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PURCHASE AND CONTRIBUTION AGREEMENT
BETWEEN
NATIONAL AUTO FINANCE COMPANY, INC.
AND
NATIONAL FINANCIAL AUTO FUNDING TRUST
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DATED AS OF JUNE 29, 1997
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PURCHASE AND CONTRIBUTION AGREEMENT
-----------------------------------
PURCHASE AND CONTRIBUTION AGREEMENT, dated as of June 29,
1997, by and between National Auto Finance Company Inc., a Delaware corporation
("NAFI"), and National Financial Auto Funding Trust, a Delaware business trust
("National Financial").
W I T N E S S E T H :
In consideration of the mutual covenants herein contained,
NAFI and National Financial agree as follows:
ARTICLE I
DEFINITIONS
1.1 Incorporation of Definitions. Capitalized terms used but not defined
herein have the meanings ascribed to them in the Sale and Servicing Agreement
(as amended, supplemented or otherwise modified from time to time in accordance
with the terms thereof, the "Sale and Servicing Agreement"), dated as of June
29, 1997, by and among National Financial, as Seller, NAFI, as Servicer,
Wilmington Trust Company, in its capacity as owner trustee of the National Auto
Finance 1997-1 Trust (the "1997-1 Trust"), and Xxxxxx Trust and Savings Bank,
not in its individual capacity, but solely as Trust Collateral Agent and Backup
Servicer (the "Trust Collateral Agent").
Other Definitions. When used in this Agreement, the following
words and phrases shall have the following meanings:
Bankruptcy Event: The occurrence of either of the following
with respect to either NAFI or National Financial:
(a) a case or other proceeding shall be commenced, without the
application or consent of NAFI or National Financial, as applicable,, in any
court, seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of NAFI or National
Financial, as applicable,, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for NAFI or National Financial,
as applicable, or for any substantial part of its assets, or any similar action
with respect to NAFI or National Financial, as applicable, under any law
(foreign or domestic) relating to bankruptcy, insolvency, receivership,
reorganization, winding up or composition or adjustment of debts, and such case
or proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 (sixty) days or an order for relief in respect of NAFI or National
Financial, as applicable, shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws (foreign or domestic) now or
hereafter in effect; or
(b) NAFI or National Financial, as applicable, shall commence
a voluntary case or other proceeding under any applicable bankruptcy,
insolvency, receivership, reorganization, debt arrangement, dissolution or other
similar law now or hereafter in effect, or shall consent to the appointment of
or taking possession by a trustee, receiver, custodian, liquidator, assignee,
sequestrator or the like for NAFI or National Financial, as applicable, or for
any substantial part of its assets, or shall make any general assignment for the
benefit of creditors, or shall fail to, or admit in writing its inability to,
pay its debts generally as they become due.
Collection Date: With respect to a Receivable, the date in
each Due Period on which a scheduled payment on such Receivable is due.
Conveyance: As defined in Section 2.3(b).
Cut-off Date: With respect to an Initial Receivable, the
Initial Cut-off Date, and with respect to any Subsequent Receivable, the related
Subsequent Cut-off Date.
Individual Sold Balance: With respect to any Receivable, the
original principal balance of such Receivable reduced by the portion of each
payment received thereon before the applicable Cut-off Date that would represent
principal if such payments were allocated to the principal of and interest on
such Receivable based on the amortization method provided in the Contract.
Insurance Proceeds: Proceeds paid by any insurer pursuant to
any insurance policy covering a Financed Vehicle or the related Obligor.
Liquidation Proceeds: With respect to a Liquidated Receivable,
all amounts (including without limitation, Insurance Proceeds) realized with
respect to such Receivable net of amounts that are required to be refunded to
the Obligor on such Receivable; provided however, that the Liquidation Proceeds
with respect to any Receivable shall in no event be less than zero.
Master Trust: National Financial Auto Receivables Master
Trust.
Purchase Price: As defined in Section 2.1.
Receivable: Each motor vehicle retail installment sale
contract and security agreement (including any and all rights to receive
payments thereunder on and after the applicable Cut-off Date and security
interests in the Financed Vehicle securing such contract or note) assigned and
transferred to National Financial hereunder as of the Closing Date or a
Subsequent Transfer Date and not reassigned, retransferred or otherwise released
in accordance herewith, each such Receivable being identified in the Receivable
Schedule attached hereto as Schedule 1 or a Receivable Schedule attached to a
Transfer Agreement, as applicable.
Receivable Assets: The assets sold, transferred, conveyed and
assigned by NAFI to National Financial pursuant to this Agreement, which consist
of (i) all Receivables identified in the Receivable Schedules attached to the
Conveyances delivered hereunder on each Subsequent Transfer Date and all monies
received thereon on or after the related Cut-off Date (including amounts due on
or before the Cut-off Date but received by NAFI on or after such Cut-off Date);
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(ii) any proceeds and the right to receive proceeds with respect to the the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or Obligors, including rebates of
insurance premiums relating to the Receivables and any proceeds from the
liquidation of the Receivables; (iii) all rights against Dealers pursuant to
Dealer Agreements or against Originators pursuant to Originator Agreements; (iv)
the related Receivables Files and any and all other documents that NAFI keeps on
file in accordance with its customary procedures relating to the Receivables,
the Obligors or the Financed Vehicles; (v) property (including the right to
receive future Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivable; (vi) all funds on deposit from time to time in the Trust Accounts
(less all investments and proceeds thereof), and all rights of the Issuer
therein; and (vii) the proceeds of any and all of the foregoing.
Receivable Documents: With respect to a Receivable, all
Receivable papers and documents (including those contained in the Receivable
File) and all other papers and records (including computerized data) of whatever
size or description, whether developed or originated by NAFI, a Dealer,
Originator or another Person, required to document the Receivable or to service
the Receivable.
