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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-K
CURRENT REPORT PURSUANT
TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
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Date of Report (Date of Earliest Event Reported): February 14, 2000
National Auto Finance Company, Inc.
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(Exact Name of Registrant as Specified in its Charter)
Delaware
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(State or Other Jurisdiction of Incorporation)
0-22067 65-0688619
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(Commission File Number) (I.R.S. Employer
Identification No.)
10302 Deerwood Park Boulevard, Suite 100
Jacksonville, Florida 32256
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(Address of Principal Executive Offices) (Zip Code)
(904) 996-2500
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(Registrant's Telephone Number, Including Area Code)
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(Former Name or Former Address, if Changed Since Last Report)
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ITEM 5. OTHER EVENTS.
Filed herewith and incorporated herein by reference is a copy of National
Auto Finance Company, Inc. (the "Company") Contract Sale Agreement and Servicing
Agreement, dated February 4, 2000, between National Auto Finance Company, Inc.
(the "Company") and NuVell Credit Corporation.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Exhibits
10.109 Contract Sale Agreement dated February 4, 2000 by and between
National Auto Finance Company, Inc. and NuVell Credit
Corporation
10.110 Servicing Agreement dated February 4, 2000 by and between
National Auto Finance Company, Inc. and NuVell Credit
Corporation
(99) Press Release dated February 11, 2000
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereto duly authorized.
Date: February 14, 2000.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ Stephen R. Veth
Name: Stephen R. Veth
Title: Vice President, Secretary and
General Counsel
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NATIONAL AUTO FINANCE COMPANY, INC.
FORM 8-K
CURRENT REPORT
Exhibit Index
Exhibit No. Description Page
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10.109 Contract Sale Agreement dated February 4, 2000
by and between National Auto Finance Company, Inc.
and NuVell Credit Corporation
10.110 Servicing Agreement dated February 4, 2000
by and between National Auto Finance Company, Inc.
and NuVell Credit Corporation
(99) Press Release dated February 11, 2000
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EXHIBIT 10.109
CONTRACT SALE AGREEMENT
DATED AS OF FEBRUARY 4, 2000
BY AND BETWEEN
NATIONAL AUTO FINANCE COMPANY, INC.
AND
NUVELL CREDIT CORPORATION
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CONTRACT SALE AGREEMENT ( the "Sale Agreement"), dated as of February
4, 2000, by and between NATIONAL AUTO FINANCE COMPANY, INC. (the "Seller"), a
Delaware corporation, its successors and permitted assigns, and NUVELL CREDIT
CORPORATION (the "Purchaser"), a Delaware corporation, its successors and
assigns.
W I T N E S S E T H:
WHEREAS, the Seller purchases from Dealers certain retail installment
sales contracts secured by new and used automobiles and light-duty trucks
("Contracts");
WHEREAS, the Seller desires to purchase Contracts in accordance with
terms of this Agreement and the Seller's Contract Finance Program Guidelines, as
defined herein, for sale and assignment to the Purchaser;
WHEREAS, the Seller intends to sell, and the Purchaser intends to
purchase, certain of such Contracts together with all of its rights thereunder,
as described herein;
NOW, THEREFORE, the parties agree as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS
"ADVERSE CLAIM" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, either legal or
in equity, or other type of preferential arrangement having the effect of a lien
or security interest upon or with respect to the Sold Program Contracts or
Purchased Assets other than in favor of the Purchaser with respect to this Sale
Agreement.
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AMOUNT FINANCED" has the meaning ascribed thereto in the applicable
Truth-in-Lending disclosure in the Program Contract given to the Obligor.
"APR" means, with respect to a Contract, as of any time, the
contractual annual rate of interest or annual rate of finance charges being
borne by such Contract.
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"ASSIGNMENT" means the assignment by Seller to Purchaser, substantially
in the form of Exhibit A hereto, which shall have attached thereto as of the
Sale Date the original of the Program Contract that shall be purchased by the
Purchaser from the Seller on such Sale Date.
"AUTOMOBILES" means new and used automobiles and light-duty trucks, the
purchase of which the Obligors financed by the Program Contracts.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or
another day on which banks in the States of Arkansas, Florida, or Tennessee are
required, or authorized by law, to close.
"BUY RATE" means with respect to any Sold Program Contract the rate
specified as such in Seller's Contract Finance Program Guidelines in effect on
the Closing Date.
"CLOSING DATE" means the first date on which the Seller shall sell
Contracts to the Purchaser pursuant to this Agreement.
"CONTRACT FILE" means, as to each Contract, (a) the executed original
of the Contract, (b) the original credit application fully executed by each
Obligor, on Seller's customary form or on a form approved by Seller for such
application, (c) the credit information and reports in accordance with Seller's
customary practices (including proof that verification of income, employment and
residence have been completed by the Seller in accordance with its customary
practices), (d) the original certificate of title (or application therefor), or
other legal evidence of title with appropriate endorsement to Purchaser or
Purchaser's designee, (e) evidence of insurance required under this Agreement as
to the Financed Vehicle, (f) all applicable service contracts and credit life or
credit accident and disability insurance policies and agreements, (g) the
odometer statement fully completed and signed or other evidence of mileage of
the Financed Vehicle satisfactory to the Purchaser, (h) all applicable
assignments, and (i) any and all other documents and records that Seller shall
keep on file or in computer media, in accordance with its customary procedures,
relating to the origination, administration, collection and servicing of such
Contract or the related Obligor or Financed Vehicle.
"CONTRACT RATE" means with respect to any Sold Program Contract, the
interest rate on such Sold Program Contract as disclosed as the APR.
"DEALER" means a franchise automobile dealer or an independent
automobile dealer identified on Exhibit G attached hereto, or an Affiliate of
any such automobile dealer, who has entered into a Dealer Agreement with the
Seller that governs, among other things, the origination and sale to the Seller
of the Sold Program Contracts.
"DEALER AGREEMENT" means an agreement between the Seller and a Dealer
setting forth the terms for the purchase of Contracts by the Seller.
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"DEBT" of a party means (a) indebtedness for borrowed money, (b)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(c) obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases which have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or security interest granted by a party, even
though such party has not assumed or become liable for the payment of such
obligations, (f) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire or
otherwise to ensure a creditor against loss in respect of, indebtedness or
obligations of others of the kinds referred to in clause (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by the ERISA, as amended, and regulations promulgated thereunder.
"ELECTRONIC CONTRACT INFORMATION" means, as to each Contract, the
applicant information provided by the applicant and retained on electronic
medium, all electronically transmitted documents and information provided by an
applicant to a Dealer, all of which may be retained and transmitted by
electronic means from Seller to Purchaser, and the following information with
respect to each such Contract: (a) the Amount Financed, (b) the Principal
Balance, (c) the amount of each monthly payment due from the Obligor, (d) the
APR (calculated in accordance with the Contract), (e) the Contract's Origination
Date, (f) the date on which in each month the scheduled payment is due, (g) the
Contract's original term in months, (h) the next payment due date, (i) the
number of days delinquent, if applicable, (j) the accrued and unpaid interest of
such Contract, (k) Dealer participation, if any, paid or to be paid to a Dealer,
(l) the late payment fee and NSF fee applicable to such Contract, (m) the
effective Buy Rate applicable to such Contract, (n) the credit quality and/or
classification of such Contract, in accordance with Seller's Contract Finance
Program Guidelines then in effect, and (o) such other information as may be
reasonably requested by the Purchaser to be transmitted to the Purchaser by the
Seller with respect to each such Contract.
"ELIGIBLE PROGRAM CONTRACTS" means all Program Contracts that comply
with the representations and warranties set forth in Section 4.2 of this Sale
Agreement, including Program Contracts that, as of the Closing Date, have not
been funded and the Obligor's first payment is not yet due or Obligor's first
payment is included in the Contract File endorsed in favor of Purchaser.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"FEE" means the amount designated as such in the Fee Schedule attached
as Exhibit B to this Sale Agreement and which is included as part of the
Purchase Price to be paid by the Purchaser to the Seller for the purchase of an
Eligible Program Contract pursuant to Sections 2.1 and 2.3 of this Agreement.
"FEE SCHEDULE" means the schedule agreed to between the Seller and the
Purchaser setting forth the method for calculating the Purchase Price for each
Eligible Program Contract purchased
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by the Purchaser from the Seller pursuant to this Agreement, in the form of
Exhibit B hereto, which schedule the Seller and the Purchaser may jointly agree
to modify from time to time.
"FINANCED VEHICLE" means, with respect to a Contract, the Automobile,
together with all accessions thereto, securing the related Obligor's
indebtedness under such Contract.
"GOVERNMENTAL AUTHORITY" means the United States of America, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"INDEMNIFIED AMOUNTS" means any and all amounts necessary to indemnify
such Indemnified Party from and against any and all claims, actions, demands,
proceedings and suits brought by any Person other than a party to this
Agreement, whether or not groundless, and losses, damages, liabilities and
reasonable costs and expenses, including reasonable attorneys fees and
disbursements and court costs, arising out of or resulting from any such claim,
action, demand, proceeding or suit.
"INDEMNIFIED PARTY" means any Person entitled to indemnification from
the Seller or the Purchaser pursuant to Section 8.1 or 8.2 of this Agreement.
"INITIAL PERIOD" has the meaning set forth in Section 2.5 of this Sale
Agreement.
"OBLIGOR" means, with respect to any Program Contract, the Persons
obligated to make payments in respect thereto.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President, a Vice President, the Treasurer, the Secretary or any other duly
authorized officer of such Person.
"PERSON" means an individual, partnership, corporation (including a
business trust), joint stock company, limited liability company, trust,
association, joint venture, Governmental Authority or any other entity of
whatever nature.
"PRINCIPAL BALANCE" of a Program Contract means, on any date of
determination, the Amount Financed reduced by that portion of all prior payments
received by the Seller, the Purchaser or the Purchaser's assignee with respect
to such Program Contract allocable to principal as reflected on the records
maintained by the Seller or the Purchaser or the Purchaser's assignee, as the
case may be. In no event, shall the Principal Balance of a Program Contract
include administrative charges, charges for force placed insurance, late payment
fees, NSF fees or other charges that are not considered part of the Amount
Financed.
"PROGRAM CONTRACTS" or "CONTRACTS" means Contracts originated by Seller
pursuant to Article II hereof and in accordance with the Seller's Contract
Finance Program Guidelines.
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"PURCHASED ASSETS" means (a) with respect to each Sold Program
Contract, all of the Seller's right, title and interest in and to (i) the Sold
Program Contract, including all payments on or with respect to such Sold Program
Contract after the Sale Date, (ii) the security interest in the Financed Vehicle
granted by the Obligor(s) to the Dealer pursuant to the Sold Program Contract
and assigned and transferred by the Dealer to the Seller and by the Seller to
the Purchaser pursuant to this Sale Agreement, (iii) any proceeds with respect
to the Sold Program Contract from recourse to the Dealer, if any, under the
related Dealer Agreement, (iv) any documents in the Contract File for such Sold
Program Contract, (v) the proceeds of any insurance policies, warranties,
service contracts and other agreements maintained with respect to the Financed
Vehicle and Sold Program Contract, (vi) all income and proceeds of the foregoing
or relating thereto, and (vii) with respect to each Sold Program Contract, all
of the Seller's rights against the Dealer as described in the Dealer Agreement.
"PURCHASE PRICE" means the purchase price to be paid by the Purchaser
to the Seller for the purchase of an Eligible Program Contract pursuant to
Section 2.3 of this Agreement, determined in accordance with the Fee Schedule.
"PURCHASER TERMINATION EVENT" See Section 7.2 of this Agreement.
"PURCHASER'S CONTROL ACCOUNT" means an account established by the
Purchaser and the Seller at such bank as reasonably determined by the Purchaser,
in which the Purchaser shall deposit part of the Purchase Price, as specified in
Section 2.1(c) of this Agreement, for each Eligible Program Contract purchased
by the Purchaser from the Seller pursuant to this Agreement and from which the
Seller shall make payments of the purchase price for each such Eligible Program
Contract to the Dealer from which the Seller purchased such Eligible Program
Contract. The Purchaser's Control Account shall be in the name of the Purchaser,
and the Seller shall have authority to issued drafts on or authorize payments
from such account only subject to the specific approval of the Purchaser.
"REPURCHASE PRICE" means with respect to any Sold Program Contract that
the Seller is obligated to repurchase, an amount equal to the sum of (a) the
cash Purchase Price paid by the Purchaser for the purchase of such Contract
pursuant to Section 2.3 of this Agreement, plus (b) any accrued but unpaid
interest with respect to such Program Contract, plus (c) amounts expended by the
Purchaser under the Sold Program Contract, and not reimbursed by the Obligor or
some other Person, for collection, repossession and other costs related to the
enforcement of Purchaser's security interest in the Financed Vehicle or
collection of amounts due and payable by the Obligor(s) pursuant to the Sold
Program Contracts, minus (d) all payments received by the Purchaser with respect
to such Program Contract and applied as a reduction of the principal balance
thereof.
"SALE" means a sale of an Eligible Program Contract from the Seller to
the Purchaser pursuant to this Sale Agreement.
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"SALE AGREEMENT" or "AGREEMENT" means this Contract Sale Agreement,
including the Seller's Contract Finance Program Guidelines and all exhibits to
this Sale Agreement.
"SALE ASSIGNMENT" or "ASSIGNMENT" means, with respect to any Sold
Program Contract, the assignment in the form of Exhibit A hereto.
"SALE DATE" means the date on which each Sold Program Contract is sold
pursuant to this Sale Agreement.
"SALES FINANCE COMPANY LICENSE" means a current license issued to the
Seller authorizing it to purchase and sell Contracts in each state in which such
license is required.
"SCHEDULED TERMINATION DATE" means the date on which this Sale
Agreement is scheduled to terminate, as set forth in Section 2.5 of this Sale
Agreement.
"SECURITIES" has the meaning ascribed thereto in Section 5.1(g).
"SELLER'S CONTRACT FINANCE PROGRAM GUIDELINES" means the written
credit, underwriting and purchasing policies and procedures (including Seller's
published rate cards and program guidelines and such criteria as may be
established by the Seller for Dealers to be eligible to offer and sell Contracts
to the Seller) that are reasonably acceptable to the Purchaser and pursuant to
which the Seller shall purchase Contracts from Dealers. Seller's Contract
Finance Program Guidelines shall include, but not be limited to, minimum income
requirements for an Obligor, maximum debt to income and monthly payment to
income ratios for an Obligor, limitations on the amount to be advanced for the
purchase of a Financed Vehicle and related services and products, limitations on
the make, model, age, mileage and condition of a Financed Vehicle, minimum down
payment requirements, in total dollars and as a percentage of the purchase price
for a Financed Vehicle or the amount financed, minimum credit bureau and credit
scores, maximum and minimum payment terms, maximum and minimum interest rates,
maximum amounts to be paid as dealer finance income and/or dealer participation,
minimum and maximum acquisition fees and purchase discounts applicable to the
Seller's purchase of Contracts from Dealers, and such other criteria as the
Seller, with the approval of the Purchaser, shall deem necessary or appropriate.
"SELLER TERMINATION EVENT" See Section 7.1 of this Agreement.
"SERVICER" means National Auto Finance Company, Inc. (the same entity
as the Seller herein and sometimes referred to herein as "NAFI").
"SERVICING AGREEMENT" means that certain Servicing Agreement by and
between National Auto Finance Company, Inc., as the "Servicer," and the
Purchaser, as the "Owner," dated as of the date of this Agreement, as such may
be amended from time to time.
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"SOLD PROGRAM CONTRACT" means a Program Contract sold by the Seller to
the Purchaser pursuant to Section 2.1 of this Sale Agreement.
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"TERM" means the term of this Sale Agreement, as set forth in Section
2.5 of this Sale Agreement.
"TERMINATION EVENT" means a Seller Termination Event or a Purchaser
Termination Event, as described in Sections 7.1 and 7.2 of this Agreement.
"UCC" means the Uniform Commercial Code as in effect in the state where
the Program Contract is originated.
1.2 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including," means "including without
limitation." All section and article references shall be to sections and
articles in this Agreement.
ARTICLE II
SALE OF ELIGIBLE PROGRAM CONTRACTS
2.1 SALE AND PURCHASE OF ELIGIBLE PROGRAM CONTRACTS.
(a) During the term of this Agreement and subject to the terms and
conditions hereof, on each Business Day the Seller shall sell to the Purchaser,
and the Purchaser shall purchase from the Seller, all Eligible Program Contracts
that have been purchased by the Seller from Dealers. Seller shall begin selling,
and Purchaser shall begin purchasing, Eligible Program Contracts commencing on
the Closing Date.
(b) On each Business Day, the Seller shall (i) identify the Eligible
Program Contracts to be sold by the Seller to the Purchaser pursuant to this
Agreement and (ii) deliver to the Purchaser, via overnight delivery service, (A)
a list of the Eligible Program Contracts to be sold
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by the Seller to the Purchaser, containing such information with respect to each
such Contract as may be reasonably requested by the Purchaser, (B) an
acknowledgment from the Servicer, in such form as may be reasonably acceptable
to the Purchaser, stating that upon Purchaser's payment in full of the Purchase
Price the Servicer is holding the Contract File for each such Contract as agent
for the Purchaser, (C) the executed original of each such Contract, (D) an
executed Sale Assignment for each such Contract, in the form of Exhibit A
attached to this Agreement, (E) a copy of the application for the certificate of
title or other evidence of title relating to the Financed Vehicle, (F) a copy of
the Seller's internally prepared checklist for each such Contract indicating
that all required documentation and procedures with respect to the Seller's
purchase of each such Contract from a Dealer have been completed in accordance
with the Seller's Contract Finance Program Guidelines, (G) an invoice prepared
by the Seller for each such Contract setting forth a calculation of the Purchase
Price therefor in accordance with the Fee Schedule attached as Exhibit B hereto,
as such may be amended from time to time by the parties, and (H) with respect to
each such Contract, a copy of the check drawn on the Purchaser's Control Account
made payable to the Dealer from whom the Seller has purchased such Contract, or
such other written authorization, as may be reasonably acceptable to the
Purchaser and the drawee bank, for payment of funds from the Purchaser's Control
Account to the Dealer from whom the Seller has purchased such Contract, in the
amount of the purchase price to be paid by the Seller to the Dealer for the
purchase of such Contract.
(c) Upon receipt of the documents and instruments required to be
delivered by the Seller to the Purchaser pursuant to Section 2.1(b) above, and
subject to the conditions set forth in Section 3.1 of this Agreement, the
Purchaser will consummate the purchase of each such Eligible Program Contract to
be sold by the Seller and will pay the Purchase Price for each such Eligible
Program Contract on the same Business Day, but in no event no later than the
next Business Day. Payment of the Purchase Price for each Eligible Program
Contract shall be made by (i) electronic funds transfer to the Purchaser's
Control Account in the amount of the purchase price to be paid by the Seller to
the Dealer for such Eligible Program Contract, as indicated by the information
provided by the Seller to the Purchaser pursuant to Section 2.1(b)(ii)(F) above,
and (ii) electronic funds transfer to such account as may be designated by the
Seller in writing to the Purchaser the Fee and additional amounts as the Seller
may be entitled pursuant to the Fee Schedule. In addition, simultaneous with the
transfer of funds to the Purchaser's Control Account as payment of part of the
Purchase Price for an Eligible Program Contract, the Purchaser will instruct the
drawee bank at which the Purchaser's Control Account is held to honor the
Seller's draft or other authorization for payment provided by the Seller to the
Purchaser pursuant to Section 2.1(b)(ii)(F) above. Notwithstanding the
provisions of this Section 2.1, Purchaser may decline to purchase an Eligible
Program Contract, if Purchaser determines in good faith that all of the
conditions precedent to the Purchaser's obligation to purchase such Eligible
Program Contract, as set forth in Section 3.1 of this Agreement, have not been
satisfactorily completed. The fact that the Purchaser shall have consummated the
purchase of an Eligible Program Contract shall not be deemed a waiver by the
Purchaser of any of the requirements of Section 3.1 of this Agreement or any
breach by the Seller of any covenant, representation or warranty with respect to
such Eligible Program Contract.
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(d) The sale by the Seller of each Eligible Program Contract shall be
without recourse by the Purchaser and its successors and assigns against Seller,
except to the extent specifically provided for in this Agreement.
(e) Prior to each Sale Date, Purchaser shall have the right to review
the Electronic Contract Information for each Eligible Program Contract proposed
to be sold by Seller. Purchaser may reject any Contract that in Purchaser's good
faith judgment does not materially conform to any representation or warranty
contained in Article IV. Purchaser shall have the right, in its sole discretion,
to refuse to purchase any Eligible Program Contract for which a letter of
guaranty has been provided by a Dealer to any financing entity or any Eligible
Program Contract upon which any financing entity has exercised any rights or
asserted any claims against any Dealer bonds.
2.2 PURCHASER'S ACCESS TO AND REVIEW OF INFORMATION RELATING TO OFFERED
PROGRAM CONTRACTS.
For purposes of Purchaser's review of the Electronic Contract
Information for any Eligible Program Contract, Seller shall afford Purchaser,
its counsel, accountants, and other representatives full access to the
Electronic Contract Information related to such Eligible Program Contract and
the books and records of Seller relating to such Eligible Program Contract, and
to the extent necessary to evaluate the purchase of any Eligible Program
Contract, Seller shall cause its officers and employees to provide such
assistance and to furnish such reasonably available information in respect to
such Eligible Program Contracts as Purchaser may from time to time request.
2.3 CONVEYANCE OF SOLD PROGRAM CONTRACTS BY SELLER.
(a) Following payment of the Purchase Price by the Purchaser and
execution and delivery of the Sale Assignment by the Seller, the ownership of
each Sold Program Contract specified in such Sale Assignment and the Purchased
Assets shall be vested in the Purchaser, and the Seller shall not take any
action inconsistent with such ownership and shall not claim any ownership
interest in any such Sold Program Contract.
(b) The Seller shall indicate in its records that ownership of each
Sold Program Contract and the Purchased Assets is held by the Purchaser or its
assignee. In addition, the Seller shall respond to any inquiries with respect to
ownership of any Sold Program Contract by stating that it is no longer the owner
of such Sold Program Contract and that ownership of such Sold Program Contract
is held by Purchaser or its assignee. Seller agrees to hold in trust for
Purchaser any cash payments received in connection with a Sold Program Contract
and shall remit such funds by wire transfer or in the form received within
twenty-four (24) hours after their receipt to an account established by
Purchaser.
(c) The Seller agrees that, from time to time, at its expense, it will
promptly execute and deliver all further instruments, notices and documents, and
take all further action, that may
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be necessary or appropriate, or that the Purchaser may reasonably request, in
order to perfect, protect or more fully evidence the transfer of ownership of
the Sold Program Contracts to the Purchaser or its assignee or to enable the
Purchaser or its assignee to exercise or enforce any of its rights hereunder or
under any Sale Assignment. Without limiting the generality of the forgoing, the
Seller will promptly, upon the request of the Purchaser, execute and file or
cause to be filed such financing or continuation statements, certificates of
title or other title documentation in support of the lien of the Purchaser's
assignee in the related Automobile, or amendments thereto or assignments
thereof. The Seller hereby authorizes the Purchaser to file one or more
financing or continuation statements, and amendments thereto and assignments
thereof, relating to all or any of the Sold Program Contracts and proceeds
thereof without the signature of the Seller. Seller also hereby constitutes
Purchaser, its permitted successors and assigns, as Seller's true and lawful
attorneys, with full power of substitution, in the name of Seller or otherwise,
whether in relation to tangible or intangible property, to transfer all right,
title and interest in and to any Financed Vehicle, to execute and deliver any
and all certificates, instruments and other documents necessary to effect such
transfer of title, to endorse and collect any checks or other payments owed to
Purchaser under the Sold Program Contract, to discharge any liens on Financed
Vehicles and to modify or change, or request modification or change of, the loss
payee or additional insured endorsement with respect to any insurance policy on
a Financed Vehicle. Seller also grants Purchaser the right to use its name to
collect from Dealers refundable insurance and warranty premiums included in the
Amount Financed. Seller will provide Purchaser with its logo and any applicable
trademarks for use on documents seeking collection of these amounts. Seller
agrees that the foregoing powers are irrevocable notwithstanding any reason
whatsoever, including, without limitation, Seller's dissolution, merger,
consolidation or any other change in Seller. Seller will, at Purchaser's
reasonable request, execute appropriate separate instruments evidencing the
forgoing powers. Purchaser will indemnify and hold Seller harmless from any
claims or liabilities arising from Purchaser's exercise of the powers granted in
this Section. A copy of that Power of Attorney is attached hereto as Exhibit D.
