event a successor backup servicer is not appointed within 60 days
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after the Backup Servicer has given notice of its resignation and has provided
an Opinion of Counsel, if so required hereunder, the Backup Servicer may
petition a court for the appointment of a successor.
SECTION 4.03 Termination.
(a) The Insurer may elect to remove the Backup Servicer upon the
occurrence of any of the following conditions:
(i) The termination of the Servicing Agreements;
(ii) The Insurer terminates the Backup Servicer as Backup Servicer
hereunder, which termination may be effected either immediately with
cause or upon 60 days notice to the Backup Servicer and the Trustee
without cause;
(iii) The entry with respect to the Backup Servicer of a decree or
order for relief by a court or agency or supervisory authority having
jurisdiction under any present or future federal or state bankruptcy,
insolvency or similar law;
(iv) A conservator, receiver or liquidator is appointed with
respect to the Backup Servicer in any insolvency, readjustment of debt,
marshaling of assets and liabilities or similar proceedings; or
(v) The Backup Servicer shall admit in writing its inability to pay
its debts generally as they become due, file a petition to take
advantage of any applicable insolvency or reorganization statute, make
an assignment for the benefit of its creditors or voluntarily suspend
payment of its obligations.
(b) The Backup Servicer will be allowed to terminate its
obligations under this Agreement if it does not receive any payment required to
be made under the terms of this Agreement, which failure continues unremedied
for a period of 30 Business Days after written notice of such failure shall have
been given to the Trustee, the Insurer and the Servicer and which notice shall
state the intent of the Backup Servicer to terminate its obligations hereunder
in the event of non-payment after 30 Business Days.
SECTION 4.04 Effect of Removal. Upon removal of LSE as Backup Servicer
hereunder, prior to the transfer of servicing to the Backup Servicer, it is
expressly agreed that the parties are under no obligation to enter into an
agreement whereby LSE will become successor Servicer under the Servicing
Agreements.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BACKUP SERVICER
SECTION 5.01 Insurance Coverage. The Backup Servicer shall at all times
maintain an errors and omissions insurance policy providing coverage in an
amount of not
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less than $1,000,000 and a fidelity bond in an amount of not less than $100,000,
in such form as is customary for loan servicers acting in respect of consumer
loans on behalf of institutional investors therein.
SECTION 5.02 Representations and Warranties of the Backup Servicer. The
Backup Servicer hereby represents, warrants and covenants to the Insurer, the
Trustee and the Servicer that as of the date of this Agreement or as of such
date specifically provided herein;
(a) The Backup Servicer is a limited partnership duly organized and
validly existing under the laws of the State of Texas;
(b) All necessary partnership, regulatory or other similar action
has been taken to authorize and empower the Backup Servicer and the officers or
representatives acting on the Backup Servicer's behalf, and the Backup Servicer
has full power and authority, and the legal right, to execute, deliver and
perform this Agreement.
(c) This Agreement has been duly authorized, executed and delivered
by the Backup Servicer and the performance and compliance with the terms of this
Agreement will not conflict with, result in any breach of the terms and
provisions of, or constitute (with or without notice, lapse of time or both) a
default under the Backup Servicer's partnership agreement any material contract,
indenture, lease, credit agreement or any other agreement or instrument to which
the Backup Servicer is a party or which may be applicable to the Backup Servicer
or any of its assets and will not result in the creation or imposition of any
lien upon any of its properties pursuant to the terms of any such indenture,
agreement, or other instrument (other than the Agreement);
(d) This Agreement shall constitute a legal, valid, and binding
obligation of the Backup Servicer enforceable in accordance with its terms,
except as 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;
(e) The Backup Servicer is duly licensed and qualified to transact
business and is in good standing under the laws of each state in which such
qualification is required to perform the functions specified herein and this
Agreement constitutes a valid, legal and binding obligation of the Backup
Servicer, enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium and other laws affecting the
enforcement of creditors' rights generally and to general principles of equity;
(f) The Backup Servicer is not in violation of, and the execution,
delivery and performance of this Agreement by the Backup Servicer will not
constitute a violation with respect to any order or decree of any court or any
order, regulation or demand of any federal, state, municipal or governmental
agency, which violation might have consequences that would materially and
adversely affect the condition (financial or other)
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of operations of the Backup Servicer or its properties or might have
consequences that would affect the performance of its duties hereunder;
(g) No proceeding of any kind, including but not limited to
litigation, arbitration, judicial or administrative, is pending or threatened
against or contemplated by the Backup Servicer (A) asserting the invalidity of
this Agreement, (B) seeking to prevent the consummation of any of the
transactions contemplated by this Agreement, (C) seeking any determination or
ruling that would under any circumstances have an adverse effect on the
execution, delivery, performance or enforceability of this Agreement;
(h) No information, certificate of an officer, statement furnished
in writing or report delivered to Servicer, Trustee or the Insurer, or if
applicable any escrow agent, by the Servicer will, to the knowledge of the
Backup Servicer, contain any untrue statement of a material fact or omit a
material fact necessary to make the information, certificate, statement or
report not misleading, and
(i) All approvals, authorizations, consents, orders or other
actions of any Person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery of this Agreement by the Backup Servicer have been or
will be taken or obtained on or prior to the date hereof.
SECTION 5.03 Representations and Warranties of the Servicer. The
Servicer hereby represents, warrants and covenants to the Backup Servicer and
the Insurer that as of the date of this Agreement or as of such date
specifically provided herein:
(a) The Servicer is a corporation duly organized 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 as such properties are owned and
such business is presently conducted.
(b) The Servicer has the power and authority to execute and deliver
this Agreement and to carry out its terms; and the execution, delivery, and
performance of this Agreement have been duly authorized by the Servicer by all
necessary corporate action.
(c) This Agreement shall constitute a legal, valid, and binding
obligation of the Servicer enforceable in accordance with its terms, except as
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.
(d) The consummation of the transactions contemplated by this
Agreement and the fulfillment of the terms thereof 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 articles of
incorporation or by-laws of the Servicer, or to the best knowledge of the
Servicer, after reasonable investigation, any indenture, agreement, or
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other instrument to which the Servicer is a party or by which it shall be bound;
nor result in the creation or imposition of any lien upon any of its properties
pursuant to the terms of any such indenture, agreement, or other instrument
(other than the Agreement); nor violate any law or, to the best knowledge of the
Servicer, any order, rule, or regulation applicable to the Servicer of any court
or of any federal or state regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or its
properties.
(e) Except with respect to the pending shareholder class action
complaints against the Servicer or any amendments thereto, there are no
proceedings or investigations pending or, to the best knowledge of the Servicer,
threatened before any court, regulatory body, administrative agency, or other
governmental instrumentality having jurisdiction over the Servicer or its
properties (a) asserting the invalidity of this Agreement, (b) seeking to
prevent the consummation of any of the transactions contemplated by this
Agreement, or (c) seeking any determination or ruling that might materially and
adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement.
SECTION 5.04 Survival of Representations and Warranties. The
representations and warranties set forth in this Article V are continuous and
shall survive the date of this Agreement. Upon discovery by the Insurer, the
Trustee, the Servicer or the Backup Servicer of a breach of any of the foregoing
representations and warranties, the party discovering such breach shall give
prompt written notice to the other parties.
ARTICLE VI
MISCELLANEOUS
SECTION 6.01 Waivers. The provisions of this Agreement may only be
waived by written consent of the party making the waiver. The failure of any
party at any time to require performance by another party of any provision of
this Agreement shall in no way affect that party's right to enforce such
provision, nor shall the waiver by any party of any breach of any provision of
this Agreement be taken or held to be a waiver of any further breach of the same
provision or any other provision.
SECTION 6.02 Effect of Agreement. Except as expressly set forth herein,
this Agreement shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of any of the parties to
the Servicing Agreements under the Servicing Agreements, nor alter, modify,
amend or in any way affect any of the terms, conditions, obligations, covenants
or agreements contained in the Servicing Agreements, all of which are hereby
ratified and affirmed in all respects by the parties hereto and shall continue
in full force and effect.
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SECTION 6.03 Effectiveness of Agreement. This Agreement shall become
effective as of the date first above written when counterparts hereof executed
and delivered on behalf of each party hereto shall have been received by the
Insurer.
SECTION 6.04 Notices. All notices, requests, consents and other
communications hereunder shall be in writing and shall be delivered personally
or mailed by first-class registered or certified mail, postage prepaid, or by
telephonic facsimile transmission and overnight delivery service, postage
prepaid, in any case addressed as follows:
To the Backup Servicer: Loan Servicing Enterprise
9330 LBJ Freeway, Suite 500
Dallas, Texas 75343-3429
Attn: John Kilgore
TEL: (972) 238-1898
FAX: (972) 783-3532
To Insurer: Financial Security Assurance Inc.
350 Park Avenue
New York, New York 10022
Attn: Errol Uhr
TEL: (212) 826-0100
FAX: (212) 339-3518
To Servicer: National Auto Finance Company, Inc.
10302 Deerwood Park Blvd., Suite 100
Jacksonville, Florida 32256
Attn: Keith B. Stein
TEL: (904) 996-2548
FAX: (904) 996-2557
To Trustee: Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, Illinois 60606
Attn: Indenture Trust Administration
TEL: (312) 461-4662
FAX: (312) 461-3525
Such notice, request, consent or other communication shall be deemed given when
so delivered, or if mailed five days after deposit as aforesaid with the U. S.
Postal Service.
SECTION 6.05 Rights Cumulative. All rights and remedies under this
Agreement are cumulative, and none is intended to be exclusive of another. No
delay or omission in insisting upon the strict observance or performance of any
provision of this Agreement, or in exercising any right or remedy, shall be
construed as a waiver or
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relinquishment of such provision, nor shall it impair such right or remedy.
Every right and remedy may be exercised from time to time and as often as deemed
expedient.
SECTION 6.06 Captions. The article, paragraph and other headings
contained in this Agreement are for reference purposes only, and shall not limit
or otherwise affect the meaning hereof.
SECTION 6.07 Legal Holidays. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day in New York, New York, Dallas, Texas,
Chicago, Illinois or Jacksonville, Florida such action, delivery or payment need
not be made on that date, but may be made on the next succeeding Business Day.
SECTION 6.08 Relationship of the Parties. The relationship of the
parties to this Agreement is that of independent contractors. Neither this
Agreement nor any of the activities contemplated hereby shall be deemed to
create any partnership, joint venture, agency or employer/employee relationship
between the Backup Servicer, Insurer or Servicer.
SECTION 6.09 Incorporation of Exhibits. This Agreement shall from time
to time incorporate exhibits which shall be part of this Agreement. All exhibits
attached to this Agreement, at any time and from time to time, and signed by the
parties are hereby incorporated in this Agreement by reference for all purposes.
SECTION 6.10 Integration. This Agreement, with its exhibits,
constitutes the sole agreement between the parties concerning the subject matter
hereof. All previous agreements between these parties concerning the subject
matter hereof, whether oral or written, have been integrated into this
Agreement.
SECTION 6.11 Counterparts; Signatures. This Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument. Signatures to this Agreement obtained via facsimile shall
be valid.
SECTION 6.12 Governing Law. THIS AGREEMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER, GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF NEW YORK.
SECTION 6.13 Amendments. This Agreement may be amended from time to
time by the parties hereto with the prior written consent of the Insurer and
written notice to the Trustee. Any such amendment shall become effective when
counterparts thereof executed and delivered on behalf of each party thereto
shall have been received by the Insurer and the Insurer shall have executed a
written consent to such amendment.
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SECTION 6.14 Assignment. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective successors and
permitted assigns. Notwithstanding anything to the contrary contained herein,
this Agreement may not be assigned by NAFI, including in its capacity as
Servicer, or LSE, including in its capacity as Backup Servicer, without the
prior written consent of the Insurer and written notice to the Trustee, except
as contemplated by Section 4.01 hereof.
SECTION 6.15 Limitations on Rights of Others; Third Party
Beneficiaries. The provisions of this Agreement are solely for the benefit of
the parties hereto. Any right of the Insurer to direct, appoint, consent to,
approve of, or take any action under this Agreement, shall be a right exercised
by the Insurer in its sole and absolute discretion. The Insurer may disclaim any
of its rights and powers under this Agreement, including, without limitation,
its rights under Section 6.17, upon delivery of a written notice to the Trustee
or Trust Collateral Agent, as applicable. Nothing in this Agreement, whether
express or implied, shall be construed to give any other Person any legal or
equitable right, remedy or claim in the Owner Trust Estate or Trust Estate, as
applicable, or under or in respect of this Agreement or any covenants,
conditions or provisions contained herein; provided, however, that the Insurer
is a third-party beneficiary of this Agreement and is entitled to the rights and
benefits granted to it hereunder.
SECTION 6.16 Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provision hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render enforceable
such provision in any other jurisdiction.
SECTION 6.17 Insurer as Controlling Party. The parties hereby
acknowledge that the Insurer shall have certain rights and powers hereunder as
partial consideration for the issuance of the Policies. The parties hereto
hereby further acknowledge that the Insurer is the Controlling Party under each
of the Servicing Agreements as of the date hereof. The Insurer may give or
withhold any consent required hereunder in its sole and absolute discretion.
SECTION 6.18 Submission to Jurisdiction. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT, AND HEREBY (A) IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT AND (B) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING. NOTHING IN THIS SECTION 6.18 SHALL
AFFECT THE RIGHT
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OF ANY PARTY HERETO TO BRING ANY ACTION OR PROCEEDING AGAINST ANY OR ALL OF THE
OTHER PARTIES HERETO OR ANY OF THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY
OTHER JURISDICTION.
SECTION 6.19 Waiver of Jury Trial. EACH PARTY HERETO WAIVES ANY RIGHT
TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
ACTIONS OF ANY OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
SECTION 6.20 Backup Servicer Fees and Expenses. In the event that the
Backup Servicer is entitled to payment of any fee or expense hereunder from the
Servicer or under the applicable Servicing Agreement or Transaction Document,
the Insurer agrees, upon written notice, to pay any such amount which has not
been paid within 30 Business Days of accrual of such fee or expense; provided,
that if prior consent of the Insurer is required before the Backup Servicer
incurs such expenses, such consent has been obtained.
