EXECUTION COPY
MASTER SPREAD ACCOUNT AGREEMENT,
dated as of November 13, 1996
among
NATIONAL FINANCIAL AUTO FUNDING TRUST,
FINANCIAL SECURITY ASSURANCE INC.
and
XXXXXX TRUST AND SAVINGS BANK,
as Trustee and as Collateral Agent
TABLE OF CONTENTS
Page
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ARTICLE I.
DEFINITIONS
Section 1.01. Definitions................................................. 2
Section 1.02. Rules of Interpretation..................................... 9
ARTICLE II.
REVERSIONARY HOLDERS; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. Reversionary Holders........................................ 9
Section 2.02. Series Supplements.......................................... 10
Section 2.03. Creation and Grant of Security Interest by the
Transferor............................................. 11
Section 2.04. Priority.................................................... 12
Section 2.05. Transferor Remains Liable................................... 12
Section 2.06. Maintenance of Collateral................................... 12
Section 2.07. Termination and Release of Rights........................... 13
Section 2.08. Non-Recourse Obligations of Transferor and the
Reversionary Holders................................... 14
ARTICLE III.
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits
into Spread Accounts................................... 15
Section 3.02. Investments................................................. 16
Section 3.03. Distributions; Priority of Payments......................... 17
Section 3.04. General Provisions Regarding Spread Accounts................ 20
Section 3.05. Reports by the Collateral Agent............................. 21
ARTICLE IV.
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers...................................... 22
Section 4.02. Performance of Duties....................................... 22
Section 4.03. Limitation on Liability..................................... 22
Section 4.04. Reliance upon Documents..................................... 23
Section 4.05. Successor Collateral Agent.................................. 24
Section 4.06. Indemnification............................................. 26
Section 4.07. Compensation and Reimbursement.............................. 26
Section 4.08. Representations and Warranties of the Collateral
Agent.................................................. 27
Section 4.09. Waiver of Setoffs........................................... 27
Section 4.10. Control by the Controlling Party............................ 27
ARTICLE V.
COVENANTS OF THE Transferor
Section 5.01. Preservation of Collateral.................................. 28
Section 5.02. Opinions as to Collateral................................... 28
Section 5.03. Notices..................................................... 29
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of
Assets................................................. 29
Section 5.05. Noninterference, etc........................................ 29
Section 5.06. Transferor Changes.......................................... 30
ARTICLE VI.
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party............................ 30
Section 6.02. Controlling Party's Authority............................... 31
Section 6.03. Rights of Secured Parties................................... 32
Section 6.04. Degree of Care.............................................. 32
ARTICLE VII.
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default..................................... 33
Section 7.02. Waiver of Default........................................... 33
Section 7.03. Restoration of Rights and Remedies.......................... 33
Section 7.04. No Remedy Exclusive......................................... 34
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Further Assurances.......................................... 34
Section 8.02. Waiver...................................................... 34
Section 8.03. Amendments, Waivers......................................... 34
Section 8.04. Severability................................................ 35
Section 8.05. Nonpetition Covenant........................................ 35
Section 8.06. Notices..................................................... 36
Section 8.07. Term of this Agreement...................................... 38
Section 8.08. Assignments, Third-Party Rights; Reinsurance................ 38
Section 8.09. Consent of Controlling Party................................ 39
Section 8.10. Trial by Jury Waived........................................ 39
Section 8.11. Governing Law............................................... 39
Section 8.12. Consents to Jurisdiction.................................... 40
Section 8.13. Limitation of Liability..................................... 40
Section 8.14. Determination of Adverse Effect............................. 41
Section 8.15. Counterparts................................................ 41
Section 8.16. Headings.................................................... 41
MASTER SPREAD ACCOUNT AGREEMENT
MASTER SPREAD ACCOUNT AGREEMENT, dated as of November 13, 1996 (the
"Agreement"), by and among NATIONAL FINANCIAL AUTO FUNDING TRUST, a Delaware
business trust (the "Transferor"), FINANCIAL SECURITY ASSURANCE INC., a New York
stock insurance company ("Financial Security"), and XXXXXX TRUST AND SAVINGS
BANK, an Illinois banking corporation, in its capacities as Trustee under each
Securitization Agreement referred to below, in such capacity as agent for the
Certificateholders and Financial Security with respect to the related Series
(the "Trustee") and as Collateral Agent (as defined below).