2.4 INTENDED CHARACTERIZATION OF EACH TRANSACTION; GRANT OF SECURITY
INTEREST IN FAVOR OF PURCHASER.
It is the intention of the parties hereto that each transfer of Sold
Program Contracts to be made hereunder shall constitute a purchase and sale and
not a loan. In the event, however, that a court of competent jurisdiction were
to hold that the transaction evidenced hereby constitutes a loan and not a
purchase and sale, or a Governmental Authority determines that the Purchaser may
not purchase or acquire Program Contracts, it is the intention of the parties
hereto that this Sale Agreement shall constitute a security agreement under
applicable law and that the Seller shall be deemed to have granted to the
Purchaser as of the date hereof a first priority security interest in all of the
Seller's right, title and interest in, to and under each Sold Program Contract,
and all proceeds thereof.
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2.5 TERM.
The Term of this Agreement shall be for an initial period (the "Initial
Period") commencing on the date hereof and ending on the last day of the third
full calendar month following the Closing Date (such date, as such may be
extended pursuant hereto, is hereinafter referred to as the "Scheduled
Termination Date"). The Term of this Agreement shall be extended for an
additional three (3) calendar months, unless the Purchaser or the Seller shall
give written notice to the other party of its desire to terminate this Agreement
at least fifteen (15) days prior to a Scheduled Termination Date. Either the
Purchaser or the Seller shall be allowed to terminate this Agreement and its
respective obligations under this Agreement (not including its indemnification
obligations and such other obligations as shall survive termination of this
Agreement, as specifically set forth herein) upon the earlier of (i) the
Scheduled Termination Date, (ii) the passage of any applicable period of remedy
and notice pursuant to Article VII, or (iii) after the Initial Period, the
giving to the other party of at least thirty (30) days advance written notice of
its desire to terminate this Agreement.
ARTICLE III
CONDITIONS PRECEDENT TO EFFECTIVENESS
OF SALE AGREEMENT AND TO EACH SALE
3.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF PURCHASER.
(a) The obligation of the Purchaser to purchase Eligible Program
Contracts from the Seller pursuant to this Agreement is subject to the
conditions precedent that the Purchaser shall have satisfactorily completed its
due diligence review of the Seller and its operations and that the Purchaser
shall have received the following, in form and substance satisfactory to the
Purchaser, by the Closing Date, or such other date as may be specified for the
receipt of such document or instrument by the parties. In the event Seller has
not provided the following as set forth herein, a Seller Termination Event shall
automatically occur.
(i) The articles of incorporation of the Seller certified, as
of a date no more than ten (10) days prior to the Closing Date, by the Secretary
of State of Delaware.
(ii) A good standing certificate from the State of Delaware,
dated no later than ten (10) days prior to the Closing Date, and within twenty
(20) days after the Closing Date ,from each state in which the Seller is
required to qualify to do business as a foreign corporation, each of which shall
be dated no later than thirty (30) days prior to the actual delivery date;
(iii) A list of states in which the Seller is qualified to
engage in business and has obtained a Sales Finance Company License or a
collection agency license, and a copy of each Sales Finance Company License and
collection agency license;
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(iv) A power of attorney from the Seller, in substantially the
form of Exhibit D attached hereto, which power shall entitle the Purchaser
certain irrevocable rights to effect the transfer of Sold Program Contracts, to
effect the transfer and sale of the Financed Vehicles securing the Sold Program
Contracts, to effect the transfer and release of any lien on any such Financed
Vehicle, to recover proceeds under any Insurance Policy relating to the Sold
Program Contracts, and to effect the sale of and recovery of proceeds with
respect to the Purchased Assets;
(v) A certificate of the Secretary or Assistant Secretary of
the Seller (on which certificate the Purchaser may conclusively rely until such
time as it shall receive from the Seller a revised certificate meeting the
requirements of this subsection) certifying as of the Closing Date: (A) the
names and true signatures of the officers authorized on its behalf to sign this
Sale Agreement, the power of attorney and any Sale Assignment, (B) a copy of the
Seller's articles of incorporation and bylaws, and (C) a copy of the resolutions
of the board of directors of the Seller approving this Sale Agreement and the
transactions contemplated hereby;
(vi) An Officer's Certificate in the form of Exhibit E hereto;
(vii) Acknowledgment copies of proper financing statements
(Form UCC-1), duly filed with the appropriate Governmental Authorities, in
respect of Sold Program Contracts naming the Seller as the debtor and the
Purchaser as the secured party, or other similar instruments or documents as may
be necessary or, in the opinion of the Purchaser, desirable under the UCC of all
appropriate jurisdictions or any comparable law to perfect the Purchaser's
ownership interests in all Sold Program Contracts;
(viii) The favorable Opinion of Seller's outside counsel
satisfactory to the Purchaser, in substantially the form of Exhibit F attached
to this Agreement;
(ix) The Seller's Contract Finance Program Guidelines;
(x) A list of all Dealers, separated by state in which each
Dealer is located, from which the Seller has purchased in any calendar month
during the period January 1999 through January 2000 greater than one-half
percent (0.5%) of the total dollar amount of Automobile retail installment sale
contracts purchased during any such month, which list shall include, for each
such calendar month during such period, the number of such Contracts purchased
and the dollar amount of such Contracts purchased;
(xi) A list and detailed description of material pending and
threatened litigation to which the Seller or any of its Affiliates or assets may
be subject;
(xii) A copy of the balance sheet and related statements of
income and retained earnings and changes in financial position of the Seller and
its consolidated Subsidiaries for the year ended December 31, 1998, and the
calendar quarter ended September 30, 1999, which either shall be audited
statements or shall be certified by the Chief Financial Officer of the Seller as
being
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true and correct and fairly reporting the financial condition and results of
operations of the Seller and its consolidated Subsidiaries at and for the year
and calendar quarter, respectively, then ended in accordance with generally
accepted accounting principles consistently applied, and stating that the Seller
and its Subsidiaries are paying their debts as they mature, and neither the
Seller nor any Subsidiary has incurred debts beyond its ability to pay as they
mature; and
(xiii) Such other approvals, consents, opinions, documents and
instruments, as the Purchaser may reasonably request in writing prior to the
Closing Date, to be delivered by the Seller to the Purchaser at such time as
reasonably requested by the Purchaser.
Upon the receipt by the Purchaser of the items referred to in Paragraphs (i)
through (xiii) of this Section 3.1(a) that are required to be delivered by the
Seller to the Purchaser on or prior to the Closing Date, the Purchaser shall
notify the Seller in writing that the conditions precedent to the effectiveness
of this Sale Agreement have been satisfied and that this Sale Agreement is
effective as of the date and time specified in such notice.
(b) (i) Each Sale from the Seller to the Purchaser shall be subject to
the following additional conditions precedent that on the related date of such
Sale, the Seller shall have certified in the related Sale Assignment executed by
the Seller and delivered to the Purchaser that (except as specifically disclosed
in such Sale Assignment or in writing and specifically consented to by the
Purchaser, in its sole discretion):
(A) The representations and warranties of the Seller set forth
in Sections 4.1 and 4.2 are true and correct on and as of such date, before and
after giving effect to such Sale and to the application of the proceeds
therefrom, as though made on and as of such date;
(B) No event has occurred which, with notice or the passage of
time, would constitute a Seller Termination Event;
(C) The Seller is in compliance with each of its covenants set
forth herein;
(D) The Scheduled Termination Date has not occurred; and
(E) The Program Contract described in the Assignment and to
which the Assignment relates is an Eligible Program Contract;
(ii) The Seller shall have taken such other actions, including
delivery to the Purchaser of such approvals, consents, opinions, additional
information with respect to the Seller, documents and instruments, as the
Purchaser may reasonably request; and
(iii) The Purchaser or the Servicer acting as agent for and on behalf
of the Purchaser shall have received from the Seller, in satisfactory form, the
following:
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(A) The Contract File for each and every Sold Program
Contract;
(B) The Seller's internally prepared checklist indicating that
all required documentation and procedures with respect to the Seller's purchase
of the Eligible Program Contract from a Dealer have been completed in accordance
with the Seller's Contract Finance Program Guidelines;
(C) The buy data for each and every Sold Program Contract
setting forth all amounts paid (and with respect to Dealer participation, to be
paid) by the Seller to the Dealer, together with such other information as may
be reasonably requested by the Purchaser to evidence that the Dealers have been
paid in full (excepting Dealer participation, which may be paid in installments)
by the Seller for each and every Sold Program Contract;
(D) A power of attorney from each named lienholder, if any
other than Seller individually, on any Financed Vehicle, which power shall
entitle the Seller, with full right of substitution, certain irrevocable rights
to effect the transfer of the Financed Vehicle or any lien on the Financed
Vehicle; and
(E) (1) For the first Sale Date occurring after the
forty-fifth (45th) day after the end of a calendar quarter, a balance sheet and
related statement of income, in conformity with the requirements of Section
3.1(a)(xii), at and for the year-to-date period ending on the last day of the
calendar quarter immediately preceding such Sale Date; (2) within one hundred
twenty (120) days after the end of the Seller's fiscal year, commencing with the
fiscal year ending December 31, 1999, a balance sheet as at the end of such year
and the related statements of income and retained earnings and changes in
financial position for the Seller and its consolidated Subsidiaries for such
year, setting forth in each case in comparative form the figures for the
previous year, accompanied by an audit report of a firm of independent public
accountants of recognized national standing and membership of AICPA stating that
such firm has audited the financial statements of the Seller and its
consolidated Subsidiaries and issued its report thereon and that such audit was
made in accordance with generally accepted auditing standards and included such
tests of the accounting records and such other auditing procedures as such firm
considered necessary in the circumstances and that the financial statements of
the Seller and its consolidated Subsidiaries report the financial condition and
results of operations of the Seller and its consolidated Subsidiaries at and for
the years then ended in accordance with generally accepted accounting principles
consistently applied, without a qualification arising out of the scope of the
audit; and (3) with the delivery of each such financial statement, a certificate
from the Chief Financial Officer of the Seller stating that the Seller and its
Subsidiaries are paying their debts as they mature, neither the Seller nor any
Subsidiary has incurred debts beyond its ability to pay as they mature, and
there has not occurred any material adverse change in the financial condition or
results of operations of the Seller or any Subsidiary since the date of the most
recent financial statements delivered by the Seller to the Purchaser pursuant to
either Section 3.1(a)(xii) of this Agreement or this Section 3.1(b)(iii)(E).
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE SELLER
4.1 GENERAL REPRESENTATIONS AND WARRANTIES OF SELLER.
The Seller represents and warrants to the Purchaser, as of the date
hereof and on each subsequent date on which a Sale is made, as follows:
(a) The Seller is a corporation duly organized, validly existing and
in good standing under the laws of Delaware, is duly qualified to do business
and is in good standing in every jurisdiction in which the nature of its
business requires it to be so qualified and which failure to qualify could have
a material adverse affect on Seller;
(b) The Seller has the power and authority to own and convey all of its
properties and assets and to execute and deliver this Sale Agreement and to
perform the transactions contemplated hereby;
(c) The execution, delivery and performance by the Seller of this Sale
Agreement and the transactions contemplated hereby, (i) have been duly
authorized by all necessary action on the part of the Seller, (ii) do not
contravene or cause the Seller to be in default under (A) the Seller's articles
of incorporation and bylaws, (B) any contractual restriction with respect to any
Debt of the Seller or contained in any indenture, loan or credit agreement,
lease, mortgage, security agreement, bond, note or other agreement or instrument
binding on or affecting the Seller or its property or (C) any law, rule,
regulation, order, writ, judgment, award, injunction or decree applicable to,
binding on or affecting the Seller or its property, and (iii) do not result in
or require the creation of any Adverse Claim;
(d) This Sale Agreement has been, and each Sale Assignment executed and
delivered by the Seller will have been, when so executed and delivered, duly
executed and delivered on behalf of the Seller;
(e) No consent of, or other action by, and no notice to or filing with,
any Governmental Authority or any other party, is required for the due
execution, delivery and performance by the Seller of this Sale Agreement or for
the perfection of or the exercise by the Purchaser of any of its rights or
remedies hereunder, each of which has been obtained and complete copies of which
have been provided to the Purchaser;
(f) This Sale Agreement and each Sale Assignment delivered by the
Seller is (or will be if not executed and delivered as of the date hereof) the
legal, valid and binding obligation of the Seller enforceable against the Seller
in accordance with its respective terms;
(g) There is no pending or threatened action, suit or proceeding,
against or affecting the Seller, its Affiliates, its officers, or the property
of the Seller, in any court or tribunal, or
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before any arbitrator of any kind or before or by any Governmental Authority (i)
asserting the invalidity of this Sale Agreement, (ii) seeking to prevent the
sale and assignment of any Program Contract or the consummation of any of the
transactions contemplated thereby, (iii) seeking any determination or ruling
that might materially and adversely affect (A) the performance by the Seller of
this Sale Agreement, (B) the validity or enforceability of this Sale Agreement,
(C) any Program Contract or (4) the federal income tax attributes of the Sales.
(h) No injunction, writ, restraining order or other order of any
material nature adverse to the Seller or the conduct of its business or which is
inconsistent with the due consummation of the transactions contemplated by this
Sale Agreement has been issued by a Governmental Authority;
(i) No defaulted Debt exists under any instrument or agreement
evidencing, securing or providing for the issuance of Debt of the Seller;
(j) The principal place of business and chief executive office of the
Seller are located at the address of the Seller set forth in the designated
space beneath its signature line in this Sale Agreement and, there are now no,
and during the past four months there have not been, any other locations where
the Seller is located (as that term is used in the UCC in the state of such
location) except that, with respect to such changes occurring after the date of
this Sale Agreement, as shall have been specifically disclosed to the Purchaser
in writing;
(k) The legal name of the Seller is as set forth at the beginning of
this Sale Agreement and the Seller has not changed its name since February 1,
1997, and during such period, the Seller did not use, nor does the Seller now
use any trade-names, fictitious names, assumed names or "doing business as"
names other than "Auto Credit Clearing House" or "ACCH," except with respect to
such changes occurring after the date of this Sale Agreement, as shall have been
specifically disclosed to the Purchaser in writing;
(l) The Seller is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Sale Agreement; the Seller is
paying its debts as they mature; the Seller has not sold any Program Contract to
the Purchaser with intent to hinder, delay or defraud any entity to which the
Seller was, or may become, after the date that such transfer was made, indebted;
the Seller's sale of any Program Contract to the Purchaser has been and will be
made for reasonably equivalent value and fair consideration; the Seller has not
incurred debts beyond its ability to pay as they mature; and the Seller, after
giving effect to the transactions contemplated by this Sale Agreement, will have
adequate assets to conduct its business in the foreseeable future;
(m) For federal income tax, reporting and accounting purposes, the
Seller will treat the sale of each Sold Program Contract sold pursuant to this
Sale Agreement as a sale, or absolute assignment, of its full right, title and
ownership interest in such Sold Program Contract to the
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Purchaser, and the Seller has not and will not account for or treat the
transactions contemplated by this Sale Agreement in any other manner;
(n) The Seller has and maintains all permits, licenses, authorizations,
registrations, approvals and consents of Governmental Authorities (including,
without limitation, Sales Finance Company Licenses, if any, necessary for (i)
the activities and business of the Seller as currently conducted and as proposed
to be conducted, (ii) the ownership, use, operation and maintenance of its
properties, facilities and assets, (iii) the performance by the Seller of this
Sale Agreement, and (iv) the performance by the Seller of its duties,
responsibilities and obligations under the Servicing Agreement;
(o) The Seller has filed on a timely basis all tax returns (federal,
state, and local) required to be filed and has paid or made adequate provisions
for the payment of all taxes, assessments and other governmental charges due
from the Seller;
(p) To the best knowledge of the Seller, each pension plan or profit
sharing plan to which the Seller is a party has been fully funded in accordance
with the obligations of the Seller set forth in such plan;
(q) To the best knowledge of the Seller, there has not occurred any
event which has or is reasonably likely to have a material adverse effect on the
Seller's ability to perform its obligations under this Sale Agreement;
(r) The consolidated balance sheet of the Seller and its consolidated
Subsidiaries as of December 31, 1998, and the related statements of income and
shareholders' equity of the Seller and its consolidated Subsidiaries for the
fiscal year then ended, which have been certified by an independent certified
public accountant, together with all quarterly reports with respect to completed
fiscal quarters occurring after such fiscal year until September 30, 1999,
copies of which have been furnished to the Purchaser, fairly present the
consolidated financial condition, business and operations of the Seller and its
consolidated Subsidiaries as at such dates and the consolidated results of
operations of the Seller and its consolidated Subsidiaries for the periods ended
on such dates, all in accordance with generally accepted accounting principles
consistently applied, and since September 30, 1999, there has not occurred any
material adverse change in the financial condition, business or operations of
the Seller or any Subsidiary, except as specifically disclosed by the Seller to
the Purchaser in a writing delivered prior to or simultaneously with its
execution and delivery of this Agreement;
(s) The Seller has valid business reasons for selling its interests in
the Sold Program Contracts rather than obtaining a loan with the Sold Program
Contracts as collateral;
(t) The Seller has not disclosed and will not disclose to any Dealer or
Obligor under an Eligible Program Contract the existence of any insurance which
has been or may be purchased by the Purchaser to protect its interests under the
Eligible Program Contract;
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(u) All information heretofore or hereafter furnished with respect to
the Seller to the Purchaser in connection with any transaction contemplated by
this Sale Agreement is and will be true and complete in all material respects
and does not and will not omit to state a material fact necessary to make the
statements contained therein not misleading.
4.2 REPRESENTATIONS AND WARRANTIES OF SELLER AS TO THE CONTRACTS.
With respect to each Program Contract sold pursuant to this Sale
Agreement, Seller represents and warrants to Purchaser as follows on such Sale
Date:
(a) Each Program Contract (i) arises from the sale of an Automobile as
to which delivery and acceptance has been fully performed by the Obligor and the
Dealer party thereto, (ii) arises from the normal course of the Dealer's
business, (iii) the Obligor of which is a natural person residing in any state,
(iv) the Obligor of which is not a government or a governmental subdivision or
agency, (v) the Obligor of which is not a minor and has full power and capacity
to enter into such Program Contract, (vi) is denominated and payable in dollars
in the United States, (vii) is in full force and effect and constitutes the
legal, valid and binding obligation of the Obligor in accordance with its terms,
(viii) is not subject to any dispute, litigation, counterclaim or defense, or
any offset, right of offset, or any exercisable right of rescission, (ix) has an
original term to maturity of not less than 24 and not more than 72 months, (x)
provides for equal monthly payments that will cause the Program Contract to
fully amortize during its term, (xi) has an APR of not less than the lesser of
(A) the rate as determined in accordance with the Seller's Contract Finance
Program Guidelines or (B) the maximum interest rate permitted by law with
respect to such Program Contract, (xii) together with the contract applicable
thereto, does not contravene any requirements of law applicable thereto, (xiii)
is a Program Contract with respect to which all required consents, approvals and
authorizations have been obtained, (xiv) is a Program Contract secured by a
purchase money security interest in the Financed Vehicle that has been recorded
or applied for in the name of the Seller and assigned to the Purchaser, which
security interest is or is reasonably expected to be in full force and effect,
in each case, subject to no prior or equal liens, claims or encumbrances, (xv)
was purchased by the Seller using and conforming to the Seller's Contract
Finance Program Guidelines, (xvi) requires the Seller to be named as loss payee
or beneficiary (as applicable) under an insurance policy with respect to the
Financed Vehicle related to such Program Contract and entitles the Seller to the
benefits of such insurance policy, (xvii) requires no additional action by the
Seller before becoming a valid and binding obligation of the Obligor thereunder,
enforceable against such Obligor in accordance with its terms, (xviii) relates
to a Financed Vehicle with respect to which the Obligor made at least the
minimum down payment as specified in the Seller's Contract Finance Program
Guidelines and in the form and manner described in the Seller's Contract Finance
Program Guidelines, including, but not limited to a down payment that is made
with the Obligor's own cash money and that is not borrowed, deferred (except for
deferred payments that are allowed by law and disclosed as deferred in the
Contract) or obtained as a cash advance on a credit card or other open line of
credit, and (xix) complies in all respects with the requirements of the
Purchaser's Contract Requirements set forth in Exhibit C attached to this
Agreement.
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(b) Each Program Contract was originated by a Dealer that had all
necessary licenses and permits to originate Program Contracts in the state where
such Dealer was located, was fully and properly executed by the parties thereto,
was purchased by the Seller from such Dealer under an existing Dealer Agreement
with the Seller, and was validly assigned by the Dealer to the Seller.
(c) Each Program Contract contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for
realization against the collateral security.
(d) Each Program Contract was originated by a Dealer to an Obligor and
was sold by the Dealer to the Seller without any fraud or material
misrepresentation on the part of such Dealer.
(e) Each Program Contract complied at the time it was purchased by the
Seller, including the sale of any related physical damage, credit life and
credit accident and death insurance, Gap or debt cancellation coverage, and any
extended service contract at the time it was originated or made, and as of the
Sale Date in all material respects with all requirements of applicable federal,
state and local laws and regulations, including usury laws, the federal
Truth-in-Lending Act, the Equal Credit Opportunity Act, the Fair Credit
Reporting Act, the Magnuson-Moss Warranty Act, the Federal Reserve Board's
Regulations B and Z, the Fair Debt Collection Practices Act, the Federal Trade
Commission Act, the Rees-Levering Act, and state adaptations of the National
Consumer Act and of the Uniform Consumer Credit Code, other consumer credit laws
and equal credit opportunity and disclosure laws and other applicable legal
requirements.
(f) The Program Contract has not been satisfied, subordinated or
rescinded, and the related Financed Vehicle has not been released from the lien
granted by such Program Contract, in whole or in part.
(g) No provision of any Program Contract has been waived, altered,
extended, revised or otherwise modified in any respect since its origination. No
Program Contract has been modified as a result of the Soldier's and Sailor's
Relief Act of 1940, as amended.
(h) The title certificate for each Financed Vehicle either (A) shows
the Purchaser or the Seller or their nominee named as the original secured party
under the applicable Program Contract, or (B) has been applied for in the name
of the Purchaser or Seller or their nominee. If the Program Contract was
originated in a state in which a filing or recording is required of the secured
party to perfect a security interest in motor vehicles, such filing or recording
has been duly made to show the Purchaser or Seller or their nominee named as the
original secured party under the related Program Contract. Immediately after the
sale, transfer and assignment thereof to the Purchaser, each Program Contract
will be secured by an enforceable and perfected security interest in the
Financed Vehicle in favor of the Purchaser or Seller as secured party, which
security interest is prior to all other liens and security interests in such
Financed Vehicle (except, as to priority, for any lien for taxes, labor or
materials affecting an Automobile that attach to the Financed Vehicle after the
sale of the Program Contract) and which lien is not a preference under
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Section 544 of the United States Bankruptcy Code. For purposes of this section,
Seller also represents and warrants that the lien, as applied for pursuant to
the requirements herein, will be obtained in a timely manner such as not to
adversely affect the interests of Purchaser in the Financed Vehicle.