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IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
CSC LOGIC/MSA LLP d/b/a LOAN SERVICING
ENTERPRISE, as Backup Servicer
By: /s/ JOHN F. KILGORE
------------------------------------
Name: John F. Kilgore
----------------------------------
Title: Executive Director
---------------------------------
NATIONAL AUTO FINANCE
COMPANY, INC., as Servicer
By: /s/ STEPHEN R. VETH
------------------------------------
Name: Stephen R. Veth
----------------------------------
Title: Vice President, Secretary &
---------------------------------
General Counsel
---------------------------------
FINANCIAL SECURITY ASSURANCE INC., as
to its obligations under Section 6.20
only
By: /s/ RICHARD J. BAUERFELD
------------------------------------
Name: Richard J. Bauerfeld
---------------------------------
Title: MD
---------------------------------
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ACKNOWLEDGED AND ACCEPTED:
FINANCIAL SECURITY ASSURANCE INC., as Insurer
By: /s/ RICHARD J. BAUERFELD
------------------------------------------
Name: Richard J. Bauerfeld
----------------------------------------
Title: MD
---------------------------------------
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EXHIBIT A
BACK-UP SERVICING DUTIES
I. ONE TIME, UP FRONT DUTIES:
A. GENERAL SETUP
Obtain Contact List of Personnel
Set up Bank Control Record
Input Class Codes
Set up Record Control Record
Establish Customer Service P.O. Box
Establish Customer Service 800 #
Establish Custodial Bank Accounts
Set up Lockbox P.O. Box
Set up/Format Welcome Letter
Set up/Format Billing Statements
Set up Client ID
Obtain Prior Servicing and Credit Agreements
Obtain Month End Servicer Reports
Obtain Trial Balance and List of Receivables
Obtain Copies of VSI/Default Insurance Policies
B. DATA COLLECTION
o OBTAIN DATA FILES (necessary data listed below)
Loan File
Name & Address File and Telephone Number
Collection Notes
Transaction History
OBTAIN REPORTS (in order to balance to Data Files)
Trial Balance (derived from BNI System)
Suspense Account Insurance Tracking Status (when available)
Past Due Summary with Detail
Aged Delinquency Summary
Servicer Report
Repossession Report
Inventory Report
C. DATA MAPPING: RECEIVE TEST FILES AND REPORTS ("0 balance"
loans will not be loaded, and Collection Notes and Transaction
History will be stored in an electronic file but will not be
mapped to the system)
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PRELIMINARY MAPPING
Loan File
Name & Address File
INSTALLMENT LOAN (IL) DATA ANALYSIS (testing validity of data)
Loan File
Name & Address File
DEVELOPMENT OF CONVERSION PROGRAM
INSTALLMENT LOAN SYSTEM
Loan File
Name & Address File
SYSTEM TESTING (LSE will take output from Conversion Program
and load to Test System)
IL SYSTEM
Loan File
Name & Address File
PERFORM LOAN VALIDATION SYSTEM BALANCING TO REPORTS,
PERFORM TESTING REASONABLENESS
Loan File
Name & Address File
II. MONTHLY SERVICES:
o RECEIVE AND STORE MONTHLY FILES AND REPORTS FROM SERVICER
FILES (stored on LSE system and reviewed to ensure
completeness on face)
Loan File
Name & Address File
o RECEIVE AND STORE MONTHLY SERVICER REPORT FROM SERVICER
Upon receipt of the Monthly Data File and Monthly Servicer
Report, LSE shall compare the two and will: (i) verify the
aggregate Outstanding Balance of Receivables at the
beginning of the related Collection Period; (ii) verify the
number and principal balance of delinquent Receivables at
the close of the related Collection Period; and (iii)
verify the aggregate Outstanding Balance of Receivables at
the close of the related Collection period.
o RECEIVE, STORE AND REVIEW MONTHLY REPOSSESSION REPORT AND
INVENTORY REPORT
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Monthly Repossession Reports and Inventory Report in order
to monitor location and quantity of vehicles in
repossession and liquidation.
III. ADDITIONAL MONTHLY SERVICES:
o RECEIPT, STORAGE AND VERIFICATION OF THE FOLLOWING REPORTS:
Trial Balance
Suspense Account
Insurance Tracking Status
Aged Delinquency Summary
Month-End Investor Report Validation
Repossession Report
Inventory Report
o FULL CONVERSION OF LATEST DATA FILE RECEIVED
On a monthly basis, Back-up Servicer will load the latest
Files received from Servicer onto the LSE system and will
run a conversion program, test system and verify reports.
o VERIFICATION OF REPORTS
Back-up Servicer will produce its own reports from the
conversion and will compare the information on the reports
received from Servicer.
The above duties may be performed on a more or less frequent basis,
provided that Backup Servicer has received prior written notification from FSA
requesting such change and that any associated fees (to be charged to Servicer)
have been mutually agreed upon.
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EXHIBIT 10.102
AMENDMENT TO
CUSTODIAN AGREEMENT
THIS AMENDMENT, dated March , 1999 (this "Amendment") to the Custodian
Agreement, dated October 15, 1998 (the "Custodian Agreement"), by and among
HARRIS TRUST AND SAVINGS BANK, an Illinois banking corporation ("Custodian"),
NATIONAL AUTO FINANCE COMPANY, INC. as Administrator (the "Company" or "NAFI")
and HARRIS TRUST AND SAVINGS BANK as (i) trustee pursuant to the Pooling and
Servicing Agreement, dated as of October 1, 1995, pursuant to which the National
Auto Finance 1995-1 Trust was formed and the Pooling and Servicing Agreement,
dated as of October 21, 1996, pursuant to which the National Auto Finance 1996-1
Trust was formed, each among National Financial Auto NFAFT ("NFAFT"), NAFI, as
successor to National Auto Finance Company L.P., and Harris Trust and Savings
Bank, as trustee, (ii) trust collateral agent pursuant to the Sale and Servicing
Agreement, dated as of June 29, 1997, among NFAFT, NAFI, National Auto Finance
1997-1 Trust and Harris Trust and Savings Bank, as trust collateral agent and
the Sale and Servicing Agreement, dated as of December 15, 1997, among NFAFT,
NAFI, National Auto Finance 1998-1 Trust and Harris Trust and Savings Bank, as
trust collateral agent, and (iii) trust collateral agent pursuant to the
Indenture, dated as of June 29, 1997, between National Auto Finance 1997-1 Trust
and Harris Trust and Savings Bank, as trust collateral agent and indenture
trustee and the Indenture, dated as of December 15, 1997, between National Auto
Finance 1998-1 Trust and Harris Trust and Savings Bank, as trust collateral
agent and indenture trustee (each such agreement referenced in the preceding
clauses (i) through (iii), as such agreement has been amended as of the date
hereof and as the same may be further amended, supplemented, amended and
restated or otherwise modified in accordance with the terms thereof, an
"Agreement" and, collectively, the "Agreements"). Harris Trust and Savings Bank
in its capacity as trustee as referenced in clause (i) above and trust
collateral agent as referenced in clauses (ii) and (iii) above shall be referred
to herein as "Trustee." National Auto Finance 1995-1 Trust, National Auto
Finance 1996-1 Trust, National Auto Finance 1997-1 Trust, and National Auto
Finance 1998-1 Trust, shall each be referred to herein as a "NAFI Trust" and
together shall be referred to herein as the "NAFI Trusts."
WITNESSETH
WHEREAS the parties hereby desire to amend certain terms of the Custodian
Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants herein
contained, the parties hereto agree as follows:
SECTION 1. DEFINED TERMS. Capitalized terms used but not defined
herein shall have the respective meanings assigned to such terms in the
Custodian Agreement.
SECTION 2. AMENDMENTS TO THE CUSTODIAN AGREEMENT
Section 4 of the Custodian Agreement shall be amended as follows:
<PAGE> 2
MAINTENANCE OF CUSTODIAN DOCUMENTS. (a) Senior Interests and Perfection on
behalf of Senior Interest. The Custodian agrees to maintain the Custodian
Documents in its possession at its office located at 111 West Monroe Street,
Lower Level West, Chicago, Illinois 60603 or at such other location as Custodian
shall give Trustee thirty (30) days advance written notice. It is intended that
by the Custodian's possession of the Custodian Documents pursuant to this
Custodian Agreement that the Trustee will be deemed to have possession of the
Custodian Documents for purposes of Section 9-305 of the UCC as in effect in the
state in which the Custodian Documents are located, for itself and as Trustee on
behalf of the Series 1995-1 Certificateholders, the Series 1996-1
Certificateholders, the Series 1997-1 Noteholders, the Series 1998-1 Noteholders
(the "Related Security Holders") the Collateral Agent and Financial Security
Assurance Inc. ("FSA") (the interest of all such holders herein, the "Senior
Lien Holders"), all as set forth in the Subordination and Intercreditor
Agreement, by and among NFAFT, the NAFI Trusts, NAFI, First Union National Bank
("FUNB"), FSA and Harris (the "Intercreditor Agreement").
(b) Subordinate Interest. The Custodian acknowledges, pursuant to the
Revolving Credit Term Loan and Security Agreement (the "Credit Agreement") among
NFAFT, NAFI, and FUNB, that FUNB has been granted a security interest,
subordinate only to the interests of the Senior Lien Holders in the Custodian
Documents and, until the applicable Insurance Termination Date related thereto
such security interests of FUNB are subordinate only to the interests of the
Senior Lien Holders under the Intercreditor Agreement and such security
interests of FUNB shall, immediately upon the related Insurance Termination Date
(as defined in the immediately succeeding sentence) be as a perfected security
interest prior to all other Liens, claims and encumbrances in, to, and under the
Custodian Documents, until the Final Insurance Termination Date related thereto
related to such Insurance Termination Date with respect to the related NAFI
Trust. The "Insurance Termination Date" with respect to any NAFI Trust is the
termination date of (i) in the case of National Auto Finance 1995-1 Trust, the
Insurance and Indemnity Agreement dated as of November 21, 1995, (ii) in the
case of National Auto Finance 1996-1 Trust, the Insurance and Indemnity
Agreement dated as of November 13, 1996, (iii) in the case of National Auto
Finance 1997-1 Trust, the Insurance and Indemnity Agreement dated as of July 23,
1997, and (iv) in the case of National Auto Finance 1998-1 Trust, the Insurance
and Indemnity Agreement dated as of January 20, 1998, in each case among FSA,
NFAFT, and NAFI and, in the case of the latter two agreements, also among the
related NAFI Trust, in each case as such Insurance and Indemnity Agreement
terminates in accordance with its terms pursuant to Section 4.01 thereof. The
Custodian covenants that it shall, immediately after each such Insurance
Termination Date with respect to any NAFI Trust, unless there shall have been a
foreclosure by any of the Senior Lien Holders under the Intercreditor Agreement,
(i) hold the Custodian Documents related to such NAFI Trust as bailee and
Custodian of FUNB for the purpose of perfecting the Lender's interest in a sale
of, or security interest in the Custodian Documents, until the Obligations (as
defined in the Credit Agreement) are paid in full to FUNB, (ii) not act to harm
the interests of FUNB in such bailment, and (iii) only follow the written
instructions of FUNB with respect to such bailment until the Obligations are
paid in full to the Lender. Until such time as the Insurance Termination Date
with respect to the related NAFI Trust has occurred, (i) the interest of FUNB in
the related Custodian Documents shall be subordinate to the interests of the
Senior Lien Holders, as aforesaid and as set forth in the Intercreditor
Agreement, (ii) no authority shall be conferred upon FUNB to direct any
Custodian with respect to the NAFI Trust to which such Custodian's duties
relate, and (iii) the Custodian shall maintain possession of any
-2-
<PAGE> 3
Custodian Documents for purposes of perfection of a sale thereof, or security
interest therein, only for the benefit of the Senior Lien Holders as described
in paragraph (a) above and shall not maintain possession of any Custodian
Documents for purposes of perfection of a sale thereof, or security interest
therein, for any other person. Until the Insurance Termination Date with respect
to the related NAFI Trust has occurred, the Custodian shall continue to follow
the direction of the Controlling Party exclusively. Custodian shall be notified
in writing by FUNB when the Obligations are paid in full and at such time, the
Custodian shall then cease to hold the Custodian Documents for the benefit of
FUNB, and shall follow the procedures in Section 10 of the Custodian Agreement.
In the event of a foreclosure by any of the Senior Lien Holders under the
Intercreditor Agreement, the Custodian shall dispose of or retain the Custodian
Documents as directed by such foreclosing creditor free and clear of the
interests of FUNB hereunder.
SECTION 3. FSA, by execution of its acknowledgement hereto, consents to
this Amendment and, as Controlling Party under the Agreements, directs Harris
Trust and Savings Bank as Trustee and as Custodian to enter into this Amendment.
In the event of any contradiction or ambiguity between this Agreement and
the Intercreditor Agreement, the terms of the Intercreditor shall govern. All
disputes with respect to matters addressed in the Intercreditor Agreement shall
be determine by reference to the Intercreditor Agreement exclusively and no
provisions of this Agreement or any other Agreement should be interpreted as
altering, amending, explaining or clarifying and provision of the Intercreditor
Agreement.
Nothing contained herein is intended to or should be deemed to (i) restrict
in any manner the authority or discretion of the Controlling Party under the
Agreements or (ii) any of the rights or remedies available to any of the Senior
Lien Holders under the Intercreditor Agreement or the Agreements or any other
Controlling Party (as defined in the Agreements).
-3-
<PAGE> 4
IN WITNESS WHEREOF, each of the parties hereto have executed this Custodian
Agreement as of the date first above written.
HARRIS TRUST AND SAVINGS BANK,
as Custodian
/s/ ROBERT D. FOLTZ
------------------------------------
By: ROBERT D. FOLTZ
Title: VICE PRESIDENT
HARRIS TRUST AND SAVINGS BANK,
as Trustee
/s/ ROBERT D. FOLTZ
------------------------------------
By: ROBERT D. FOLTZ
Title: VICE PRESIDENT
NATIONAL AUTO FINANCE COMPANY, INC.
/s/ KEITH B. STEIN
------------------------------------
By: Keith B. Stein
Title: Vice Chairman and
Chief Executive Officer
Acknowledged and Agreed
FINANCIAL SECURITY ASSURANCE INC.
/s/ RICHARD J. BAUERFELD
- -------------------------------
By: Richard J. Bauerfeld
Title: MD
<PAGE> 5
FIRST UNION NATIONAL BANK
/s/ C. BRAND HOSFORD
- -------------------------------
By: C. BRAND HOSFORD
Title: VICE PRESIDENT
<PAGE> 1
EXHIBIT 10.103
EXECUTION COPY
SUPPLEMENT TO BACKUP SERVICING AGREEMENT
This Supplement, dated as of March 31, 1999, by and among National
Financial Auto Funding Trust ("Funding Trust"), National Auto Finance Company,
Inc. ("NAFI", formerly National Auto Finance Company LP) and Harris Trust and
Savings Bank ("Harris") (the "Supplement") to the Backup Servicing Agreement,
dated as of March 31, 1998, by and among Funding Trust, NAFI and Harris (the
"Agreement").
W I T N E S E T H:
WHEREAS, Funding Trust, NAFI and Harris wish to supplement the
Agreement in accordance with the terms of this Supplement;
NOW THEREFORE, the parties hereby agree, in consideration of the mutual
promises and mutual obligations set forth herein, to the terms and conditions of
the Agreement as amended by this Supplement.
SECTION 1 Survival of the Agreement. Nothing contained herein or
contained in the Agreement for Monitoring and Backup Servicing, dated as of the
date hereof (the "LSE Agreement"), by and among NAFI, CSC Logic/MSA LLP d/b/a
Loan Servicing Enterprise and Financial Security Assurance Inc. ("FSA"), shall
terminate the Agreement. Except as explicitly provided herein, the terms of the
Agreement shall continue to govern, and the rights and responsibilities of the
parties under the Agreement shall survive the parties' entry into this
Supplement and NAFI's entry into the LSE Agreement.
SECTION 2 Suspension of Obligations.