RECITALS
1. National Auto Finance 1996-1 Trust (the "Series 1996-1 Trust") was
formed pursuant to a Pooling and Servicing Agreement dated as of October 21,
1996, as such agreement may be amended, supplemented or otherwise modified from
time to time in accordance with the terms thereof (the "Series 1996-1
Securitization Agreement") among the Transferor, National Auto Finance Company
L.P., a Delaware limited partnership ("NAFCO"), in its capacity as Servicer (the
"Servicer"), and the Trustee, in its capacities as Trustee, Standby Servicer and
Collateral Agent.
2. Pursuant to the Series 1996-1 Securitization Agreement, the Transferor
assigned to the Trustee all of its right, title and interest in and to the
Contracts and certain other property of the Series 1996-1 Trust Estate.
3. The Transferor requested that Financial Security issue the Series
1996-1 Policy to the Trustee to guarantee payment of the Guaranteed
Distributions (as defined in such Policy) on each Distribution Date in respect
of the Series 1996-1 Certificates.
4. In partial consideration of the issuance of the Series 1996-1 Policy,
the Transferor has agreed that Financial Security shall have certain rights as
Controlling Party, to the extent set forth herein with respect to the Contracts
and the Series 1996-1 Trust Estate.
5. In order to secure the performance of the Secured Obligations, the
Transferor, as the Reversionary Holder, has agreed to pledge the Collateral to
the Collateral Agent for the benefit of Financial Security and for the benefit
of the Trustees on behalf of the Trusts, upon the terms and conditions set forth
herein.
6. It is contemplated that NAFCO and/or the Transferor and/or any other
Affiliate of NAFCO may in the future enter into
one or more additional Securitization Agreements pursuant to which the
Transferor, NAFCO and/or such other Affiliate of NAFCO will sell or pledge all
or a portion of its right, title and interest in and to pools of Contracts
and/or other financial assets or property to a Trust or other Person and in
connection therewith Financial Security in its discretion may in the future
issue additional Policies with respect to certain guaranteed distributions or
scheduled payments with respect to the corresponding additional Series. In
connection with any such issuance of additional Policies, it is contemplated
that Financial Security will obtain certain Controlling Party rights with
respect to the related Series, and that, in connection with each such additional
Series, the parties hereto will enter into a Series Supplement hereto pursuant
to which NAFCO and/or the Transferor and/or any other Affiliate of NAFCO will
assign, or cause to be assigned, additional Collateral pursuant to the terms
hereof.
AGREEMENTS
In consideration of the premises, and for other good and valuable
consideration, the adequacy, receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Unless defined in this Agreement, capitalized
terms used in this Agreement shall have the meaning given such terms in the
applicable Securitization Agreement or Series Supplement, as identifiable from
the context in which such term is used. The following terms shall have the
following respective meanings:
"Affiliate" means, as to any Person, any other Person that, directly or
indirectly, is in control of, is controlled by, or is under common control with,
such Person within the meaning of control under Section 15 of the Securities Act
of 1933, as amended.
"Agreement" means this Master Spread Account Agreement, as amended,
supplemented as otherwise modified from time to time in accordance with the
terms hereof.
"Authorized Officer" means, (i) with respect to Financial Security, the
Chairman of the Board, the President, the Executive Vice President or any
Managing Director of Financial Security,
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(ii) with respect to the Trustees or the Collateral Agent, any Vice President or
Trust Officer thereof, and (iii) with respect to the Transferor, any Co-Trustee
thereof.