(i) To the best of Seller's knowledge, no liens or claims have been
asserted or filed for taxes, work, labor or materials relating to the Financed
Vehicle that are liens prior to, or equal or coordinate with, the security
interest in the Financed Vehicle granted by the applicable Program Contract, and
the Obligor has good and marketable title to the Financed Vehicle subject to no
liens other than the security interest under the Program Contract.
(j) Upon sale hereunder, such Program Contract has not been sold,
transferred, assigned, offered for purchase, or pledged by the Seller to any
Person other than the Purchaser; the Seller has good and marketable title to
such Program Contract free and clear of all liens and rights of others claiming
by or through the Seller (other than the rights of the Obligor to the Financed
Vehicle thereunder) and, following the Sale Date, the Purchaser shall have good
and marketable title to such Program Contract, free and clear of all liens and
rights of others claiming by or through the Seller (other than the rights of the
Obligor to the Financed Vehicle thereunder).
(k) Such Program Contract has not been purchased by the Seller from a
Dealer in, nor is it subject to the laws of, any jurisdiction under which the
sale, transfer and assignment of such Program Contract pursuant to this Sale
Agreement is unlawful, void or voidable. No agreement has been entered into with
any Obligor that prohibits, restricts or conditions the assignment of any
portion of the Program Contract.
(l) There is only one originally executed contract for each Program
Contract.
(m) Such Program Contract constitutes "chattel paper" as defined in the
UCC.
(n) Such Program Contract has not been included in a "fleet sale"
(i.e., a sale to a single Obligor of more than five (5) vehicles).
(o) All amounts due and payable by the Seller to the Dealer under the
Dealer Agreement with respect to such Program Contract have been paid, and no
Dealer has any rights in, or claims against, the Program Contract.
(p) The Seller has indicated in its computer files that such Program
Contract has been sold to the Purchaser.
(q) The Seller has done nothing to convey any right to any Person that
would result in such Person having a right to payments due under such Program
Contract or otherwise to impair the rights of the Purchaser in any Program
Contract or the proceeds thereof.
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(r) No Program Contract is assumable by another Person in a manner that
would release the Obligor thereof from such obligor's obligations to the
Purchaser with respect to such Program Contract.
(s) No selection procedures adverse to the Purchaser have been utilized
in selecting such Program Contract from all other Program Contracts purchased
and/or owned by the Seller.
(t) To the best of Seller's knowledge, as of the Sale Date, no Obligor
is subject to a current bankruptcy proceeding. As of the Sale Date, the Program
Contract is current with regard to payment and is not otherwise in default
according to its terms and conditions.
(u) Each Program Contract is a fully amortizing simple interest
receivable that provides for level monthly payments which, if made when due,
shall fully amortize the Amount Financed over the original term.
4.3 SURVIVAL OF SELLER'S REPRESENTATIONS AND WARRANTIES
It is understood and agreed that the representations and warranties set
forth in this Article IV, measured as of the dates made, shall survive the sale
of the Sold Program Contracts to the Purchaser and any assignment of a Sold
Program Contract by the Purchaser to any subsequent assignee and shall continue
so long as any Sold Program Contract shall remain outstanding with regard to
payment thereunder and shall remain subject to any outstanding terms and
conditions. The Seller acknowledges that the Purchaser may assign all of its
right, title and interest in and to the Sold Program Contracts and its right to
exercise the remedies created by this Article IV hereof to a subsequent
assignee. The Seller agrees that, upon such assignment, any subsequent assignee
may enforce directly, without joinder of the Purchaser, the repurchase
obligations of the Seller set forth in Section 4.4 with respect to breaches of
the representations and warranties set forth in Sections 4.1 and 4.2 hereof.
4.4 REPURCHASE OBLIGATIONS OF SELLER.
(a) Upon discovery by Seller or Purchaser of (i) a breach of any
representation or warranty of Seller set forth in Section 4.1 or 4.2 hereof that
materially adversely affects the value of any Sold Program Contract, the
collectibility of payments or proceeds under or with respect to any Sold Program
Contract, the interest of Purchaser in any Sold Program Contract or the
properties or rights with respect to any Sold Program Contract conveyed by the
Seller to the Purchaser pursuant to this Agreement, (ii) a material breach of
any covenant or obligation of Seller with respect to any Sold Program Contract
set forth in Article II or Article V, or (iii) a material data error with
respect to a Sold Program Contract caused by or resulting from the boarding or
servicing of the Sold Program Contract prior to the Sale Date, the party
discovering such breach shall give prompt written notice to the other (the
Purchaser agrees to use reasonable efforts to provide the Seller any such
written notice within forty-five (45) days after the Purchaser shall have
learned of any such breach or circumstance), and Seller shall be obligated to
cure such breach in
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all material respects within thirty (30) days after its receipt of such notice.
If such breach is not cured by Seller within such period, then, in such event,
within five (5) days after Purchaser's delivery to Seller of written demand,
Seller shall repurchase the related Sold Program Contract by delivering to or
upon the order of Purchaser an amount equal to the Repurchase Price.
(b) Upon such repurchase and the payment of the Repurchase Price, the
Purchaser or any subsequent assignee shall execute and deliver an assignment and
the Purchaser or any subsequent assignee shall assign to Seller, all of the
Purchaser's or any subsequent assignee's right, title and interest in such
repurchased Sold Program Contract, without recourse, representation or warranty,
except as to the absence of liens, charges or encumbrances created by or arising
as a result of actions of the Purchaser or any subsequent assignee, other than
liens, charges or encumbrances created or arising out of this Sale Agreement.
The Purchaser and any subsequent assignee agree that it will promptly execute
and deliver and take all further action that may be necessary or appropriate, or
that the Seller may reasonably request, in order to perfect, protect or more
fully evidence the transfer of ownership of such Sold Program Contract to Seller
pursuant to Section 4.4(a). In the event Seller does not repurchase a Sold
Program Contract as required by subsection (a) above, any action taken by
Purchaser to sell or liquidate a Sold Program Contract or the related Financed
Vehicle in good faith and in a commercially reasonable manner shall be final and
conclusively binding upon Seller in determining the amount payable by Seller to
Purchaser under Section 4.4(a) hereof. If the Purchaser shall proceed, in good
faith, with the liquidation of a Sold Program Contract or the repossession
and/or liquidation of the related Financed Vehicle prior to the Seller's
repurchase of the Sold Program Contract as required by subsection (a) above,
then Seller shall reimburse the Purchaser for reasonable out-of-pocket expenses
incurred by the Purchaser in connection with such process, which, if not
included in the calculation of the Repurchase Price pursuant to its definition
as set forth in Section 1.1 hereof, shall be in addition to the Repurchase Price
payable by Seller.
ARTICLE V
SPECIAL COVENANTS OF THE SELLER
5.1 ADDITIONAL COVENANTS OF SELLER.
During the Term of this Sale Agreement, the Seller shall, unless the
Purchaser shall otherwise consent in writing:
(a) Comply in all material respects with all applicable laws, rules,
regulations and orders with respect to it, its business and properties and all
Program Contracts;
(b) Preserve and maintain its existence, rights, franchises and
privileges in the jurisdiction of its organization and all necessary Sales
Finance Company Licenses;
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(c) Cause to be delivered to the Purchaser within fifteen (15) days
after any extension of the Scheduled Termination Date (i) an Officer's
Certificate of the Seller in the form of Exhibit E, dated the date of such
delivery; (ii) a Secretary's Certificate of Seller in the form required by
Section 3.1(a)(v) hereof, dated the date of such delivery; and (iii) an opinion
of counsel, in form and substance satisfactory to the Purchaser, reaffirming as
of the date of its delivery the opinion of counsel with respect to the Seller
and delivered to the Purchaser on the Closing Date pursuant to Section
3.1(a)(viii) hereof;
(d) Furnish, or cause to be furnished, to the Purchaser, as soon as
available the financial statements of Seller required to be delivered pursuant
to Section 3.1(b)(iii)(E) of this Agreement;
(e) Promptly after the occurrence thereof, provide written notice to
the Purchaser of any pending or threatened action, suit or proceeding of a type
described in Section 4.1(g);
(f) As soon as possible and in any event within five (5) days after the
occurrence of a Seller Termination Event (including, without limitation, a
material adverse change in the financial condition of the Seller) or each event
which, with the giving of notice or lapse of time or both, would constitute a
Seller Termination Event, the statement of an officer of the Seller setting
forth complete details of such Seller Termination Event and the action which the
Seller has taken, is taking and proposes to take with respect thereto;
(g) Promptly provide and verify the accuracy of any information
concerning the Seller required for any offering document with respect to the
sale of asset-backed securities backed by the Sold Program Contracts (the
"Securities"), which may include information relating to the Seller and its
operations in connection with the origination of Program Contracts, and such
information may be published in such offering documents and relied upon by the
Purchaser and the assignee of the Purchaser;
(h) Acquire, maintain, and provide to the Purchaser such information as
the Purchaser may reasonably require (at least semi-annually) from time to time
regarding any Dealer whose Automobile sales are financed or are to be financed
by Program Contracts which are sold or to be sold hereunder and shall represent
that such information is, to the best knowledge of the Seller, true and correct.
To the extent Seller has the right, by agreement or otherwise, to inspect or
audit the books and records of any Dealer, the Seller shall allow the Purchaser,
at its expense, to exercise such right on the Seller's behalf;
(i) Maintain, at its own expense, with responsible insurance companies
such insurance on such of its properties, in such amounts and against such risks
as is customarily maintained by similar businesses. No provision of this Section
5.1(i) requiring insurance shall relieve the Seller from its duties and
obligations as set forth in this Sale Agreement. The Seller shall be deemed to
have complied with this provision, in whole or in applicable part, if one of its
Affiliates has such applicable policy or policies and, by the terms thereof, the
coverage afforded thereunder extends
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to the Seller. The Seller shall, upon the request of the Purchaser, file with
the Purchaser a list of the insurance then in effect, stating the names of the
insurance companies, the amounts of the insurance, the dates of the expiration
thereof, and the properties and risks covered thereby. Each policy required by
this Section 5.1(i) shall not be canceled or modified in a materially adverse
manner without ten (10) days' prior written notice to the Purchaser;
(j) Promptly, deliver to the Purchaser, from time to time, such other
information, documents, records or reports respecting the Program Contracts or
the condition or operations, financial or otherwise, of the Seller or any of its
Subsidiaries, as the Purchaser may, from time to time, reasonably request
(including, but not limited to, such information, documents, records or reports
which the Purchaser is requested or required by applicable law to provide to a
third party, including any Governmental Authority).
5.2 RIGHT OF PURCHASER TO AUDIT SELLER'S OPERATION.
Upon receipt of seven (7) days' prior written notice, Seller shall
permit Purchaser to audit Seller's operations at Seller's locations. Such audit
shall be limited to a review of those items that relate to this Agreement. Such
audit shall be during Seller's normal business hours. All of Purchaser's costs
for such audit shall be borne by Purchaser, unless the results of such audit
shall indicate that a Seller Termination Event has occurred which at the time of
such audit was known by the Seller and with respect to which the Purchaser has
not received notice, in which event the Seller shall pay the Purchaser's costs
of such audit. In lieu of an audit at the Seller's location, Purchaser may, from
time to time, request that information, documents or records required pursuant
to such audit be sent to Purchaser.
5.3 OBLIGATION OF SELLER TO PRODUCE CONTRACT FORMS TO PURCHASER.
Seller shall provide Purchaser with copies of all contracts, agreements
or other forms that will be included in the Contract File or included in the
Purchased Assets. Purchaser shall have the right to approve all such forms
before its purchase of any Program Contracts under this Agreement.
5.4 DUTIES OF SELLER WHILE ACTING AS SERVICER; SELLER SHALL PROVIDE
ASSISTANCE WITH RESPECT TO CONVERSION OF DATA.
Seller shall be responsible, in its capacity as Servicer under the
Servicing Agreement, for retaining and maintaining, as custodian and bailee for
the Purchaser, the Electronic Contract Information and Contract Files with
respect to the Sold Program Contracts (not including the original Contract and
title certificate for each Sold Program Contract, which shall be delivered by
the Seller to the Purchaser pursuant to Section 2.1(b) of this Agreement).
Seller shall use its best efforts to cure all documentation exceptions and
deficiencies with respect to the Sold Program Contracts, including obtaining
missing title certificates and correcting lienholder and owner information on
title certificates, and further shall use its best efforts to (a) correct all
data errors
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with respect to the Sold Program Contracts caused by or resulting from its
receipt, transmission, maintenance, modification, updating, processing and use
of the Electronic Contract Information during such time as it has acted as the
Servicer of the Sold Program Contracts pursuant to the Servicing Agreement and
(b) correct all material errors and mistakes in the conversion of electronic
data with respect to the Sold Program Contracts to the Purchaser's, or its
designated servicer's, servicing system, if and when any such conversion shall
take place (Seller understands and agrees that its failure to have collection
agency licenses in all jurisdictions in which it purchases Contracts from
Dealers may prevent it from acting as the Servicer under the Servicing Agreement
for some Sold Program Contracts, in which event the Seller shall deliver the
entire Contract File and the Electronic Contract Information for such Sold
Program Contracts to the Purchaser or its designated servicer), except for
errors or mistakes caused by the negligence, recklessness, bad faith or
misconduct of the Purchaser or its designated servicer or any of their
representatives or employees. Purchaser may require Seller to repurchase at the
Repurchase Price, as more particularly described in Section 4.4 of this
Agreement, any Sold Program Contract that is subject to any material data error
caused by or resulting from any acts or omissions of the Seller. Except for the
specific obligations of Seller set forth in this Section 5.4, Seller shall have
no obligation to the Purchaser for the reimbursement of costs incurred by the
Purchaser in connection with the conversion of electronic data with respect to
the Sold Program Contracts to Purchaser's, or its designated servicer's,
servicing system.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
6.1 GENERAL REPRESENTATIONS AND WARRANTIES OF PURCHASER.
The Purchaser represents and warrants to the Seller as of the date
hereof and on each subsequent date on which a Sale is made, as follows:
(a) Purchaser is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, with the power and authority to own
its properties and to conduct its business.
(b) Purchaser is duly qualified to do business, in good standing and
possesses all of the necessary licenses and approvals in all jurisdictions where
failure to do so would adversely affect its ability to perform its obligations
under this Sale Agreement or the enforceability or collectibility of the Sold
Program Contracts.
(c) Purchaser has the power, authority and legal right to execute and
deliver this Sale Agreement and to carry out its terms, and the execution,
delivery and performance of this Sale Agreement has been duly authorized by
Purchaser by all necessary corporate action.
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(d) This Sale Agreement constitutes a legal, valid and binding
obligation of Purchaser enforceable against Purchaser in accordance with its
terms.
(e) The execution, delivery and performance of this Sale Agreement, the
consummation of the transactions contemplated hereby and the fulfillment of the
terms hereof will not conflict with, result in any breach of or constitute (with
or without notice or lapse of time) a default under the articles of
incorporation or bylaws of the Purchaser, or conflict with or breach any of the
terms or provisions of, or constitute (with or without notice or lapse of time)
a default under, any indenture, agreement, mortgage, deed of trust or other
instrument to which Purchaser is a party or by which Purchaser is bound or to
which any of its properties are subject, or result in the creation or imposition
of any lien upon any of its properties pursuant to the terms of any such
indenture, agreement, mortgage, deed of trust or other instrument, or constitute
a violation of any law, order, rule or regulation applicable to Purchaser or its
properties of any Governmental Authority having jurisdiction over Purchaser or
any of its properties.
(f) There are no proceedings or investigations pending, or, to
Purchaser's knowledge, threatened, before any Governmental Authority having
jurisdiction over Purchaser or any of its properties: (i) asserting the
invalidity of this Sale Agreement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Sale Agreement, or (iii) seeking
any determination or ruling that might materially and adversely affect the
performance by Purchaser of its obligations under, or the validity or
enforceability of, this Sale Agreement.
SECTION VII
SELLER AND PURCHASER TERMINATION EVENTS
7.1 SELLER TERMINATION EVENTS.
For purposes of this Agreement, each of the following shall constitute
a Seller Termination Event (each, a "Seller Termination Event") hereunder:
(a) Any failure by the Seller to deliver to or upon the order of
Purchaser any proceeds or payment required to be so delivered under the terms of
this Agreement, which failure continues for a period of three (3) Business Days
after discovery by the Seller or written notice of such failure given to Seller
by Purchaser;
(b) Failure on the part of the Seller duly to observe or perform in any
material respect any other covenant or agreement of the Seller set forth in this
Agreement, which failure continues for a period of ten (10) Business Days after
discovery by the Seller or written notice of such failure given to the Seller by
Purchaser;
(c) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee
in bankruptcy, conservator, receiver,
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or liquidator for the Seller in any bankruptcy, insolvency, readjustment of
debt, marshaling of assets and liabilities or similar proceeding or for the
winding up or liquidation of its affairs, and the continuance of any such decree
or order unstayed and in effect for a period of 60 consecutive days;
(d) The consent by the Seller to the appointment of a trustee in
bankruptcy, conservator, or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceeding of or relating to any one or more Seller or relating to all
or substantially all of its property; or the Seller 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; or any judgment or order for the payment of money in excess of
$25,000 in the aggregate against the Seller shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty (30) days
or more;
(e) Any representation, warranty, covenant or statement of the Seller
made in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and within ten (10) Business Days after
the Seller has learned of such circumstance or after written notice thereof
shall have been given to the Seller by Purchaser, the circumstance or condition
in respect of which such representation, warranty, covenant or statement was
incorrect shall not have been eliminated or otherwise cured to the satisfaction
of Purchaser;
(f) A material number of Sold Program Contracts (five percent (5%) or
more) purchased by the Purchaser from the Seller during any calendar month fail
to comply, in any material respect, with the Seller's Contract Finance Program
Guidelines or the Seller's representations and warranties with respect thereto
set forth in Section 4.2 of this Agreement (as determined by the Purchaser, in
its reasonable judgment, from a review of a random sample, consisting of a
statistically significant number, of Sold Program Contracts during such calendar
month), and within ten (10) days after the Seller has learned of such
circumstance or after written notice thereof shall have been given to the Seller
by Purchaser, the cause for such noncompliance shall not have been eliminated or
otherwise cured to the reasonable satisfaction of the Purchaser, or in the
alternative, if reasonably recommended by the Purchaser, the Seller shall have
refused to accept a reduction in the amount of the Fee to be paid by the
Purchaser for the future purchase of Eligible Program Contracts pursuant to this
Agreement;
(g) A deterioration has taken place in the quality of the Sold Program
Contracts purchased by the Purchaser from the Seller pursuant to this Agreement
or in the collectibility thereof, which the Purchaser, in its reasonable
judgment, determines to be material and the Seller is unwilling, within ten (10)
days after receipt of written notice thereof, to revise the Seller's Contract
Finance Program Guidelines and/or reduce the Purchase Price applicable to future
sales of Contracts pursuant to this Agreement to the extent recommended by the
Purchaser to cover the
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financial risk, exposure and/or loss reasonably anticipated to be incurred by
the Purchaser as a result of such deterioration;
(h) The Purchaser shall reasonably determine that it will suffer
material economic or financial harm from its future purchase of Eligible Program
Contracts from the Seller pursuant to this Agreement, and the Seller is
unwilling, within fifteen (15) days after receipt of written notice thereof, to
revise the Seller's Contract Finance Program Guidelines and/or reduce the
Purchase Price applicable to future sales of Contracts pursuant to this
Agreement to the extent recommended by the Purchaser to eliminate the economic
or financial harm that will be realized by the Purchaser from its future
purchase of Contracts pursuant to this Agreement;
(i) The Purchaser and the Seller are unable to mutually agree upon the
terms and provisions of the Seller's Contract Finance Program Guidelines, and
the Purchaser shall have provided the Seller with at least ten (10) days' prior
written notice of its desire to terminate this Agreement because of such event
or circumstance; or
(j) Seller does not offer for sale to the Purchaser during any full
calendar month at least one hundred (100) Eligible Program Contracts.
7.2 PURCHASER TERMINATION EVENTS.
Any of the following acts or occurrences shall constitute a Purchaser
Termination Event (each, a "Purchaser Termination Event"):
(a) So long as no Seller Termination Event has occurred or no notice of
the termination of this Agreement shall have been given by the Purchaser to the
Seller pursuant to Section 7.3 of this Agreement, any failure by Purchaser to
purchase Eligible Program Contracts on each applicable Sale Date or to pay any
amounts due pursuant to this Agreement, which failure continues for a period of
three (3) Business Days after discovery by Purchaser or written notice of such
failure given to Purchaser by Seller;
(b) Failure on the part of Purchaser duly to observe or perform in any
material respect any other covenant or agreement of Purchaser set forth in this
Agreement, which failure continues for a period of ten (10) Business Days after
discovery by Purchaser or written notice of such failure given to Purchaser by
Seller.
(c) The entry of a decree or order by a court or agency or supervisory
authority having jurisdiction in the premises for the appointment of a trustee
in bankruptcy, conservator, receiver, or liquidator for Purchaser in any
bankruptcy, insolvency, readjustment of debt, marshaling of assets and
liabilities or similar proceeding or for the winding up or liquidation of its
affairs, and the continuance of any such decree or order unstayed and in effect
for a period of 60 consecutive days;
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(d) The consent by Purchaser to the appointment of a trustee in
bankruptcy, conservator, or receiver or liquidator in any bankruptcy,
insolvency, readjustment of debt, marshaling of assets and liabilities or
similar proceeding of or relating to Purchaser or relating to all or
substantially all of its property; or Purchaser 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; or any judgment or order for the payment of money in excess of
$25,000 in the aggregate against the Purchaser shall remain unpaid, unstayed on
appeal, undischarged, unbonded or undismissed for a period of thirty (30) days
or more
(e) Any representation, warranty, covenant or statement of Purchaser
made in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and within ten (10) Business Days after
Purchaser shall have learned of such circumstance or after written notice
thereof shall have been given to Purchaser by a Seller, the circumstance or
condition in respect of which such representation, warranty, covenant or
statement was incorrect shall not have been eliminated or otherwise cured to the
satisfaction of Seller;
(f) The Seller and the Purchaser are unable to mutually agree upon the
terms and provisions of the Seller's Contract Finance Program Guidelines, and
with respect to any of such matters, the Seller shall have provided the
Purchaser with at least ten (10) days prior written notice of its desire to
terminate this Agreement because of such event or circumstance;
(g) Purchaser does not purchase from the Seller during a calendar month
at least ninety eight percent (98%) of the Eligible Program Contracts (which
satisfy the requirements for purchase by the Purchaser pursuant to this
Agreement) offered for sale during such month by the Seller pursuant to this
Agreement.
7.3 RIGHTS UPON SELLER TERMINATION EVENT OR PURCHASER TERMINATION EVENT;
LIMITATION OF DAMAGES.