(a) Harris' duty to perform its duties as Backup Servicer under the
Agreement and Harris' entitlement to collect payments for services under the
Agreement, in each case arising after the date hereof, are hereby suspended from
the date of the signing of this Supplement until such date, if any, as the
parties to this Supplement are given written notice by FSA that the LSE
Agreement has been terminated and that they are to resume performance under the
Agreement (the "Notice Date"). NAFI's duty to pay Harris for its performance of
its duties as Backup Servicer incurred after the date hereof under the Agreement
is hereby suspended from the date of the signing of this Supplement until the
Notice Date. Harris and NAFI hereby agree that as of the date hereof no amounts
are due and outstanding to Harris under the Agreement and no performance of
duties under the Agreement are due and outstanding by Harris or NAFI. After the
Notice Date, the provisions of this Supplement will terminate and the parties
will resume their respective duties and obligations under the Agreement.
(b) FSA hereby agrees for the benefit of Harris as Backup Servicer
pursuant to the Pooling and Servicing Agreement, dated as of October 1, 1995,
and the Pooling and Servicing Agreement, dated as of October 21, 1996, each
among Funding Trust, NAFI, and Harris, as Trustee, and for the benefit of Harris
as Standby Servicer pursuant to the Sale and Servicing Agreement, dated as of
June 29, 1997, among Funding Trust, NAFI, Harris and the National Auto Finance
1997-1 Trust, and the Sale and Servicing Agreement, dated as of December 15,
<PAGE> 2
1997, among Funding Trust, NAFI, Harris, as Trust Collateral Agent and Backup
Servicer, and the National Auto Finance 1998-1 Trust (such agreements, the
"Underlying Agreements"), that so long as the Notice Date has not occurred, FSA
will not appoint Harris as successor servicer under the Underlying Agreements.
SECTION 3 Limited Effect. Except as expressly set forth in this
Supplement, the Agreement shall continue to be, and shall remain, in full force
and effect in accordance with its terms.
SECTION 4 Counterparts. This Supplement may be executed by each of the
parties hereto on any number of separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
instrument.
SECTION 5. GOVERNING LAW. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REFERENCE
TO THE CHOICE OF LAW PROVISIONS THEREOF.
2
<PAGE> 3
IN WITNESS WHEREOF, each of the parties hereto has caused a counterpart
of this Agreement to be duly executed and delivered as of the date first above
written.
HARRIS TRUST AND
SAVINGS BANK
By: /s/ E. KAY LIEDERMAN
--------------------------------------
Name: E. Kay Liederman
Title: Vice President
NATIONAL FINANCIAL AUTO
FUNDING TRUST
By: CHASE MANHATTAN
BANK DELAWARE, not in its
individual capacity but solely as
Owner Trustee
By: /s/ DENIS KELLY
--------------------------------------
Name: Denis Kelly
Title: Trust Officer
NATIONAL AUTO FINANCE
COMPANY INC.
By: /s/ STEPHEN R. VETH
--------------------------------------
Name: Stephen R. Veth
Title: Vice President, Secretary and
General Counsel
3
<PAGE> 4
ACKNOWLEDGED AND ACCEPTED:
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ RICHARD J. BAUERFELD
--------------------------------------
Name: Richard J. Bauerfeld
Title: MD
4
<PAGE> 1
EXHIBIT 10.104
EXECUTION COPY
AGREEMENT AND AMENDMENT
dated as of March 31, 1999
among
FINANCIAL SECURITY ASSURANCE INC.,
NATIONAL FINANCIAL AUTO FUNDING TRUST,
NATIONAL AUTO FINANCE COMPANY, INC.,
NATIONAL AUTO FINANCE 1997-1 TRUST and
NATIONAL AUTO FINANCE 1998-1 TRUST
to
INSURANCE AND INDEMNITY AGREEMENTS,
dated as of November 21, 1995, November 13, 1996,
July 23, 1997 and January 20, 1998
in each case among
FINANCIAL SECURITY ASSURANCE INC.,
NATIONAL FINANCIAL AUTO FUNDING TRUST and
NATIONAL AUTO FINANCE COMPANY, INC.
and with respect to the Insurance and Indemnity Agreement dated as of
July 23, 1997, also among NATIONAL AUTO FINANCE 1997-1 TRUST
and with respect to the Insurance and Indemnity Agreement dated as of
January 20, 1998, also among NATIONAL AUTO FINANCE 1998-1 TRUST
<PAGE> 2
AGREEMENT AND AMENDMENT TO INSURANCE AND INDEMNITY AGREEMENTS
THIS AGREEMENT AND AMENDMENT, dated as of March 31, 1999 (this
"Amendment"), among FINANCIAL SECURITY ASSURANCE INC., a New York stock
insurance company ("Financial Security"), NATIONAL FINANCIAL AUTO FUNDING TRUST,
a Delaware business trust (the "Transferor"), NATIONAL AUTO FINANCE COMPANY,
INC., a Delaware corporation ("NAFI"; formerly National Auto Finance Company
L.P., a Delaware limited partnership), NATIONAL AUTO FINANCE 1997-1 TRUST, a
Delaware business trust (the "Series 1997-1 Trust'), and NATIONAL AUTO FINANCE
1998-1 TRUST, a Delaware business trust (the "Series 1998-1 Trust"), to
INSURANCE AND INDEMNITY AGREEMENT, dated as of November 21, 1995 (as amended as
of the date hereof (including by this Amendment) and as the same may be further
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the terms thereof, the "Series 1995-1 Insurance
Agreement"), among Financial Security, the Transferor and NAFI, INSURANCE AND
INDEMNITY AGREEMENT, dated as of November 13, 1996 (as amended as of the date
hereof (including by this Amendment) and as the same may be further amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof, the "Series 1996-1 Insurance Agreement"),
among Financial Security, the Transferor and NAFI, INSURANCE AND INDEMNITY
AGREEMENT, dated as of July 23, 1997, among Financial Security, the Transferor,
NAFI and the Series 1997-1 Trust (as amended as of the date hereof (including by
this Amendment) and as the same may be further amended, amended and restated,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, the "Series 1997-1 Insurance Agreement" and INSURANCE AND
INDEMNITY AGREEMENT, dated as of January 20, 1998 (as amended as of the date
hereof (including by this Amendment) and as the same may be further amended,
amended and restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof, the "Series 1998-1 Insurance Agreement'; the
Series 1995-1 Insurance Agreement, the Series 1996-1 Insurance Agreement, the
Series 1997-1 Insurance Agreement and the Series 1998-1 Insurance Agreement each
an "Insurance Agreement " and, collectively, the "Insurance Agreements").
RECITALS
WHEREAS, Financial Security, the Transferor and NAFI have each entered
into the Series 1995-1 Insurance Agreement and the Series 1996-1 Insurance
Agreement and together with Wilmington Trust Company in its capacity as the
Owner Trustee of the Series 1997-1 Trust and the Series 1998-1 Trust have each
entered into the Series 1997-1 Insurance Agreement and the Series 1998-1
Insurance Agreement (for purposes of this Amendment, Financial Security, the
Transferor, NAFI, the Series 1997-1 Trust and the Series 1998-1 Trust are each a
"Party" and, collectively, the "Parties"), and each of the Parties desire to
hereby amend each of the Insurance Agreements in certain respects as provided
below.
WHEREAS, pursuant to Section 6.01 of each Insurance Agreements, such
Insurance Agreement may be amended or otherwise modified from time to time in
writing by each of the parties thereto.
1
<PAGE> 3
AGREEMENTS
In consideration of the premises set forth above, and for other good
and valuable consideration, the adequacy, receipt and sufficiency of which each
of the Parties hereto hereby acknowledges, the Parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Defined Terms. Unless defined in this Amendment,
capitalized terms used in this Amendment (including in the preamble and the
recitals hereto) shall have the meaning assigned to such terms in the Insurance
Agreement or Insurance Agreements with respect to which such term is used.
ARTICLE II
AMENDMENTS
SECTION 2. 1. April 1999 Reporting Date. With respect to the April 1999
Reporting Date, the following shall apply:
(a) the Average Delinquency Ratio, Average Net Loss
Rate and the Average Default Rate shall not be a three month average but instead
shall be equal to Delinquency Rate, Net Loss Rate and Default Rate, respectively
for the March 1999 Due Period;
(b) Subsections 5.01(f) and (g) of the Series 1995-1,
Series 1996-1, Series 1997-1 and Series 1998-1 Insurance Agreements are hereby
amended by deleting the text set forth in each of such clauses and substituting
therefor the following:
"(f) the Average Delinquency Ratio as of any Reporting Date is
equal to or greater than 14.0%;
(g) the Average Default Rate as of any Reporting Date is equal
to or greater than 28.0%;"
(c) Subsection 5.01(h) of the Series 1995-1, 1996-1
and 1997-1 Insurance Agreements are hereby amended by deleting the text set
forth in each of such clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 17.0%;"
2
<PAGE> 4
(d) Subsection 5.01(h) of the Series 1998-1 Insurance
Agreement is hereby amended by deleting the text set forth in each of such
clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 16.0%;"
SECTION 2.2. May 1999 Reporting Date. With respect to the May 1999
Reporting Date, the following shall apply:
(a) the Average Delinquency Ratio, Average Net Loss
Rate and the Average Default Rate shall be equal to the arithmetic average of
the respective Delinquency Ratios, Net Rates and Default Rates for the March
1999 and the April 1999 Due Periods.
(b) Subsections 5.01(f) and (g) of the Series 1995-1,
Series 1996-1, Series 1997-1 and Series 1998-1 Insurance Agreements are hereby
amended by deleting the text set forth in each of such clauses and substituting
therefor the following:
"(f) the Average Delinquency Ratio as of any Reporting Date is
equal to or greater than 13.0%;
(g) the Average Default Rate as of any Reporting Date is equal
to or greater than 27.0%;"
(c) Subsection 5.01(h) of the Series 1995-1, 1996-1
and 1997-1 Insurance Agreements are hereby amended by deleting the text set
forth in each of such clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 15.5%;"
(d) Subsection 5.01(h) of the Series 1998-1 Insurance
Agreement is hereby amended by deleting the text set forth in each of such
clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 14.5%;"
SECTION 2.3. June 1999 Reporting Date and any Reporting Date
thereafter. With respect to the June 1999 Reporting Date and all Reporting Dates
thereafter the following shall apply:
(a) The Average Delinquency Ratio, Average Net Loss
Rate and Default Rate shall be equal to the arithmetic average of the respective
Delinquency Ratios, Net Loss Rates and Default Rates for each of the three Due
Periods immediately preceding the Due Period in which such Reporting Date
occurs;
3
<PAGE> 5
(b) Subsections 5.01(f) and (g) of the Series 1995-1,
Series 1996-1, Series 1997-1 and Series 1998-1 Insurance Agreements are hereby
amended by deleting the text set forth in each of such clauses and substituting
therefor the following:
"(f) the Average Delinquency Ratio as of any Reporting Date is
equal to or greater than 12.0%;
(g) the Average Default Rate as of any Reporting Date is equal
to or greater than 25.0%;"
(c) Subsection 5.01(h) of the Series 1995-1, 1996-1
and 1997-1 Insurance Agreements are hereby amended by deleting the text set
forth in each of such clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 14.0%;"
(d) Subsection 5.01(h) of the Series 1998-1 Insurance
Agreement is hereby amended by deleting the text set forth in each of such
clauses and substituting therefor the following:
"(h) the Average Net Loss Rate as of any Reporting Date is
equal to or greater than 13.0%;"
ARTICLE III
CONDITION TO EFFECTIVENESS
SECTION 3.1. Execution and Delivery. This Amendment shall become
effective upon receipt by Financial Security of counterparts hereof executed and
delivered on behalf of each of the Parties hereto.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Ratification. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of any of the Parties
hereto under the Insurance Agreements, nor alter, modify, amend or in any way
affect any of the terms, conditions, obligations, covenants or agreements
contained in the Insurance Agreements, all of which are hereby ratified and
affirmed in all respects by each of the Parties hereto and shall continue in
full force and effect. This Amendment shall apply and be effective only with
respect to the provisions of the Insurance Agreements specifically referred to
herein and any references in any of the Insurance
4
<PAGE> 6
Agreements to the provisions of such Insurance Agreement specifically referred
to herein shall be to such provisions as amended by this Amendment.
SECTION 4.2. Counterparts. This Amendment may be executed in any number
of counterparts, each of which so executed shall be deemed to be an original,
but all of such counterparts shall together constitute but one and the same
instrument.
SECTION 4.3. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PROVISIONS THEREOF REGARDING CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS AND
REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAW.
SECTION 4.4. Waiver of Notice. Each of the Parties hereto waives any
prior notice and any notice period that may be required by any other agreement
or document in connection with the execution of this Amendment.
SECTION 4.5. Headings. The headings of Sections contained in this
Amendment are provided for convenience only. They form no part of this Amendment
or the Insurance Agreements and shall not affect the construction or
interpretation of this Amendment or the Insurance Agreements or any provisions
hereof or thereof.
SECTION 4.6. Directions by Instructing Party. (a) NAFI, by its
execution of this Amendment, hereby directs Chase Manhattan Bank Delaware, as
owner trustee of National Financial Auto Funding Trust, to consent to this
Amendment and to execute and deliver this Amendment and provide the instruction
in paragraph (b).
(b) Financial Security and National Financial Auto
Funding Trust, each, by its consent to and execution of this Amendment, hereby
directs Wilmington Trust Company, as owner trustee of National Auto Finance
1997-1 Trust and as owner trustee of National Auto Finance 1998-1 Trust, to
consent to this Amendment and to execute and deliver this Amendment.