Receivable File: With respect to a Receivable, the fully
executed original of such Receivable; the assignment of such Receivable by a
Dealer or Originator to NAFI, the original Title Document or UCC financing
statement evidencing that the security interest in a Financed Vehicle granted to
NAFI under such Receivable has been perfected under applicable public state law
(except for any Title Documents or UCC financing statements not returned from
the applicable records office, in which case NAFI will deliver to National
Financial, on the Closing Date or the Subsequent Transfer Date, as the case may
be, an Officer's Certificate of NAFI indicating that the original of such Title
Document has been applied for at, or the original of such UCC financing
statement was delivered to, such public office and shows NAFI as the lienholder
or secured party and that NAFI will deliver the originals thereof when returned
from such office); the original of any assumption agreement or any modification,
extension or refinancing agreement; and the original application of the related
Obligor to obtain the financing extended by such Receivable.
Receivable Schedule: The schedule of Receivables attached
hereto as Schedule 1 or attached as Schedule 1 to any Conveyance delivered
hereunder, such schedule identifying each Receivable by name of the Obligor and
setting forth as to each Receivable its Individual Sold Balance as of the
Cut-off-Date, loan number, Receivable Rate, scheduled monthly payment of
principal and interest, final maturity date and original principal amount.
Unearned Financing Charge: With respect to any Receivable, the
amount of the add-on finance charge that, under the term of the Receivable,
would be required to be refunded or credited to the related Obligor in
accordance with such Receivable if such Receivable were then prepaid in full.
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ARTICLE II
PURCHASE SALE AND CONTRIBUTION
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2.1 Purchase and Contribution. (a) Subject to and on the terms and
conditions set forth herein, NAFI hereby transfers, conveys and assigns, without
recourse except as expressly set forth herein, as a contribution of capital to
National Financial, all of its right, ittle and interest in and to (i) the
Receivables identified on the Receivables Schedule attached hereto as Schedule 1
and all monies received thereon on or after the Initial Cut-off Date (including
amounts due on or before the Initial Cut-off Date but received by NAFI on or
after the Initial Cut-off Date) and (ii) the other Receivable Assets related
thereto.
(b) Pursuant to and in connection with the transfer of certain
retail installment sale contracts or promissory notes or other financing
documents for a new or used motor vehicles and certain other property related
thereto by Bankers Trust Company ("Bankers Trust"), as trustee of the National
Financial Auto Receivables Master Trust (the "Master Trust") to National
Financial Auto Funding Trust II, a Delaware business trust ("Funding Trust II"),
under the Assignment Agreement dated as of June 29, 1997 (the "Assignment
Agreement"), between Bankers Trust and Funding Trust II, and by Funding Trust II
to National Financial under the Sale Agreement dated as of June 29, 1997 (the
"Sale Agreement"), between Funding Trust II and National Financial, NAFI hereby
transfers, conveys and assigns, without recourse except as expressly set forth
herein, all of NAFI's rights against Dealers under the Dealer Agreements and
Originators under the Originator Agreements with respect to such retail
installment sales contracts, promissory notes or other financing documents, to
the extent such rights have not been previously conveyed by NAFI to Funding
Trust II and by Funding Trust II to the Master Trust.
(c) Subject to and on the terms and conditions set forth
herein, NAFI hereby agrees to sell, transfer, convey and assign, without
recourse except as expressly provided herein, all of its right, title and
interest in and to the Receivable Assets to National Financial on each
Subsequent Transfer Date. National Financial agrees to pay to NAFI on each
Subsequent Transfer Date as the purchase price (the "Purchase Price") for the
Receivable Assets sold hereunder on such date an amount equal to 100% of the
Aggregate Principal Balance of the Receivables included in such Receivable
Assets as of the related Cut-off Date.
(d) NAFI may from time to time during the term of this
Agreement and in its sole discretion, elect to contribute capital to National
Financial in the form of Receivables and Receivable Assets conveyed hereunder,
in an amount equal to the excess of (i) the Principal Balance of Receivables
included in Receivable Assets conveyed on any Subsequent Transfer Date over (ii)
the amount of the cash Purchase Price paid by National Financial to NAFI on such
Subsequent Transfer Date.
2.2. Filings. On or prior to the Closing Date, NAFI shall have filed in the
office of the Secretary of State of Florida a UCC financing statement,
appropriate under the applicable UCC, to reflect the transfer of the Receivables
identified on the Receivable Schedule attached hereto as Schedule 1 and the
other Related Assets related thereto by NAFI to National Financial on the
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Closing Date and the Receivable Assets to be transferred from NAFI to National
Financial on any Subsequent Transfer Date and to protect National Financial's
interest in the Receivable Assets against all other Persons. NAFI shall
thereafter file any appropriate continuation statements in respect thereof.
Sales. (a) During the Pre-Funding Period, National Financial
shall, to the extent permitted by the Sale and Servicing Agreement, use funds on
deposit in the Pre-Funding Account established under the Sale and Servicing
Agreement to purchase Subsequent Receivables and other Receivable Assets from
NAFI. On or prior to each Subsequent Transfer Date, NAFI shall notify National
Financial in writing of the outstanding principal amount of eligible Receivables
included in Receivable Assets available to be sold and conveyed by NAFI to
National Financial on such Subsequent Transfer Date pursuant to this Agreement,
and subject to the terms and conditions of this Agreement, NAFI shall, on the
applicable Subsequent Transfer Date, sell and convey to National Financial
eligible Receivables and other Receivable Assets having an aggregate outstanding
principal amount equal to the amount specified in such written notice. Each
Subsequent Transfer Date shall be on the date and at the time and place mutually
agreed upon by National Financial and NAFI with the prior written consent of the
Insurer. Payment of the Purchase Price for the Subsequent Receivables and other
Receivable Assets sold and conveyed on a Subsequent Transfer Date shall be made
by National Financial to NAFI. National Financial's obligation to purchase
Subsequent Receivables and other Receivable Assets shall be limited by the
amount of funds available for such purchase in the Pre-Funding Account pursuant
to the Sale and Servicing Agreement and shall be subject to the satisfaction of
the conditions in the Sale and Servicing Agreement.