(a) If a Seller Termination Event or Purchaser Termination Event shall
occur and be continuing, so long as such Termination Event has not been cured or
waived, after the expiration of any applicable cure period, the party having the
right to terminate this Agreement (the "Terminating Party") can, by notice given
in writing to the other party, immediately terminate this Agreement. Such right
to terminate this Agreement, together with all other rights and remedies from
time to time conferred upon or reserved by Seller or Purchaser, are cumulative,
and none is intended to be exclusive of another or any right or remedy which
Seller or Purchaser may have at law or in equity; provided, however, with
respect to any Sold Program Contract purchased by the Purchaser pursuant to this
Agreement, if there shall be a breach of any representation or warranty with
respect to such Sold Program Contract set forth in Section 4.1 or 4.2 of this
Agreement, or if Seller shall be in default of any covenant or obligation with
respect to such Sold Program Contract set forth in Article II of this Agreement,
then the sole remedy of the Purchaser
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with respect to such default or breach shall be to require Seller to repurchase
such Sold Program Contract pursuant to Section 4.4 of this Agreement; provided,
however, the preceding provision is not intended to prohibit the Purchaser from
terminating this Agreement because of a Seller Termination Event described in
Section 7.1 of this Agreement or seeking recourse against Seller for
indemnification pursuant to Section 8.1 of this Agreement. No delay or omission
in insisting upon the strict observance or performance of any provision hereof
or in exercising any right or remedy shall be construed as a waiver or
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.
(b) If either party shall bring a claim, action, demand, suit or
proceeding against the other party because of a breach or default of any term or
provision of this Sale Agreement, not including a claim for indemnification
pursuant to Section 8.1 or 8.2 of this Sale Agreement, the nondefaulting party's
measure of damages shall be limited as follows:
(i) With respect to a claim by the Purchaser that there has
occurred a breach of a representation or warranty with respect to a
Sold Program Contract set forth in Section 4.1 or 4.2 of this Sale
Agreement or a default by the Seller of a covenant or obligation with
respect to a Sold Program Contract set forth in Article II of this Sale
Agreement, the Purchaser shall be allowed to recover from the Seller
with respect to Sold Program Contract the amounts set forth in Section
4.4 of this Sale Agreement, plus reasonable attorneys' fees and
disbursements and related litigation expenses incurred by the Purchaser
to enforce its rights and remedies under this Sale Agreement;
(ii) With respect to any other claim by the Purchaser against
the Seller, the Purchaser shall be allowed to recover from the Seller
its actual monetary loss directly incurred as a result of such default
or breach by the Seller, not to exceed recissionary damages calculated
in accordance with Section 4.4 of this Sale Agreement, plus reasonable
attorneys' fees and disbursements and related litigation expenses
incurred by the Purchaser to enforce its rights and remedies under this
Sale Agreement;
(iii) With respect to a claim by the Seller against the
Purchaser that there has occurred a breach or default by the Purchaser
of any covenant, obligation, representation or warranty set forth in
this Sale Agreement, the Seller shall be allowed to recover from the
Purchaser the additional costs, expenses and financing costs (equal to
(A) the difference between the Fees payable by the Purchaser to the
Seller pursuant to this Agreement and similar fees payable by a third
party to the Seller to purchase Eligible Program Contracts pursuant to
an agreement similar to this Sale Agreement or (B) the difference
between the Seller's actual cost of financing the ownership of Eligible
Program Contracts and Six and 50/100 Percent (6.50%) per annum)
actually incurred by the Seller as the result of such breach or
default, plus reasonable attorneys' fees and disbursements and related
litigation expenses incurred by the Seller to enforce its rights and
remedies under this Sale Agreement. Additional costs, expenses and
financing costs actually incurred by the Seller
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shall be based upon the actual number of Eligible Program Contracts
purchased by the Seller from Dealers during the period beginning on the
date of the Purchaser's breach, after taking into account all
applicable cure periods, and ending on the Scheduled Termination Date;
and
(iv) Neither the Purchaser nor the Seller shall be liable to
each other for any lost profits or loss of business or any special,
speculative, punitive, indirect, exemplary, punitive, consequential or
incidental damages, however caused or however based upon any theory of
liability.
7.4 WAIVER OF DEFAULTS AND TERMINATION EVENTS.
Following the occurrence of a Seller Termination Event or Purchaser
Termination Event, the Terminating Party may, by written notice to the other
party, waive such Termination Event. Upon any such waiver, such Termination
Event shall cease to exist, and any default arising therefrom shall be deemed to
have been remedied for every purpose of this Agreement. No such waiver shall
extend to any subsequent or other Termination Event or default or impair any
right consequent thereon except to the extent expressly so waived.
ARTICLE VIII
INDEMNIFICATION
8.1 INDEMNIFICATION BY SELLER.
Without limiting any other rights that an Indemnified Party may have
hereunder or under applicable law, and subject to Seller's right to cure as set
forth in this Agreement, the Seller hereby agrees to pay on demand to the
Purchaser and its parent, Subsidiaries and Affiliates and their directors,
officers, employees and authorized agents Indemnified Amounts which may be
imposed on, incurred by or asserted against an Indemnified Party as a result of
any claim, action, demand, proceeding or suit, whether or not groundless, that
in any way arises out of or results from:
(a) Use by the Seller of proceeds of any Sale or in respect of any Sold
Program Contract;
(b) Reliance by the Purchaser on any representation or warranty made or
deemed made by the Seller (or any of its officers) under or in connection with
this Sale Agreement;
(c) Any material breach by Seller of its representations and
warranties, covenants or obligations, or material failure by the Seller to
comply with any term, provision or covenant, contained in this Sale Agreement or
any agreement executed in connection with this Sale Agreement;
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(d) The failure to vest and maintain vested in the Purchaser, or to
transfer to the Purchaser, legal and equitable title to and ownership of the
Program Contracts that are, or are purported to be, Sold Program Contracts,
together with all proceeds in respect thereof, free and clear of any Adverse
Claim (except as permitted hereunder) whether existing at the time of the
proposed sale of such Program Contract or at any time thereafter, and without
limitation to the remedies set forth in Section 4.4; or
(e) Any act or omission by Seller or its agents, officers or employees
or controlled Affiliates or by any Dealer arising out of or relating to the
purchase by the Seller of any Contract, the sale by the Dealer of any Contract
or the sale by the Dealer of a Financed Vehicle or related product or service to
an Obligor, which results in a material loss by or claim against the Purchaser,
including any claim by an Obligor or Governmental Authority that the form, terms
or provisions of the Contract fail to comply with the requirements of applicable
federal and state laws.
If a claim for indemnification is tendered by an Indemnified Party to the
Seller, the Seller may, at its option, repurchase the Program Contracts involved
in such claim in accordance with the terms of Section 4.4 of this Agreement and
the Repurchase Price for such Program Contracts actually paid by the Seller to
the Purchaser shall be taken into account in determining the amount of the loss
that the Indemnified Party has incurred as a result of such claim. The Seller
acknowledges that the Purchaser may assign its rights of indemnity granted
hereunder to an assignee and upon such assignment, such assignee shall have all
rights of the Purchaser hereunder and may in turn assign such rights. The Seller
agrees that, upon such assignment, such assignee may enforce directly, without
joinder of the Purchaser, the indemnities set forth in this Section.
8.2 INDEMNIFICATION BY PURCHASER.
Purchaser shall indemnify and hold harmless Seller and its parent,
Subsidiaries, Affiliates and their directors, officers, employees and authorized
agents against any claim, action, demand, proceeding and suit brought by any
Person other than the Seller, whether or not groundless, and against every
liability, damage and cost (including reasonable legal fees and related costs),
arising out of, directly or indirectly, from any such claim, action, demand,
proceeding or suit, resulting from, arising out of or relating to: (i) any
material breach by Purchaser of its representations and warranties, covenants or
obligations contained in this Agreement, or (ii) any act or omission by
Purchaser or its agents, officers or employees or controlled Affiliates (not
including acts and omissions of the Seller while it is acting as servicer of the
Sold Program Contracts pursuant to the Servicing Agreement) with respect to the
collection, application or administration of payments under any Sold Program
Contract, the repossession of any Financed Vehicle that secures a Sold Program
Contract, or the exercise of any rights or pursuit of claims against any Obligor
under any Sold Program Contract, which results in a material loss by or claim
against the Seller.
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8.3 INDEMNIFICATION GENERALLY.
(a) A claim for indemnification pursuant to this Article shall be made,
if at all, within five (5) years after the applicable Sale Date notwithstanding
any statute of limitations that may specify a shorter period, the provisions of
which are hereby waived.
(b) As a condition of any claim for indemnification under this Article,
the indemnifying party shall be given timely notice of any claim or demand as to
which indemnification may be claimed and shall have the right, together with the
Indemnified Party, to participate in the defense, compromise or closing thereof
through the indemnifying party's own attorney and at the indemnifying party's
expense.
(c) If a party has received indemnity payments hereunder with respect
to a Contract and thereafter receives payments from third parties so as to fully
recoup its losses with respect to such Contract, the Indemnified Party shall
remit any excess payments to the indemnifying party to the extent of the
indemnification payments previously made by the indemnifying party and subject
to the rights of the Obligor.
ARTICLE IX
CONFIDENTIALITY; SELLER NOT TO SOLICIT OBLIGORS;
NO SOLICITATION OF OTHER PARTY'S EMPLOYEES
9.1 CONFIDENTIALITY COVENANT.
Except to the extent required by applicable law and upon satisfaction
of the procedures set forth in this Section 9.1 or unless the parties hereto
shall shall mutually agree otherwise, the parties (including their directors,
officers, employees and counsel) agree to keep confidential the existence and
terms of this Sale Agreement and all proprietary information relating to each
other's business, including, but not limited to, credit underwriting criteria,
products, customer lists, pricing policies, employment records and policies,
operational methods, marketing plans and strategies, product development
techniques and inventions and research programs, trade know- how, trade secrets,
specific software, algorithms, computer processing systems, object and source
codes, user manuals, systems documentation and other business and financial
affairs, and the parties agree not to disclose, deliver or otherwise make
available such materials or information to any third party (other than their own
directors, officers, employees, accountants and counsel who need such
information or materials). If a party is required by applicable law or legal
process to make disclosure to a third party of information or materials required
to be maintained as confidential pursuant to this Section 9.1, the disclosing
party shall give prior written notice to the other party (the "Protected Party")
of the information and materials it intends to disclose and the reasons why the
disclosing party believes it is required to disclose such information and
materials. The Protected Party may either consent to such disclosure, object to
such disclosure or seek a protective order or appropriate remedy to prohibit or
limit such disclosure. In the event that the
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<PAGE> 35
Protected Party objects to such disclosure but fails to obtain a protective
order or other remedy, the disclosing party shall disclose only such information
and materials as counsel for the disclosing party determines is required to be
made. Notwithstanding the foregoing, no party shall make a public announcement
regarding the existence of this Agreement or the terms hereof without the prior
consent of the other party, and the parties will cooperate with each other in
preparing the contents and determining the manner of distribution of any such
announcement.
9.2 SELLER NOT TO SOLICIT OBLIGORS.
From and after each Sale Date as to any Contract and for so long as
such Contract is outstanding, neither Seller nor any officer or employee of
Seller shall knowingly solicit, and neither Seller nor its officers and
employees shall encourage or recommend any agent or representative of Seller to
solicit, any Obligor in respect of such Contract, either singly or as part of a
group, on behalf of Seller or any other entity in any manner that would
encourage prepayment of such Contract, except that Seller may continue to make
general solicitations to the public and to any of Seller's customers and may
advertise, sell and provide all financial services offered by Seller.
9.3 NO SOLICITATION OF OTHER PARTY'S EMPLOYEES.
During the term of this Agreement and for one year after its
termination, both Seller and Purchaser agree not to solicit or cause to be
solicited the employment of any person who is employed by the other party.
Notwithstanding anything to the contrary in this section, the employment by
Seller or Purchaser of officers and employees of the other party who contact the
hiring party on their own initiative without any direct solicitation or
encouragement from the hiring party or who are solicited by advertising or
notices in newspapers or periodicals of general circulation shall not constitute
a breach of this Section 9.3.
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 NOTICES.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing and mailed or telecommunicated, or
delivered as to each party hereto, at its address set forth under its name on
the signature page hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
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<PAGE> 36
10.2 NO WAIVER; REMEDIES.
No failure on the part of the Seller or the Purchaser to exercise, and
no delay in exercising, any right hereunder or under any Sale Assignment 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. The remedies herein provided are cumulative and not
exclusive of any other remedies provided by law.
10.3 BINDING EFFECT; ASSIGNABILITY.
This Sale Agreement shall be binding upon and inure to the benefit of
the Seller and the Purchaser, and their respective successors and permitted
assigns. The Seller may not assign any of its rights and obligations hereunder
or any interest herein without the prior written consent of the Purchaser, which
consent will not be unreasonably withheld. The Purchaser may assign all of its
rights hereunder to one or more Persons. This Sale 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 its termination;
provided, that the obligations of the Seller set forth in Sections 2.3, 2.4, and
5.4, the obligations of both parties set forth in Article IX, the rights and
remedies granted to the Purchaser pursuant to Section 4.4 and the
indemnification and payment provisions of Article VIII shall be continuing and
shall survive any termination of this Sale Agreement.
10.4 AMENDMENTS; CONSENTS AND WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of, or with respect to, any
provision of this Sale Agreement, and all other agreements, instruments and
documents delivered hereto, and no consent to any departure by the Seller or by
the Purchaser from any of the terms or conditions hereof shall be effective
unless it shall be in writing and signed by each of the parties hereto. Any
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No consent to or demand by the Seller or the Purchaser
in any case shall, in itself, entitle such party to any other consent or further
notice or demand in similar or other circumstances. This Sale Agreement and the
documents referred to herein embody the entire agreement of the Seller and the
Purchaser with respect to the Sold Program Contracts and supersede all prior
agreements and understandings relating to the subject hereof.
10.5 SEVERABILITY.
In case any provision in or obligation under this Sale Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provision or obligations, or of such
provision or obligation, shall not in any way be affected or impaired thereby in
any other jurisdiction.
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<PAGE> 37
10.6 PURCHASER TO PROVIDE SELLER DATA WITH RESPECT TO SOLD PROGRAM
CONTRACTS.
Purchaser shall provide Seller (no more often than once per calendar
month) data relating to the performance of all Sold Program Contracts. Such data
will be of the type and level of detail considered necessary by the Seller, in
its reasonable discretion, to allow Seller to perform static pool and other
analyses on such Sold Program Contracts. It is understood that this condition
becomes effective once the volume of Sold Program Contracts reaches a level
where such analyses would be considered by the Seller to be meaningful. It is
also understood that, once effective, this provision shall apply to all Sold
Program Contracts since the date of this Sale Agreement and for the life of all
such Sold Program Contracts.
10.7 COSTS, FEES AND EXPENSES.
If any legal proceeding is instituted by either party against the other
under this Agreement or with respect to any Sold Program Contract, upon the
entry of a final order or judgment, the non-prevailing party shall be required
to pay the prevailing party's costs and expenses of such litigation, including
reasonable attorneys' fees. The Seller shall be solely responsible for paying
any and all brokers' fees and expenses that may be payable to any broker,
advisor or agent who has provided services to the Seller with respect to this
Agreement and the transactions contemplated hereby. Except as otherwise provided
in this Agreement, each party agrees to pay all costs, fees and expenses which
it has incurred in connection with or incidental to the matters contained in
this Agreement, including any fees and disbursements to its accountants and
counsel.
10.8 RIGHT OF OFFSET AND DEDUCTION.
Any party (the "Offsetting Party") may offset and deduct from any
amount payable by the Offsetting Party to the other party (the "Debtor Party")
under this Agreement or the Servicing Agreement any amount which is, at the time
of exercise of the right of offset and deduction, presently due and payable by
the Debtor Party to the Offsetting Party pursuant to this Agreement or the
Servicing Agreement.
10.9 GOVERNING LAW.
THIS SALE AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
FLORIDA.
10.10 CONSENT TO JURISDICTION AND VENUE.
Each of the Seller and the Purchaser hereby irrevocably and
unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any Arkansas state court, Florida State Court, federal court of
the United States of America for the Eastern District of Arkansas, or federal
court of the United States of America for the Northern District of Florida, and
any
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<PAGE> 38
appellate court from any thereof, in any action or proceeding arising out of or
relating to this Agreement, or for recognition or enforcement of any judgment,
and the parties agree that all claims in respect of any such action or
proceeding may be heard and determined in such Arkansas or Florida state or, to
the extent permitted by law, federal court.
10.11 EXECUTION IN COUNTERPARTS.
This Sale Agreement may be executed by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same agreement
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<PAGE> 39
IN WITNESS WHEREOF, the parties have cause this Sale Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ WILLIAM MAGRO
-----------------------------
NAME: William Magro
Title: President and Chief Operating Officer
Address: National Auto Finance Company, Inc.
10302 Deerwood Park Boulevard
Suite 100
Jacksonville, Florida 32255-0970
Telephone: 904-996-2500
Telecopy: 904-996-2539
With a copy to:
Stephen R. Veth, Esq.
Vice President, Secretary and General Counsel
Telephone: 904-486-1151
Telecopy: 904-996-2557
NUVELL CREDIT CORPORATION
By: /S/ TOMMY E. PRITCHARD
-------------------------------
Tommy E. Pritchard
President
Address:
17500 Chenal Parkway, Suite 201
Little Rock, Arkansas 72223-9131
Telephone: 501-821-5200
Telecopy: 501-821-5208
Attn.: Tommy E. Pritchard
President
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<PAGE> 40
With a copy to:
Thomas N. Rose
Executive Vice President
17500 Chenal Parkway, Suite 201
Little Rock, Arkansas 72223-9131
Telephone: 501-821-9400
Telecopy: 501-821-5208
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<PAGE> 41
EXHIBIT LIST
A Assignment
B Fee Schedule
C Purchaser's Contract Requirements
D Power of Attorney
E Officer's Certificate
F Legal Opinion of Seller's Counsel
G List of Independent Automobile Dealers From Whom Seller Purchases Contracts
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<PAGE> 42
EXHIBIT A
ASSIGNMENT
ASSIGNMENT dated _______________, ______, from NATIONAL AUTO FINANCE
COMPANY, INC. ("Seller") to NUVELL CREDIT CORPORATION ("Purchaser").
FOR VALUE RECEIVED, pursuant to the Contract Sale Agreement dated as of
February 4, 2000, by and between Seller and Purchaser (the "Agreement"), Seller
does hereby sell, transfer, assign and convey unto Purchaser, its successors and
assigns, all of its right, title and interest in, to and under the Motor Vehicle
Retail Installment Sales Contract (the "Contract") attached hereto, which has
the following characteristics:
Origination Date: _______________ Description of Financed Vehicle:
Amount Funded: _______________ Year: _______________
Name of Obligor(s): _______________ Make: _______________
Model: _______________
VIN: _______________
together with all of its right, title and interest in, to and under all
documents, payments, recoveries, proceeds and obligations arising therefrom or
in connection therewith.
And Seller hereby represents, warrants and confirms to Purchaser, subject
to the terms and provisions of the Agreement, that the Contract is an "Eligible
Program Contract," as defined in the Agreement, all of Seller's representations
and warranties regarding the Seller and the Contract made in or pursuant to the
Agreement are true and correct in all material respects as of the date hereof,
the Seller is in compliance, as of the date hereof, with each of it covenants
set forth in the Agreement, the "Scheduled Termination Date," as defined in the
Agreement, has not occurred, and no event has occurred which, with notice or the
passage of time, would constitute a "Seller Termination Event," as defined in
the Agreement, or a breach by Seller of its representations, warranties or
obligations under the Agreement.
And Seller hereby grants to Purchaser a power of attorney, with full power
of substitution, to execute in Seller's name and on Seller's behalf such
notices, endorsements (including, without limitation, endorsement of the
Contract and any related promissory notes or other instruments), consents, and
other instruments and documents which may be reasonably necessary in Purchaser's
judgment to evidence the sale and assignment of the Contract to Purchaser or to
record or otherwise perfect Purchaser's interest therein or in the collateral
securing the Contract, or which may be otherwise consistent with the sale and
assignment of the Contract effected by this Assignment and pursuant to the
Agreement. This power of attorney is coupled with an interest and is
irrevocable.
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<PAGE> 43
All terms used herein and not otherwise defined shall have the meaning set
forth in the Agreement. This Assignment is made WITHOUT RECOURSE AGAINST THE
SELLER OR WARRANTY TO THE PURCHASER, except to the extent specifically provided
for in the Agreement.
IN WITNESS WHEREOF, Seller has caused this Assignment to be executed by its
duly authorized officer effective as of the date first set forth above.
Seller: NATIONAL AUTO FINANCE COMPANY, INC.
By: ____________________________
Name:
Title: ____________________________
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<PAGE> 44
EXHIBIT B
Fee Schedule
The Purchase Price for each Sold Program Contract purchased by the
Purchaser from the Seller pursuant to the Contract Sale Agreement shall equal
the following:
1. The Amount Financed, plus
2. Dealer participation in the amount actually paid to the Dealer, but not
exceeding such amount as is payable pursuant to the Seller's Contract Finance
Program Guidelines, minus
3. The applicable discount and/or acquisition fee, minus
4. The applicable overadvance warranty fee and the overadvance fee, the
total of the above to be paid by the Purchaser to the Purchaser's Control
Account; plus
5. The referral fee payable by the Seller to a third-party, if and to the
extent that the payment of such fee has not resulted in an applicable discount
in the amount paid to the Dealer for such Contract in excess of the amount
allowed by the Purchaser's Contract Requirements attached as Exhibit C to the
Contract Sale Agreement, plus
6. The amount payable to the applicable Governmental Authority in the State
of Florida for documentary stamps, plus
7. The amount of cash payable by the Seller to any Dealer pursuant to its
Contract Finance Program Guidelines as compensation for the volume of Contracts
sold by the Dealer to the Seller, if and to the extent that such cash amounts
relate to Sold Program Contracts previously purchased by the Purchaser from the
Seller, plus
8. An acquisition fee of $465.00, the total of Items 5 through 8 to be paid
by the Purchaser directly to the Seller to such account as may be designated by
the Seller in writing to the Purchaser, as set forth in Section 2.1(c) of the
Contract Sale Agreement.
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<PAGE> 45
EXHIBIT C
Purchaser's Contract Requirements
Nuvell will purchase only Eligible Program Contracts that comply with
Seller's Contract Finance Program Guidelines and satisfy, as of the closing
date, all of the criteria set forth in the Contract Sale Agreement. In addition,
each Eligible Program Contract must satisfy the following criteria:
(1) has a NAFI credit score of at least one hundred and fifty-two
(152), unless the amount financed is 100% or less of the wholesale value of
the financed vehicle, as determined by reference to a reputable, nationally
distributed used car guide;
(2) does not involve the financing of any of the following makes or
models:
Alfa Romeo
Daewoo
Daihatsu
Peugeot
Kia
Hyundais
Suzuki
Mitsubishi Mirage -
unless the Amount Financed (a) for any new such vehicle is less than ninety
percent (90%) of invoice and (b) for any used such vehicle is less than
ninety percent (90%) of the NADA "Trade-In Value" of such vehicle, with
reference to the NADA Used Car Guide for the region of the United States in
which such vehicle is sold to the Obligor, except the States of Arizona,
California, Nevada, Utah and Washington, in which reference will be made to
Kelley Blue Book for the region of the United States in which such vehicle
is sold to the Obligor;
(3) has an original principal balance of at least $7,000 and not more
than $30,000;
(4) has a stated APR of at least 12.95% and not more than 25.95%;
(5) does not involve the financing of or sale to the Obligor of GAP
insurance, a deficiency waiver or debt cancellation agreement, except
pursuant to such form of agreement as has been approved by the Purchaser
and in such states as approved by the Purchaser;
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<PAGE> 46
(6) does not involve a purchase discount (being the difference between
the original principal balance of the Contract and the amount paid to the
dealer for the purchase of the Contract) of greater than 10% of the
original principal balance, unless the original principal balance of the
Contract is less than $10,000;
(7) does not involve any prepaid finance charge;
(8) does not involve the sale of a Financed Vehicle at a sales price
(not including sales tax) greater than 115% of the wholesale value of the
Financed Vehicle, as determined by reference to a reputable, nationally
distributed used car guide;
(9) does not involve a difference between the buy rate and the
Contract rate resulting in greater than two (2) percentage points of
reserve, dealer participation or dealer finance income;
(10) does not involve the payment to the dealer of dealer
participation or dealer finance income that is refundable by or chargeable
back to the dealer;
(11) does not involve the sale of any of the following: (a) a vehicle
having a salvage, branded or flood title, (b) a vehicle subject to state or
federal lemon laws, ( c) a vehicle for which the true mileage is unknown,
(d) a vehicle which has been altered by a conversion package, or (e) a
vehicle that is considered a truck with one (1) ton or greater capacity;
and
(12) does not involve the payment by the Seller of any referral fee to
a third-party, except pursuant to a referral program that has been
specifically approved by the Purchaser.