[Remainder of Page Intentionally Blank]
5
<PAGE> 7
IN WITNESS WHEREOF, the Parties hereto have caused this Amendment to
be duly executed by their respective duly authorized officers as of the day
and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ RICHARD J BAUERFELD
-----------------------------------
Name: Richard J. Bauerfeld
Title: MD
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
-----------------------------------
Name: Keith B. Stein
Title: Vice Chairman and Chief
Financial Officer
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: CHASE MANHATTAN BANK DELAWARE,
not in its individual capacity
but solely as owner trustee of
the National Financial Auto
Funding Trust
By: /s/ DENIS KELLY
-----------------------------------
Name: Denis Kelly
Title: Trust Officer
<PAGE> 8
NATIONAL AUTO FINANCE 1997-1 TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
owner trustee of the
National Auto Finance
1997-1 Trust
By: /s/ EXECUTED BY AUTHORIZED OFFICER
---------------------------------------
Name: Executed By Authorized Officer
Title: Senior Financial Services Officer
NATIONAL AUTO FINANCE 1998-1 TRUST
By: WILMINGTON TRUST COMPANY,
not in its individual
capacity but solely as
owner trustee of the
National Auto Finance
1997-1 Trust
By: /s/ EXECUTED BY AUTHORIZED OFFICER
---------------------------------------
Name: Executed By Authorized Officer
Title: Senior Financial Services Officer
<PAGE> 1
EXHIBIT 10.105
AGREEMENT AND AMENDMENT
dated as of March 31, 1999
among
FINANCIAL SECURITY ASSURANCE INC.,
NATIONAL FINANCIAL AUTO FUNDING TRUST,
HARRIS TRUST AND SAVINGS BANK,
to the
FIRST AMENDED AND RESTATED MASTER SPREAD ACCOUNT AGREEMENT
dated as of March 31, 1998
and to the supplements thereto designated
SERIES 1996-1 SUPPLEMENT, SERIES 1997-1 SUPPLEMENT
AND SERIES 1998-1 SUPPLEMENT
each dated as of March 31, 1998
<PAGE> 2
AGREEMENT AND AMENDMENT TO THE FIRST AMENDED AND RESTATED MASTER
SPREAD ACCOUNT AGREEMENT AND TO THE SERIES SUPPLEMENTS THERETO
THIS AGREEMENT AND AMENDMENT, dated as of March 31, 1999 (this "Amendment"),
among FINANCIAL SECURITY ASSURANCE INC., a New York stock insurance company
("Financial Security"), NATIONAL FINANCIAL AUTO FUNDING TRUST, a Delaware
business trust (the "Transferor"), and HARRIS TRUST AND SAVINGS BANK, an
Illinois banking corporation ("Harris"), in its capacities as trustee under
each Securitization Agreement and as Collateral Agent, to (i) the FIRST AMENDED
AND RESTATED MASTER SPREAD ACCOUNT AGREEMENT, dated as of March 31, 1998, among
Financial Security, the Transferor and Harris, in its capacities as trustee
under each Securitization Agreement and as Collateral Agent (as amended as of
the date hereof (including by this Amendment) and as the same may be further
amended, amended and restated, supplemented or otherwise modified from time to
time in accordance with the terms thereof, the "Master Spread Account
Agreement") and (ii) to the SERIES 1996-1 SUPPLEMENT, SERIES 1997-1 SUPPLEMENT
AND SERIES 1998-1 SUPPLEMENT, each dated as of March 31, 1998, in each case
among Financial Security, the Transferor and Harris, to the First Amended and
Restated Master Spread Account Agreement (as amended as of the date hereof
(including by this Amendment) and as the same may be further amended, amended
and restated, supplemented or otherwise modified from time to time in
accordance with the terms thereof, the "Series 1996-1 Supplement", "Series
1997-1 Supplement" and "Series 1998-1 Supplement", respectively; the Series
1996-1 Supplement, the Series 1997-1 Supplement and the Series 1998-1
Supplement, each a "Series Supplement" and, collectively, the "Series
Supplements").
RECITALS
WHEREAS, Financial Security, the Transferor and Harris have each
entered into the Master Spread Account Agreement, the Series 1996-1 Supplement,
the Series 1997-1 Supplement and the Series 1998-1 Supplement (for purposes of
this Amendment, Financial Security, the Transferor and Harris are each a
"Party" and, collectively, the "Parties"), and each of the Parties desire to
hereby amend the Master Spread Account Agreement and each of the Series
Supplements in certain respects as provided below.
WHEREAS, pursuant to Section 8.03 of the Master Spread Account
Agreement, such Agreement and the Series Supplements may be amended or otherwise
modified from time to time in writing by each of the parties thereto.
1
<PAGE> 3
AGREEMENTS
In consideration of the premises set forth above, and for other good
and valuable consideration, the adequacy, receipt and sufficiency of which each
of the Parties hereto hereby acknowledges, the Parties hereto hereby agree as
follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Defined Terms. Unless defined in this Amendment,
capitalized terms used in this Amendment (including in the preamble and the
recitals hereto) shall have the meaning assigned to such terms in the Master
Spread Account Agreement.
ARTICLE II
AMENDMENTS
SECTION 2.1. Amendment to Section 1.01 to the Master Spread Account
Agreement and Section 1.1 of the Series Supplements.
(a) The following definition set forth in Section 1.01 of the Master
Spread Account Agreement is hereby amended by deleting the definition set forth
therein in its entirety and substituting therefor the following:
"Requisite Amount" means, with respect to the Series 1995-1
Certificates, as of any Reporting Date after giving effect to any
distributions of the Certificate Distributable Amount to be made on
the related Distribution Date, (i) if no Insurance Agreement Event of
Default shall have occurred as of such Reporting Date, the lesser of
(A) the greater of (1) 11.0% of the Series 1995-1 Balance and (2)
$840,000, and (B) the greater of (1) the Certificate Balance as of
such Reporting Date, and (2) $100,000; provided, if (x) the Chase
Manhattan Bank Delaware, not in its individual capacity but as Trustee
of the Transferor, has transferred an amount equal to the total
Retransfer Amount (as defined in Section 9.01 of the Series 1995-1
Securitization Agreement) to the Trustee on or prior to such Reporting
Date and such amount together with any other amounts made available by
the Transferor to the Trustee for such purpose have been used to fully
pay the Certificate Balance and any amounts due and payable with
respect to the Certificates as of such Reporting Date, in each case
pursuant to Section 9.01 of the Series 1995-1 Securitization
Agreement, and (y) all Secured Obligations due and payable to
Financial Security and Trustee as of such Reporting Date have been
fully paid, then for purposes of this clause (i) the Requisite Amount
shall be an amount equal to $100,000 as of such Reporting Date, and
(ii) if an Insurance Agreement Event of Default shall have occurred as
of such Reporting Date, an unlimited amount."
2
<PAGE> 4
(b) The following definition set forth in Section 1.1 of the Series
1996-1 Supplement is hereby amended by deleting the definition set forth
therein in its entirety and substituting therefor the following:
"Requisite Amount" means, with respect to the Series 1996-1
Certificates, as of any Reporting Date after giving effect to any
distributions of the Certificate Distributable Amount to be made on
the related Distribution Date, (i) if no Insurance Agreement Event of
Default shall have occurred as of such Reporting Date, the lesser of
(A) the greater of (1) 11.0% of the Series 1996-1 Balance, and (2)
$1,364,791.20, and (B) the greater of (1) the Certificate Balance as
of such Reporting Date and (2) $100,000; provided, if (x) the
Transferor has transferred an amount equal to the total Retransfer
Amount (as defined in Section 9.01 of the Series 1996-1 Securitization
Agreement) to the Trustee on or prior to such Reporting Date and such
amount together with any other amounts made available by the
Transferor to the Trustee for such purpose have been used to fully pay
the Certificate Balance and any amounts due and payable with respect
to the Certificates as of such Reporting Date, in each case pursuant
to Section 9.01 of the Series 1996-1 Securitization Agreement, and (y)
all Secured Obligations due and payable to Financial Security and
Trustee as of such Reporting Date have been fully paid, then for
purposes of this clause (i) the Requisite Amount shall be an amount
equal to $100,000 as of such Reporting Date, and (ii) if an Insurance
Agreement Event of Default shall have occurred as of such Reporting
Date, an unlimited amount."
(c) The following definition set forth in Section 1.1 of the Series
1997-1 Supplement is hereby amended by deleting the definition set forth
therein in its entirety and substituting therefor the following:
"Requisite Amount" means, with respect to the Series 1997-1
Notes, as of any Reporting Date after giving effect to any
distributions of principal on the Series 1997-1 Notes to be made on
the related Distribution Date, (i) if no Insurance Agreement Event of
Default shall have occurred as of such Reporting Date, the lesser of
(A) the greater of (1) 11% of the Series 1997-1 Balance and (2)
$2,205,204.40, and (B) the greater of (1) the outstanding principal
amount of the Series 1997-1 Notes as of such Reporting Date after
giving effect to any distributions of principal to be made thereon on
the related Distribution Date and (2) $100,000; provided, if (x) the
Transferor has deposited to the Collection Account an amount equal to
the aggregate Purchase Amount (as determined by the appraiser referred
to in Section 11.1 of the Series 1997-1 Sale and Servicing Agreement)
for the Receivables pursuant to Section 11.1 of the Series 1997-1
Sale and Servicing Agreement on or prior to such Reporting Date, (y)
the Notes have been redeemed for an amount equal to the Redemption
Price pursuant to Section 10.01 of the Series 1997-1 Indenture on or
prior to such Reporting Date and all amounts due and payable on the
Notes as of such Reporting Date have been fully paid and (z) all
Secured Obligations due and payable to Financial Security and the
Trustee as of such Reporting Date have been fully paid, then for
purposes of this clause (i) the Requisite Amount shall be an amount
equal to $100,000 as of such Reporting Date, and (ii) if an Insurance
Agreement Event of Default shall have occurred as of such Reporting
Date, an unlimited amount."
3
<PAGE> 5
(d) The following definition set forth in Section 1.1 of the Series
1998-1 Supplement is hereby amended by deleting the definition set forth
therein in its entirety and substituting therefor the following:
"Requisite Amount" means, with respect to the Series 1998-1
Notes, as of any Reporting Date after giving effect to any
distributions of principal on the Series 1998-1 Notes to be made on
the related Distribution Date, (i) if no Insurance Agreement Event of
Default shall have occurred as of such Reporting Date, the lesser of
(A) the greater of (1) 11.0% of the Series 1998-1 Balance and (2)
$2,340,659.34, and (B) the greater of (1) the outstanding principal
amount of the Series 1998-1 Notes as of such Reporting Date after
giving effect to any distributions of principal to be made thereon on
the related Distribution Date and (2) $100,000; provided, if (x) the
Transferor has deposited to the Collection Account an amount equal to
the aggregate Purchase Amount (as determined by the appraiser referred
to in Section 11.1 of the Series 1998-1 Sale and Servicing Agreement)
for the Receivables pursuant to Section 11.1 of the Series 1998-1
Sale and Servicing Agreement on or prior to such Reporting Date, (y)
the Notes have been redeemed for an amount equal to the Redemption
Price pursuant to Section 10.01 of the Series 1998-1 Indenture on or
prior to such Reporting Date and all amounts due and payable on the
Notes as of such Reporting Date have been fully paid and (z) all
Secured Obligations due and payable to Financial Security and the
Trustee as of such Reporting Date have been fully paid, then for
purposes of this clause (i) the Requisite Amount shall be an amount
equal to $100,000 as of such Reporting Date, and (ii) if an Insurance
Agreement Event of Default shall have occurred as of such Reporting
Date, an unlimited amount."
(e) For the March 1999 and April 1999 Due Periods, the Requisite Amount
with respect to the Series 1995-1 Certificates, Series 1996-1 Certificates,
Series 1997-1 Notes and the 1998-1 Notes shall equal the sum of (i) the
"Requisite Amount" as defined without reference to this Section 2.1(e) and (ii)
$500,000.
SECTION 2.2. Release of Funds from Spread Accounts. Notwithstanding any
provision to the contrary contained herein or in the First Amended and Restated
Master Spread Agreement or the Series Supplements, all amounts otherwise
distributable from the Spread Accounts pursuant to the First Amended and
Restated Master Spread Account Agreement or this Agreement will be retained in
such Spread Accounts until such time as the Chase Manhattan Bank Delaware, not
in its individual capacity but as Trustee of the Transferor has delivered (or
caused to be delivered) to Financial Security a report regarding certain
proposed adjustments to the Series 1995-1 Balance, the Series 1996-1 Balance,
the Series 1997-1 Balance and the Series 1998-1 Balance and Financial Security
has consented to such proposed adjustments (such adjustments, as consented to by
Financial Security, the "Reconciliation"), which consent shall not be
unreasonably withheld; provided, however, that all amounts deposited to the
Spread Accounts on or after the April 1999 Distribution Date and prior to the
Release Date (as defined below) shall be promptly remitted to the Reversionary
Holder unless there shall have occurred and be continuing an Insurance Agreement
Event of Default. On the first Distribution Date following the first full Due
Period after the Due Period in which Financial Security gives its
4
<PAGE> 6
consent to such proposed adjustments (such first Distribution Date, the "Release
Date"), funds on deposit in the Spread Account (including amounts retained in
the Spread Accounts pursuant to the preceding sentence) shall be released to the
Reversionary Holder or such party as shall have been designated by the
Reversionary Holder to the extent and only to the extent the Reversionary Holder
is entitled to a Distribution under Section 3.03 of the First Amended and
Restated Master Spread Agreement and the Series Supplements. The parties hereto
further agree that funds on deposit in the Collection Accounts for the
transactions to which the Series Supplements relate shall, to the extent such
funds would have been released on a prior Distribution Date but for the
discrepancies in principal balances of the receivables that were the subject of
the Reconciliation (such funds, the "Prior Period Funds"), be applied on the
Release Date pursuant to the distribution provisions of the Pooling and
Servicing Agreements relating to the Series 1995-1 and Series 1996-1
transactions and the Sale and Servicing Agreements relating the Series 1997-1
transaction and the Series 1998-1 transaction and, to the extent such funds as
deposited to the Spread Accounts, shall be released from the Spread Accounts if
and to the extent provided in the preceding sentence.
ARTICLE III
CONDITION TO EFFECTIVENESS
SECTION 3.1. Execution and Delivery. This Amendment shall become
effective upon receipt by Financial Security of counterparts hereof executed and
delivered on behalf of each of the Parties hereto.
ARTICLE IV
MISCELLANEOUS
SECTION 4.1. Ratification. Except as expressly set forth herein, this
Amendment shall not by implication or otherwise limit, impair, constitute a
waiver of, or otherwise affect the rights and remedies of any of the Parties
hereto under the Master Spread Account Agreement or the Series Supplements, nor
alter, modify, amend or in any way affect any of the terms, conditions,
obligations, covenants or agreements contained in the Master Spread Account
Agreement or the Series Supplements, all of which are hereby ratified and
affirmed in all respects by each of the Parties hereto and shall continue in
full force and effect. This Amendment shall apply and be effective only with
respect to the provisions of the Master Spread Account Agreement and each
Series Supplement specifically referred to herein and any references in the
Master Spread Account Agreement or any Series Supplement or to the provisions
of such Master Spread Account Agreement or Series Supplement specifically
referred to herein shall be to such provisions as amended by this Amendment.
SECTION 4.2. Counterparts. This Amendment may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
5
<PAGE> 7
SECTION 4.3. GOVERNING LAW. THIS AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE
PROVISIONS THEREOF REGARDING CONFLICTS OF LAWS), AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HERETO SHALL BE DETERMINED IN ACCORDANCE WITH SUCH
LAW.
SECTION 4.4. Waiver of Notice. Each of the Parties hereto waives any
prior notice and any notice period that may be required by any other agreement
or document in connection with the execution of this Amendment.
SECTION 4.5. Headings. The headings of Sections contained in this
Amendment are provided for convenience only. They form no part of this
Amendment, the Master Spread Account Agreement or Series Supplements and shall
not affect the construction or interpretation of this Amendment, the Master
Spread Account Agreement or the Series Supplements or any provisions hereof or
thereof.
SECTION 4.6. Directions by Instructing Party.
(a) NAFI, by its execution of this Amendment, hereby directs
Chase Manhattan Bank Delaware, as owner trustee of National Financial Auto
Funding Trust, to consent to this Amendment and to execute and deliver this
Amendment.
(b) Financial Security, by its execution and delivery of this
letter, hereby consents to this Amendment and hereby directs Harris as trustee
to the Master Spread Account Agreement and Series Supplement, to consent to this
Amendment and to execute and deliver this Amendment.