(b) On or prior to the Closing Date, NAFI shall (i) deliver to
National Financial or such other Person as National shall direct the original
motor vehicle retail installment sale contracts, duly endorsed by NAFI and the
Receivable Files with respect to each Initial Receivable included in the
Receivable Assets then being sold to National Financial, (ii) deliver to
National Financial or such other Person as National Financial shall direct cash
equal to all payments received by NAFI on such Initial Receivables on or after
the Initial Cut-off Date and on or before two Business Days prior to such
Initial Transfer Date. Within two Business Days after such Initial Transfer
Date, NAFI shall deliver to National Financial or such other Person as National
Financial shall direct all other payments received by NAFI on such Initial
Receivables on or after the applicable Cut-off Date and on or before the Closing
Date. National Financial hereby directs NAFI to deliver the materials referenced
in the preceding clause (i) of the second preceding sentence to OFSA, as
Custodian, and hereby directs NAFI to remit any payments received by NAFI and
referenced in the preceding sentence or in clause (ii) of the second preceding
sentence to the Collection Account.
(c) On or prior to any Subsequent Transfer Date, NAFI shall
(i) deliver to National Financial a conveyance instrument substantially in the
form attached hereto as Exhibit A (a "Conveyance") with respect to the
Receivable Assets sold and conveyed hereunder on such Subsequent Transfer Date,
(ii) deliver to National Financial or such other Person as National Financial
shall direct the original motor vehicle retail installment sale contracts, duly
endorsed by NAFI and the Receivable Files with respect to each Subsequent
Receivable included in the Receivable Assets then being sold to National
Financial, (iii) deliver to National Financial or such other Person as National
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Financial shall direct cash equal to all payments received by NAFI on such
Subsequent Receivables on or after the applicable Cut-off Date and on or before
two Business Days prior to such Subsequent Transfer Date. Within two Business
Days after such Subsequent Transfer Date, NAFI shall deliver to National
Financial or such other Person as National Financial shall direct all other
payments received by NAFI on such Subsequent Receivables on or after the
applicable Cut-off Date and on or before such Subsequent Transfer Date. National
Financial hereby directs NAFI to deliver the materials referenced in the
preceding clause (ii) of the second preceding sentence to OFSA, as Custodian,
and hereby directs NAFI to remit any payments received by NAFI and referenced in
the preceding sentence or in clause (iii) of the second preceding sentence to
the Collection Account.
2.3. No Recourse. Except as specifically provided in this Agreement, the sale
and purchase of Receivables and other Receivable Assets under this Agreement
shall be without recourse to NAFI; provided that NAFI shall be liable to
National Financial for all representations, warranties and covenants made by
NAFI pursuant to the terms of this Agreement, it being understood that such
obligations of NAFI do not constitute recourse for the credit risk of the
Obligors.
2.4. True Sales. NAFI and National Financial intend that the transactions
contemplated hereby be true sales of Receivables and other Receivable Assets by
NAFI to National Financial providing National Financial with the full benefits
of ownership of the Receivables and other Receivable Assets free and clear of
any Liens, and neither NAFI nor National Financial intends the transactions
contemplated hereby to be, or for a purpose to be characterized as, a loan from
National Financial to NAFI. NAFI shall reflect sales of the Receivable Assets
hereunder on its balance sheet and other financial statements as sales of
assets, and shall treat such sales as sales for all purposes. NAFI will respond
to third party inquiries by indicating that the Receivables have been sold.
2.5. Receipt of Payments after Closing Date and Subsequent Transfer Dates.
National Financial shall be entitled to all payments received or receivable with
respect to any Receivable or Subsequent Receivable sold and conveyed by NAFI to
National Financial hereunder that are received on and after the applicable
Cut-off Date. If NAFI receives any payment on a Receivable belonging to the
Trust, NAFI promptly shall turn such payment over to the Trust Collateral Agent
not later than two Business Days after receipt for deposit in the Collection
Account.
2.6. Servicing of Receivables. Consistent with National Financial's ownership of
the Receivable Assets, National Financial shall have the sole right to service,
administer and collect the Receivables, to assign such right and to delegate
such right to others. In consideration of National Financial's purchase of the
Receivable Assets, NAFI agrees to cooperate fully with National Financial to
facilitate the full and proper performance of such duties and obligations for
the benefit of National Financial.
2.7. Other Sales. Prior to the end of the Pre-Funding Period, NAFI shall not
sell, transfer, convey or assign any motor vehicle retail installment sale
contract originated or purchased by it, except as follows: (i) NAFI may sell,
transfer, convey and assign any such motor vehicle retail installment sale
contract to National Financial pursuant to this Agreement; (ii) NAFI may sell,
transfer, convey and assign to any Person, without limitation, any such motor
vehicle retail installment sale contract that does not comply with the
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representations and warranties set forth in Section 4.1(b) or, if included in
the Trust, would result in a violation of clause (v) of Article III; and (iii)
NAFI may sell, transfer, assign and convey such motor vehicle retail installment
sale contract to any Person, without limitation, pursuant to a warehouse
lending, repurchase or other similar arrangement for the financing of the
Receivable Assets pending transfer to NAFI hereunder on the next Subsequent
Transfer Date.
2.8. Protection of Title to Interest.
(a) NAFI shall execute and file such financing statements and
cause to be executed and filed such continuation and other statements, all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of National Financial, the 1997-1 Trust, the
Trust Collateral Agent and the Insurer under this Agreement in the Trust
Property and in the proceeds thereof. NAFI shall deliver (or cause to be
delivered) to National Financial and the Insurer file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) NAFI shall not change its name, identity or corporate
structure in any manner that would, could or might make any financing statement
or continuation statement filed by National Financial in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Trust Collateral Agent and the
Insurer (so long as an Insurer Default shall not have occurred and be
continuing) at least 60 days prior written notice thereof, and shall promptly
file appropriate amendments to all previously filed financing statements and
continuation statements as may be required to preserve and protect National
Financial's interest in the Receivable Assets, which filings shall be made no
later than 30 days after the effective date of any such change.