"Certificateholders" means the holders of the Certificates of a Series as
more particularly described in the Securitization Agreement with respect to such
Series.
"Certificates" means the "certificates", "notes" or other obligations
issued or arising under a Securitization Agreement.
"Collateral" means the Series 1996-1 Collateral, and with respect to any
other Series, all collateral delivered hereunder with respect to each of such
Series, as specified in the related Series Supplement.
"Collateral Agent" means, initially, Xxxxxx Trust and Savings Bank, in its
capacity as collateral agent on behalf of the Secured Parties, including its
successors in interest, until a successor Person shall have become the
Collateral Agent pursuant to Section 4.05 hereof, and thereafter "Collateral
Agent" shall mean such successor Person.
"Collateral Agent Fee" means, with respect to the Series 1996-1
Certificates, the annual fee payable to the Collateral Agent for services
rendered as the Collateral Agent, which Collateral Agent Fee is included in the
fees paid to Xxxxxx Trust and Savings Bank pursuant to the Series 1996-1
Securitization Agreement.
"Collection Account" means the Collection Account applicable to any
Series, as specified in the related Securitization Agreement.
"Controlling Party" means, with respect to a Series, at any time, the
Person designated as the Controlling Party at such time pursuant to Section 6.01
hereof.
"Deemed Cured" means, as of a Reporting Date, with respect to a Trigger
Event that has occurred with respect to a Series, that no Trigger Event with
respect to such Series shall have occurred as of such Reporting Date or as of
any of the two consecutively preceding Reporting Dates.
"Default" means with respect to any Series, at any time, (i) if Financial
Security is then the Controlling Party with respect to such Series, any
Insurance Agreement Event of Default with respect to such Series, and (ii) if
the Trustee is then the Controlling Party with respect to such Series, any
Servicer Default with respect to such Series.
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"Delinquency Claim Date" means, with respect to any Distribution Date, the
fourth Business Day preceding such Distribution Date.
"Delivery" shall have the meaning set forth in the Series 1996-1
Securitization Agreement.
"Final Termination Date" means, with respect to a Series, the date that is
the later of (i) the Insurer Termination Date with respect to such Series and
(ii) the Trustee Termination Date with respect to such Series.
"Financial Security Default" means, with respect to any Series, any one of
the following events shall have occurred and be continuing:
(a) Financial Security shall have failed to make a payment required
under the related Policy;
(b) Financial Security shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar Federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization,
(ii) made a general assignment for the benefit of its creditors, or (iii)
had an order for relief entered against it under the United States
Bankruptcy Code or any other similar Federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization
which is final and nonappealable; or
(c) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority shall have entered a
final and nonappealable order, judgment or decree (i) appointing a
custodian, trustee, agent or receiver for Financial Security or for all or
any material portion of its property or (ii) authorizing the taking of
possession by a custodian, trustee, agent or receiver of Financial
Security (or the taking of possession of all or any material portion of
the property of Financial Security).
"Guaranteed Distributions" shall have the meaning set forth in the related
Policy.
"Xxxxxx Trust and Savings Bank" means Xxxxxx Trust and Savings Bank, an
Illinois banking corporation.
"Initial Spread Account Deposit" means, with respect to the Series 1996-1
Certificates, an amount equal to $682,395.60.
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"Insurance Agreement" means, with respect to any Series, the Insurance and
Indemnity Agreement among Financial Security and/or NAFCO and/or the Transferor
and such other parties as may be named therein, pursuant to which Financial
Security issued a Policy to the Trustee.
"Insurer Secured Obligations" means, with respect to a Series, all amounts
and obligations which may at any time be owed to or on behalf of Financial
Security (or any agents, accountants or attorneys for Financial Security) under
the Insurance Agreement related to such Series or under any Transaction Document
in respect of such Series, regardless of whether such amounts are owed now or in
the future, whether liquidated or unliquidated, contingent or noncontingent.