6
<PAGE> 8
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective duly authorized officers as of the day and
year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ ERROL UHR
-----------------------------------
Name: Errol Uhr
Title: Managing Director
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: CHASE MANHATTAN BANK/DELAWARE,
not in its individual capacity,
but solely as owner trustee of the
National Financial Auto Funding Trust
By: /s/ DENIS KELLY
-------------------------------
Name: Denis Kelly
Title: Trust Officer
HARRIS TRUST AND SAVINGS BANK,
as Trustee
By: /s/ ROBERT D. FOLTZ
-----------------------------------
Name: Robert D. Foltz
Title: Vice President
HARRIS TRUST AND SAVINGS BANK,
as Collateral Agent
By: /s/ ROBERT D. FOLTZ
-----------------------------------
Name: Robert D. Foltz
Title: Vice President
ACCEPTED AND ACKNOWLEDGED
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ KEITH B. STEIN
--------------------------------
Name: Keith B. Stein
Title: Vice Chairman and Chief
Executive Officer
7
<PAGE> 1
EXHIBIT 10.106
[FIRST UNION LETTERHEAD]
April 7, 1999
Keith B. Stein, Chief Executive Officer
National Auto Finance Company, Inc. ("NAFI")
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Dear Mr. Stein:
We are pleased to advise you that the Credit Committee of First Union
National Bank (the "Bank") has approved the purchase, from the date hereof to
and including March 31, 2001, of up to $20,000,000 aggregate original principal
balance in Subordinated Asset-Backed Notes (the "Subordinated Notes") to be
issued in connection with securitization transactions of vehicle finance
contracts originated by NAFI. Each purchase is subject to the general terms and
conditions in the attached Outline of Terms dated April 8, 1999, which is
incorporated into this letter by reference, and to no development occurring
prior to the closing date for each purchase which would, in the good faith
judgment of the Bank, materially adversely affect any then existing and/or such
particular issue of Subordinated Notes.
Our purchase of any Subordinated Notes is additionally subject to the
execution of satisfactory agreements containing the customary covenants, terms
and conditions for a transaction of this nature for each such purchase, and to
satisfactory legal structure, portfolio, servicing, credit enhancement and
documentation (including legal opinions) for each securitization transaction,
consistent with the terms and conditions set forth in the attached Outline of
Terms. As such, the text of this letter and the Outline of Terms is intended to
provide a brief description of the transactions as contemplated by us and will
not be considered as prejudicing the terms and conditions to be contained in
the final documentation related to each issue of Subordinated Notes.
If this letter correctly sets forth your understanding of the terms
that we have discussed, please indicate your approval by signing and returning
this letter to us no later than April 9, 1999. Based upon your acceptance of
this letter, when the time arises for each such purchase we shall authorize our
attorneys to prepare the necessary documentation to reflect our purchase of the
Subordinated Notes, the costs and charges which shall be for your account
whether or not the transactions are completed.
Very truly yours,
FIRST UNION NATIONAL BANK
By: /s/ EXECUTED BY AUTHORIZED OFFICER
-----------------------------------
Title: VICE PRESIDENT
<PAGE> 2
Accepted this 7th day of April, 1999.
FOR: National Auto Finance Company, Inc.
By: /s/ KEITH B. STEIN
-----------------------------------------
Keith B. Stein, Chief Executive Officer
2
<PAGE> 3
NATIONAL AUTO FINANCE COMPANY, INC.
$20,000,000 SUBORDINATED ASSET-BACKED NOTE PROGRAM
SUMMARY OF INDICATIVE TERMS AND CONDITIONS
APRIL 8, 1999
This summary of indicative term ("Summary") is prepared by First Union National
Bank ("First Union"). Please note that the terms herein are summaries of a
possible transaction, and are not intended to define or describe all of the
terms and conditions of such possible transaction. Consummation of the
transactions contemplated herein is subject to final documentation and other
provisions as set forth on the cover letter attached hereto. Where
discrepancies exist between this Summary (or any subsequent summary) and final
documentation, the final documentation shall govern.
Except as required for the completion or funding of the possible transaction or
as required by law or regulatory requirements, each party to whom this Summary
is delivered acknowledges that this Summary is confidential and agrees that it
will not disclose this Summary or its contents to any other party without the
consent of First Union.
PARTIES
Seller: National Auto Finance Trust 1999-1, a special purpose
bankruptcy remote entity, and other entities that
will purchase auto loans from the Originator,
together with the associated receivables and
security interest in the related automobile or light
truck (together, the "Receivables").
Originator: National Auto Finance Company, Inc. ("NAFI" or the
"Company").
Servicer: NAFI.
Back-Up Servicer Loan Servicing Enterprise.
Custodian: Harris Trust and Savings Bank.
Trustee: Harris Trust and Savings Bank, or such other trustee
acceptable to First Union, in its good faith
judgment.
Purchaser: First Union National Bank.
<PAGE> 4
THE PROGRAM
Commitment Amount: Up to $20,000,000, aggregate initial principal
balance.
Program Term: The purchase commitment will extend through March 31,
2001 (the "Scheduled Program Termination Date").
Initial Closing Date: Concurrent with closing of first Qualified ABS
Transaction (projected 1st or 2nd calendar quarter
of 1999).
Program Description: Purchaser will purchase Subordinated Asset-Backed
Notes (the "Subordinated Notes") issued by the
Seller in Qualified ABS Transactions, in an
aggregate amount up to the Commitment Amount. Each
purchase will be subject to the Originator and
Seller meeting certain conditions precedent.
Qualified ABS
Transaction: 1. All obligations senior in interest to the
Subordinated Notes (the "Senior Notes")
must be rated:
a. At least BBB by S&P and Baa by
Moody's for transactions carrying
bond insurance.
b. At least BBB- by S&P or Baa3 by
Moody's for all other
transactions.
Approved rating level(s) must take into
account the terms of the Subordinated Notes
(i.e. rating levels must be set after
giving effect to the amount, coupon and
other structural attributes of the
Subordinated Notes).
2. Priority of payments to provide that
interest on the Subordinated Notes shall be
paid immediately after payment of interest
on the Senior Notes, and before payment of
principal on the Senior Notes.
3. Priority of Payments to provide that
reimbursement claims of any Credit
Enhancement provider are to be subordinated
in interest to the Subordinated Notes.
4. If a transaction includes Credit
Enhancement provided by a party other than
the Seller or its affiliates, then the
following additional requirements shall
apply:
a. Financial guaranty insurance
policy, if provided, to be issued
by Financial Security Assurance
Inc. ("FSA") or MBIA Insurance
Corporation ("MBIA"), for so long
as a credit rating of such insurer
is not downgraded.
b. Any financial guaranty insurance
policy is to provide for timely
payment of interest and ultimate
payment of principal.
2
<PAGE> 5
c. Form, terms and provider (other
than FSA or MBIA of Credit
Enhancement subject to approval by
Purchaser in its good faith
judgment.
FEES
PROGRAM FEE RATE: LIBOR + 5.00% per annum, payable monthly, based on a
360 day year.
STRUCTURING FEE: None.
COMMITMENT FEE: None.
LEGAL FEES: Legal, ratings agency, audit fees, and all out of
pocket expenses shall be for the account of the
Seller.
PURCHASE LIMIT
PURCHASE LIMIT: The Purchase Limit for each Note shall be determined
in accordance with Condition Precedent 1 set forth
below. The first Subordinated Note purchased in
connection with a Qualified ABS Transaction (the
currently proposed terms of which are summarized in
the offering letter from Prudential Investments
dated as of January 28, 1999, and attached hereto)
will, additionally, be subject to an absolute
purchase limit in an amount equal to the product of
(a) 17.4%, and (b) the ultimate Credit Enhancement
level required for the related Qualified ABS
Transaction.
"Credit Enhancement" means overcollateralization,
subordination, cash reserves, the par amount of any
letter of credit or standby letter of credit (plus
the par amount of any re-insurance policy), or the
par amount of any other credit-enhancing instrument.
CONDITIONS PRECEDENT, RESTRICTIONS, DEFAULT, OTHER
CONDITIONS PRECEDENT
TO ANY NOTE PURCHASE: 1. A. THE SELLER may elect to obtain
Qualifying Ratings for any
Subordinated Note prior to the
closing of the related Qualifying
ABS Transaction, in which case the
rating agencies providing such
Qualifying Ratings shall determine
the Purchase Limit for such
Subordinated Note.
Qualifying Ratings shall mean both
(i) and (ii) below:
3
<PAGE> 6
i. a rating of BB or higher from
S&P or a rating of Ba2 or
higher from Moody's; and
ii. a rating of BB or higher from
Duff and Phelps or from Fitch
IBCA.
b. If the Seller does not obtain
Qualifying Ratings for any
Subordinated Note prior to the
closing of the related Qualifying
ABS Transaction then the Purchase
Limit for such Subordinated Note
shall be consistent, in the good
faith judgment of First Union,
with the criteria for a BB rating,
as published by S&P from time to
time (Note: Current published S&P
guidance is that BB rating
requires sufficient Credit
Enhancement to provide 1.5 - 1.7
times coverage of expected
lifetime net losses. Maintenance
of such coverage may require a
downward adjustment in the above
estimated formula for determining
the Purchase Limit).
2. No default exists under any transaction
document relating to or giving rise to a
Subordinated Note purchase.
3. No material adverse change in the financial
position or operations of the Company
(including, without limitation,
maintenance, in the aggregate, of at least
$5.0 million in unrestricted cash balances
and borrowing availability under the
Revolving Credit, Term Loan and Security
Agreement dated as of March 31, 1999).
4. Receipt of all required legal opinions.
Form, substance, and provider(s) of legal
opinions must be satisfactory to First
Union in its good faith judgment.
5. Documentation (not otherwise inconsistent
with this Summary and the cover letter
attached hereto) satisfactory to First
Union in its sole discretion
RESTRICTIONS ON USE
OF PROCEEDS: Proceeds from sale of the Subordinated Notes shall be
used by the Originator solely for the purposes of
originating new receivables and for repayment of
outstandings under the National Financial Auto
Receivables Master Trust credit facility with First
Union National Bank. Any other use of proceeds by
the Originator, Seller, or any Affiliate for any
other purpose (including, but not limited to,
payment of dividends to any equity holder, payment
to any creditor other than First Union, or payment
to any other investor) is prohibited.
4
<PAGE> 7
Restrictions on
Other Indebtedness: No interest-bearing obligation (other than Senior
Notes) of any Seller may exist that is equal or
senior in interest to the Subordinated Notes.
Termination of
Commitment: The purchase commitment will terminate upon the
earliest to occur of:
1. The Scheduled Program Termination Date.
2. Events of Default as defined in this
Summary or as set forth in any transaction
document relating to or giving rise to a
Subordinated Note purchase.
3. Notification by FSA or MBIA that such
insurer elects not to provide bond guaranty
insurance in the event that (a) NAFI has
requested that FSA or MBIA provide such
insurance in conjunction with a
contemplated securitization transaction,
and (b) an Approved Institutional Investor
or Investors has not committed to purchase,
without insurance provided by FSA or MBIA,
all of the Senior Notes to be issued
pursuant to such securitization
transaction.
Approved Institutional Investor means:
a. Prudential Insurance, its
affiliates and subsidiaries; or
b. An entity (i) rated at least A and
A2 by S&P and Moody's,
respectively, and (ii) which has
consolidated tangible net worth of
at least $100 million.
4. Upon breach of any Performance Measure
trigger for any Qualifying ABS Transaction:
With respect to each Qualifying ABS
transaction, the trigger level for each
Performance Measure shall be set at a level
that is 1.0% more restrictive (i.e. lower,
in the case of default rate, net loss rate,
and delinquency rate) than the respective
trigger level then effective (but as set
forth in the transaction documents for such
Qualifying ABS Transaction on its Closing
Date or as revised with the consent of the
Purchaser) for portfolio and/or asset
performance related Events of Default,
Insurance Agreement Events of Default, or
similar events in such Qualified ABS
Transactions that entitle the
securityholders, the trustee on behalf of
the securityholders or guarantor or other
credit support provider to liquidate the
receivables pool securing the securities or
to terminate the servicer.
Performance Measures shall include
portfolio and asset performance measures
set forth in the relevant Qualified ABS
5
<PAGE> 8
Transactions, including, but not limited to,
default rate, net loss rate, and
delinquency rate (as those terms or like
terms are so defined in the transaction
documents for such Qualified ABS
Transactions).
5. Default under any bond transaction, credit
agreement, or any other similar agreement
to which NAFI or any Seller is a party
(including, but not limited to, any Default
by National Financial Auto Funding Trust,
National Financial Auto Funding Trust II,
or National Financial Auto Receivables
Master Trust under any credit agreement or
other financing agreement with First Union
National Bank).
6. Downgrade of any rated security issued in
conjunction with a Qualifying ABS
Transaction, except (in the case of a
transaction for which FSA or MBIA have
provided a guaranty insurance policy) where
such downgrade resulted solely from a
downgrade of a rating of the bond insurer
for such transaction.
Events of
Default: 1. Bankruptcy of NAFI or the Seller.
2 Failure to make any payment of principal or
interest on the Subordinated Notes within 2
business days of the due date (any
principal or interest arrearage exists).
3. Event of Default or other equivalent event
(as defined in the particular transaction
documents) under (a) any bond transaction,
credit agreement, or any other similar
agreement for which obligations in the
aggregate exceed $1,000,000 to which NAFI
or any affiliate (including, but not limited
to, National Financial Auto Funding Trust,
National Financial Auto Funding Trust II,
or National Financial Auto Receivables
Master Trust) is a party, or (b) any bond
transaction, credit agreement, or any
other similar agreement between NAFI or its
affiliates and First Union National Bank.
4. Termination of Custodian or Back-Up
Servicer without immediate replacement by a
party acceptable to First Union National
Bank, in its good faith judgment.
5. Occurrence of any Servicer Termination
Event under any bond transaction, credit
agreement or similar agreement to which
NAFI or any Seller is a party.
6. Any other customary events of default (as
determined in good faith by First Union
National Bank) for subordinated, below
investment grade, securitized note
purchases.
6
<PAGE> 1
EXHIBIT 10.107
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "AGREEMENT")
dated as of March 31, 1999, is made by and among (a) National Financial Auto
Funding Trust, a Delaware business trust ("BORROWER"); (b) National Auto Finance
1995-1 Trust, National Auto Finance 1996-1 Trust, National Auto Finance 1997-1
Trust and National Auto Finance 1998-1 Trust (collectively, the "ISSUERS"); (c)
National Auto Finance Company, Inc. ("NAFI"); (d) First Union National Bank
("FIRST UNION" or "JUNIOR LIEN HOLDER"); (e) Financial Security Assurance Inc.,
a New York stock insurance company ("FSA"); and (f) Harris Trust and Savings
Bank, an Illinois banking corporation, as Trustee and Collateral Agent ("SENIOR
LIEN HOLDER"). All capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement (as defined below).
R E C I T A L S
A. FSA is the "Controlling Party" as that term is defined in the
Underlying Transaction Documents.
B. FSA issued insurance policies to Senior Lien Holder in such Senior
Lien Holder's capacity as the trustee or indenture trustee, as applicable (in
such capacity, the "TRUSTEE") of the Underlying Trusts, to guarantee certain
scheduled payments to holders of notes or certificates, as applicable (the
"NOTEHOLDERS" or "CERTIFICATEHOLDERS") issued by the Issuers (the "INSURER
OBLIGATIONS").