(c) NAFI shall give National Financial, the Trust Collateral
Agent and the Insurer at least 60 days prior written notice of any relocation of
its principal executive office if, as a result of such relocation, the
applicable provisions of the UCC would require the filing of any amendment of
any previously filed financing or continuation statement or of any new financing
statement, and shall promptly file appropriate amendments to all previously
filed financing statements and continuation statements as may be required to
preserve and protect National Financial's interest in the Receivable Assets,
which filings shall be made no later than 30 days after the effective date of
any such change. NAFI shall at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(d) If at any time NAFI proposes to sell, grant a security
interest in, or otherwise transfer any interest in automotive receivables to any
prospective purchaser, lender or other transferee, NAFI shall give to such
prospective purchaser, lender or other transferee computer tapes, records or
printouts (including any restored from backup archives) that, if they refer in
any manner whatsoever to any Receivable, indicate clearly that such contract has
been sold and is owned by the 1997-1 Trust unless such Receivable has been paid
in full or repurchased by NAFI, National Financial or the Servicer.
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(e) NAFI shall permit National Financial, the Trust Collateral
Agent, the Insurer and their respective agents, at any time to inspect, audit
and make copies of and abstracts from NAFI's records regarding any Receivables
or any other portion of the Trust Property.
(f) NAFI shall furnish to National Financial, the Trust
Collateral Agent and the Insurer at any time upon request a list of all
Receivables then held as part of the Trust, together with a reconciliation of
such list to the Receivable Schedules and to each of the Servicer's statements
furnished before such request indicating removal of Receivables from the Trust.
The Trust Collateral Agent shall hold any such list and Receivable Schedules for
examination by interested parties during normal business hours at the Corporate
Trust Office upon reasonable notice by such Persons of their desire to conduct
an examination.
ARTICLE III
CONDITIONS PRECEDENT
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National Financial's obligation to purchase Receivable Assets
hereunder on each Subsequent Transfer Date shall be subject to the execution,
delivery and effectiveness of the Sale and Servicing Agreement and the Indenture
and the delivery of the purchase price for the Notes to National Financial by
the initial purchasers thereof. In addition, the obligation of National
Financial to purchase Receivable Assets hereunder on each Subsequent Transfer
Date shall be further subject to the satisfaction of the following conditions on
or before the Closing Date or such Subsequent Transfer Date, as the case may be:
(i) all representations and warranties of NAFI
contained in Section 4.1(a) shall be true and correct and
all representations and warranties of NAFI in Section 4.1(b)
shall be true and correct with respect to the Receivables
sold, transferred, conveyed and assigned to National
Financial on the Subsequent Transfer Date, in each case, on
and as of such Subsequent Transfer Date, as the case may be;
(ii) on such Subsequent Transfer Date, NAFI shall have
duly completed and executed to National Financial a
Conveyance conforming to the requirements of Section 2.03(b)
or 2.4(b), as applicable;
(iii) on or before such Subsequent Transfer Date, (a)
NAFI shall have delivered to National Financial or such
other Person as National Financial shall direct the original
motor vehicle retail installment sale contract, duly
endorsed by NAFI to National Financial, and the Receivable
Files that relate to each Receivable included in the
Receivable Assets then being sold by NAFI to National
Financial and (b) NAFI shall have performed all other
obligations then required to be performed by it pursuant to
this Agreement, including, without limitation, Sections 2.2
and 2.3 (b) or 2.4(b), as applicable;
(iv) no Bankruptcy Event or Servicer Termination Event
shall have occurred and be continuing on and as of such
Subsequent Transfer Date; 8
(v) as of such Subsequent Transfer Date, the
Receivables then in the Trust, together with the Subsequent
Receivables to be transferred to National Financial on such
Subsequent Transfer Date, shall meet the following criteria
(computed based on the characteristics of the Subsequent
Receivables as of the applicable Subsequent Cut-off Date):
(A) the weighted average Interest Rate of the Receivables
shall not be less than 18.0%, (B) the weighted average
remaining term of the Receivables shall not be greater than
55 months, and (C) not more than 80% of the Aggregate
Principal Balance Receivables shall represent loans to
finance the purchase of used Financed Vehicles and (D) the
final scheduled payment date on the Receivable with the
latest maturity shall not be later than October 30, 2002;
and
(vi) all conditions precedent in Section 2.2 of the
Sale and Servicing Agreement to the transfer and assignment
of such Subsequent Receivables to the Trust pursuant to the
Sale and Servicing Agreement shall have been satisfied.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
-----------------------------------------
(a) NAFI hereby represents, warrants and covenants to National
Financial on and as of the Closing Date and each Subsequent Transfer Date that:
(i) NAFI is a Delaware corporation duly organized,
validly existing, and in good standing under the laws of the
state of its incorporation and has all licenses necessary to
carry on its business as now being conducted and shall
appoint and employ agents or attorneys in each jurisdiction
where it shall be necessary to take action under this
Agreement; NAFI has the full power and authority to own its
property, to carry on its business as presently conducted,
and to execute, deliver and perform this Agreement
(including all instruments of transfer to be delivered
pursuant to this Agreement) by NAFI and the consummation of
the transaction contemplated hereby have been duly and
validly authorized; this Agreement evidences the valid,
binding and enforceable obligation of NAFI (subject to
applicable bankruptcy and insolvency laws and other similar
laws affecting the enforcement of creditors' rights
generally); and all requisite corporate action has been
taken by NAFI to make this Agreement valid and binding upon
NAFI;
(ii) NAFI is not required to obtain the consent of any
other party or obtain the consent, license, approval or
authorization of, or make any registration or declaration
with, any governmental authority, bureau or agency in
connection with the execution, delivery, performance,
validity or enforceability of this Agreement except for
those which have been obtained;
(iii) the consummation of the transactions contemplated
by this Agreement will not result in the breach of any term
or provision of the bylaws of NAFI or result in the breach
of any term or provision of, or conflict with or constitute
a default (with or without notice, lapse of time, or both)
under or result in the acceleration of any obligation under,