"Insurer Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date of the expiration of all Policies issued in
respect of such Series, (ii) the date on which Financial Security shall have
received payment and performance in full of all Insurer Secured Obligations with
respect to such Series and (iii) the latest date any payment referred to above
could be avoided as a preference or otherwise under the United States Bankruptcy
Code or any other similar Federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, as specified in an
Opinion of Counsel delivered to the Collateral Agent and the Trustee.
"Lien" means any security interest, lien, change, pledge, preference,
equity or encumbrance of any kind, including tax liens, mechanics' liens and any
liens that attach by operation of the law.
"Monthly Period" means, with respect to a Reporting Date or a Distribution
Date, the calendar month immediately preceding the month in which such Reporting
Date or Distribution Date occurs (such calendar month being referred to as the
"related" Monthly Period with respect to such Reporting Date or Distribution
Date).
"NAFCO" means National Auto Finance Company L.P., a Delaware limited
partnership.
"Non-Controlling Party" means with respect to a Series at any time, the
Secured Party that is not the Controlling Party at such time.
"Opinion of Counsel" means a written opinion of counsel acceptable, as to
form, substance and issuing counsel, to the Controlling Party.
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"Policy" means the Series 1996-1 Policy and any insurance policy
subsequently issued by Financial Security with respect to a Series.
"Requisite Amount" means, with respect to Series 1996-1, as of any
Reporting Date after giving effect to any distributions of the Certificate
Distributable Amount to be made on the related Distribution Date, the greater of
(a) the lesser of (i) $1,364,791.20 and (ii) the greater of (A) the Certificate
Balance as of such Reporting Date and (B) $100,000, and (b) (i) if a Trigger
Event shall have occurred as of such Reporting Date (and until such Trigger
Event is Deemed Cured) and no Insurance Agreement Event of Default shall have
occurred as of such Reporting Date, 7% of the Series 1996-1 Balance as of such
Reporting Date; or (iii) if an Insurance Agreement Event of Default shall have
occurred as of such Reporting Date, an unlimited amount.
"Reversionary Holder" has the meaning specified in Section 2.01 hereof.
"Scheduled Payments" shall have the meaning set forth in the related
Policy.
"Secured Obligations" means, with respect to each Series the Insurer
Secured Obligations with respect to such Series and the Trustee Secured
Obligations with respect to such Series.
"Secured Parties" means Financial Security and the Trustee.
"Securitization Agreement" means, with respect to the Series 1996-1
Certificates, the Series 1996-1 Securitization Agreement and, for each other
Series created pursuant to a Securitization Agreement, the "Pooling and
Servicing Agreement", "Sale and Servicing Agreement", "Indenture", "Purchase and
Contribution Agreement" or any other financing document related to such Series.
"Security Interests" means, with respect to the Series 1996-1
Certificates, the security interests and Liens in the Series 1996-1 Collateral
granted pursuant to Section 2.03 hereof, and, with respect to any other Series,
the security interests and Liens in the related Collateral granted pursuant to
the related Series Supplement.
"Series 0000-0 Xxxxxxx" means with respect to any Reporting Date, the sum
of the Pool Outstanding Principal Balance as of the related Distribution Date,
the amount on deposit in the Pre-Funding Account, if any, on such date and the
amount on deposit in the Revolving Account, if any, on such date.
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"Series 1996-1 Certificates" means the Series of Certificates issued
pursuant to the Series 1996-1 Securitization Agreement.
"Series 1996-1 Collateral" has the meaning specified in Section 2.03(a)
hereof.
"Series 1996-1 Initial Balance" means $62,098,000.
"Series 1996-1 Insurance Agreement" means the Insurance Agreement related
to the Series 1996-1 Certificates.
"Series 1996-1 Insurer Secured Obligations" means the Insurer Secured
Obligations with respect to the Series 1996-1 Certificates.
"Series 1996-1 Policy" means the Policy issued with respect to the Series
1996-1 Certificates.