C. Pursuant to that certain Revolving Credit, Term Loan and Security
Agreement ("CREDIT AGREEMENT") dated as of March 31, 1999 among Borrower, NAFI
and First Union, First Union will extend certain financial accommodations to the
Borrower to be secured by, among other things, a lien on the Borrower's right,
title and interest in and to the Collateral (as such term is defined in Section
10.1 of the Credit Agreement; for purposes of this Agreement, "SUBORDINATED
COLLATERAL" shall mean all Collateral that is not First Priority Collateral).
The obligations of Borrower and its affiliates to Junior Lien Holder, whether
under the Credit Agreement or otherwise, are referred to herein as the "JUNIOR
LOAN."
D. It is a condition precedent to the Credit Agreement that FSA consent
to a junior lien on the Collateral and FSA is willing to consent solely upon and
in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and in order to
induce FSA and Senior Lien Holder to consent, First Union, Senior Lien Holder,
Borrower, the Issuers, and FSA hereby agree as follows:
LA/INTERCREDITOR AGREEMENT(FINAL)
<PAGE> 2
ARTICLE I
THE SUBORDINATION
I.1 AGREEMENT TO SUBORDINATE. Junior Lien Holder, each Issuer and
Borrower each agrees that any and every lien and security interest, whether now
existing or hereinafter granted, in the Subordinated Collateral in favor of or
held for the benefit of Senior Lien Holder or FSA has and shall have priority
over any lien or security interest that Junior Lien Holder now has or may
hereafter acquire in the Subordinated Collateral notwithstanding (a) any
statement or provision to the contrary, whether or not contained in any
agreement, instrument or document; (b) irrespective of the time or order of
filing or recording of financing statements, deeds of trust, mortgages or other
notices of security interests, liens or assignments granted pursuant thereto;
(c) irrespective of anything contained in any filing or agreement to which any
party hereto or its respective successors and assigns may now or hereafter be a
party; and (d) irrespective of the ordinary rules for determining priorities
under the UCC or under any other law governing the relative priorities of
secured creditors. The Junior Loan and the Transaction Documents and all
advances made thereunder (without regard to the application of such advances)
are hereby, and shall continue to be, except with respect to First Priority
Collateral, subject and subordinate in lien and in payment to: (a) Senior Lien
Holder, FSA and the Certificateholders and Noteholders; (b) the Underlying
Transaction Documents and all sums due thereunder; and (c) all interest,
premiums and all other sums due to Senior Lien Holder, FSA or the
Certificateholders and Noteholders. All of the terms, covenants and conditions
of the Transaction Documents are hereby, and shall continue to be, subordinate
to all of the terms, covenants and conditions of the Underlying Transaction
Documents.
I.2 SUSPENSION OF REMEDIES OF JUNIOR LIEN HOLDER. For purposes of this
Agreement, the "SENIOR SECURED OBLIGATIONS" shall mean all indebtedness and
other obligations of any kind owed to each of the Underlying Trustees, Senior
Lien Holder, FSA and the Noteholders and Certificateholders in connection with
the Original Underlying Transaction Documents. Until the Senior Secured
Obligations have been fully and indefeasibly paid in full in cash and the Final
Insurance Termination Date shall have occurred:
(a) Junior Lien Holder shall have no right to receive any payment,
dividend or other distribution from Borrower, any Issuer or either Underlying
Trustee from or by way of the Collateral, or enforce any security interest in,
foreclose, levy or execute upon, or collect or attach the Collateral, whether by
private or judicial action or otherwise except with respect to First Priority
Collateral to the extent set forth in this Section 1.2 below;
(b) Junior Lien Holder agrees that any payments, dividends or other
distribution received from Borrower, any Issuer or any Underlying Trustee,
directly or indirectly, in violation of this Agreement, in cash or other
property, by setoff or in any other manner, from or by way of the Subordinated
Collateral, shall be received in trust for the benefit of Senior lien holder,
FSA and the Noteholders and Certificateholders as their interests may appear
pursuant to the Underlying Transaction Documents, shall be held in the same form
in which it is received and shall be immediately turned over to
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Senior Lien Holder for the benefit of the Senior Secured Obligations until the
Senior Secured Obligations have been fully and indefeasibly paid in full in
cash;
(c) Junior Lien Holder agrees not to ask, demand, take or receive from
Borrower, any Issuer or any Underlying Trustee, directly or indirectly, in cash
or other property or by setoff or in any other manner, from or by way of the
Subordinated Collateral, any payment, dividend or other distribution unless and
until the Senior Secured Obligations shall have been fully and indefeasibly
paid in full in cash; and
(d) Junior Lien Holder agrees that it will not take or permit any
action to be taken which would be prejudicial to or inconsistent with the
priority position of Senior Lien Holder, FSA or the Certificateholders or
Noteholders under this Agreement or with Senior Lien Holder's, FSA's or
Certificateholders' or Noteholders' rights under the Underlying Transaction
Documents.
(e) Nothing contained in this Agreement is intended to or shall be
deemed to restrict the payment of Free Cash Flow as defined in the Irrevocable
Instruction Letter or to restrict Junior Lien Holder's ability to compel the
payment of Free Cash Flow to the extent Borrower could do so under the
Underlying Transaction Documents or to set off against First Priority
Collateral only; provided that such payments are made strictly in accordance
with, upon the terms and subject to the conditions set forth in the
Underlying Transaction Documents, the Irrevocable Instruction Letter and this
Agreement.
I.3 LOCKBOX ACCOUNT.
(a) First Union, in its capacity of Lockbox Bank, hereby acknowledges
and agrees that any and all Trust Receivables (as defined below) received by
First Union or deposited into the Lockbox Account (as defined below) shall be
transferred by First Union to the Collection Account (as defined in the
Underlying Transaction Documents) to be distributed in accordance with the
Underlying Transaction Documents. First Union further acknowledges and agrees
that it may not exercise, and hereby expressly waives, any rights of set off,
recoupment, banker's lien, statutory lien or any similar rights pursuant to any
applicable law or in equity against the Trust Receivables received by First
Union, in its capacity of Lockbox Bank, or deposited into the Lockbox Account;
provided, however, that if any checks, money orders, drafts, collection
remittances and other instruments (collectively, "CHECKS") relating to Trust
Receivables paid to the Collection Account are returned unpaid or otherwise
dishonored, First Union, in its capacity of Lockbox Bank, shall have the right
to charge any and all such returned or dishonored Checks (together with all
customary service charges and other fees related thereto) against the Lockbox
Account or to demand reimbursement therefor directly from Borrower, or if
neither of the foregoing reimburses First Union, then upon notice delivered to
the Senior Lien Holder and FSA prior to the Final Insurance Termination Date,
First Union, in its capacity of Lockbox Bank, may obtain reimbursement from
the Collection Account, the Master Spread Account or to the extent funds on
account for such dishonored checks actually were received in the Collection
Account, in the Master Spread Account or by FSA.
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(b) First Union, in its capacity of Lockbox Bank, shall send to each
of Senior Lien Holder only upon written request of Senior Lien Holder and FSA
copies of all returned and dishonored Checks relating to Trust Receivables
promptly upon (and, in any event, within ten days following) First Union's
receipt thereof, and upon Senior Lien Holder's or FSA's request First Union, in
its capacity of Lockbox Bank, shall provide each of Senior Lien Holder and FSA
with copies of the regular monthly bank statements provided to Borrower or its
Affiliates or Issuer or its Affiliate and such other information relating to the
Lockbox Account as shall reasonably be requested by Senior Lien Holder or FSA.
First Union, in its capacity of Lockbox Bank, shall also deliver a copy of all
notices and statements required to be sent pursuant to any agreement governing
or related to the Lockbox Account (including any Lockbox agreements executed in
connection therewith) to Senior Lien Holder and FSA at such times as provided
therein.
(c) For the purposes of this Section 1.3, the term (i) "LOCKBOX
ACCOUNT" shall mean any and all lockbox or other accounts established with First
Union by Borrower, Borrower's Affiliates, the Issuers or the Issuers'
Affiliates, and (ii) "TRUST RECEIVABLES" shall mean each of (A) any and all
payments made or amounts paid in connection with the Contracts, and (B) any and
all proceeds from the repossession or other disposition of any Vehicle made in
connection with a delinquent Contract.
(d) Borrower, NAFI, Senior Lien Holder, and FSA will at any time and
from time to time, promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or desirable, or
that First Union may request, in order to carry out the provisions of this
Section 1.3, including without limitation, providing all documents and other
information related to returned or dishonored Checks and all customary service
charges and other fees related thereto, all of which shall be at the expense of
Borrower and if Borrower fails to pay, at the expense of NAFI. First Union shall
not be liable for customary service charges and other fees in its capacity as
Lockbox Bank.
I.4 DEFINITION OF PROCEEDING. "Proceeding" as used herein means any
voluntary or involuntary bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or similar proceedings or upon an assignment for the
benefit of creditors or any other marshaling of the assets and liabilities of
any Issuer or Borrower or any other distribution of all or any of the assets of
any Issuer or Borrower to creditors of any Issuer or Borrower upon the
dissolution, winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of any Issuer or Borrower or its debts. Upon
the occurrence of any Proceeding, any payment or distribution of any kind
(whether in cash, property or securities) which otherwise would be payable or
deliverable upon or with respect to the Subordinated Collateral to Junior Lien
Holder shall be paid or delivered directly to senior lien Holder for application
(in the case of cash) to or as collateral (in the case of noncash property or
securities) for the Senior Secured Obligations until the Senior Secured
Obligations shall have been fully and indefeasibly paid in full in cash.
I.5 NO COMMENCEMENT OF ANY PROCEEDING. Junior Lien Holder agrees
that, prior to the date which one year and one day after the later of: (a) the
date on which all Senior Secured Obligations have been fully and indefeasibly
paid in full in cash and (b) the Final Insurance Termination Date, such Junior
Lien Holder will not
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commence, or join with any creditor in commencing or maintaining, any Proceeding
by or against Borrower, any Issuer or NAFI. This Section 1.5 shall survive the
termination of this Agreement.
I.6 NONASSIGNABILITY OF JUNIOR LOAN AND LIENS CONSENTED TO. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, participants, transferees and assigns
(collectively, "ASSIGNEES") including any Assignee who may be in interest as a
matter of applicable law such as a receiver or trustee or any Assignee
purporting to obtain an interest in violation of the provisions of this
Agreement. Junior Lien Holder hereby covenants and agrees that none of its legal
or beneficial right, title or interest in or to the Subordinated Collateral or
under the Transaction Documents may be sold, assigned, participated, syndicated,
pledged, encumbered or transferred, in whole or in part, absolutely or
collaterally, to any Person without the prior written consent of Senior Lien
Holder and FSA, which consent may be arbitrarily withheld for any reason or for
no reason. Any attempt to transfer, directly or indirectly, all or any portion
of the Junior Loan, the Junior Lien or the First Priority Lien under the Credit
Agreement or any other Transaction Document or to transfer any of Junior Lien
Holder's interest in the Collateral in violation of this Agreement shall be null
and void, ab initio.
I.7 MARSHALING; PAYMENTS SET ASIDE. None of Senior Lien Holder, FSA,
the Noteholders, or the Certificateholders shall be under any obligation to
marshal any assets in favor of Junior Lien Holder, Borrower, any Issuer or any
other Person or against or in payment of any or all of the Senior Secured
Obligations. Each of Junior Lien Holder, Borrower and each Issuer hereby waives
any and all rights each shall have at any time under any law pertaining to
marshaling of assets, the sale of property in the inverse order of alienation,
the administration of estates of decedents, appraisement, valuation, stay,
extension or redemption or any other similar laws or equitable principles as now
or hereafter in force to the fullest extent permitted by applicable law.
I.8 NO SET-OFFS BY JUNIOR LIEN HOLDER. Until the Final Insurance
Termination Date, Junior Lien Holder hereby agrees that it may not exercise any
right of set off, recoupment, banker's lien, statutory lien or any similar right
under any applicable law or in equity against Borrower. Until the Insurance
Termination Date, Junior Lien Holder hereby agrees that it may not exercise any
right of set off, recoupment, banker's lien, statutory lien or any similar right
under any applicable law or in equity against such Issuer. If any action is
taken in violation of this provision or if the preceding sentence should be
inapplicable or unenforceable in any respect, Junior Lien Holder agrees that the
exercise of any such right shall be for the benefit of Senior Lien Holder, FSA
and the Certificateholders and Noteholders and agrees to immediately turns over
the proceeds of any such set off, recoupment or lien to Senior Lien Holder for
application to the Senior Secured Obligations.
I.9 NO RIGHTS OF SUBROGATION/NO ASSIGNMENT. Junior Lien Holder agrees
that no payment or distribution to Senior Lien Holder pursuant to the provisions
of this Agreement shall entitle Junior Lien Holder to exercise rights of
subrogation, if any, until the Final Insurance Termination Date. Nothing
contained in this Agreement shall constitute an assignment by any party to
another. Nothing contained in this Agreement is intended to or shall excuse or
alter, as between Borrower and Junior Lien Holder, any of
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the obligations of Borrower to Junior Lien Holder, or to affect the relative
rights against Borrower of Junior Lien Holder and creditors of Borrower other
than the rights of Senior Lien Holder and FSA and the Noteholders and
Certificateholders and Junior Lien Holder as between them. Junior Lien Holder,
each Issuer and Borrower each agrees to and hereby does expressly waive to the
fullest extent permitted under applicable law any and all rights, whether at law
or in equity, (a) to request or compel Senior Lien Holder, FSA or the
Noteholders or Certificateholders to give notice to Junior Lien Holder of any
action taken (or not taken) by Senior Lien Holder, FSA or the Noteholders or
Certificateholders with respect to the Collateral (other than the Interest
Reserve Account and the Swap Agreement), the Senior Secured Obligations or
otherwise under the Underlying Transaction Documents; (b) to request or compel
marshalling with respect to the Collateral held for the Senior Secured
Obligations; or (c) to challenge the validity, enforceability or first priority
of Senior Lien Holder's and FSA's claims and liens or the exercise of any rights
or remedies by Senior Lien Holder, FSA or the Noteholders or Certificateholders
pursuant to the Underlying Transaction Documents.
I.10 FURTHER ASSURANCES. Junior Lien Holder, each Issuer and Borrower
will, at its expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action
(other than any action to commence or maintain a Proceeding), that may be
necessary or desirable, or that either Senior Lien Holder, FSA or the
Certificateholders or Noteholders may reasonably request, in order to protect
any right or interest granted or purported to be granted hereby or to enable
Senior Lien Holder, FSA or the Certificateholders or Noteholders to exercise and
enforce its rights and remedies under this Agreement or the Underlying
Transaction Documents.
Junior Lien Holder, each Issuer and Borrower each agrees that Senior
Lien Holder, FSA and the Certificateholders and Noteholders shall have all of
the rights, remedies and discretion provided in connection with the Underlying
Transaction Documents, including, without limitation, the right to extend,
renew, modify, increase, waive or amend any of the terms thereof, to sell,
exchange, release or otherwise deal with any of the Collateral, release
Borrower, any Issuer or any other person liable in any manner for any
obligations owed to Senior Lien Holder, FSA or the Certificateholders or
Noteholders, or exercise or refrain from exercising any rights thereunder or at
law. The foregoing reservation of rights and remedies under the Underlying
Transaction Documents shall further include, without limitation, the right to
charge a default rate of interest on any amounts owed thereunder, to foreclose
upon the Collateral as provided therein, and to purchase in lieu of redemption
any Certificates and any Notes (as the terms "Certificates" and "Notes" are
defined in the Underlying Transaction Documents).