any material agreement, indenture or loan or credit
agreement or other
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instrument to which NAFI or its property is subject, or
result in the violation of any law (including, without
limitation, any bulk transfer or similar law), rule,
regulation, order, judgment or decree to which NAFI or its
property or the Receivables are subject;
(iv) no statement, report or other document furnished
or to be furnished pursuant to this Agreement or in
connection with the transaction contemplated hereby contains
or will, when furnished, contain any untrue statement of a
material fact or omits or will, when furnished, omit to
state a material fact necessary to make the statements
contained therein not misleading, in light of the
circumstances under which they were made;
(v) neither NAFI nor any of its subsidiaries or
affiliates is a party to, bound by or in breach or violation
of any indenture or other agreement or instrument, or is
subject to or in violation of any statute, order or
regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it,
which materially and adversely affects, or may in the future
materially and adversely affect, the ability of NAFI to
perform its obligations under this Agreement;
(vi) there are no actions, suits or proceedings pending
or, to the knowledge of NAFI, threatened against NAFI,
before or by any court, regulatory body, administrative
agency, arbitrator or governmental body with respect to any
of the transactions contemplated by this Agreement, which
will, if determined adversely to NAFI, affect the validity
or enforceability hereof or materially and adversely affect
NAFI's ability to perform its obligations under this
Agreement;
(vii) NAFI has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors
and other non-governmental persons, in each case, in
connection with the execution and delivery of this
Agreement, and the consummation of all the transactions
herein contemplated;
(viii) NAFI shall not take any action to impair
National Financial's rights in any Receivable; and
(ix) NAFI is solvent and will not become insolvent
after giving effect to the transactions contemplated
hereunder and under the Basic Documents; NAFI is paying its
debts as they become due; NAFI, after giving effect to the
contemplated transactions, will have adequate capital to
conduct its business.
NAFI shall indemnify National Financial and the Insurer and
hold National Financial and the Insurer harmless against any loss and damages
resulting from a breach of the representations and warranties set forth in
Section 4.1(a).
(b) NAFI hereby represents and warrants to National Financial
as of the Closing Date with respect to the Initial Receivables contributed and
conveyed to National Financial on the Closing Date by NAFI pursuant to this
Agreement and
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the Initial Receivables sold and conveyed to National Financial on the Closing
Date by National Financial Auto Funding Trust II ("Funding Trust II") and as of
each Subsequent Transfer Date with respect to the Subsequent Receivables sold
and conveyed to National Financial on such Subsequent Transfer Date by NAFI
(unless another date or time period is otherwise specified or indicated in the
particular representation or warranty):
(i) the information regarding such Receivables set
forth in the applicable Receivable Schedule or Receivables
Schedule is true and correct in all material respects at the
applicable Cut-off Date; each Receivable was originated in
the United States of America and at the time of origination,
materially conformed to all requirements of the NAFI
underwriting policies and guidelines then in effect; and no
Obligor is the United States of America or any state or any
agency, department, subdivision or instrumentality thereof;
(ii) immediately prior to the Closing Date or such
Subsequent Transfer Date, as the case may be, Funding Trust
II or NAFI, as the case may be, had a valid and enforceable
security interest in the related Financed Vehicle, and such
security interest had been duly perfected and was prior to
all other present and future liens and security interests
(except future tax liens and liens that, by statute, may be
granted priority over previously perfected security
interests) that exist or may hereafter arise, and Funding
Trust II or NAFI, as applicable, had the full right to
assign such security interest to National Financial;
(iii) on and after the Closing Date or such Subsequent
Transfer Date, as the case may be, there shall exist under
the Receivable a valid, subsisting and enforceable first
priority perfected security interest in the Financed Vehicle
security under such Receivable (other than, as to the
priority of such security interest, any statutory lien
arising by operation of law after the Closing Date or the
Subsequent Transfer Date, as the case may be, which is prior
to such interest) and at such time as enforcement of such
security interest is sought there shall exist a valid,
subsisting and enforceable first priority perfected security
interest in such Financed Vehicle in favor of National
Financial or its assigns (other than, as to the priority of
such security interest, any statutory lien arising by
operation of law after the Closing Date or such Subsequent
Transfer Date which is prior to such interest);
(iv) as of the Closing Date or such Subsequent Transfer
Date, as the case may be, each such Receivable has not been
sold, assigned or pledged to any other Person other than an
endorsement to the Servicer for purposes of servicing or any
such pledge has been released, and immediately prior to the
transfer and assignment contemplated by this Agreement or
the Sale Agreement, NAFI or National Financial Auto Funding
Trust II, as applicable, has good and marketable title to
each such Receivable free and clear of any encumbrance,
equity, pledge, charge, claim or security interest and is
the sole owner thereof and has full right to transfer each
such Receivable to National Financial and, upon the
11
transfers pursuant to Article II or the Sale Agreement,
as applicable, National Financial will have good and
marketable title to each such clear of any encumbrance,
lien, pledge, charge, claim, security interest or rights of
others; the purchase of each such Receivable by NAFI from a
Dealer or Originator was not an extension of financing to
such Dealer or Originator. No Dealer or Originator has a
participation in, or other right to receive, proceeds of any
Receivable. NAFI, Funding Trust II, the Master Trust,
National Financial and the Originators have not taken any
action to convey any right to any Person that would result
in such Person having a right to payments received under the
related insurance policies, Dealer Agreement or Originator
Agreement or to payments due under such Receivable;
(v) as of the Closing Date or such Subsequent Transfer
Date, as the case may be, no such Receivable is delinquent
for more than thirty days in payment as to any scheduled
payment;
(vi) as of the Closing Date or such Subsequent Transfer
Date, as the case may be, there is no lien against any
related Financed Vehicle for delinquent taxes;
(vii) as of the Closing Date or such Subsequent