"Series 1996-1 Reversionary Holder" has the meaning specified in Section
2.01 hereof.
"Series 1996-1 Secured Obligations" means the Secured Obligations related
to the Series 1996-1 Certificates.
"Series 1996-1 Securitization Agreement" has the meaning set forth in the
first recital to this Agreement.
"Series 1996-1 Spread Account" has the meaning specified in Section
3.01(a) hereof.
"Series 1996-1 Trust" has the meaning provided in the first recital to
this Agreement.
"Series 1996-1 Trust Estate" means the Trust Estate with respect to the
Series 1996-1 Series, as described in the Series 1996-1 Securitization
Agreement.
"Series of Certificates" or "Series" means the Series 1996-1 Certificates
or, as the context may require, any other series of Certificates issued or
arising as described in Section 2.02 hereof, or collectively, all such series.
"Series Supplement" means a supplement hereto executed by the parties
hereto in accordance with Section 2.02 hereof.
"Servicer Termination Side Letter" shall have the meaning set forth in the
Insurance Agreement.
"Spread Account" has the meaning specified in Section 3.01(a) hereof.
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"Spread Account Permitted Investments" means Permitted Investments held by
the Collateral Agent in a Spread Account and with respect to which the
Collateral Agent has taken Delivery.
"Spread Account Shortfall" means, with respect to any Series and any
Reporting Date with respect to which the Requisite Amount for such Series is 7%
of the Series 1996-1 Balance or unlimited, the excess, if any, of (a) the
greater of 7% of the Series 1996-1 Balance and the amount determined by
reference to clause (a) of the definition of Requisite Amount with respect to
such Distribution Date over (b) the amount on deposit in the related Spread
Account after making any withdrawals therefrom required by priorities FIRST,
SECOND, and THIRD of Section 3.03(b) hereof.
"Transaction Documents" means, with respect to a Series, this Agreement,
each of the applicable Securitization Agreement, the Servicer Termination Side
Letter, the Insurance Agreement, the Indemnification Agreement, the Purchase
Agreement, the Premium Letter, the Assignment Agreement, if any, the Custodial
Agreement, any Conveyance related to such Series, any Transfer Agreement related
to such Series and any other financing document related to such Series.
"Trigger Event" means, with respect to Series 1996-1, that as of any
Reporting Date with respect to Series 1996-1 that any one of the following
events shall have occurred and shall not have terminated: (a) the Average
Delinquency Ratio as of such Reporting Date is equal to or greater than 8.25%;
or (b) the Average Default Rate as of such Reporting Date (i) occurring on or
before October 15, 1998 is equal to or greater than 18.0 and (ii) occurring
subsequent to October 15, 1998 is equal to or greater than 14.0%; or (c) the
Average Net Loss Rate as of such Reporting Date (i) occurring on or before
October 15, 1998 is equal to or greater than 8.0% and (ii) occurring subsequent
to October 15, 1998 is equal to or greater than 6.0%.
"Trust" means a trust formed pursuant to a Securitization Agreement.
"Trust Estate" with respect to any Series means the property assigned to
the Trustee or other Person or held in the estate of the Trust, in each case
pursuant to the related Securitization Agreement.
"Trustee" means with respect to any Series, the Trustee named in the
related Securitization Agreement.
"Trustee Secured Obligations" means, with respect to a Series, all amounts
and obligations which NAFCO or the Transferor may at any time owe to or on
behalf of the Trustee, the Trust or
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the Certificateholders under the Securitization Agreement with respect to such
Series.
"Trustee Termination Date" means, with respect to any Series, the date
which is the latest of (i) the date on which the Trustee shall have received, as
Trustee for the holders of the Certificates of such Series, payment and
performance in full of all Trustee Secured Obligations arising out of or
relating to such Series, (ii) the date on which all payments in respect of the
Certificates shall have been made and the related Trust shall have been
terminated pursuant to the terms of the related Securitization Agreement and
(iii) the latest date any payment referred to above could be avoided as a
preference or otherwise under the United States Bankruptcy Code or any other
similar Federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization, as specified in an Opinion of Counsel delivered
to the Collateral Agent and the Trustee.