Any and all such rights, remedies, actions or omissions in Senior Lien
Holder's or FSA's discretion may be taken without incurring any responsibility
or liability to Junior Lien Holder, without impairing or releasing the
obligations of Borrower, any Issuer or Junior Lien Holder under this Agreement,
without otherwise affecting the rights of Senior Lien Holder or FSA under this
Agreement or any Underlying Transaction Document and without any notice to or
consent of Junior Lien Holder.
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The rights of Senior Lien Holder, FSA and the Noteholders and
Certificateholders under this Agreement shall not be prejudiced or impaired by
any action or omission of Senior Lien Holder, Borrower, any Issuer, any
Underlying Trustee, Junior Lien Holder or any person in custody of the
Collateral or the assets, property or operations of Borrower or any Issuer or by
the failure of Borrower, any Issuer, or Junior Lien Holder to comply with any of
the terms of this Agreement, the Transaction Documents or the Underlying
Transaction Documents.
Junior Lien Holder agrees not to directly or indirectly challenge,
contest, or participate in any effort to challenge, contest, set aside, alter,
amend or modify the rights and priorities set forth in the Underlying
Transaction Documents or this Agreement.
I.11 AGREEMENT BY JUNIOR LIEN HOLDER, BORROWER AND ISSUERS. Junior
Lien Holder, each Issuer and Borrower each agrees that it will not (a) take any
other action, in contravention of the provisions of this Agreement, (b)
challenge, directly or indirectly, the enforceability or validity of this
Agreement, any of the Underlying Transaction Documents or any of the provisions
hereof or thereof, or (c) challenge, directly or indirectly, the true sale
nature and absolute assignment of all of any Issuer's, Senior Lien Holder's or
FSA's interest in the Trust Estate (as defined in the Underlying Transaction
Documents).
I.12 OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interests of
Senior Lien Holder, FSA and the Noteholders and Certificateholders under this
Agreement, and all agreements and obligations of Junior Lien Holder, Borrower
and Issuers under this Agreement, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Transaction
Document or Underlying Transaction Document or any other agreement or instrument
relating thereto;
(b) any change in any term of any Transaction Document or Underlying
Transaction Document, or any other amendment or waiver of or any consent to
departure from any Transaction Document or Underlying Transaction Document;
(c) any exchange, release or non-perfection of the Collateral, or any
release or amendment or waiver of or consent to departure from any of the terms
of the Senior Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Borrower, any Issuer, or any guarantor or
subordinated creditor.
Notwithstanding anything contained in this Agreement or any Transaction
Document, this Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment to any of Senior Lien Holder, FSA or any
Noteholder or Certificateholder from Borrower, any Issuer or any other person or
by way of enforcement of any remedies or otherwise from the Collateral is
rescinded, avoided or must otherwise be returned or paid by Senior Lien Holder,
FSA or any Noteholder or
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Certificateholder for any reason, whether following the institution of a
Proceeding or otherwise, under any bankruptcy law, state or federal law, common
law or equitable cause, all as though such payment had not been made and, in
that event, the obligations of the parties hereunder shall be revived with
respect to such amounts ("REVIVED CLAIMS"), all of which shall constitute Senior
Secured Obligations.
I.13 PAYMENTS AND DISTRIBUTIONS HELD IN TRUST. All payments, dividends
or other distributions from or by way of the Collateral, other than First
Priority Collateral, which are received by Junior Lien Holder contrary to the
provisions of this Agreement shall be received in trust for the benefit of
Senior Lien Holder, FSA and the Noteholders and Certificateholders, shall be
held in the same form received, and shall be segregated from other funds and
property held by Junior Lien Holder and shall immediately be paid over to Senior
Lien Holder in the same form as received (with any necessary endorsement) to be
applied (in the case of cash) to or held as collateral (in the case of noncash
property or securities) for the Senior Secured Obligations in accordance with
the terms of the Underlying Transaction Documents until the Senior Secured
Obligations are fully and indefeasibly paid in full in cash.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
II.1 REPRESENTATIONS AND WARRANTIES OF FIRST UNION. First Union
represents and warrants that it is the only Lender and Agent under the Credit
Agreement and that, as Lender, it holds one hundred percent (100%) of the
Lender's legal and beneficial interests, obligations and liens under the Credit
Agreement and other Transaction Documents. First Union covenants that it will
not sell, transfer, syndicate, participate, pledge, encumber or otherwise
assign, in whole or in part, all or any portion of its interests, obligations or
liens in or under any of the Transaction Documents.
ARTICLE III
MISCELLANEOUS
III.1 AMENDMENTS. (a) No amendment or waiver of any provision of this
Agreement nor consent to any departure therefrom by Junior Lien Holder, Borrower
or any Issuer shall in any event be effective unless the same shall be in
writing and signed by Senior Lien Holder and FSA, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of Senior Lien Holder or FSA to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. No notice to or demand on Borrower, any Issuer or Junior Lien Holder in
any case shall entitle Borrower, any Issuer or Junior Lien Holder to any other
or further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
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(b) Junior Lien Holder hereby acknowledges and agrees that FSA may
direct each of the Owner Trustee (as defined in the Underlying Transaction
Documents) or the Underlying Trustees to enter into amendments in accordance
with the terms of the relevant Underlying Transaction Documents, but without
Junior Lien Holder's consent, to make changes to the Underlying Transaction
Documents that FSA believes in good faith are necessary, appropriate, or
incidental to engaging and retaining a satisfactory successor servicer in the
event of a servicer succession under the terms of the Underlying Transaction
Documents, including, without limitation, any amendment entered into in
accordance with the terms of the relevant Underlying Transaction Documents that
make changes to (a) the duties or standard of care of the servicer or (b) the
compensation paid to the servicer even if the change in compensation paid to the
servicer reduces or eliminates the amount of Free Cash Flow.
III.2 INDEMNIFICATION OF FSA AND SENIOR LIEN HOLDER. (a) NAFI hereby
acknowledges and agrees that it shall upon demand, indemnify, protect, save,
defend and hold harmless FSA and Senior Lien Holder, as the case may be, from
and against any and all obligations, fees, liabilities, losses, damages,
penalties, claims, demands, actions, suits, judgments, costs and expenses,
including reasonable legal expenses and attorneys fees, of every kind and nature
whatsoever (collectively, "INDEMNIFIABLE EXPENSES"), imposed on, incurred by, or
asserted against FSA or Senior Lien Holder by any Person in connection with any
(i) Revived Claim and (ii) payments made by FSA in connection with preference
payments made to Noteholders and Certificateholders, pursuant to certain
provisions of the relevant Underlying Transaction Documents, including, but not
limited to Section 4.05 of the 1995-1 and 1996-1 Pooling and Servicing
Agreements, Section 5.19 of the 1997-1 and 1998-1 Indentures and Section 6.2 of
the 1997-1 and 1998-1 Sale and Servicing Agreements.
(b) NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless FSA and Senior Lien Holder,
as the case may be, from Indemnifiable Expenses resulting in an out-of-pocket
expenditure or payment by FSA or Senior Lien Holder to the extent such
Indemnifiable Expenses resulted from the existence of the Transaction Documents
or any of the accommodations, consents or waivers made by FSA and Senior Lien
Holder with respect to First Union's rights or remedies thereunder.
(c) First Union hereby acknowledges and agrees that it shall upon
demand, indemnify, protect, save, defend and hold harmless FSA and Senior Lien
Holder, as the case may be, from any Indemnifiable Expenses pursuant to
subsections (a) and (b) above to the extent that NAFI has failed to fully
indemnify FSA and Senior Lien Holder in accordance therewith.
III.3 ADDITIONAL WAIVERS. (a) Junior Lien Holder, each Issuer and
Borrower each hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Senior Secured Obligations and this
Agreement and any requirement that Senior Lien Holder protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against Borrower, any Issuer or any other
person or entity or the Subordinated Collateral.
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(b) Junior Lien Holder hereby acknowledges and agrees that,
notwithstanding anything contained in the Credit Agreement or any other
Transaction Document to the contrary, no obligation or liability shall become
due and payable under the Credit Agreement at any time before the Final
Insurance Termination Date if the effect of such obligation or liability
becoming due would be to cause the Borrower to not be Solvent. Subject to the
terms hereof, any amount that is prevented by operation of this restriction from
becoming due and payable may, at the option of the Junior Lien Holder, become an
arrearage that becomes due and payable no earlier than the first to occur of
the date upon which Borrower can satisfy such obligation or liability in full in
cash and remain Solvent and the day following the Final Insurance Termination
Date.
III.4 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of the
Transaction Documents and the making of the Loan.
III.5 NO WAIVER BY SENIOR LIEN HOLDER OR FSA. No failure or delay on
the part of Senior Lien Holder, FSA or the Underlying Trustees in the exercise
of any power, right or privilege under this Agreement or any of the other
Underlying Transaction Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
III.6 SEVERABILITY. Whenever possible, each provision of this
Agreement, the Transaction Documents and the Underlying Transaction Documents
shall be interpreted in such manner as to be valid, legal and enforceable under
the applicable law of any jurisdiction. Without limiting the generality of the
foregoing sentence, in case any provision of this Agreement, the Transaction
Documents or the Underlying Transaction Documents shall be invalid, illegal or
unenforceable under the applicable law of any jurisdiction, the validity,
legality and enforceability of the remaining provisions, or of such provision in
any other jurisdiction, shall not in any way be affected or impaired thereby.
III.7 IN FURTHERANCE OF SUBORDINATION. Notwithstanding the prohibition
against the initiation, commencement or maintenance of any Proceeding with
respect to Borrower or any Issuer, if any such Proceeding with respect to
Borrower or any Issuer is nevertheless pending and not dismissed,
(a) Senior Lien Holder and FSA are hereby irrevocably authorized and
empowered (in their own names or in the name of Junior Lien Holder or
otherwise), but shall have no obligation, to demand, sue for, collect and
receive every payment or distribution referred to in Sections 1.2(a) through
1.2(d), inclusive, and give acquittance therefor and, in the event Junior Lien
Holder has failed to file a claim or proof of claim prior to the 30th day
preceding any bar date or other date fixed as the last day for the filing of
such claims or proofs of claim, to file claims and proofs of claim and take such
other action. Junior Lien Holder hereby irrevocably appoints Senior Lien Holder
and FSA, as such Junior Lien Holder's attorney-in-fact, with full power in the
place and stead of such Junior Lien Holder and in the name of such Junior Lien
Holder, Senior Lien Holder or FSA, or otherwise, from time to time, in Senior
Lien Holder's or FSA's
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discretion to take any action, execute any instrument or other document in
connection with any Proceeding or enforce any security interest or other lien on
the Subordinated Collateral securing payment to Junior Lien Holder;
(b) Junior Lien Holder shall duly and promptly take such action
(other than any action to commence or maintain a Proceeding) as any Senior Lien
Holder or FSA may reasonably request to collect and receive any and all payments
or distributions which may be payable or deliverable upon or with respect to the
Subordinated Collateral; and
(c) Notwithstanding any other provision hereof, Junior Lien Holder
hereby agrees that any credit extended by Senior Lien Holder or FSA to Borrower
or any Issuer or any refinancing arrangement of the Original Underlying
Transactions consented to by FSA and the Senior Lien Holder (whether or not in
connection with such Proceeding) shall be entitled to all the priorities,
preferences and benefits of this Agreement.
III.8 ENTIRE AGREEMENT; CONSTRUCTION; AMENDMENTS AND WAIVERS.
(a) This Agreement, the Transaction Documents and the Underlying
Transaction Documents constitute and contain the entire agreement among the
parties and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the parties, whether
written or oral, respecting the subject matter hereof.
(b) This Agreement is the result of negotiations between and has been
reviewed by each of the parties and their respective counsel; accordingly, this
Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against any party. The parties agree
that they intend the literal words of this Agreement and that no parol evidence
shall be necessary or appropriate to establish any party's actual intentions.
(c) The right of Junior Lien Holder to exercise any remedies under
the Credit Agreement or any other Transaction Document is subject to the terms
of this Agreement. Notwithstanding anything in the Credit Agreement or in any
other Transaction Document, until the Final Insurance Termination Date, all
rights and remedies of Junior Lien Holder under the Credit Agreement, any other
Transaction Document or otherwise, whether at law or in equity, is subject to
and limited by this Agreement. In the event of any contradiction or ambiguity
between any Transaction Document and this Agreement, the terms of this Agreement
shall govern. All disputes with respect to the matters addressed in this
Agreement shall be determined by reference to this Agreement exclusively and no
provision of the Credit Agreement or any other Transaction Document should be
interpreted as altering, amending, explaining or clarifying any provision of
this Agreement.
(d) Notwithstanding anything in the Credit Agreement or any other
Transaction Document to the contrary, no obligation or liability shall become
due and payable hereunder at any time before the Final Insurance Termination
Date if the effect of such obligation or liability becoming due would be to
cause the Borrower to not be
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Solvent. Subject to the terms of this Agreement, any amount that is prevented by
operation of this restriction from becoming due and payable may, at the option
of Junior Lien Holder, become an arrearage that becomes due and payable no
earlier than the first to occur of the date upon which Borrower can satisfy such
obligation or liability in full in cash and remain Solvent and the day which is
a year and a day following the Final Insurance Termination Date.
III.9 NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by overnight
courier or U.S. Mail and shall be deemed given: (a) if served in person, when
served; (b) if telecopied, on the date of transmission if before 3:00 p.m.
(Eastern time) on a business day; provided that a hard copy of such notice is
also sent pursuant to (c) or (d) below; (c) if by overnight courier, on the
first business day after delivery to the courier; or (d) if by U.S. Mail,
certified or registered mail, return receipt requested on the fourth (4th) day
after deposit in the mail postage prepaid.
Notices to Junior
Lien Holder: First Union National Bank
One First Union Center
Attn: Reggie Imamura
301 South College Street, TW-10
Charlotte, NC 28288-0610
Telephone No.: (704) 374-6501
Telecopy No.: (704) 374-3254
With copies to: Stephen Whelan, Esq.
Thacher, Profitt & Wood
Two World Trade Center
New York, NY 10048
Telephone No.: (212) 912-7400
Telecopy No.: (212) 912-7751
Notices to Issuers: National Auto Finance 1995-1 Trust
Harris Trust and Savings Bank, as Trustee
311 West Monroe Street, 12th Floor
Chicago, IL 60606
Attention: Indenture Trust Administration
Telephone No.: (312) 461-6030
Telecopy No.: (312) 461-3525
National Auto Finance 1996-1 Trust
Harris Trust and Savings Bank, as Trustee
311 West Monroe Street, 12th Floor
Chicago, IL 60606
Attention: Indenture Trust Administration
Telephone No.: (312) 461-6030
Telecopy No.: (312) 461-3525
LA/INTERCREDITOR AGREEMENT(FINAL) 12
<PAGE> 13
National Auto Finance 1997-1 Trust
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
Telephone No.: (302) 651-1000
Telecopy No.: (302) 651-8882
National Auto Finance 1998-1 Trust
c/o Wilmington Trust Company, as Owner Trustee
Rodney Square North
1100 North Market Street
Wilmington, DE 19890
Attn: Corporate Trust Administration
Telephone No.: (302) 651-1000
Telecopy No.: (302) 651-8882
Notices to NAFI: National Auto Finance Company, Inc.