Transfer Date, as the case may be, there is no right of
rescission, offset, defense or counterclaim to the
obligation of the related Obligor to pay the unpaid
principal or interest due under such Receivable; the
operation of the terms of such Receivable or the exercise of
any right thereunder will not render such Receivable
unenforceable in whole or in part or subject to any right of
rescission, offset, defense or counterclaim, and no such
right of rescission, offset, defense or counterclaim has
been asserted;
(viii) as of the Closing Date or such Subsequent
Transfer Date, as the case may be, each such Receivable is
not assumable by another Person in a manner which would
release the Obligor thereon from such Obligor's obligations
to National Financial with respect to such Receivable;
(ix) as of the Closing Date or such Subsequent Transfer
Date, as the case may be, there are no prior liens or claims
for work, labor or material affecting any related Financed
Vehicle which are or may become a lien prior to or equal
with the security interest granted by such Receivable;
(x) each such Receivable, and the sale of the Financed
Vehicle securing such Receivable, where applicable,
complied, at the time it was made and as of the Closing Date
or related Subsequent Transfer Date, as applicable, in all
material respects with applicable state and federal laws
(and regulations thereunder), including, without limitation,
usury, disclosure and consumer protection laws, equal credit
opportunity, fair-credit reporting, truth-in-lending or
other similar laws, the Federal Trade Commission Act, and
applicable state laws regulating retail installment sales
contracts and loans in general and motor vehicle retail
installment sales contracts and loans in particular, and the
receipt of interest on, and the ownership of, such
Receivable by National Financial will not violate any such
laws;
(xi) each such Receivable is a legal, valid and binding
obligation of the Obligor thereunder and is enforceable in
accordance with its terms,
12
except only as such enforcement of creditors' rights
generally whether enforcement is sought in a proceeding in
equity or at law, and all parties to such Receivable had
full legal capacity to execute such Receivable and all
documents related thereto and to grant the security interest
purported to be granted thereby at the time of execution and
grant;
(xii) as of the Closing Date or such Subsequent
Transfer Date, as the case may be, the terms of each such
Receivable have not been impaired, waived, altered or
modified in any respect, except by written instruments that
are part of the Receivable Documents, and no such Receivable
has been satisfied, subordinated or rescinded;
(xiii) at the time of origination of each such
Receivable, the proceeds of such Receivable were fully
disbursed, there is no requirement for future advances
thereunder, and all fees and expenses in connection with the
origination of such Receivable have been paid;
(xiv) as of the Closing Date or such Subsequent
Transfer Date, as the case may be, there is no default,
breach, violation or event of acceleration existing under
any such Receivable (except payment delinquencies permitted
by subparagraph (v) above) and no event which, with the
passage of time or with notice or with both, would
constitute a default, breach, violation or event of
acceleration under any such Receivable or would otherwise
affect the value or marketability of such contract; and
NAFI, Funding Trust II or the Master Trust have not waived
any such default, breach, violation or event of acceleration
and as of the applicable Cut-off Date, the related Finance
Vehicle has not been repossessed;
(xv) at the origination date of each such Receivable,
the related Financed Vehicle was covered by a comprehensive
and collision insurance policy (i) in an amount at least
equal to the lesser of (a) and actual cash value of the
related Financed Vehicle or (b) the unpaid balance owing on
such Receivable, less the related Unearned Financing Charge,
(ii) naming NAFI as a loss payee and (iii) insuring against
loss and damage due to fire, theft, transportation,
collision and other risks generally covered by comprehensive
and collision coverage; each Receivable requires the Obligor
to maintain physical loss and damage insurance, naming NAFI
as an additional insured party;
(xvi) each such Receivable was acquired by NAFI from a
Dealer or Originator with which it ordinarily does business;
such Dealer or Originator had full right to assign to NAFI
such Receivable and the security interest in the related
Financed Vehicle (and the Dealer that assigned any such
Receivable to any such Originator had full right to assign
to such Originator such Receivable and the security interest
in the related Financed Vehicle) and the Dealer's or
Originator's assignment thereof to NAFI is legal, valid and
binding (and any such assignment by any Dealer to any
Originator is legal, valid and binding) and the Master Trust
had full right to assign to NAFI or Funding Trust II, as the
case may be, such Receivable and the security interest in
the related Financed Vehicle and NAFI or Funding Trust II,
as the case may be, had full right to assign to National
Financial such Receivable and the security interest in the
related Financed Vehicle and NAFI's or Funding Trust II's
assignment thereof to National Financial is legal, valid and
binding;
13
(xvii) each such Receivable contains customary and
enforceable provisions such as to render the rights and
remedies of the holder thereof adequate for the realization
against the related Financed Vehicle of the benefits of the
security;
(xviii) scheduled payments under each such Receivable
are due monthly (or, in the case of the first payment, no
later than the forty-fifth day after the date of the
Receivable) in substantially equal amounts to maturity
(other than with respect to those Receivables designated as
balloon contracts on the related Receivable Schedule), and
will be sufficient to fully amortize such Receivable at
maturity, assuming that each scheduled payment is made on
its Due Date; such scheduled payments are applicable only to
payment of principal and interest on such Receivable and not
to the payment of any insurance premiums (although the
proceeds of the extension of credit on such Receivable may
have been used to pay insurance premiums); the original term
to maturity of such Receivable was not more than 60 months;
(xix) the collection practices used with respect to
each such Receivable have been in all material respects
legal, proper, prudent and customary in the automobile
installment sales contract or installment loan servicing
business;
(xx) there is only one original of each such
Receivable, the Servicer is currently in possession of the
Receivable Documents for such Receivable and there are no
custodial agreements in effect adversely affecting the right
of NAFI to make the deliveries required hereunder on the
Closing Date or such Subsequent Transfer Date;
(xxi) as of the Cut-off Date or Subsequent Cut-off
Date, as applicable, no Obligor was the subject of a current
bankruptcy proceeding;
(xxii) with respect to each Due Period, the aggregate
of the interest due on all the Receivables in such Due
Period from scheduled payments is in excess of the sum of