"Uniform Commercial Code" or "UCC" means the Uniform Commercial Code in
effect in the relevant jurisdiction, as the same may be amended from time to
time.
"Unreimbursed Amounts" has the meaning specified in Section 3.03(b)
hereof.
Section 1.02. Rules of Interpretation. The terms "hereof," "herein" or
"hereunder," unless otherwise modified by more specific reference, shall refer
to this Agreement in its entirety. Unless otherwise indicated in context, the
terms "Article," "Section," "Appendix," "Exhibit" or "Annex" shall refer to an
Article or Section of, or Appendix, Exhibit or Annex to, this Agreement. The
definition of a term shall include the singular, the plural, the past, the
present, the future, the active and the passive forms of such term. A term
defined herein and used herein preceded by a Series designation, shall mean such
term as it relates to the Series designated.
ARTICLE II.
REVERSIONARY HOLDERS; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. Reversionary Holders. It is anticipated that each
Securitization Agreement will require that certain amounts be deposited into a
Spread Account. With respect to any Series, the Person or Persons who will
ultimately be entitled to receive distributions of amounts released from the
related Spread Account are the "Reversionary Holders" with respect to such
Spread Account and Series and may be classified into different classes of
Reversionary Holders pursuant to the applicable Securitization
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Agreement and Section 3.03 hereof. With respect to the Series 1996-1
Certificates, the Reversionary Holder (the "Series 1996-1 Reversionary Holder")
shall be the Transferor.
It is intended by the parties hereto that the Collateral shall constitute
property held in trust by the Collateral Agent, to provide for the payment of
the Secured Obligations, and that such Collateral and any property rights
appurtenant thereto shall vest in the related Reversionary Holders only when
such Collateral is released to such Reversionary Holders in accordance with
Section 3.03(b) hereof.
Notwithstanding the foregoing, each Reversionary Holder may treat the
deposit of the related Collateral into the related Spread Account as the receipt
by such Reversionary Holder of such Collateral for Federal and state income
taxes, as may be required by law.
Each Securitization Agreement in which the Transferor is not itself the
sole Reversionary Holder shall provide that the Transferor shall be deemed to be
the agent of the related Reversionary Holders for the purpose of perfecting the
Collateral Agent's Security Interest in the related Collateral. Each
Securitization Agreement shall additionally provide that the Reversionary
Holders agree to execute and deliver such instruments of conveyance, assignment,
grant, confirmation, etc., as well as any financing statements, in each case, as
the Controlling Party shall consider reasonably necessary in order to perfect
the Collateral Agent's Security Interest in the related Collateral.
Section 2.02. Series Supplements. The parties hereto agree that the
Transferor will have the option to enter into a Series Supplement hereto with
respect to each Series, the Secured Obligations with respect to which are to be
secured by Collateral held pursuant to the provisions of this Agreement. The
parties will enter into a Series Supplement only if the following conditions
shall have been satisfied:
(i) The Transferor shall have sold or pledged all or a portion of
its right, title and interest in and to a pool of Contracts and/or other
financial assets or property to a Trust or other Person pursuant to a
Securitization Agreement;
(ii) Financial Security shall have issued a Policy in respect of the
Guaranteed Distributions or Scheduled Payments, as the case may be, with
respect to the senior class of the Series issued or arising pursuant to
such Securitization Agreement; and
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(iii) Pursuant to the related Series Supplement the related
Collateral specified herein shall be administered by the Collateral Agent
substantially on the terms set forth in Section 2.03 hereof.
Section 2.03. Creation and Grant of Security Interest by the Transferor.