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<PAGE> 47
EXHIBIT D
IRREVOCABLE POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that the undersigned, NATIONAL AUTO FINANCE
COMPANY, INC. (the "Company") does hereby make, constitute and appoint NUVELL
CREDIT CORPORATION and NUVELL FINANCIAL SERVICES CORP., which are hereby
authorized to act together or separately, as its true and lawful
attorney-in-fact, with full power of substitution with respect to those certain
retail installment sales contracts sold by the Company to Nuvell Credit
Corporation pursuant to a Contract Sale Agreement by and between the Company, as
"Seller," and Nuvell Credit Corporation, as "Purchaser," dated as of
______________________, and as such may be amended from time to time and which
is incorporated by reference herein, the collateral securing such contracts, and
all security documents related thereto (collectively, the "Property"), to sign,
acknowledge and file, in the name, place and stead of the Company, all such
certificates, documents and instruments, including, but not limited to, any
instrument of assignment, certificate of title, notice of lien, assignment of
lien, application for a certificate of title or duplicate of such certificate,
application to register or transfer title, document to effect the notation of a
lien upon a certificate of title or the assignment of such a lien, notice of any
such assignment, and application to register or transfer the rights as secured
party under any policy of insurance; affidavits of repossession, bills of sale,
notices of sale, lien releases and odometer statements; to authorize the sale
and disposition of Property and transact as necessary to sell or re-market such
Property; and to sell the Property and receive proceeds thereon through any
authorized party or auction; and further as said attorney-in-fact may deem fit
and proper to perfect the right, title and interest of Nuvell Credit Corporation
and/or its successors and assigns in the Property.
The undersigned further hereby gives and grants unto said attorney-in-fact
full power and authority to do and perform every act necessary and proper to be
done in the exercise of any of the foregoing powers with respect to the Property
as fully as the undersigned might or could do if personally present.
This Power of Attorney is coupled with an interest and is irrevocable by
the undersigned. Anyone to whom this Power of Attorney is presented may rely
upon it without further inquiry of the undersigned. A photocopy of this Power of
Attorney shall have the same effect as an original, manually signed and
acknowledged counterpart of this Power of Attorney.
IN WITNESS WHEREOF, the undersigned has executed this instrument this ___
day of _______________, ________.
NATIONAL AUTO FINANCE COMPANY, INC.
By: ----------------------------------
Title: ----------------------------------
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<PAGE> 48
ACKNOWLEDGMENT
STATE OF )
) ss.
COUNTY OF )
On this __________ day of ___________________, ______, before me
_____________________________ personally appeared ____________________________,
personally known to me (or proved to me on the basis of satisfactory evidence)
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he executed the same in his authorized capacity, and
that by his signature on the instrument the person, or the entity upon behalf of
which the person acted, executed the instrument.
IN WITNESS WHEREOF, I hereunto set my hand and official seal.
------------------------------------
Notary Public
My Commission expires:
----------------------
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<PAGE> 49
EXHIBIT E
Form of Officer's Certificate to Be Delivered by Seller
The undersigned, an officer of NATIONAL AUTO FINANCE COMPANY, INC. (the
"Company"), having the title and position set forth below his signature, hereby
certifies to Nuvell Credit Corporation (the "Purchaser") as follows:
(1) The undersigned officer delivers this certificate on behalf of the
Company pursuant to section 3.1(a)(vi) of the Contract Sale Agreement by
and between the Company and Purchaser dated as of __________________ (the
"Agreement").
(2) Each of the representations and warranties of the Company
contained in the Agreement are true and correct in all respects on and as
of the date hereof.
(3) No event has occurred which constitutes a Seller Termination Event
under the Agreement.
(4) The Company is in compliance with each of its covenants set forth
in the Agreement.
(5) There has not occurred any material adverse change in the
business, operations, financial condition or prospects of the Company since
the date of the Agreement.
(6) To the best of the undersigned's knowledge, all of the conditions
precedent to the obligations of the Purchaser to purchase Eligible Program
Contracts from the Seller, as set forth in Section 3.1(a) of the Agreement,
have been satisfactorily completed, and upon the Company's receipt of
written notice from the Purchaser stating that such conditions precedent
have been completed, to the satisfaction of the Purchaser, the Company will
begin to offer Eligible Program Contracts for sale to the Purchaser in
accordance with the provisions of Section 2.1 of the Agreement.
IN WITNESS WHEREOF, the undersigned officer of the Company has executed and
delivered this Officer's Certificate effective as of the _____ day of
______________, ______.
NATIONAL AUTO FINANCE COMPANY, INC.
By:
------------------------------------
Title:
---------------------------------
<PAGE> 50
EXHIBIT F
Form of Opinion Required by Section 3.1(a)(viii)
[Closing Date]
Nuvell Credit Corporation
17500 Chenal Parkway, Suite 201
Little Rock, Arkansas 72223-9131
Re: Contract Sale Agreement Dated as of ____________________, 2000,
Between National Auto Finance Company, Inc., as Seller, and Nuvell
Credit Corporation, as Purchaser
Ladies and Gentlemen:
You have requested my opinion, as counsel to National Auto Finance Company,
Inc. (the "Seller"), with respect to certain matters in connection with the sale
by Seller of motor vehicle receivables (the "Contracts") pursuant to that
certain Contract Sale Agreement, dated as of ____________________, 2000 (the
"Sale Agreement"), between Seller and Nuvell Credit Corporation (the
"Purchaser").
I have reviewed the Sale Agreement and such other documents as I deemed
necessary or advisable for purposes of this opinion. In rendering this opinion,
I have examined and relied upon originals or copies, certified or otherwise, of
all such corporate records, documents, agreements or other instruments of
Seller, have made such investigations of law and have discussed with officers of
Seller such questions of fact as I have deemed necessary or appropriate. In
rendering this opinion, I have relied upon certificates and statements of
officers and directors of Seller as to factual matters and assumed the
genuineness of all documents submitted as copies and the legal capacity of
natural persons.
I assume for purposes of this opinion that the Sale Agreement has been duly
authorized by the Purchaser and will be duly executed and delivered by the
Purchaser in accordance with such authorization. [Include other reasonable
assumptions and qualifications consistent with the Legal Opinion Accord of the
ABA Section of Business Law (1991)]
Relying on the matters stated above, and based upon and subject to the
foregoing, I am of the opinion that:
1. Seller is a duly organized and a validly existing corporation in good
standing under the laws of the State of Delaware, and it is properly qualified
and in good standing in each other
<PAGE> 51
Nuvell Credit Corporation
[Closing Date]
Page 2
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary and wherein the failure to be so
qualified would materially and adversely affect its business or properties, the
enforceability of the Sale Agreement or the enforceability of any Contract.
2. Seller has the power to engage in the transactions contemplated by the
Sale Agreement and all requisite power, authority and legal right to execute and
deliver the Sale Agreement and the form of Assignment (the "Assignment")
attached as Exhibit A to the Sale Agreement, and to perform and observe the
terms and conditions of such agreement and instruments.
3. The Sale Agreement has been duly authorized, executed and delivered by
Seller and is a legal, valid and binding agreement of Seller enforceable against
Seller in accordance with its terms, subject to bankruptcy laws and other
similar laws of general application affecting rights of creditors and subject to
the application of the rules of equity, including those respecting the
availability of specific performance. [Include other exceptions and/or
qualifications to enforceability opinion as may be reasonably acceptable to the
Purchaser]
4. Seller's execution and delivery of an Assignment to the Purchaser and
its delivery of the Contract described in any such Assignment to the Purchaser
are sufficient to transfer all of Seller' right, title and interest in such
Contract to the Purchaser. [Include explanation of Florida law on how to perfect
a security interest in a Financed Vehicle] The Purchaser will receive title to
such Contracts free and clear of any liens, encumbrances and security interests
of any other person, except as set forth below: [set forth exceptions to
priority opinion which are reasonably acceptable to the Purchaser]
5. No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution and delivery by Seller
of, and performance by Seller of its obligations under, the Sale Agreement and
any Assignment or the Seller's consummation of the transactions contemplated by
the Sale Agreement, or if such consent, approval, authorization or order is
required, it has been disclosed to the Purchaser and has been obtained.
6. Neither the sale nor delivery of any Contract to the Purchaser, nor the
consummation of the transactions contemplated by the Sale Agreement, nor the
fulfillment of the obligations of Seller under the terms of the Sale Agreement
materially conflicts with or will materially conflict with or results or will
result in a material breach of or constitutes or will constitute a material
default under the Articles of Incorporation or Bylaws of Seller, the terms of
any indenture or other agreement or instrument known to me to which Seller are a
party or by
<PAGE> 52
Nuvell Credit Corporation
[Closing Date]
Page 3
which it is bound or to which it is subject, or any statute, order, rule,
regulation, writ, injunction or decree of any court, governmental authority or
regulatory body to which any Seller is subject or by which it is bound.
7. There is no material litigation or administrative proceeding pending or,
to the best of my knowledge, threatened against Seller which, in my judgment,
either in any one instance or in the aggregate, would draw into question the
validity of the Sale Agreement or of any action taken or to be taken in
connection with the transactions contemplated thereby, or which would be likely
to impair materially the ability of Seller to perform its obligations under the
terms of the Sale Agreement.
Whenever my opinion herein with respect to the existence or absence of
facts is indicated to be "to the best of my knowledge, information and belief"
or "known to me" or similar words, it is intended to signify that during the
course of my representation of Seller no information has come to my attention
that would give me actual knowledge of the existence of facts or circumstances
contrary to the opinions as qualified.
My opinions herein are limited in all respects to the substantive laws of
the State of _______________ and the federal laws of the United States.
This opinion letter is provided for the purposes of complying with
requirements of the Sale Agreement referred to herein. This opinion may not be
relied upon by any person, firm or entity whatsoever, other than the addressee
hereof, without my prior written consent.
This opinion is rendered as of the date hereof, and I undertake no, and
hereby disclaim any, obligation to advise you of any changes in or developments
that might affect any matters or opinions set forth herein.
Very truly yours,
------------------------------
Name of Counsel
<PAGE> 53
EXHIBIT G
List of Independent Automobile Dealers From Whom Seller Purchases Contracts
<PAGE> 1
EXHIBIT 10.110
SERVICING AGREEMENT
This SERVICING AGREEMENT, dated as of February 4, 2000, is by and
between NATIONAL AUTO FINANCE COMPANY, INC., a Delaware corporation, as Servicer
("Servicer" or "NAFI"), and NUVELL CREDIT CORPORATION, a Delaware corporation
("Owner"), as owner of certain retail installment sales contracts related to the
sale of automobiles and/or light trucks (collectively, "Automobiles"), which
have been purchased by the Owner from NAFI.
WHEREAS, Owner is engaged in the business of purchasing retail
installment sales contracts related to the sale of Automobiles from automobile
dealers and finance companies;
WHEREAS, NAFI is engaged in the business of, among other things, making
and extending credit on Automobiles, purchasing retail installment sales
contracts from automobile dealers and servicing the contracts arising with
respect thereto;
WHEREAS, NAFI, as the "Seller," and the Owner, as the "Purchaser," have
entered into that certain Contract Sale Agreement dated as of the date of this
Servicing Agreement, pursuant to which NAFI has agreed to sell, and the Owner
has agreed to purchase, "Eligible Program Contracts" purchased by NAFI from
automobile dealers; and
WHEREAS, the Owner desires to engage NAFI to provide certain collection
and administration services with respect to the "Sold Program Contracts"
purchased by the Owner from NAFI pursuant to said Contract Sale Agreement.
NOW, THEREFORE, in consideration of the premises, the mutual agreements
hereinafter set forth, and other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the parties intending to be
legally bound, mutually agree with each other as follows:
ARTICLE I
DEFINITIONS
1.1 DEFINITIONS.
"ADVERSE CLAIM" means a claim of ownership or any lien, security
interest, title retention, trust or other charge or encumbrance, either legal or
in equity, or other type of preferential arrangement having the effect of a lien
or security interest upon or with respect to the Sold Program Contracts or the
Financed Vehicles other than in favor of the Owner with respect to the Sale
Agreement.
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<PAGE> 2
"AFFILIATE" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this Servicing Agreement, including any exhibits or
schedules hereto and all amendments hereof and hereto.
"AUTOMOBILE" means any new or used automobile or light-duty truck, the
purchase of which an Obligor financed pursuant to a Contract.
"BUSINESS COMBINATION" means any one or more of the following events or
actions or any event or action with substantially similar effects:
(1) The sale, exchange, lease, transfer or other disposition
to or with any Person and/or any of its Affiliates by the Servicer (in
a single transaction or in a series of related transactions) of all or
substantially all, or any substantial part, of its or their assets or
businesses or a change in control of the Servicer;
(2) Any merger, consolidation or purchase and/or assumption
("P&A") of assets and/or liabilities of the Servicer into or with
another Person and/or any of its Affiliates, where the Servicer is not
the surviving entity in such merger or consolidation or a change in
control of the Servicer; and
(3) The adoption of any plan or proposal of partial or
complete liquidation, dissolution, spinoff, splitoff or splitup of the
Servicer.
As used in this definition, a "series of related transactions" shall be deemed
to include a series of transactions with the same Person considered together
with all Affiliates of such Person.
"BUSINESS DAY" means any day other than a Saturday or a Sunday, or
another day on which banks in the States of Arkansas, Florida or Tennessee are
required, or authorized by law, to close.
"CERTIFICATE OF TITLE" means the actual motor vehicle title in question
or the application therefor pending issuance of the actual title; alternatively,
in those certain states whose law requires or contemplates that the original of
the actual motor vehicle title be possessed by the Obligor, then, in lieu of the
actual title, "Certificate of Title" shall mean such duplicate titles,
certificates or other documents as are permitted, required and/or contemplated
to be possessed by the secured party under such state's laws and/or procedures
or applications therefor pending issuance of the appropriate document.
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<PAGE> 3
"CLOSING DATE" means the first date on which the Owner shall purchase
Sold Program Contracts from NAFI pursuant to the Sale Agreement.
"COLLECTIONS ACCOUNT" means a separate interest-bearing account
established in the name of the Owner at a federally-insured depository
institution (the Lockbox Bank), into which shall be deposited all payments of
principal and interest made by Obligors on the Contracts and all proceeds
received with respect to the Financed Vehicles and other collateral securing the
Contracts.
"CONTRACT FILE" means, as to each Contract, (a) a copy of the executed
original of the Contract, (b) the original credit application fully executed by
each Obligor, (c) the credit information and reports relating to the Obligor
(including verifications of income, employment and residence), (d) a copy of the
original Certificate of Title (or application therefor), or other legal evidence
of title, (e) evidence of the insurance policies required to be obtained by the
Servicer from the Obligor pursuant to Section 6.6 of this Agreement, (f) all
applicable service contracts and credit life or credit accident and disability
insurance policies and agreements, (g) the odometer statement fully completed
and signed or other evidence of mileage of the Financed Vehicle, (h) all
applicable assignments relating to the Contract, and (i) any and all other
documents and records that Servicer shall receive, create or keep on file or in
computer media, in accordance with its customary procedures, relating to the
origination, administration, collection and servicing of such Contract or the
related Obligor or Financed Vehicle.
"CONTRACTS" means Sold Program Contracts that are serviced by the
Servicer pursuant to this Agreement.
"DEALER" means a franchise automobile dealer, an independent automobile
dealer described in the Sale Agreement, or an Affiliate of any such automobile
dealer.
"DEBOARD" means, whether with respect to an individual Contract, group
of Contracts or all Contracts being serviced pursuant to this Agreement,
deactivation of all electronic records related to such Contracts on the
Servicer's System.
"DEBOARDING DATE" means the date specified by the Owner in the
Deboarding Notice, by which date all Contracts so designated by the Owner are to
be Deboarded, or with respect to Contracts that are subject to a Total Reduction
Event, the date on which such Contracts are required to be Deboarded pursuant to
Section 6.10(a) of this Agreement.
"DEBOARDING NOTICE" means the written notice provided by the Owner to
the Servicer stating that the Servicer must Deboard the Contracts so designated
in the notice or in a schedule accompanying such notice.
"DEBOARDING PROCESS" means the process defined in Section 6.10(b) of
this Agreement.
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<PAGE> 4
"DEBT" of a party means (a) indebtedness for borrowed money, (b)
obligations evidenced by bonds, debentures, notes or other similar instruments,
(c) obligations to pay the deferred purchase price of property or services, (d)
obligations as lessee under leases which have been or should be, in accordance
with generally accepted accounting principles, recorded as capital leases, (e)
obligations secured by any lien or security interest granted by a party, even
though such party has not assumed or become liable for the payment of such
obligations, (f) obligations under direct or indirect guaranties in respect of,
and obligations (contingent or otherwise) to purchase or otherwise acquire or
otherwise to ensure a creditor against loss in respect of indebtedness or
obligations of others of the kinds referred to in clause (a) through (e) above,
and (g) liabilities in respect of unfunded vested benefits under plans covered
by the ERISA, as amended, and regulations promulgated thereunder.
"DEFAULT RATIO" means, as of any date of determination and for any
portfolio of Contracts for which such is being determined, a fraction (a) the
numerator of which is equal to the aggregate unpaid principal balance of all
Defaulted Contracts included in such portfolio, and (b) the denominator of which
is equal to the aggregate original principal balance of all Contracts included
in such portfolio.
"DEFAULTED CONTRACT" means a Contract (i) for which all or any part of
any Scheduled Payment is due and unpaid for one hundred twenty (120) days or
more after the due date of such Scheduled Payment; (ii) for which, the Financed
Vehicle securing such Contract is subject to surrender or repossession; (iii)
which has been liquidated by Servicer through the sale of the Financed Vehicle;
(iv) the Obligor of which is in default of any of the contractual requirements
(not including the installment payment requirements and obligations) of such
Contract, including, but not limited to, the requirement to provide insurance to
cover the Financed Vehicle; (v) neither the Obligor nor the Financed Vehicle can
be located by the Servicer, after using reasonable efforts to learn the
whereabouts of the Obligor and the Financed Vehicle; or (vi) the Obligor of
which is known by Owner or Servicer to have died or is a party to a proceeding
under any bankruptcy, insolvency or other debtor relief laws, other than as a
creditor or claimant.
"DEFICIENCY BALANCE RECEIVABLE" means a Contract for which the Servicer
has determined a deficiency balance, or which is classified as a Deficiency
Balance Receivable pursuant to the request of the Owner, and which shall be
collected by the Servicer pursuant to Section 6.15 of this Agreement.
"DELINQUENCY RATIO" means, as of any date of determination and for any
portfolio of Contracts for which such is being determined, a fraction (a) the
numerator of which is equal to the aggregate unpaid principal balance of all
Contracts included in such portfolio, not including Defaulted Contracts, that
involve a Delinquent Obligor, and (b) the denominator of which is equal to the
aggregate unpaid principal balance of all Contracts, not including Defaulted
Contracts, included in such portfolio.
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<PAGE> 5
"DELINQUENT OBLIGOR" means with respect to any Contract, the Obligor of
such Contract that is delinquent at least thirty-one (31) days with respect to
any Scheduled Payment, or part thereof, such delinquency to be determined
without giving effect to (i) any payments made other than by the Obligor or (ii)
any grace period permitted by the related Contract.
"ELECTRONIC CONTRACT INFORMATION" means, as to each Contract, the
applicant information provided by the applicant and retained on electronic
medium, all electronically transmitted documents and information provided by an
applicant to a Dealer, all of which may be retained and transmitted by
electronic means to Servicer, and the following information with respect to each
such Contract: (a) the original Amount Financed, (b) the unpaid principal
balance, (c) the amount of each monthly payment due from the Obligor, (d) the
APR (calculated in accordance with the Contract), (e) the Contract's origination
date, (f) the date on which in each month the Scheduled Payment is due, (g) the
Contract's original term in months, (h) the next payment due date, (i) the
number of days delinquent, if applicable, (j) the accrued and unpaid interest or
finance charge of such Contract, (k) Dealer participation, if any, paid or to be
paid to a Dealer, (l) the late payment fee and NSF fee applicable to such
Contract, (m) the effective Buy Rate applicable to such Contract, (n) the credit
quality and/or classification of such Contract, in accordance with NAFI's
Contract Finance Program Guidelines as defined in the Sale Agreement, (o) the
number of times the due date for any Scheduled Payment has been extended or
deferred by the Servicer, (p) the delinquency history of the Contract, (q) the
Servicer's collectors' comments relating to the Contract, (r) the collection
status of the Contract, established by the Servicer in accordance with the terms
of this Agreement, and (s) such other information as is generally maintained by
the Servicer pursuant to its Servicing Policies and Procedures or as may be
reasonably requested by Owner to be transmitted to Owner by Servicer with
respect to each such Contract.
"ERISA" means the Employment Retirement Income Security Act of 1974, as
amended.
"EVENTS OF DEFAULT" means any event set forth in Article X of this
Servicing Agreement.
"FINANCED VEHICLE" means, with respect to a Contract, the Automobile,
together with all accessions thereto, securing the related Obligor's
indebtedness under such Contract.
"GOVERNMENTAL AUTHORITY" means the United States of America, any
federal, state, local or other political subdivision thereof and any entity
exercising executive, legislative, judicial, regulatory or administrative
functions thereof or pertaining thereto.
"INDEMNIFIED PERSONS" means any Person entitled to indemnification by
NAFI or by Owner pursuant to this Servicing Agreement.
"INITIAL PERIOD" has the meaning set forth in Section 11.1 of this
Servicing Agreement.
"INSURANCE POLICIES" means all comprehensive and collision, fire and
theft insurance policies maintained by the Obligors with respect to the Financed
Vehicles and any credit (including
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<PAGE> 6
credit life and credit disability), warranty or similar insurance maintained by
the Obligors and benefitting the holder of the Contracts.
"INSURANCE PROCEEDS" means all amounts recovered pursuant to the
Insurance Policies with respect to any Contract, all of which shall be promptly
deposited by the Servicer into the Collections Account.
"LAW" means with respect to any Person, property or matter, any
judgment, order, decree, writ, injunction, award, statute, rule, law,
regulation, published Government Authority or agency interpretation, ordinance,
code or other requirements applicable to such Person, property or matter.
"LIQUIDATION PROCEEDS" means net cash amounts recovered in connection
with the liquidation of a Financed Vehicle after payment of the reasonable costs
incurred in connection with the repossession, sale and liquidation of the
Financed Vehicle, including, without limitation, taxes owed to state or other
Governmental Authorities, repossession charges, transportation fees and charges,
storage fees, refurbishing expenses and auction or sales fees.