(i) Servicing Fee due and any fees due to the Trust
Collateral Agent and the Insurer, each in such Due Period
and (ii) the amount of interest payable on the Notes with
respect to such Due Period, in each case assuming that each
scheduled payment is made on its Due Date;
(xxiii) the Receivables constitute "chattel paper"
within the meaning of the UCC as in effect in the applicable
jurisdiction, and all filings (including without limitation,
UCC filings) required to be made and all actions required to
be taken or performed by any Person in any jurisdiction to
give National Financial a first priority perfected lien on,
or an ownership interest in the Receivables and the proceeds
thereof and the remaining Trust Property have been made,
taken or performed;
(xxiv) by the Closing Date and prior to each Subsequent
Transfer Date, as applicable, NAFI will have caused the
portions of NAFI's servicing records relating to the
Receivables to constitute part of the Trust Property and to
be owned by the Trust in accordance with the terms of this
Agreement;
14
(xxv) the computer tape or listing made available by
NAFI to the Trust Collateral Agent on the Closing Date and
on each Subsequent Transfer Date was complete and accurate
as of the applicable Cut-off Date, and includes a
description of the same Receivables that are described in
the applicable Receivable Schedule;
(xxvi) no Receivable was originated in, or is subject
to the laws of, any jurisdiction the laws of which would
make unlawful, void or voidable the sale, transfer and
assignment of such contract under this Agreement or the
Transfer Agreement, as applicable, or pursuant to transfers
of the Notes. National Financial has not entered into any
agreement with any account debtor that prohibits, restricts
or conditions the assignment of any portion of the
Receivables;
(xxvii) no selection procedures adverse to the
Noteholders or to the Insurer have been utilized in
selecting such Receivable from all other similar Receivables
originated by NAFI; and
(xxviii) as of the Initial Cut-off Date, the weighted
average annual percentage rate, as such term is used with
respect to the Federal Truth-in Lending Act ("APR") of the
Initial Receivables was approximately 19.38% and the
weighted average remaining scheduled maturity on the Initial
Receivables was approximately 50.31 months and the
percentage of the aggregate outstanding balance of the
Initial Receivables relating to the financing of used
Financed Vehicles was 80.45%. The final scheduled payment
date on the Initial Receivable with the latest maturity is
June 29, 2002. Each Receivable is a Simple Interest or
Actuarial Receivable.
In the event NAFI has breached any of the foregoing
representations and warranties and National Financial has accepted a retransfer
or is required to accept a retransfer of the affected Receivable pursuant to the
Sale and Servicing Agreement, NAFI shall, upon demand, repurchase such
Receivable from National Financial. In addition, with respect to any Receivable
in respect of which the Title Document was being applied for on the Closing Date
or the applicable Subsequent Transfer Date, as the case may be, if such Title
Document has not been received by National Financial or its transferee within
180 days after the Closing Date or such Subsequent Transfer Date, as the case
may be, and National Financial is required to accept a retransfer of such
Receivable pursuant to the Sale and Servicing Agreement, NAFI shall, upon demand
by National Financial, repurchase such Receivable. Any such repurchases by NAFI
shall be at a repurchase price equal to the Purchase Amount determined in the
manner provided in the Sale and Servicing Agreement. Such repurchase price shall
be paid by NAFI at the direction of National Financial and upon receipt of such
repurchase price, National Financial shall release, or cause to be released, to
NAFI the related Receivable File and National Financial or its transferee shall
15
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in NAFI or its designee any
Receivable released pursuant thereof. Except as expressly provided in the next
sentence, it is understood and agreed that the obligation of NAFI to purchase
any Receivable as to which such a breach has occurred and is continuing as
described above shall constitute the sole remedy respecting such breach
available to National Financial. NAFI shall indemnify, defend and hold National
Financial harmless from and against any and all losses, damages, claims,
expenses and liabilities arising out of or relating to a breach by NAFI of its
representations and warranties in clauses (vii) and (x) of this Section 4.1(b).
Notwithstanding Section 5.1, it is understood and agreed that
the representations, warranties and covenants set forth in this Section 4.1
shall survive until the date upon which the Trust terminates pursuant to Section
11.1 of the Sale and Servicing Agreement.
ARTICLE V
DEFINITIONS
5.1 Term. This Agreement shall commence as of the Closing Date and shall
continue in full force and effect until the close of business on October 30,
1997.
5.2. Notices. All notices, demands and requests that may be given or that are
required to be given hereunder shall be sent by United States certified mail,
postage prepaid, return receipt requested, to the parties at their respective
addresses as follows:
IF TO NAFI: National Auto Finance Company, Inc.
Xxx Xxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
IF TO NATIONAL FINANCIAL National Financial Auto Funding Trust
Xxx Xxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention:
Telecopy No.:
Confirmation: (000) 000-0000
WITH A COPY TO Chase Manhattan Bank Delaware
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Corporate Trust Administration
Department
IF TO THE TRUST COLLATERAL AGENT: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
00
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Division
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
IF TO THE INSURER: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Re: NAFI Auto Finance 1997-1 Trust,
6.35% Automobile Receivables-Backed
Notes
Telecopier No.: (000) 000-0000
(000) 000-0000
Confirmation: (000) 000-0000
5.3. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS
AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH
SUCH LAWS.
5.4. Counterparts. This Agreement may be executed in any
number of counterparts, each of which so executed shall be deemed to be an
original, but all of such counterparts shall together constitute but one and the
same instrument.
5.5. Amendment. This Agreement may be amended from time to
time by NAFI and National Financial to cure any ambiguity, to correct or
supplement any provisions herein which may be inconsistent with any other
provisions herein or therein, or to make any other provisions with respect to
matters or questions arising under this Agreement which shall not be materially
inconsistent with the provisions of this Agreement, provided that such action
shall not, as evidenced by an Opinion of Counsel delivered to the Trust
Collateral Agent, adversely affect in any material respect the interests of the
Noteholders and provided further that such action shall be consented to in
writing by the Insurer (unless an Insurer default shall have occurred and be
continuing).