Attn: Keith B. Stein
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Telephone No.: (904) 996-2500
Telecopy No.: (904) 996-2557
With copies to: Morrison & Foerster LLP
Attn: Thomas Cassidy
1290 Avenue of the Americas
New York, NY 10104
Telephone No.: (212) 468-8000
Telecopy No.: (212) 468-7900
Notices to Borrower: National Auto Financial Auto Funding Trust
Attn: Keith B. Stein
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Telephone No.: (904) 996-2500
Telecopy No.: (904) 996-2557
With copies to: Chase Manhattan Bank Delaware
Attn: Denis Kelly
1201 Market Street
Wilmington, DE 19801
Telephone No.: (302) 428-3372
Telecopy No.: (302) 984-4903
and
Richards Layton & Finger
Attn: Tara Hoffner
920 King Street
LA/INTERCREDITOR AGREEMENT(FINAL) 13
<PAGE> 14
One Rodney Square
Wilmington, DE 19801
Telephone No.: (302) 651-7708
Telecopy No.: (302) 658-6548
Notices to Senior
Lien Holder: Harris Trust and Savings Bank
311 West Monroe Street, 12th Floor
Chicago, IL 60606
Attention: Indenture Trust Administration
Telephone No.: (312) 461-6030
Telecopy No.: (312) 461-3525
Wtih a copy to: Seward & Kissel Attn: Dotte Derrickson
One Battery Park Plaza
New York, NY 10004
Telephone No.: (212) 574-1334
Telecopy No.: (212) 480-8421
Notices to FSA: Financial Security Assurance, Inc.
Attn: Erroll Uhr
350 Park Avenue
New York, New York 10022-6022
Telephone No.: (212) 339-3425
Facsimile No.: (212) 339-3518
With a copy to: Paul, Hastings, Janofsky & Walker LLP
555 South Flower, 23rd Floor
Los Angeles, California 90071
Attn: Hydee R. Feldstein
Telephone No.: (213) 683-6249
Facsimile No.: (213) 627-0705
III.10 CONTINUING AGREEMENT; TRANSFER OF NOTES. This Agreement is a
continuing agreement and shall (a) remain in full force and effect until the
Senior Secured Obligations shall have fully satisfied or paid, (b) be binding
upon Junior Lien Holder, each Issuer and Borrower and each of their respective
successors and assigns, and (c) inure to the benefit of and be enforceable by
Senior Lien Holder and FSA and each of their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), to the
extent Senior Lien Holder or FSA assigns or otherwise transfers its rights or
obligations under any Underlying Transaction Document to any other person or
entity, such other person or entity shall thereupon become vested with all the
rights in respect thereof granted to Senior Lien Holder or FSA, as applicable,
under this Agreement or any Transaction Document. This Agreement shall terminate
upon the Final Insurance Termination Date except with respect to Revived Claims
and Sections 1.5, 3.2 and 3.11.
LA/INTERCREDITOR AGREEMENT(FINAL) 14
<PAGE> 15
III.11 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH PARTIES PERTAINING TO THIS
AGREEMENT OR TO ANY DISPUTE BETWEEN FSA, SENIOR LIEN HOLDER OR THE NOTEHOLDERS
OR CERTIFICATEHOLDERS, ON THE ONE HAND, AND FIRST UNION ON THE OTHER, UNDER ANY
OF THE TRANSACTION DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT PROVIDED, THAT SUCH PARTY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE FSA OR SENIOR LIEN HOLDER FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON ITS
COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF FSA OR
SENIOR LIEN HOLDER. EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND SUCH PARTY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER, EACH ISSUER AND JUNIOR LIEN HOLDER EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL
SERVICE OF PROCESS BE MADE IN THE MANNER SET FORTH FOR NOTICE IN SECTION 3.9 OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT.
III.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
reference to the conflict of laws provisions thereof.
III.13 PAYMENT OF COUNSEL FEES AND EXPENSES. The Borrower agrees to
pay upon demand, the reasonable fees and expenses of Paul, Hastings, Janofsky &
Walker, LLP, special counsel to FSA, in connection with the negotiation,
preparation, approval, execution and delivery of this Agreement and the other
related Transaction Documents.
III.14 NO DUTIES IMPOSED ON SENIOR LIEN HOLDER. The rights granted to
Senior Lien Holder and FSA hereunder are solely for their protection and nothing
herein contained shall impose on Senior Lien Holder or FSA any duties with
respect to the Collateral or any property of Borrower, any Issuer or Junior Lien
Holder received
LA/INTERCREDITOR AGREEMENT(FINAL) 15
<PAGE> 16
hereunder. Neither Senior Lien Holder nor FSA shall have any duty to preserve
rights against prior parties in any instrument or chattel paper received
hereunder.
III.15 SPECIFIC PERFORMANCE. Senior Lien Holder and FSA are hereby
authorized to demand specific performance of this Agreement, whether or not
Borrower, any Issuer or Junior Lien Holder shall have complied with any of the
provisions hereof applicable to it, at any time when Borrower, any Issuer or
Junior Lien Holder shall have failed to comply with any of the provisions of
this Agreement applicable to it. Borrower, each Issuer and Junior Lien Holder
each hereby irrevocably waives any defense based on the adequacy of a remedy at
law, which might be asserted as a bar to such remedy of specific performance.
III.16 AUTHORITY OF TRUSTEES. NAFI and FSA by their execution of this
Agreement, hereby direct Chase Manhattan Bank Delaware, not in its individual
capacity but solely as Owner Trustee of National Financial Auto Funding Trust
and Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee of National Auto Finance 1997-1 Trust and National Auto Finance 1998-1
Trust to acknowledge, agree to, execute and deliver this Agreement on behalf of
National Financial Auto Funding Trust and National Auto Finance 1997-1 Trust and
National Auto Finance 1998-1 Trust, respectively. In connection herewith,
Wilmington Trust Company and Chase Manhattan Bank Delaware shall be afforded all
of the rights, protections, immunities and indemnities provided in the
Underlying Agreements as if the same were specifically set forth herein.
III.17 LIMITATION OF LIABILITY. It is expressly understood and agreed
by the parties hereto that (a) this Agreement is executed and delivered by each
of Wilmington Trust Company and Chase Manhattan Bank Delaware, not individually
or personally, but solely as Owner Trustee of the respective Trusts, in the
exercise of the powers and authority conferred and vested in each under each
respective Trust Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of the Borrower and the Issuers is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company or Chase Manhattan Bank Delaware but is made and
intended for the purpose of binding only the Borrower and the Issuers,
respectively, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company or Chase Manhattan Bank Delaware,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto, (d) under no circumstances shall Wilmington Trust Company or Chase
Manhattan Bank Delaware be personally liable for the payment of any indebtedness
or expenses of Borrower or the Issuers or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Borrower or Issuers under this Agreement or any other related documents, and (e)
each of the representations, undertakings and agreements herein made on the part
of the Borrower or Issuers is made and intended not as representations,
undertakings and agreements by Wilmington Trust Company or Chase Manhattan Bank
Delaware, in their respective capacity as Owner Trustee or individually, but
rather is made and intended for the purpose for binding only the Borrower or
Issuers respectively.
LA/INTERCREDITOR AGREEMENT(FINAL) 16
<PAGE> 17
III.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall together constitute but one agreement.
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE.]
LA/INTERCREDITOR AGREEMENT(FINAL) 17
<PAGE> 18
IN WITNESS WHEREOF, each of Junior Lien Holder, Borrower, each Issuer,
each Senior Lien Holder and FSA has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
JUNIOR LIEN HOLDER
FIRST UNION NATIONAL BANK
By: /s/ C. BRAND HOSFORD
-------------------------------------
Title: C. BRAND HOSFORD
---------------------------------
VICE PRESIDENT
<PAGE> 19
BORROWER
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee
By: /s/ DENIS KELLY
-------------------------------------
Title: DENIS KELLY
----------------------------------
TRUST OFFICER
19
<PAGE> 20
ISSUERS
NATIONAL AUTO FINANCE 1995-1 TRUST
By: Harris Trust and Savings Bank, not in its
individual capacity but solely as Trustee
By: /s/ E. KAY LIEDERMAN
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
NATIONAL AUTO FINANCE 1996-1 TRUST
By: Harris Trust and Savings Bank, not in its
individual capacity but solely as Trustee
By: /s/ E. KAY LIEDERMAN
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
NATIONAL AUTO FINANCE 1997-1 TRUST
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: /s/ EXECUTED BY AUTHORIZED OFFICER
----------------------------------
Title: Senior Financial Services Officer
----------------------------------
NATIONAL AUTO FINANCE 1998-1 TRUST
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: /s/ EXECUTED BY AUTHORIZED OFFICER
----------------------------------
Title: Senior Financial Services Officer
----------------------------------
20
<PAGE> 21
NAFI
NATIONAL AUTO FINANCE, COMPANY, INC.
By: /s/ KEITH B. STEIN
---------------------------------------------
Title: Chief Executive Officer and Vice Chairman
------------------------------------------
21
<PAGE> 22
FSA
Financial Security Assurance, Inc.
By: /s/ RICHARD J. BAUERFELD
----------------------------------
Title: MD
----------------------------------
22
<PAGE> 23
SENIOR LIEN HOLDER
HARRIS TRUST AND SAVINGS BANK,
as Trustee, Trust Collateral Agent and Collateral
Agent for the 1995-1 Trust, 1996-1 Trust, 1997-1
Trust and 1998-1 Trust
By: /s/ E. KAY LIEDERMAN
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
22
<PAGE> 1
EXHIBIT 10.108
[ROTHSCHILD INC. LETTERHEAD]
April 7, 1999
Board of Directors
National Auto Finance Company, Inc.
10302 Deerwood Park Blvd., Suite 100
Jacksonville, FL 32256
Gentlemen:
Reference is hereby made to: (i) the Restructuring Agreement, dated as of April
7, 1999 (the "Restructuring Agreement"), by and among National Auto Finance
Company, Inc. ("NAFI"), National Auto Finance Company, L.P., Gary L. Shapiro,
Edgar A. Otto, Stephen L. Gurba, The 1818 Mezzanine Fund, L.P., PC Investment
Company, Progressive Investment Company, Inc., Manufacturers Life Insurance
Company (U.S.A.), The Structured Finance High Yield Fund, LLC, Nova Financial
Corporation and Nova Corporation, pursuant to which NAFI will, among other
things, (a) restructure its outstanding Senior Subordinated Notes by issuing
Amended and Restated Senior Subordinated Promissory Notes (which will permit
NAFI, at its option, for a period of 24 months, to pay up to 50% of scheduled
interest payments through the issuance of Convertible Senior Subordinated Notes
which may be converted into Common Stock at a conversion price of $0.75 per
share) and (b) issue an aggregate of (x) 7,071,429 shares of Common Stock to the
Noteholders and (y) 1, 178,571 shares of Common Stock to the Equityholders and
(ii) the Note Exchange Agreement dated as of April 7, 1999 (the "Note Exchange
Agreement") by and among NAFI and the Junior Noteholders, pursuant to which,
NAFI will, among other things, restructure its outstanding Junior Notes by
issuing Second Amended and Restated Promissory Notes (which will permit NAFI, to
pay scheduled interest payments through the issuance of Junior Convertible
Subordinated Notes which may be converted into Common Stock at a conversion
price of $0.75 per share). In addition, pursuant to the Restructuring Agreement
and the Note Exchange Agreement, the Noteholders, the Equityholders and the
Junior Noteholders will waive all
<PAGE> 2
currently existing defaults and breaches by NAFI contained in the Agreements and
the Junior Notes, as the case may be. Capitalized terms defined in the
Restructuring Agreement and the Note Exchange Agreement and used but not
otherwise defined herein are used herein as so defined.
In formulating our opinion, we have, among other things: (i) reviewed the
proposed Restructuring Agreement and Note Exchange Agreement and related
exhibits (collectively, the "Restructuring Documents"); (ii) performed site
inspections; (iii) met with management of NAFI; (iv) reviewed certain
publicly-available financial and other data with respect to NAFI, including the
consolidated financial statements for the 1995, 1996 and 1997 fiscal years as
reported on SEC Form 10-K (as amended) and the September 30, 1998, June 30, 1998
and March 30, 1998 quarterly reports on SEC Form 10-Q, and certain other
financial and operating data relating to NAFI made available to us from
published sources and from the internal records of NAFI; (v) reviewed certain
financial and other data with respect to the sub-prime auto lending industry;
(vi) compared NAFI, from a financial point of view, with certain other companies
in the sub-prime auto industry that we deemed relevant; (vii) considered the
financial terms, to the extent publicly-available, of selected recent business
combinations of companies in the sub-prime auto industry which we could
reasonably foresee as relevant to NAFI's current situation; (viii) reviewed and
discussed with management of NAFI historical and forecasted financial
requirements for the execution of the Restructuring Documents; (ix) performed
such other analyses and examination and considered such other financial,
economic and market data as we deemed relevant and appropriate.
In connection with this review, we have not verified any information utilized or
independently assumed any obligation to verify any information utilized,
reviewed or considered by us in formulating our opinion and have relied on such
information being accurate and complete in all material respects. With respect
to the financial forecasts for the Restructuring Documents that have been
provided to us, we have assumed, but independently verified for purposes of our
opinion, that the forecasts have been reasonably prepared on bases reflecting
the best available estimates and judgments of management at the time of
preparation as to the future financial performance of NAFI. We have also assumed
that there have not occurred any material changes in the assets, financial
condition, results of operations, business or prospects for NAFI since the
respective dates on which their most recent financial statements were made
available to us. We have relied on advice of the respective counsel and
independent accountants to NAFI as to all legal and financial reporting matters.
In addition, we have neither assumed responsibility for making an independent
evaluation, appraisal or physical inspection of any of the assets or liabilities
(contingent or otherwise) of NAFI which it is agreed was beyond the scope of our
assignment, nor have we been furnished with any such appraisals. Our opinion is
based on economic, monetary and market and other conditions as in effect on, and
the information made available to us as of, the date hereof. Accordingly,
although subsequent developments may affect this opinion, we have not assumed
any obligations to update, revise or reaffirm this opinion.
We have further assumed that the Restructuring Documents will be executed
substantially as presented.
2
<PAGE> 3
We have acted as financial advisor to NAFI in connection with the Restructuring
and have been compensated for so doing. We have been retained to render this
opinion and are being compensated therefor.
Based upon the foregoing and other factors we deem relevant and in reliance
thereon, it is our opinion that the transactions contemplated by the
Restructuring Documents are fair, from a financial point of view, to NAFI and
the shareholders of NAM (other than the Equityholders and the Partnership, as to
which we express no opinion).
Very truly yours,
/s/ ROTHSCHILD, INC.
Rothschild, Inc.
3