"LOCKBOX" means the lockbox established in the name of the Owner at the
Lockbox Bank, at which Obligors will be instructed by the Servicer to deliver
Scheduled Payments.
"LOCKBOX BANK" means the federally-insured depository institution
jointly determined by the Servicer and the Owner that will be responsible for
receiving and processing Scheduled Payments delivered to the Lockbox and at
which the Collections Account will be maintained.
"LOSS RATIO" means, as of any date of determination and for any
portfolio of Contracts for which such is being determined, a fraction (a) the
numerator of which is equal to the aggregate unpaid principal balance of all
Deficiency Balance Receivables included in such portfolio, and (b) the
denominator of which is equal to the aggregate original principal balance of all
Contracts included in such portfolio.
"MATERIAL ADVERSE EFFECT" means, with respect to a Person or Contract,
an event, change or occurrence which, individually or together with any other
event, change or occurrence, has a material adverse effect on (i) the financial
position, business, or results of operations of such Person and its
Subsidiaries, taken as a whole; (ii) the ability of such Person to perform its
obligations under this Servicing Agreement or to consummate the other
transactions contemplated hereby; or (iii) the value, enforceability or
marketability of any Contract or any Financed Vehicle. The foregoing
notwithstanding, "Material Adverse Effect" shall not be deemed to include the
effect of compliance with the provisions of this Servicing Agreement on the
results of operations of the parties hereto.
"NONACCRUAL CONTRACT" means a Contract that for investor accounting
purposes is no longer deemed to accrue interest or a finance charge. A Contract
shall be classified as
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<PAGE> 7
"Nonaccrual" by the Servicer pursuant to the nonaccrual policy of the Owner, as
such may be amended by the Owner from time to time.
"OBLIGOR" means, with respect to any Contract, the Owner and
co-purchaser or guarantor of the related Financed Vehicle or any other Person
who owes or may be liable for payments under such Contract, whether as a
guarantor, endorser or otherwise.
"OFFICER'S CERTIFICATE" means, with respect to any Person, a
certificate signed by the Chairman of the Board, the Chief Executive Officer,
the President, a Vice President, the Treasurer, the Secretary or any other duly
authorized officer of such Person.
"OWNER" means the Person identified on the first page of this Agreement
as Owner of the Contracts to be serviced under this Servicing Agreement.
"PERMIT" means any federal, state, local and foreign governmental
approval, authorization, certificate, easement, filing, franchise, license,
notice, permit or right to which any Person is a party or that is or may be
binding upon or inure to the benefit of any Person or its securities, assets or
business.
"REPOSSESSION FEE" means with respect to any Contract and subject to
all applicable Laws for the jurisdiction where such Contract is located, a fee
payable to Servicer by Owner in the amount of Two Hundred Fifteen and 00/100
Dollars ($215.00) per successful repossession and liquidation of a Financed
Vehicle.
"SALE AGREEMENT" means the Contract Sale Agreement executed by NAFI, as
"Seller," and Owner, as "Purchaser," of even date with this Agreement.
"SCHEDULED PAYMENT" means with respect to any Contract, the amount
indicated in such Contract as required to be paid by the Obligor during each
calendar month by the due date specified in such Contract, after giving effect
to any rescheduling or reduction of payments in any insolvency, bankruptcy or
similar proceeding.
"SCHEDULED TERMINATION DATE" means the date on which this Servicing
Agreement is scheduled to terminate, as set forth in Section 11.1 of this
Agreement.
"SERVICER" means National Auto Finance Company, Inc., and its
successors and assigns.
"SERVICER'S SYSTEM" means the Servicer's proprietary computer loan
servicing system, including, but not limited to, the hardware, software, the
source code for the software and all field and layout descriptions.
"SERVICING COMPENSATION" means the Servicing Fee, and the other amounts
to which Servicer is entitled pursuant to Article VII of this Agreement.
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<PAGE> 8
"SERVICING EXPENSES" means any and all expenses incurred by Servicer in
performance of its obligations and duties pursuant to this Servicing Agreement
and which are reimbursable by Owner pursuant to Section 7.1(d) of this
Agreement.
"SERVICING FEE" means with respect to each Contract that is not a
Deficiency Balance Receivable, an amount equal to Eighteen and 85/100 Dollars
($18.85) per Contract per calendar month or part of a calendar month for which
the Servicer shall provide services pursuant to this Agreement, payable monthly,
as adjusted from time to time as set forth in Section 7.1 of this Agreement.
"SERVICING POLICIES AND PROCEDURES" means the Servicer's existing
standard servicing policies and procedures for nonprime automobile receivables,
a copy of which has been previously provided to the Owner, together with the
NAFI/Nuvell Credit Corporation Servicing Standards attached as Exhibit B to this
Servicing Agreement. If and to the extent that the Servicer's existing standard
servicing policies and procedures for nonprime automobile receivables conflict
with or are inconsistent with the NAFI/Nuvell Credit Corporation Servicing
Standards attached hereto as Exhibit B, then the NAFI/Nuvell Credit Corporation
Servicing Standards shall prevail. The Servicer's Servicing Policies and
Procedures may be amended by the Servicer from time to time as set forth in
Section 6.2(d) of this Agreement.
"SOLD PROGRAM CONTRACT" means an "Eligible Program Contract," as
defined in the Sale Agreement, sold by NAFI to Owner pursuant to the Sale
Agreement.
"SUBSIDIARY" means, as to any Person, any corporation or other entity
of which securities or other ownership interests having ordinary voting power to
elect a majority of the Board of Directors or other Persons performing similar
functions are at the time directly or indirectly owned by such Person.
"TERM" means the term of this Servicing Agreement, as set forth in
Section 11.1 of this Servicing Agreement.
"TOTAL REDUCTION EVENT" means, as to any Contract, the earlier of: (a)
the date of payment or pre-payment in full by or on behalf of the related
Obligor of the outstanding balance of the Contract, together with any unpaid
finance charges and other amounts payable in respect thereof, or (b) the date on
which the Servicer, in accordance with its Servicing Policies and Procedures, or
the Owner determines that no further proceeds (including in connection with any
litigation for a deficiency judgment) are expected to be received with respect
to the Contract or that the Contract is uncollectible.
"UCC" means the Uniform Commercial Code as in effect in the state where
the Contract was originated.
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<PAGE> 9
"VSI POLICY" means the Interstate Indemnity Company insurance policy,
or any replacement policy, which has been purchased by the Servicer for the
purpose of providing VSI insurance coverages for automobile receivables owned
and/or serviced by the Servicer.
1.2 USAGE OF TERMS.
With respect to all terms in this Agreement, the singular includes the
plural and the plural the singular; words importing any gender include the other
genders; references to "writing" include printing, typing, lithography and other
means of reproducing words in a visible form; references to agreements and other
contractual instruments include all subsequent amendments thereto or changes
therein entered into in accordance with their respective terms and not
prohibited by this Agreement; references to Persons include their permitted
successors and assigns; and the term "including," means "including without
limitation." All section and article references shall be to sections and
articles in this Agreement. Any capitalized term herein that is not specifically
defined herein shall have the meaning ascribed to it set forth in the Sale
Agreement.
ARTICLE II
CONDITIONS PRECEDENT TO EFFECTIVENESS
OF SERVICING AGREEMENT
2.1 CONDITIONS PRECEDENT TO OBLIGATIONS OF OWNER.
The obligation of Owner to tender Sold Program Contracts to the
Servicer pursuant to this Servicing Agreement is subject to the conditions
precedent that Owner shall have satisfactorily completed its due diligence
review of the Servicer and its operations and that Owner shall have received the
following, in form and substance satisfactory to Owner, by the Closing Date, or
such other date as may be specified for the receipt of such document or
instrument by the Owner.
(a) The articles of incorporation of the Servicer certified, as of a
date no more than ten (10) days prior to the Closing Date, by the Secretary of
State of Delaware;
(b) A good standing certificate from the State of Delaware, dated no
later than ten (10) days prior to the Closing Date, and within twenty (20) days
after the Closing Date, from each state in which the Servicer is required to
qualify to do business as a foreign corporation, each of which shall be dated no
later than thirty (30) days prior to the actual delivery date;
(c) A list of states in which the Servicer is qualified to engage in
business and, if necessary, has obtained a collection agency license or like or
similar license and a copy of each such collection agency license or other
authority to transact such business;
(d) A certificate of the Secretary or Assistant Secretary of the
Servicer (on which certificate the Owner may conclusively rely until such time
as it shall receive from the Servicer
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<PAGE> 10
a revised certificate meeting the requirements of this subsection) certifying as
of the Closing Date: (i) the names and true signatures of the officers
authorized on its behalf to sign this Servicing Agreement, (ii) a copy of the
Servicer's articles of incorporation and bylaws, and (iii) a copy of the
resolutions of the board of directors of the Servicer approving this Agreement
and the transactions contemplated hereby;
(e) An Officer's Certificate in the form of Exhibit E attached to the
Sale Agreement;
(f) The favorable Opinion of Servicer's outside counsel satisfactory to
Owner, in substantially the form of Exhibit F attached to the Sale Agreement;
(g) The Servicer's Servicing Policies and Procedures;
(h) A list and detailed description of material pending and threatened
litigation to which the Servicer or any of its Affiliates or assets may be
subject;
(i) The financial statements of Servicer required to be delivered by
the Servicer to the Owner pursuant to Section 3.1(a) of the Sale Agreement; and
(j) Such other approvals, consents, opinions, documents and
instruments, as Owner may reasonably request.
Upon the receipt by the Owner of the items referred to in Paragraphs (a) through
(j) of this Section 2.1, the Owner shall notify the Servicer in writing that the
conditions precedent to the effectiveness of this Servicing Agreement have been
satisfied and that this Servicing Agreement is effective as of the date and time
specified in such notice.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SERVICER
3.1 GENERAL REPRESENTATIONS AND WARRANTIES OF SERVICER.
The Servicer represents and warrants to Owner, as of the date hereof
and as of each day that this Agreement is in effect, as follows:
(a) The Servicer is a corporation duly organized, validly existing and
in good standing under the laws of Delaware, is duly qualified to do business
and is in good standing in every jurisdiction in which the nature of its
business requires it to be so qualified and which failure to qualify could have
a Material Adverse Effect on Servicer.
(b) The Servicer has the power and authority to execute and deliver
this Servicing Agreement and to perform the transactions contemplated hereby.
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<PAGE> 11
(c) The execution, delivery and performance by the Servicer of this
Servicing Agreement and the transactions contemplated hereby, (i) have been duly
authorized by all necessary action on the part of the Servicer, (ii) do not
contravene or cause the Servicer to be in default under (A) the Servicer's
articles of incorporation or bylaws, (B) any contractual restriction with
respect to any Debt of the Servicer or contained in any indenture, loan or
credit agreement, lease, mortgage, security agreement, bond, note or other
agreement or instrument binding on or affecting the Servicer or its property, or
(C) any law, rule, regulation, order, writ, judgment, award, injunction or
decree applicable to, binding on or affecting the Servicer or its property, and
(iii) do not result in or require the creation of any Adverse Claim.
(d) This Servicing Agreement has been duly executed and delivered by
the Servicer.
(e) No consent of, or other action by, and no notice to or filing with,
any Governmental Authority or any other party is required for the due execution,
delivery and performance by the Servicer of this Servicing Agreement or for the
perfection of or the exercise by Owner of any of its rights or remedies
hereunder, each of which has been obtained and complete copies of which have
been provided to Owner.
(f) This Servicing Agreement constitutes the legal, valid and binding
obligation of the Servicer enforceable against the Servicer in accordance with
its terms, subject to bankruptcy laws and other similar laws of general
application affecting rights of creditors and subject to the application of the
rules of equity, including those respecting the availability of specific
performance.
(g) To the best knowledge of Servicer, there is no pending or
threatened action, suit or proceeding against or affecting the Servicer, its
Affiliates, its officers or the property of the Servicer in any court or
tribunal, or before any arbitrator of any kind or before or by any Governmental
Authority (i) asserting the invalidity of this Servicing Agreement, (ii) seeking
to prevent the consummation of any of the transactions contemplated hereby,
(iii) seeking any determination or ruling that might materially and adversely
affect (A) the performance of this Servicing Agreement, or (B) the validity or
enforceability of this Servicing Agreement.
(h) No injunction, writ, restraining order or other order of any
material nature adverse to the Servicer or the conduct of its business or which
is inconsistent with the due performance by the Servicer of its duties,
responsibilities and obligations contemplated by this Servicing Agreement has
been issued by a Governmental Authority.
(i) No defaulted Debt exists under any instrument or agreement
evidencing, securing or providing for the issuance of Debt of the Servicer.
(j) The Servicer is solvent and will not become insolvent after giving
effect to the transactions contemplated by this Servicing Agreement; the
Servicer is paying its debts as they mature; the Servicer has not incurred debts
beyond its ability to pay as they mature; and the
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<PAGE> 12
Servicer, after giving effect to the transactions contemplated by this Servicing
Agreement, will have adequate assets to conduct its business in the foreseeable
future.
(k) The Servicer has and maintains all permits, licenses,
authorizations, registrations, approvals and consents of Governmental
Authorities (including, without limitation, collection agency licenses, if any)
necessary for (i) the activities and business of the Servicer as currently
conducted and as proposed to be conducted, (ii) the ownership, use, operation
and maintenance of its properties, facilities and assets and (iii) the
performance by the Servicer of its duties, responsibilities and obligations
under this Servicing Agreement.
(l) The Servicer has filed on a timely basis all tax returns (federal,
state, and local) required to be filed and has paid or made adequate provisions
for the payment of all taxes, assessments and other governmental charges due
from the Servicer.
(m) To the best knowledge of Servicer, each pension plan or profit
sharing plan to which the Servicer is a party has been fully funded in
accordance with the obligations of the Servicer set forth in such plan.
(n) With respect to the Servicer, there has not occurred any event
which has or is reasonably likely to have a Material Adverse Effect on its
ability to perform its obligations under this Servicing Agreement.
(o) The financial statements of the Servicer delivered to the Owner
pursuant to Section 2.1(i) of this Agreement fairly present the consolidated
financial condition, business and operations of the Servicer as of the dates
indicated in such financial statements and the consolidated results of
operations of the Servicer for the periods ended on such dates all in accordance
with generally accepted accounting principles consistently applied, and since
September 30, 1999, there has not occurred any material adverse change in any
such condition.
(p) All information heretofore or hereafter furnished with respect to
the Servicer to Owner in connection with any matter contemplated by this
Agreement is and will be true and complete in all material respects and does not
and will not omit to state a material fact necessary to make the statements
contained therein not misleading.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF OWNER
4.1 GENERAL REPRESENTATIONS AND WARRANTIES OF OWNER.
Owner represents and warrants to the Servicer as of the date hereof and
as of each day that this Agreement is in effect, as follows:
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(a) The Owner is a corporation duly organized, validly existing and in
good standing under the laws of Delaware, is duly qualified to do business and
is in good standing in every jurisdiction in which the nature of its business
requires it to be so qualified and which failure to qualify could have a
Material Adverse Effect on Owner.
(b) The Owner has the power and authority to execute and deliver this
Servicing Agreement and to perform the transactions contemplated hereby.
(c) The execution, delivery and performance by the Owner of this
Servicing Agreement and the transactions contemplated hereby have been duly
authorized by all necessary action on the part of the Owner, and this Servicing
Agreement has been duly executed and delivered by the Owner.
(d) No consent of, or other action by, and no notice to or filing with,
any Governmental Authority or any other party is required for the due execution,
delivery and performance by the Owner of this Servicing Agreement or for the
perfection of or the exercise by Servicer of any of its rights or remedies
hereunder, each of which has been obtained and complete copies of which have
been provided to Servicer.
(e) This Servicing Agreement constitutes the legal, valid and binding
obligation of the Owner enforceable against the Owner in accordance with its
terms, subject to bankruptcy laws and other similar laws of general application
affecting rights of creditors and subject to the application of rules of equity,
including those respecting the availability of specific performance.
(f) The execution, delivery and performance of this Servicing
Agreement, the consummation of the transactions contemplated hereby and the
fulfillment of the terms hereof will not conflict with, result in any breach of
or constitute (with or without notice or lapse of time) a default under the
articles of incorporation or bylaws of Owner, or conflict with or resulting in a
breach of any of the terms or provisions of, or constitute (with or without
notice or lapse of time) a default under, any indenture, agreement, mortgage,
deed of trust or other instrument to which Owner is a party or by which Owner is
bound or to which any of its properties are subject, or result in the creation
or imposition of any lien upon any of its properties pursuant to the terms of
any such indenture, agreement, mortgage, deed of trust or other instrument, or
constitute a violation of any law, order, rule or regulation applicable to Owner
or its properties of any Governmental Authority having jurisdiction over Owner
or any of its properties.
(g) There are no proceedings or investigations pending, or, to Owner's
knowledge, threatened, before any Governmental Authority having jurisdiction
over Owner or any of its properties: (i) asserting the invalidity of this
Agreement, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Agreement, or (iii) seeking any determination or ruling
that might materially and adversely affect the performance by Owner of its
obligations under, or the validity or enforceability of, this Agreement.
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ARTICLE V
BREACH OF REPRESENTATIONS AND WARRANTIES
SECTION 5.1 BREACH OF REPRESENTATIONS AND WARRANTIES.
It is understood and agreed that the representations and warranties set
forth in Article III and Article IV shall last until such time as this Servicing
Agreement is terminated. Upon discovery by Servicer or Owner, as the case may
be, of a breach of any of the foregoing representations or warranties, the
Person discovering such breach shall give prompt written notice to the other
party. The breaching party shall cure such breach in all material respects
within the time required by Section 10.1 of this Servicing Agreement, or with
the prior written consent of an officer of the non-breaching party, such longer
period as is specified in such consent.
ARTICLE VI
ADMINISTRATION AND SERVICING OF CONTRACTS
SECTION 6.1 SERVICER'S EXCLUSIVE RIGHT TO ADMINISTER AND SERVICE
CONTRACTS.
Owner grants unto Servicer, pursuant to the terms and provisions of and
for the Term of this Servicing Agreement, the exclusive right to administer and
service all Sold Program Contracts for which the Servicer is qualified to
provide all of the services described in this Servicing Agreement and the
servicing of which by the Servicer will not result in any breach by the Servicer
of any covenant, obligation, representation or warranty set forth in this
Servicing Agreement.
SECTION 6.2 GENERAL DUTIES OF SERVICER.
(a) Servicer shall service, administer and make collections on the
Contracts in accordance with all applicable Laws, with the applicable provisions
of the applicable Contracts and with reasonable care, using that degree of skill
and attention customary and usual for institutions which service nonprime
Automobile receivables similar to the Contracts and that Servicer exercises with
respect to similar Automobile receivables that it services for itself or others.
(b) Servicer's duties shall include collection and posting of all
payments, responding to inquiries of Obligors or of Governmental Authorities
with respect to such Contracts, contacting Delinquent Obligors, sending payment
statements to Obligors, accounting for collections, and furnishing monthly and
annual statements to Owner in a mutually acceptable format with respect to
Contracts. Without limiting the generality of the foregoing, and subject to the
servicing standards set forth in this Servicing Agreement, Servicer is
authorized and empowered by Owner to execute and deliver any and all instruments
of satisfaction or cancellation, or partial or full release or discharge, and
all other comparable instruments with respect to such Contracts or to the
Financed Vehicles securing such Contracts and/or the Certificates of Title with
respect to such
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Financed Vehicles. If Servicer shall commence a legal proceeding in its own name
to enforce a Contract, which Servicer shall do only with the prior consent of
Owner, Owner shall thereupon be deemed to have automatically assigned, solely
for the purpose of collection, such Contract to Servicer. Servicer shall prepare
and furnish, and Owner shall execute, any powers of attorney and other documents
reasonably necessary or appropriate to enable Servicer to carry out its
servicing and administrative duties hereunder.
(c) Servicer may retain third parties, including agents and independent
contractors, pursuant to its Servicing Policies and Procedures to perform
certain of its duties and services under this Servicing Agreement without prior
written notice to Owner.
(d) The Servicer may, upon giving reasonable prior notice to the Owner,
at its discretion, change its Servicing Policies and Procedures, not including
the NAFI/Nuvell Credit Corporation Servicing Standards attached hereto as
Exhibit B, which may be amended only upon agreement of both the Servicer and the
Owner; provided, however, any material amendment or change by the Servicer of
its Servicing Policies and Procedures with respect to the Contracts shall be
made only with the prior written consent of the Owner.
SECTION 6.3 COLLECTION AND ALLOCATION OF CONTRACT PAYMENTS, INSURANCE
PROCEEDS AND LIQUIDATION PROCEEDS.
(a) Consistent with the terms of this Servicing Agreement, Servicer
shall make reasonable efforts to timely collect all payments lawfully called for
under the terms and provisions of the Contracts as and when the same shall
become due, and shall follow such collection procedures as it follows with
respect to all comparable Automobile receivables that it services for itself.
Servicer, at its expense, shall notify each Obligor to make payments either in
person to the Servicer or by mail or other appropriate means to the Lockbox. All
payments received at the Lockbox shall be processed by the Lockbox Bank and
deposited in the Collections Account, unless a payment cannot be processed
because of a stop processing instruction given to the Lockbox Bank by the
Servicer, pursuant to is Servicing Policies and Procedures, or the Lockbox Bank
is unable to identify the account for which the payment was made. If the
Servicer receives any payment for a Contract directly, or when the Servicer
receives any Insurance Proceeds or Liquidation Proceeds, the Servicer shall
promptly, no later than one (1) Business Day after receipt thereof, deposit such
amounts into the Collections Account, and at all times the Servicer shall hold
such payments and proceeds in trust for the benefit of Owner, segregated from
the assets of Servicer. Servicer shall allocate Scheduled Payments, Insurance
Proceeds, Liquidation Proceeds and other collections with respect to the
Contracts between principal and interest in accordance with the terms of the
related Contracts and applicable Law.
(b) Except as otherwise provided in this Servicing Agreement, Servicer
may grant due date extensions or payment deferments to an Obligor only in
accordance with its Servicing Policies and Procedures.
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(c) The Servicer shall determine when a Contract has been paid in full,
and the Servicer shall notify the Owner of all such determinations in the
monthly reports provided by the Servicer to the Owner pursuant to Section 6.7 of
this Servicing Agreement. If the Servicer requires possession of the original of
the Contract or the Certificate of Title in order to perform its duties and
obligations hereunder, prior to taking possession of such documents, the
Servicer will deliver to the Owner a trust receipt in a form approved by the
Owner. The Servicer agrees to promptly return any such documents, possession of
which the Servicer has taken in accordance with this Section 6.3(c), after its
need for possession thereof ceases.
(d) The Servicer will refund to Obligors any overpayments of which the
Servicer is aware. All dishonored checks written by Obligors will be charged to
the Collections Account. Reconciliations for checks dishonored during a calendar
month will appear in the reports delivered by the Servicer to the Owner for such
calendar month. Whenever the Servicer receives an unidentified check or
unidentified remittance which the Servicer believes may relate to a Contract,
the Servicer will deposit the remittance in the Collections Account, and for a
period of thirty (30) days thereafter will use reasonable efforts to ascertain
the proper allocation of the amount. At the end of the 30-day period, the
Servicer shall request reimbursement of such amount from the Owner and shall
issue a refund check to the payor, or if such is not possible, the Servicer will
hold and maintain the reimbursement received from the Owner in accordance with
applicable escheat laws, if any such laws apply.