5.6. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
5.7. Assignment. This Agreement may not be assigned by NAFI or
National Financial except as contemplated by this Section and the Sale and
Servicing Agreement; provided however, that simultaneously with the execution
and delivery
17
of this Agreement, National Financial shall assign all of its right, title and
interest under Section 4.1 to the 1997-1 Trust to which NAFI hereby expressly
consents. NAFI agrees to perform its obligations hereunder for the benefit of
the Trust and further agrees that the Trust Collateral Agent or the Insurer may
(but shall have no obligation to) enforce the provisions of Section 4.1 and
exercise the rights of National Financial to enforce the obligations of NAFI
under Section 4.1 on behalf of the Trust Collateral Agent and the Noteholders
without the consent of National Financial.
5.8. Third-Party Beneficiaries. This Agreement will inure to
the benefit of and be binding upon the parties hereto, and shall also be for the
benefit of the Trust Collateral Agent (for the benefit of the Noteholders) and
the Insurer, each of which shall be considered to be third-party beneficiaries
and shall be entitled to rely on and directly enforce the provisions of this
Agreement. Except as otherwise provided in this Agreement, no other Person will
have any right or obligation hereunder. The Insurer may disclaim any of its
rights and powers under this Agreement upon delivery of a written notice to the
Trust Collateral Agent and NAFI.
5.9. No Petition: NAFI hereby agrees that it will not
institute against National Financial, or join any other Person instituting
against National Financial, any bankruptcy or insolvency proceeding under any
applicable state or federal law so long as any Note issued pursuant to the
Indenture remains outstanding or there shall have not elapsed one year plus one
day since the date of the final payment on the Notes issued pursuant to the
Indenture. The foregoing shall not limit the right of NAFI to file any claim in
or otherwise take any action with respect to any bankruptcy or insolvency
proceeding that was instituted against National Financial by any Person other
than NAFI.
5.10. Limitation of Liability of National Financial Trustee:
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Chase Manhattan Bank Delaware not in its
individual capacity but solely as Trustee and in no event shall Chase Manhattan
Bank Delaware, have any liability for the representations, warranties,
covenants, agreements or other obligations of National Financial hereunder or in
any of the certificates, notices or agreements delivered pursuant hereto, as to
all of which recourse shall be had solely to the assets of National Financial.
18
IN WITNESS WHEREOF, the parties hereto have executed this
Purchase and Contribution Agreement as of the day and year first written above.
NATIONAL FINANCIAL AUTO FUNDING TRUST
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Trustee of
National Financial Auto Funding Trust,
By: ____________________________________
Name:
Title:
NATIONAL AUTO FINANCE COMPANY, INC.
By: ____________________________________
Name:
Title:
19
EXHIBIT A
---------
FORM OF CONVEYANCE
CONVEYANCE No. ___, dated as of _______________, 19__, by National Auto
Finance Company, Inc., a Delaware corporation ("Originator"), to National
Financial Auto Funding Trust, a Delaware business trust ("National Financial"),
pursuant to the Purchase and Contribution Agreement referred to below.
WITNESSETH:
----------
WHEREAS, Originator and National Financial are parties to the Purchase
and Contribution Agreement, dated as of July __, 1997 (as such agreement may
have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, Originator wishes to sell,
transfer, convey and assign Receivable Assets (as defined in the Purchase
Agreement) to National Financial;
NOW THEREFORE, Originator and National Financial hereby agree as
follows:
1. Defined Terms. All capitalized terms used but not defined
herein shall have meanings ascribed to them in the Purchase Agreement.
"Subsequent Transfer Date" shall mean, with respect to the
Receivable Assets sold hereby, ____________________, 199[ ].
2. Transfer of Receivables. For value received, Originator
hereby sells, transfers, assigns, sets-over and conveys to National Financial,
without recourse except as set forth in the Purchase Agreement, and with the
representations, warranties and covenants set forth in the Purchase Agreement,
on and after the Subsequent Transfer Date, all right, title and interest of
National Financial in, to and under all Subsequent Receivables listed in
Schedule 1 hereto and the Receivable Assets related thereto.
3. Delivery of Receivable Schedule. Originator does hereby
deliver National Financial herewith a Receivable Schedule containing a true and
complete list of each Subsequent Receivable being sold hereby as of the
Subsequent Transfer Date. Such Receivable Schedule is marked as Schedule 1 to
this Conveyance and is hereby incorporated in and made a part of this Conveyance
and the Purchase Agreement.
4. Receivable Files. Originator does hereby deliver to
National Financial or such other Person designated by National Financial the
original motor vehicle retail installment sale contracts and Receivable Files
for each Receivable identified in the Receivable Schedule.
5. Acceptance and Acknowledgment. National Financial hereby
acknowledges its acceptance of all right, title and interest of Originator in,
to and under the
20
Receivables and the other Receivable Assets sold hereby. Originator further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Conveyance the conditions precedent to such sale set forth in Article III
of the Purchase Agreement have been satisfied.
6. Certification; Representations and Warranties. Originator
hereby certifies to National Financial that all applicable requirements of
Article III of the Purchase Agreement have been fully satisfied and that all
representations and warranties of Originator set forth in Section 4.1(a) of the
Purchase Agreement are true and correct on and as of the date hereof and all
representations and warranties of Originator set forth in Section 4.1(b) of the
Purchase Agreement are true and correct on and as of the date hereof with
respect to the Subsequent Receivables sold hereby. The aggregate outstanding
principal balance of the Subsequent Receivables sold hereby as of the applicable
Cut-off Date is $__________________.
7. The Purchase Agreement. The Purchase Agreement shall
continue to be, and shall remain, in full force and effect in accordance with
its terms, and hereby is ratified and confirmed in all respects.
8. Counterparts. This Conveyance may be executed in any number
of counterparts, all of which taken together shall constitute one and the same
instrument.
21
SCHEDULE 1
----------
SCHEDULE OF RECEIVABLES
22