(e) When an Obligor no longer has a legal interest in the Financed
Vehicle, and when an extended warranty contract, credit life or disability
policy or other service payable in a lump sum premium was financed, the Servicer
will apply for a refund of the premium in accordance with the terms of the
agreement for the given service. The Owner will provide the Servicer such
authorizations as may be required to perform such function. Any amounts received
by the Servicer shall be held in trust by the Servicer for the benefit of the
Owner and shall be deposited into the Collections Account within one (1)
Business Day after receipt by the Servicer and credited as proceeds on the
appropriate Contract.
SECTION 6.4 CERTIFICATES OF TITLE.
(a) If the Servicer learns that a Contract has no evidence of an
original Certificate of Title, the Servicer shall notify the Owner in writing
and use reasonable efforts to follow up with the applicable Governmental
Authority to obtain receipt of such Certificate of Title. These efforts may
require that the Servicer reconstruct the chain of title in appropriate cases.
Upon receipt of any original Certificate of Title, the Servicer shall promptly
verify that the information contained on the Certificate of Title is correct,
that the appropriate Person is named as the lienholder and owner, as applicable,
of the Financed Vehicle covered thereby, and shall arrange for the immediate
delivery of the Certificate of Title to the Owner, at such address and to such
person's attention as designated by the Owner in writing to the Servicer. The
Servicer shall provide periodic reports, in such form as it may reasonably
select, to the Owner as to the status of the Servicer's efforts under this
Section 6.4(a).
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(b) The Servicer will, on behalf of the Owner, retitle a Financed
Vehicle which has been permanently moved or transported to a different state.
(c) The Servicer will request the Owner to deliver to the Servicer the
Certificate of Title for a Financed Vehicle for which the Servicer intends to
release the lien thereon pursuant to Section 6.8 of this Agreement. The Servicer
shall be responsible for delivering the Certificate of Title to the appropriate
Person to accomplish the release of lien. At all times that a Certificate of
Title is in the possession of the Servicer, it shall be held in trust by the
Servicer for the benefit of the Owner.
SECTION 6.5 REALIZATION UPON DEFAULTED CONTRACTS.
(a) Servicer shall use all commercially reasonable efforts consistent
with the servicing procedures set forth herein, to lawfully repossess or
otherwise convert the ownership of the Financed Vehicle securing any Contract as
to which Servicer shall have determined eventual payment in full is unlikely,
and where permitted by the express terms of the Contract and applicable Law.
Servicer shall commence efforts to repossess or otherwise convert the ownership
of a Financed Vehicle for any Defaulted Contract as determined by Servicer's
reasonable judgment after considering the current status of such Contract;
provided, however, that Servicer may elect not to commence such efforts within
such time period if, in good faith and reasonable judgment, it determines either
that such action would violate the terms of the related Contract, it would be
impracticable to do so or that the proceeds ultimately recoverable with respect
to such Contract would be increased by forbearance, in which case, such Contract
shall constitute a Defaulted Contract.
(b) Servicer shall use all commercially reasonable efforts to timely
make all collections on Contracts, which may include reasonable efforts
consistent with the terms hereof and applicable Law to recover under any
recourse provisions from Dealers, originators or transferors, and selling the
Financed Vehicle at public or private sale. If Servicer determines in its
reasonable judgment that it should retain the services of an attorney to
exercise Owner's rights pursuant to such recourse provisions by commencing
litigation or taking such other action, Servicer shall so advise Owner in
writing of such recommended course of action, and if such recommended course of
action is agreed to by Owner, Owner will pay all reasonable attorney's fees,
court costs and related litigation expenses relating to such proceeding or
action. Upon obtaining such approval from the Owner, Servicer will select the
attorney(s) to commence litigation and/or take such other action necessary or
appropriate to protect the interests of Owner. Servicer shall sell all
repossessed Financed Vehicles at auction, unless it determines in its good faith
and reasonable judgment either that it would be impractical to do so or that the
proceeds ultimately recoverable with respect to such Contracts would be
increased by an alternative sale procedure. The foregoing shall be subject to
the provision that, in any case in which the Financed Vehicle shall have
suffered damage, Servicer shall not expend funds in connection with the repair
or the repossession of such Financed Vehicle unless it shall determine in its
good faith and reasonable discretion that such repair and/or repossession will
increase the net proceeds ultimately recoverable with respect to
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such Contracts by an amount greater than the amount of such expenses. All
amounts received upon sale of a Financed Vehicle shall be remitted directly by
Servicer to the Collections Account within one (1) Business Day after receipt by
the Servicer.
(c) If Servicer receives a notice that an Obligor has died or has filed
for relief under the United States Bankruptcy Code, Servicer shall notify Owner
of the death or file a proof of claim and notify Owner of the bankruptcy filing.
In the event that activities outside the scope of routine consumer bankruptcy
proceedings, and follow-up are necessary, Owner may, at its option, instruct
Servicer to retain counsel to represent Owner and Servicer in the Obligor's
bankruptcy at the expense of Owner. If Owner determines that Servicer should
retain the services of an attorney to represent the interests of the Owner,
Servicer will select the attorney, and Owner will pay all reasonable attorney's
fees and costs, including all filing fees, relating to such proceeding.
SECTION 6.6 PHYSICAL DAMAGE INSURANCE; OTHER INSURANCE.
If proper insurance verification forms are not contained in a Contract
File, the Servicer will, for a period of ninety (90) days after making such
determination, take all reasonable steps to obtain a copy of the required
Insurance Policy. If evidence of the required Insurance Policy is not obtained
within this ninety (90)-day period, the Servicer will notify the Owner of this
deficiency in the monthly reports provided by the Servicer to the Owner. Upon
the Servicer's learning of any cancellation or reduction of insurance, the
Servicer will send a written notice to the Obligor in an attempt to secure or
verify the proper Insurance Policy. If the Servicer is unable to verify that the
Obligor has in place the proper Insurance Policy within the time required by the
Servicer's Servicing Policies and Procedures, then the Servicer may proceed to
repossess the Financed Vehicle.
SECTION 6.7 SERVICER'S RECORDKEEPING AND REPORTING REQUIREMENTS.
(a) Servicer shall maintain borrower and investor accounting records
for each Contract, which records shall be updated at least every Business Day,
which records shall include the original principal balance of the Contract, the
amount of the original purchase discount, acquisition fee or purchase premium
applicable to the purchase of the Contract by the Owner, the amount of dealer
reserve, participation and/or dealer finance income paid or to be paid to a
dealer with respect to the Contract, the amount of dealer reserve, participation
and/or dealer finance income to be refunded by a dealer to the Owner with
respect to the Contract, the amount of each payment and other proceeds applied
to either principal, interest, the finance charge or other charges with respect
to the Contract, the date of receipt of each payment and other proceeds, the
interest rate or periodic finance charge applicable to the Contract, the amount
of interest or finance charge that has been accrued on the Contract but not paid
by the Obligor, the amount of unearned interest or finance charge applicable to
the Contract, the current outstanding principal balance (for both borrower
purposes and investor accounting purposes), the amount of purchase discount and
acquisition fee accretion and purchase premium amortization applicable to the
Contract, and such other Electronic Contract Information required to be
maintained by the Servicer. Servicer's
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obligation to perform its servicing duties and maintain accurate records
hereunder is subject to and limited by the accuracy, completeness and
availability of the information Servicer receives initially and from time to
time from Owner.
(b) The Servicer shall provide to Owner, within the time requested by
Owner, monthly, quarterly and/or annual reports with respect to the Contracts,
the Financed Vehicles and the cash accounts maintained by the Servicer with
respect to the Contracts and the Financed Vehicles, which shall include a
general Servicer's report, a bank reconciliation report for each cash account
maintained by the Servicer, a trial balance (for both borrower purposes and
investor accounting purposes), a delinquency report, a repossession report, a
legal and bankruptcy report, a Contract payoff report, a Contract charge-off
report, a Defaulted Contract report, a Nonaccrual Contract report, an interest
earned past stop accrual report, a Contracts boarded by Servicer report, a
Contracts Deboarded by Servicer report, a Deficiency Balance Contracts
collection report, a Contract File exception report, a Contracts by state
report, an income by state report, and such other reports generally produced by
the Servicer for itself for similar type motor vehicle receivables owned or
serviced by the Servicer. All reports setting forth income, expense and
outstanding balance data with respect to the Contracts and the Financed Vehicles
shall be prepared in accordance with Generally Accepted Accounting Principles,
unless otherwise agreed by Owner.
(c) In addition to the reports required to be provided pursuant to
subsections (a) and (b) above, Servicer will provide to Owner such monthly,
quarterly and annual reports and information as Owner may reasonably request and
which Servicer is reasonably capable of providing, which reports shall be in a
mutually agreeable format. At the request of Owner, Servicer will provide a copy
of any report which Servicer receives from any outside service vendor for which
Servicer is not required to pay a fee.
SECTION 6.8 ADDITIONAL COVENANTS OF SERVICER.
Servicer shall not release the Financed Vehicle securing a Contract
from the security interest granted by such Contract in whole or in part except
in the event of payment in full by the Obligor thereunder or repossession, nor
shall Servicer take any action to impair the rights of Owner in such Contracts;
provided however, Servicer may release Owner's security interest in such
Financed Vehicle in its reasonable judgment if the balance owing on such
Contract is One Hundred and 00/100 Dollars ($100.00) or less.
SECTION 6.9 PURCHASE OF CONTRACTS UPON BREACH.
Servicer or Owner shall inform the other party, in writing, upon the
discovery of any breach of this Article VI; provided, however, that the failure
to give such notice shall not affect any obligation of either party hereunder.
In the event of a breach by Servicer and unless such breach shall have been
cured by the last day of the calendar month following the month in which such
breach was discovered, Servicer shall purchase any Contract materially and
adversely affected by such breach or any Contract relating to a breach the
nature of which materially and
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adversely affects the interest of Owner in such Contract. In consideration of
the purchase of such Contract, Servicer shall remit to Owner the amount for such
Contract which, under the terms of such Contract, would be required by the
Obligor to prepay in full such Contract, including the total principal balance
and interest up to, but excluding, the date of purchase. The sole and exclusive
remedy of Owner with respect to a breach of this Article shall be to require
Servicer to purchase Contracts pursuant to this Section; provided, however, that
Servicer shall indemnify Owner against all costs, expenses, losses, damages,
claims and liabilities, including reasonable fees and expenses of counsel, which
may be asserted against or incurred by Owner as a result of third-party claims
arising out of the events or facts giving rise to such breach.
SECTION 6.10 DEBOARDING OF CONTRACTS.
(a) The Servicer shall Deboard any Contract that becomes subject to a
Total Reduction Event within thirty (30) days after the end of the calendar
month in which the Total Reduction Event occurs. In addition, the Owner may
deliver to the Servicer, not less than fifteen (15) days' prior to the requested
Deboarding Date, a Deboarding Notice requesting that the Servicer Deboard any or
all Deficiency Balance Receivables being serviced hereunder. In such event, the
Owner shall provide to the Servicer with the Deboarding Notice a schedule of the
Deficiency Balance Receivables it desires to be Deboarded.
(b) Except as otherwise provided in this Section 6.10, upon receipt of
a Deboarding Notice, the Servicer shall take the steps necessary to transfer to
the Owner (or such other Person in accordance with the Owner's written
instructions) the serviced property related to each Contract identified on the
Deboarding Notice by the Deboarding Date, including the electronic records
(Electronic Contract Information) in such electronic form as may be reasonably
provided by the Servicer, and all money collected and held by the Servicer. The
Servicer shall continue to provide the services contemplated by this Agreement
up to the Deboarding Date on all such Contracts to be Deboarded. The Servicer
may, at its option, after completion of the Deboarding Process, retain the
electronic records related to such Contracts on the Servicer's System. Any
documents or moneys received by the Servicer on or after the Deboarding Date
shall be mailed (or, if so requested by the Owner, wire-transferred) to the
Owner within two (2) Business Days after receipt. The Servicer shall have no
obligation, on or after the Deboarding Date, to provide the services described
in this Article VI with respect to any Contract for which the Deboarding Process
has been completed, except as specifically set forth in Sections 6.9 and 6.11 of
this Agreement. In connection with any Deboarding of all Contracts pursuant to
this Section 6.10, the Servicer shall comply with Section 11.2 of this
Agreement.
SECTION 6.11 ACCESS TO CERTAIN DOCUMENTATION AND INFORMATION REGARDING
CONTRACTS.
Servicer and Owner, and their respective representatives, shall be
permitted, following reasonable notice to the other and during regular business
hours, to inspect, audit and make copies of and abstracts from the other's
records regarding any Contracts or related Obligors.
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SECTION 6.12 RIGHT OF OWNER TO AUDIT SERVICER'S OPERATION.
Upon receipt of seven (7) days prior written notice, Servicer shall
permit Owner to audit Servicer's operations at Servicer's location. Such audit
shall be limited to a review of those items that relate to this Servicing
Agreement. Such audit shall be during Servicer's normal business hours. All of
Owner's costs for such audit shall be borne by Owner, unless the results of such
audit shall indicate that a Servicer Default has occurred, which at the time of
such audit was known by the Servicer and with respect to which the Owner has not
received notice, in which event the Servicer shall pay the Owner's costs of such
audit. In lieu of an audit at the Servicer's location, Owner may, from time to
time, request that information, documents or records required pursuant to such
audit be sent to Owner.
SECTION 6.13 CRIME INSURANCE; CONTINGENT DISASTER RELIEF PROTECTION; ERRORS
AND OMISSIONS INSURANCE.
(a) Servicer shall maintain, at its own expense, a crime insurance
policy or a bond with responsible companies on all officers, employees or other
Persons acting on behalf of Servicer in any capacity with regard to the
Contracts to handle funds, money, documents and papers relating to the
Contracts. Any such insurance shall protect and insure Servicer against losses
for dishonest acts of such Persons and shall be maintained in a form that would
meet the requirements of prudent institutional servicers of Automobile
receivables similar to the Contracts and in an amount of not less than
Twenty-Five Thousand Dollars ($25,000) per occurrence. In addition, the Servicer
will maintain at all times during the Term of this Agreement errors and
omissions insurance in a reasonable amount, as determined jointly by the
Servicer and the Owner. The Servicer shall provide the Owner, within ten (10)
days after receipt of a written request from the Owner, a certificate of
insurance reflecting the amount of coverages, deductible amounts and expiration
dates of the policies providing the aforementioned coverages. No provision of
this Section 6.13 requiring such insurance shall diminish or relieve Servicer
from its duties and obligations as set forth in this Servicing Agreement.
(b) Servicer shall maintain, at its own expense, a computer disaster
recovery plan and computer disaster recovery procedures in forms consistent with
industry standards of prudent institutional receivables servicers. No provision
of this Section 6.13(b) requiring such a plan and such procedures shall diminish
or relieve Servicer from its duties and obligations as set forth in this
Servicing Agreement. Upon written request, Servicer shall cause to be delivered
to Owner a certification as to the existence of such a plan and such procedures.
(c) Servicer shall maintain, at its own expense, backup data tapes of
all Electronic Contract Information, and Servicer shall deliver to the Owner
within two (2) Business Days after the end of each calendar month a backup data
tape containing all Electronic Contract Information for the Contracts as of the
last day of such month.
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SECTION 6.14 POSSESSION OF CONTRACT FILES.
Owner shall, upon the execution and delivery of this Servicing
Agreement, authorize the delivery to Servicer the original of the documents in
each Contract File, not including the original Certificate of Title or the
original retail installment sales contract, which will be held by the Owner.
Servicer shall hold the contents of each Contract File in trust for the benefit
of Owner. Servicer's possession of the Contract Files is for the sole purpose of
servicing the related Contracts. In the event of termination of this Agreement,
Servicer shall promptly return all Contract Files to Owner, or to such other
Person as Owner may direct, as soon as is practicable after such termination.
6.15 COLLECTION OF DEFICIENCY BALANCE RECEIVABLES.
Upon liquidation of a Financed Vehicle, the Servicer will calculate the
Obligor's deficiency balance in accordance with the Contract and applicable Law,
taking into consideration all Liquidation Proceeds and Insurance Proceeds
received by the Servicer. Any such Deficiency Balance Receivable collected by
the Servicer shall be deposited in the Collections Account within one (1)
Business Day after received by the Servicer. The Servicer shall have the power
and authority to take all reasonable and customary steps necessary to collect a
Deficiency Balance Receivable (in conformity, at all times, with all applicable
Laws) and to do all things that the Owner could do to collect such amounts,
including, with the prior written consent of the Owner, the initiation of legal
proceedings against the Obligor.
ARTICLE VII
FEES AND EXPENSES PAYABLE TO SERVICER
7.1 SERVICING COMPENSATION AND SERVICING EXPENSES.
(a) As compensation for its services hereunder, Servicer shall be
entitled to charge Owner once each calendar month a Servicing Fee as of the last
day of each calendar month.
(b) With respect to any Deficiency Balance Receivable, in lieu of the
Servicing Fee set forth in subparagraph (a) above, the Servicer shall receive a
Deficiency Balance Receivable collection fee equal to One Third (1/3) of the net
amount collected by the Servicer with respect to such Deficiency Balance
Receivable (gross amount collected less reasonable out-of-pocket expenses
incurred by the Servicer in connection with the collection of the Deficiency
Balance Receivable).
(c) In addition, Servicer shall be entitled to receive and retain for
its own account, late charges, deferment/extension fees, assignment/transfer or
assumption fees, insufficient funds check charges (to the extent permitted by
the Contract and applicable state law and to the extent not charged by and
payable to other Persons), amortization schedule fees and optional insurance
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with respect to Contracts. In addition, Servicer shall be entitled to a fee of
Thirty-Five Dollars ($35.00) for each proof of claim prepared and filed by the
Servicer on behalf of the Owner with respect to a Contract subject to a claim in
bankruptcy, and Servicer shall be entitled to a fee of Five Dollars ($5.00) for
each Contract, not including any Deficiency Balance Receivable, for which the
Deboarding Process has been completed in accordance with Section 6.10(b), unless
the Deboarding Process is required because of a Servicer Event of Default, in
which event the Servicer shall not be entitled to receive such fee for any of
the Contracts Deboarded by the Servicer (the fees payable to the Servicer
pursuant to Sections 7.1(b) and (c) together with the Servicing Fee are
hereinafter referred to as the "Servicing Compensation"). Servicer shall be
required to pay all expenses incurred by Servicer hereunder and shall not be
entitled to reimbursement therefor, except as expressly provided herein.
(d) Without limiting the generality of the foregoing, Servicer shall be
entitled to be reimbursed from the Owner for certain Servicing Expenses,
consisting of reasonable fees and expenses of third parties incurred by Servicer
for (i) fees and expenses related to financing statements, continuation
statements and other documents and instruments necessary to maintain the
perfection and priority of the lien on a Financed Vehicle, (ii) the reasonable
fees and charges of legal counsel not salaried employees of Servicer, a
subservicer, or any Affiliate of either and others who shall have been retained
by Servicer subject to the limitations provided herein and in accordance with
the servicing standards set forth herein in connection with the enforcement,
collection, and foreclosure, of the related Contracts, (iii) fees and expenses
(including reasonable legal fees and expenses) incurred in prosecuting and
defending any litigation or adverse claims against such assets, to the extent
Servicer determines in its reasonable judgment that such advances will be
recoverable, and (iv) certain other third party fees and expenses described in
Exhibit A attached hereto.
(e) Owner shall be required to pay a Repossession Fee and all
reasonable third party expenses incurred by Servicer in connection with the
repossession and disposition of a Financed Vehicle.
(f) As soon as practicable after the last day of each calendar month,
Servicer shall tender to Owner an invoice for all Servicer Compensation computed
as of the last day of such month, plus any and all Servicing Expenses incurred
by or invoiced to Servicer during such calendar month, all of which shall be due
and payable by Owner within ten (10) days after receipt. Owner shall remit
payment of such invoice by electronic funds transfer to a depository account(s)
designated by Servicer.
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<PAGE> 24
ARTICLE VIII
OWNER
SECTION 8.1 LIABILITY OF OWNER.
Owner shall be liable in accordance herewith only to the extent of the
obligations specifically imposed by this Servicing Agreement.
SECTION 8.2 INDEMNIFICATION OF OWNER.
Servicer shall indemnify and hold harmless Owner and its respective
directors, officers, employees, agents, representatives and controlling Persons
(collectively, the "Indemnified Persons") with respect to, and from and against,
any and all claims, demands, actions, losses, damages, penalties, fines,
forfeitures, (including reasonable legal fees and charges), judgments, arbitral
awards and any other costs, fees, charges and expenses that Owner and the
Indemnified Persons may sustain in connection with any investigations,
proceedings or actions or that are in any way related to or arise out of the
Servicer's failure to perform its duties hereunder or service the Contracts in
compliance with the terms of this Servicing Agreement. Servicer shall
immediately notify Owner if a claim, demand or action (each a "Claim") is made,
asserted or threatened by a third party with respect to this Servicing Agreement
or any Contract, and to the extent such Claim relates to allegations which, if
true, would involve or would have arisen because of a failure of the Servicer to
perform its duties hereunder or service the Contracts in compliance with the
terms of this Servicing Agreement, Servicer shall assume (with the prior written
consent of Owner) the defense of any such Claim and pay (without reimbursement
hereunder) all charges, fees and expenses in connection therewith, including
reasonable counsel fees and charges, as incurred, and promptly pay, discharge
and satisfy any judgment, decree, awards, damages, penalties, fines,
forfeitures, and costs (including legal fees and charges) which may be entered
against Servicer or Owner in respect of such Claim. Servicer will not compromise
or settle any matters described in this Section 8.2 without the prior written
consent of Owner; provided, however, such consent is not required as long as all
other Indemnified Persons are released and held harmless with respect to all
matters by all Persons having any interest in such matters. Servicer may, in its
sole discretion, select counsel in defense of such claim which is reasonably
acceptable to Owner.
ARTICLE IX
SERVICER
SECTION 9.1 LIMITATION ON LIABILITY OF SERVICER AND OTHERS.
Neither Servicer nor any of its directors, officers, employees, agents
or representatives shall be under any liability to the Owner or any third
parties for any action taken or not taken in good faith pursuant to this
Servicing Agreement; provided, however, this provision shall not protect
Servicer or any other such Person against any breach of warranties or
representations made herein, or against any specific liability imposed pursuant
hereto, or against any liability which would otherwise be imposed by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of reckless disregard of obligations or duties
hereunder. Owner, Servicer and any director, officer, employee or agent of Owner
or Servicer,
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<PAGE> 25
may rely in good faith on any document of any kind which, prima facie, is
properly executed and submitted by any appropriate Person respecting any matters
arising hereunder. Servicer shall not be under any obligation to appear in,
prosecute or defend any action, claim or other proceeding (other than customary
collection activities with respect to Defaulted Contracts) that in the
Servicer's opinion may involve expense or liability to the Servicer.
SECTION 9.2 MERGER OR CONSOLIDATION OF SERVICER.
(a) Servicer will keep and maintain in full force and effect (i) its
existence, rights and franchises as a corporation, (ii) its qualification to do
business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to protect the validity and
enforceability of this Servicing Agreement, the Contracts or the Contract Files,
(iii) all its Permits necessary to its services as Servicer hereunder, and (iv)
otherwise conduct its business so as to maintain as true and correct all of the
Servicer's representations, warranties and covenants hereunder.
(b) Any Person resulting from any Business Combination where the
Servicer is a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder and succeed to all of the
Servicer's duties, obligations and liabilities hereunder, subject to the Owner's
prior written consent, which consent shall not be unreasonably withheld;
provided, however, that the proposed successor or surviving Person to the
Servicer must, prior to the closing of any such Business Combination, deliver an
Officers' Certificate and other appropriate instruments in form and substance
acceptable to the Owner (i) establishing to the Owner's satisfaction the
qualification of the successor or surviving Person and making all the
representations and warranties of the Servicer, (ii) expressly assuming the due
and punctual performance of the Servicer's covenants, conditions and
obligations, and (iii) otherwise taking all actions and satisfying all
requirements of this Servicing Agreement.
SECTION 9.3 SUCCESSOR TO SERVICER.
(a) Subject to the prior written consent of Owner, which consent shall
not be unreasonably withheld, Servicer may assign all or substantially all of
its rights and delegate all or substantially all of its duties and obligations
under this Servicing Agreement; provided that the Person accepting such
assignment or delegation shall be a Person which (i) is qualified to service
Contracts and (ii) is willing to service the Contracts and executes and delivers
to the Owner an agreement, in form and substance satisfactory to Owner, which
makes and affirms all the representations, warranties and covenants on behalf of
the proposed successor servicer contained herein and contains an express
assumption by such Person of the due and punctual performance and observance of
all covenants, conditions and obligations to be performed or observed by the
Servicer under this Servicing Agreement. In the case of any permitted assignment
and delegation hereunder, the Servicer shall be released from future obligations
under this Servicing Agreement only upon the completion of all actions required
to be taken under this Section 9.3; provided the Servicer shall remain liable
for all liabilities and obligations theretofore incurred by it as Servicer
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<PAGE> 26
hereunder and hereby indemnifies and agrees to hold harmless and defend such
successor servicer and its directors, officers, employees, agents,
representatives and controlling Persons from and against all claims, demands,
actions, losses, damages, penalties, fines, forfeitures, judgments, arbitral
awards and any other costs, fees, charges and expenses that in any way relate to
or arise out of the Servicer's performed services hereunder.
(b) Any successor servicer appointed as provided herein shall execute,
acknowledge and deliver to Owner and Servicer an instrument accepting such
appointment, and confirming the representations, warranties and covenants of the
Servicer as to itself as successor servicer and agreeing to perform all of the
duties and assuming all of the obligations of the Servicer provided herein, and
upon the Owner's written acceptance thereof, the successor servicer shall become
fully vested with all the rights, powers, duties, responsibilities, obligations
and liabilities of the Servicer hereunder which are required to be performed or
shall first arise after the effective date of the appointment of such successor
servicer, with like effect as if originally named as the Servicer hereunder, and
shall become a party to this Servicing Agreement. Any termination or resignation
of the Servicer pursuant to this Servicing Agreement shall not affect or impair
any of the obligations and liabilities of such Servicer incurred or arising
prior to the successor servicer becoming Servicer hereunder, or any claims that
Owner may have against the Servicer arising before such successor servicer
effectively becomes the Servicer hereunder, all of which, together with the
indemnification provided in Section 9.3(a), shall survive and remain in full
force and effect any such termination and the appointment of a successor
servicer.
(c) If the Servicer is terminated and a successor servicer is appointed
by Owner, Servicer shall promptly deliver to such successor servicer, all funds
in the Servicing Account and any other monies or assets otherwise held as a
result hereof for the benefit of the Owner or any Obligor, and any portion of
the Contract Files and related documents and statements held by the Servicer
hereunder, and Servicer shall account for all funds and shall execute and
deliver such documents, instruments and agreements, and do such other and
further things as may reasonably be required to more fully and definitely vest
and confirm in the successor servicer all such rights, powers, duties,
responsibilities, obligations and liabilities of the Servicer, and in
furtherance thereof Servicer shall execute and deliver an instrument naming the
successor servicer as attorney- in-fact for the Servicer for purposes of acting
in such capacity hereunder.
SECTION 9.4 NOTICE OF BUSINESS COMBINATION; CHANGE IN CONTROL OF SERVICER.
In the event a Business Combination involving the Servicer or a change
in control of the Servicer are proposed or any event occurs where it is
reasonably likely that a Business Combination involving, or a change in control
of, the Servicer may result, Servicer shall give Owner written notice of such
event as soon as practicable and in no event later than the first public
disclosure of such event, proposal, arrangement or understanding.
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SECTION 9.5 INDEMNIFICATION OF SERVICER.
Owner shall indemnify and hold harmless Servicer and its directors,
officers, employees, agents, representatives and controlling Persons
(collectively, the "Indemnified Persons") against any and all claims, demands,
actions, losses, damages, penalties, fines, forfeitures, including reasonable
legal fees and charges, judgments, arbitral awards and any other costs, fees,
charges and expenses ("Claims") that the Servicer or the Indemnified Persons may
sustain as a result of third party claims, actions, investigations or
proceedings brought against the Servicer or the Indemnified Persons, which are
related to the Owner's acts or omissions hereunder or the breach of any of
Owner's representations, warranties and covenants hereunder, except for Claims
for which the Servicer is required to indemnify any Person pursuant to Section
8.2, or which result from an act or omission caused by Servicer or the failure
of Servicer to service and administer the Contracts in strict compliance with
the terms of this Servicing Agreement. Servicer shall give Owner prompt written
notice of any such Claim within three (3) Business Days of the Servicer's
receipt of notice thereof (or such longer reasonable time if the rights of the
Owner are not prejudiced thereby), and shall not settle or compromise such Claim
without the Owner's prior written consent. Owner may, in its sole discretion,
assume Servicer's defense of any such Claim with counsel reasonably acceptable
to Servicer.
ARTICLE X
DEFAULT
SECTION 10.1 EVENTS OF DEFAULT.
The following events by Servicer or Owner shall be Events of Default
under this Servicing Agreement:
(a) Any failure by Servicer to remit to Owner or to the Collections
Account any payment required to be made under the terms of this Servicing
Agreement, which continues unremedied for three (3) Business Days, unless such
failure is caused by the act or omission of an unrelated third party, in which
event an Event of Default shall be deemed to have occurred if the failure is not
cured within four (4) Business Days after the Servicer has notice of such
failure; or
(b) Failure on the part of Servicer or Owner duly to observe or
perform, in any material respect any of the covenants, obligations or agreements
set forth in this Servicing Agreement, which failure is not cured within thirty
(30) days after the date on which written notice of such failure, requiring the
same to be remedied, shall have been given to Servicer or Owner, as the case may
be, or, if such failure cannot reasonably be cured within thirty (30) days, such
party has not commenced and diligently pursued the cure of such failure within
thirty (30) days after the date of such notice; or
(c) A decree or order of a court or agency or supervisory authority
having jurisdiction for the appointment of a conservator or receiver or
liquidator in any insolvency, readjustment of
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<PAGE> 28
debt, marshaling of assets and liabilities or similar proceedings, or for the
winding-up or liquidation of its affairs, shall have been entered against
Servicer or Owner and such decree or order shall have remained in force,
undischarged or unstayed for a period of forty-five (45) days; or
(d) Servicer or Owner shall consent to the appointment of a conservator
or receiver or liquidator in any insolvency, readjustment of debt, marshaling of
assets and liabilities or similar proceedings of or relating to Servicer or
Owner, as the case may be, or of or relating to all or substantially of
Servicer's or Owner's property, as the case may be; or
(e) Servicer or Owner shall admit in writing its inability to pay its
Debts 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; or
(f) Any representation or warranty of Owner in this Servicing Agreement
is false, incorrect or misleading in any material respect, or if any
representation or warranty contained in any reports, documents, certificates or
other papers delivered to Servicer from time to time, is false, incorrect or
misleading in any material respect, and is not cured within thirty (30) days of
written notice thereof to Owner; or
(g) Any representation or warranty of Servicer in this Servicing
Agreement is false, incorrect or misleading in any material respect, or if any
representation or warranty contained in any reports, documents, certificates or
other papers delivered to Owner from time to time is false, incorrect or
misleading in any material respect and is not cured within thirty (30) days of
written notice thereof to Servicer.
SECTION 10.2 NOTICE OF DEFAULT AND/OR TERMINATION.
Upon the happening of an Event of Default as provided in Section 10.1
above, the non- defaulting party shall give written notice of such Event of
Default to the defaulting party. After the expiration of any applicable period
for curing such default, if the default is still not cured, then the
non-defaulting party may commence termination of all the rights and obligations
of both parties under this Servicing Agreement in accordance with Section 11.1
of this Agreement.
SECTION 10.3 WAIVER OF DEFAULT.
Following an Event of Default, as provided in Section 10.1, the
non-defaulting party may, by written notice to the other party, waive such
Default and any attendant right of Termination. Upon any such waiver, such Event
of Default shall cease to exist, and shall deemed to have been remedied for
every purpose of this Servicing Agreement. No such waiver shall extend to any
subsequent or other Event of Default, or impair any right consequent thereon to
the extent expressly so waived.
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<PAGE> 29
ARTICLE XI
TERMINATION OF THE SERVICING AGREEMENT
SECTION 11.1. TERM AND TERMINATION.
This Servicing Agreement shall be effective commencing as of the date
hereof. The Term of this Servicing Agreement shall be for an initial period (the
"Initial Period") commencing on the date hereof and ending on the last day of
the third full calendar month following the "Closing Date," as such term is
defined in the Sale Agreement (such date, as such may be extended pursuant
hereto, is hereinafter referred to as the "Scheduled Termination Date"). The
Term of this Servicing Agreement shall be extended for an additional three (3)
calendar months, unless the Owner shall give written notice to the Servicer of
its desire to terminate this Agreement at least fifteen (15) days prior to a
Scheduled Termination Date. Notwithstanding the foregoing, the Term of this
Servicing Agreement shall be terminated upon the happening of any of the
following events: (a) the later of the collection by Servicer and transfer to
Owner of final payment or liquidation with respect to the last Contract and the
remittance of all funds due hereunder; (b) the mutual written consent of
Servicer and Owner; (c) Servicer or Owner has an uncured Default under Article X
hereof, and the non-defaulting party has given the defaulting party notice of
termination as provided in Article X, which Event of Default has not been waived
by the non- defaulting party pursuant to Section 10.3 hereof, or (d) the last
day of the calendar month in which the Sale Agreement shall be terminated,
pursuant to its terms or otherwise.
SECTION 11.2 SERVICER'S DUTIES ON TERMINATION.
By not later than the effective date of any termination of this
Agreement, the Servicer shall effect the orderly, efficient and expeditious
transfer of servicing to the Owner (or such successor servicer as may be
designated in writing by the Owner to the Servicer), which shall include:
(a) To the extent it has not already done so in accordance with
the provisions of this Article XI, pay or cause to be paid over to the Owner or
its designee all money collected and held by it relating to the Contracts,
including, but not limited to, any funds in its possession or in any account
held by or for its benefit;
(b) Deliver to the Owner a full accounting, including a statement
showing the monthly payments collected by it since the most recent reports
delivered by the Servicer to the Owner, and a statement of money held by it in
trust, and final reports as of the date of completion of the Deboarding Process
for all of the Contracts, as required by Section 6.7;
(c) Deliver to the Owner (i) all Contract Files which are then in
the Servicer's possession, (ii) the electronic records (Electronic Contract
Information) relating to the Contracts, in such electronic form as may be
reasonably requested, and (iii) an administrative status report
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<PAGE> 30
detailing the location of each Financed Vehicle repossessed or otherwise held by
the Servicer on the Owner's behalf;
(d) Complete the Deboarding Process for each and every Contract in
accordance with Section 6.10(b) of this Agreement;
(e) Deliver to the Obligors a written notice, containing such
disclosures and in such form as are reasonably acceptable to the Owner,
notifying them of the existence of a new servicer for the Contracts; and
(f) Provide its best efforts to correct, or assist the Owner in
correcting, any material errors, inaccuracies and omissions in the Electronic
Contract Information relating to the Contracts that is transferred to the Owner
as part of the Deboarding Process.
ARTICLE XII
CONFIDENTIALITY; OWNER NOT TO SOLICIT OBLIGORS;
NO SOLICITATION OF OTHER PARTY'S EMPLOYEES
12.1 CONFIDENTIALITY COVENANT.
Except to the extent required by applicable law and upon satisfaction
of the procedures set forth in this Section 12.1 or unless the parties hereto
shall mutually agree otherwise, the parties (including their directors,
officers, employees and counsel) agree to keep confidential the existence and
terms of this Servicing Agreement and all proprietary information relating to
each other's business, including, but not limited to, credit underwriting
criteria, products, customer lists, pricing policies, employment records and
policies, operational methods, marketing plans and strategies, product
development techniques and inventions and research programs, trade know- how,
trade secrets, specific software, algorithms, computer processing systems,
object and source codes, user manuals, systems documentation and other business
and financial affairs, and the parties agree not to disclose, deliver or
otherwise make available such materials or information to any third party (other
than their own directors, officers, employees, accountants and counsel who need
such information or materials). If a party is required by applicable law or
legal process to make disclosure to a third party of information or materials
required to be maintained as confidential pursuant to this Section 12.1, the
disclosing party shall give prior written notice to the other party (the
"Protected Party") of the information and materials it intends to disclose and
the reasons why the disclosing party believes it is required to disclose such
information and materials. The Protected Party may either consent to such
disclosure, object to such disclosure or seek a protective order or appropriate
remedy to prohibit or limit such disclosure. In the event that the Protected
Party objects to such disclosure but fails to obtain a protective order or other
remedy, the disclosing party shall disclose only such information and materials
as counsel for the disclosing party determines is required to be made.
Notwithstanding the foregoing, no party shall make a public announcement
regarding the existence of this Agreement or the terms hereof without
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<PAGE> 31
the prior consent of the other party, and the parties will cooperate with each
other in preparing the contents and determining the manner of distribution of
any such announcement.
12.2 OWNER NOT TO SOLICIT OBLIGORS.
From and after each Sale Date, as defined in the Sale Agreement, as to
any Contract and for so long as such Contract is outstanding, neither Servicer
nor any officer or employee of Servicer shall knowingly solicit, and neither
Servicer nor its officers and employees shall encourage or recommend any agent
or representative of Servicer to solicit, any Obligor in respect of such
Contract, either singly or as part of a group, on behalf of Servicer or any
other entity in any manner that would encourage prepayment of such Contract,
except that Servicer may continue to make general solicitations to the public
and to any of Servicer's customers and may advertise, sell and provide all
financial services offered by Servicer.
12.3 NO SOLICITATION OF OTHER PARTY'S EMPLOYEES.
During the term of this Servicing Agreement and for one year after its
termination, both Servicer and Owner agree not to solicit or cause to be
solicited the employment of any person who is employed by the other party.
Notwithstanding anything to the contrary in this section, the employment by
Servicer or Owner of officers and employees of the other party who contact the
hiring party on their own initiative without any direct solicitation or
encouragement from the hiring party or who are solicited by advertising or
notices in newspapers or periodicals of general circulation shall not constitute
a breach of this Section 12.3.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.1 NOTICES.
All notices and other communications provided for hereunder shall,
unless otherwise stated herein, be in writing and mailed or telecommunicated, or
delivered as to each party hereto, at its address set forth under its name on
the signature page hereof or at such other address as shall be designated by
such party in a written notice to the other parties hereto. All such notices and
communications shall not be effective until received by the party to whom such
notice or communication is addressed.
13.2 NO WAIVER; REMEDIES.
No failure on the part of Servicer or Owner 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.
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<PAGE> 32
The remedies herein provided are cumulative and not exclusive of any other
remedies provided by law.
13.3 BINDING EFFECT; ASSIGNABILITY.
This Servicing Agreement shall be binding upon and inure to the benefit
of Servicer and Owner, and their respective successors and permitted assigns.
The Servicer may not assign any of its rights and obligations hereunder or any
interest herein without the prior written consent of the Owner, which consent
should not be unreasonably withheld. Owner may assign all of its rights
hereunder to one or more Persons. This Servicing 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 its termination;
provided, that the obligations of both parties set forth in Article XII, the
rights and remedies granted to the Owner pursuant to Section 6.9, the
indemnification and payment provisions of Sections 8.2 and 9.5, and the
obligations of Servicer set forth in Section 11.2 shall be continuing and shall
survive any termination of this Servicing Agreement.
13.4 AMENDMENTS; CONSENTS AND WAIVERS; ENTIRE AGREEMENT.
No modification, amendment or waiver of, or with respect to, any
provision of this Servicing Agreement, and all other agreements, instruments and
documents delivered hereto, and no consent to any departure by the Servicer or
by the Owner from any of the terms or conditions hereof shall be effective
unless it shall be in writing and signed by each of the parties hereto. Any
waiver or consent shall be effective only in the specific instance and for the
purpose for which given. No consent to or demand by Servicer or Owner in any
case shall, in itself, entitle such party to any other consent or further notice
or demand in similar or other circumstances. This Servicing Agreement and the
documents referred to herein embody the entire agreement of Servicer and Owner
with respect to servicing and administering the Contracts and supersede all
prior agreements and understandings relating to the subject hereof. This
Servicing Agreement and the Sale Agreement are independent and mutually
exclusive of each other.
13.5 SEVERABILITY.
In case any provision in or obligation under this Servicing Agreement
shall be invalid, illegal or unenforceable in any jurisdiction, the validity,
legality and enforceability of the remaining provision or obligations, or of
such provision or obligation, shall not in any way be affected or impaired
thereby in any other jurisdiction.
13.6 COSTS, FEES AND EXPENSES.
If any legal proceeding is instituted by either party against the other
under this Servicing Agreement or in respect to any Contract, the non-prevailing
party shall also be required to pay the prevailing party's costs and expenses of
such litigation, including reasonable attorneys fees.
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<PAGE> 33
Except as otherwise provided in this Servicing Agreement, each party agrees to
pay all costs, fees and expenses which it has incurred in connection with or
incidental to the matters contained in this Servicing Agreement, including any
fees and disbursements to its accountants and counsel.
13.7 RIGHT OF OFFSET AND DEDUCTION.
Any party (the "Offsetting Party") may offset and deduct from any
amount payable by the Offsetting Party to the other party (the "Debtor Party")
under this Agreement or the Sale Agreement any amount which is, at the time of
exercise of the right of offset and deduction, presently due and payable by the
Debtor Party to the Offsetting Party pursuant to this Agreement or the Sale
Agreement.
13.8 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAWS PROVISIONS) OF THE STATE OF
FLORIDA.
13.9 CONSENT TO JURISDICTION AND VENUE.
Each of the Servicer and the Owner hereby irrevocably and
unconditionally submits, for itself and its property, to the non-exclusive
jurisdiction of any Arkansas state court, Florida state court, federal court of
the United States of America for the Eastern District of Arkansas, or federal
court of the United States of America for the Northern District of Florida, and
any appellate court from any thereof, in any action or proceeding arising out of
or relating to this Agreement, or for recognition or enforcement of any
judgment, and the parties agree that all claims in respect of any such action or
proceeding may be heard and determined in such Arkansas or Florida state or, to
the extent permitted by law, federal court
13.10 EXECUTION IN COUNTERPARTS.
This Servicing Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which when taken together shall constitute one and the same
agreement
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<PAGE> 34
IN WITNESS WHEREOF, the parties have cause this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
NATIONAL AUTO FINANCE COMPANY, INC.
By: /s/ WILLIAM MAGRO
--------------------------------------------------
William Magro
President and Chief Operating Officer
Address: National Auto Finance Company, Inc.
10302 Deerwood Park Boulevard
Suite 100
Jacksonville, Florida 32255-0970
Telephone: 904-996-2500
Telecopy: 904-996-2539
With a copy to:
Stephen R. Veth, Esq.
Vice President, Secretary and
General Counsel
Telephone: 904-486-1151
Telecopy: 904-996-2557
NUVELL CREDIT CORPORATION
By: /s/ TOMMY E. PRITCHARD
--------------------------------------------------
Tommy E. Pritchard
President
Address: 17500 Chenal Parkway, Suite 201
Little Rock, Arkansas 72223-9131
Telephone: 501-821-5200
Telecopy: 501-821-5208
With a copy to:
Thomas N. Rose, Esq.
Executive Vice President
Telephone: 501-821-8105
Telecopy: 501-821-5208
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<PAGE> 35
EXHIBIT LIST
A List of Third Party Fees and Expenses Reimbursable by the Owner to the
Servicer
B NAFI/Nuvell Credit Corporation Servicing Standards
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<PAGE> 36
EXHIBIT A
List of Third Party Fees and Expenses Reimbursable by the Owner to the Servicer
This Exhibit A lists fees and expenses paid by the Servicer to third
parties that must be reimbursed by the Owner to the Servicer pursuant to Section
7.1(d)(iv) of the Servicing Agreement.
(1) Vehicle appraisal fees
(2) Special investigation and skip tracing fees incurred by the
Servicer, not to exceed $100 for any one Contract without the
Owner's prior consent
(3) Reasonable fees and out-of-pocket expenses paid to
repossession agents
(4) Auction fees and expenses
(5) Reasonable fees and expenses incurred with respect to the
transfer of repossessed vehicles
(6) Vehicle storage fees and impound fees
(7) Fees paid to departments of motor vehicles to obtain duplicate
and repo titles
(8) Costs incurred to recondition repossessed vehicles, not to
exceed $675 for any one vehicle without the Owner's prior
consent
(9) Costs incurred to obtain new or duplicate keys for repossessed
vehicles
(10) Reasonable fees and expenses of outside counsel engaged by the
Servicer in accordance with the terms of the Servicing
Agreement
(11) Overnight courier expenses, except for overnight courier
expenses incurred to transmit items to and from the Lockbox
Bank or to and from the Owner
(12) Reasonable out-of-pocket costs and expenses incurred to ship
Contract Files to the Owner
<PAGE> 1
EXHIBIIT 99
FOR IMMEDIATE RELEASE: CONTACTS: Bill Magro, (904) 996-2527
National Auto Finance Co., Inc.
Larry Marscheck, (904) 396-9344
Willman & Company
NATIONAL AUTO FINANCE COMPANY, INC. ESTABLISHES FLOW
PROGRAM WITH NUVELL CREDIT CORPORATION
JACKSONVILLE, FL (FEBRUARY 11, 2000) -- National Auto Finance Company,
Inc. (OTC: NAFI), a non-prime auto finance company based in Jacksonville,
Florida today announced that it has entered into agreements with Nuvell Credit
Corporation (Nuvell) that provide for the origination by NAFI of motor vehicle
retail installment sales contracts from dealers with whom NAFI has relationships
and the subsequent sale of such contracts to Nuvell. NAFI will retain the
servicing of all contracts sold to Nuvell. Under the terms of the agreements,
NAFI will underwrite the purchase of the retail installment sales contracts
using program guidelines and credit criteria developed by NAFI and approved by
Nuvell. All of the contracts that satisfy the conditions set forth in the
agreements will then be sold to Nuvell. NAFI will service contracts using its
servicing unit. The agreements with Nuvell are initially for 90 days, at which
point program results will be evaluated and a determination made whether to
continue the contractual relationship.
Although NAFI expects a significant increase in its cash flow from the
program with Nuvell, it does not expect such program to become profitable until
the volume of loan originations, and corresponding increase in the size of
NAFI's servicing portfolio, increases significantly. The Company cautions that
such profitable levels may never be achieved.
The flow program and servicing agreement with Nuvell is the latest in a
series of strategic developments for the Jacksonville-based non-prime auto
finance company. NAFI recently announced that it had entered into a strategic
alliance with Atlantic Coast Federal Credit Union of Waycross, Georgia, that
created a non-prime auto loan referral program between the two organizations, as
well as an agreement for NAFI to service ACFCU's indirect automobile loan
portfolio past due accounts.
National Auto Finance Company, Inc. is a specialized consumer finance
company engaged in the purchase and servicing of automobile loans primarily
originated by manufacturer-franchised automobile dealers for non-prime
consumers. The company markets its products and services to dealers through the
efforts of its direct sales force and through strategic referral and marketing
alliances with financial and other institutions that have established
relationships with dealers. NAFI has active contractual relationships with
approximately 1,000 dealers in 35 states.