(a) To secure the performance of the Series 1996-1 Secured Obligations and
the Secured Obligations with respect to each other Series to the extent provided
herein, the Transferor, including in its capacity as agent on behalf of the
Reversionary Holders, hereby pledges, assigns, grants, transfers and conveys to
the Collateral Agent, on behalf of and for the benefit of the Secured Parties, a
lien on and security interest in (which lien and security interest is intended
to be prior to all other Liens), all of its right, title and interest in and to
the following (all being collectively referred to herein as the "Series 1996-1
Collateral" and constituting Collateral hereunder):
(i) the amounts distributed to the Series 1996-1 Spread Account
pursuant to Sections 4.01(b)(v) and 4.01(b)(xi) of the Series 1996-1
Securitization Agreement and all rights and remedies that the Series
1996-1 Reversionary Holder may have to enforce such distributions, whether
under the Series 1996-1 Securitization Agreement or otherwise;
(ii) the Series 1996-1 Spread Account established pursuant to
Section 3.01 hereof, and each other account established by the Transferor
and maintained by the Collateral Agent (including, without limitation, the
Initial Spread Account Deposit related thereto and all additional monies,
checks, securities, investments and other documents from time to time held
in or evidencing any such accounts);
(iii) all of the Transferor's right, title and interest in its
capacity as the Series 1996-1 Reversionary Holder, in and to investments
made with proceeds of the property described in clauses (i) and (ii) above
or made with amounts on deposit in the Series 1996-1 Spread Account; and
(iv) all distributions, revenues, products, substitutions, benefits,
profits and proceeds, in whatever form, of any of the foregoing.
(b) To effectuate the provisions and purposes of this Agreement, including
for the purpose of perfecting the security interests granted hereunder, the
Transferor represents and
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warrants that it has, prior to the execution of this Agreement, executed and
filed an appropriate Uniform Commercial Code financing statement in the State of
Illinois sufficient to assure that the Collateral Agent, as agent for the
Secured Parties, has a first priority perfected security interest in all Series
1996-1 Collateral which can be perfected by the filing of a financing statement.
Section 2.04. Priority. The Transferor intends the security interests in
favor of the Collateral Agent, for the benefit of the Secured Parties, to be
prior to all other Liens in respect of the Collateral, and the Transferor shall
take all actions necessary to obtain and maintain, in favor of the Collateral
Agent, for the benefit of the Secured Parties, a first lien on and a first
priority perfected security interest in the Collateral. Subject to the
provisions hereof specifying the rights and powers of the Controlling Party from
time to time to control certain specified matters relating to the Collateral,
each Secured Party shall have all of the rights, remedies and recourse with
respect to the Collateral afforded a secured party under the Uniform Commercial
Code, and all other applicable law in addition to, and not in limitation of, the
other rights, remedies and recourse granted to such Secured Parties by this
Agreement or any other law relating to the creation and perfection of liens on,
and security interests in, the Collateral.
Section 2.05. Transferor Remains Liable. The Security Interests are
granted as security only and shall not (i) transfer or in any way affect or
modify, or relieve the Transferor from, any obligation to perform or satisfy,
any term, covenant, condition or agreement to be performed or satisfied by the
Transferor under or in connection with this Agreement, the Insurance Agreement
or any other Transaction Document to which it is a party or (ii) impose any
obligation on any of the Secured Parties or the Collateral Agent to perform or
observe any such term, covenant, condition or agreement or impose any liability
on any of the Secured Parties or the Collateral Agent for any act or omission on
its part relative thereto or for any breach of any representation or warranty on
its part contained therein or made in connection therewith, except, in each
case, to the extent provided herein and in the other Transaction Documents.
Section 2.06. Maintenance of Collateral.
(a) Safekeeping. The Collateral Agent agrees to (i) maintain the
Collateral (other than Spread Account Permitted Investments) received by it and
all records and documents relating thereto at the office of the Collateral Agent
specified in Section 8.06 hereof or such other address within the State of
Illinois (unless all filings have been made to continue the
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perfection of the security interest in the Collateral to the extent such
security interest can be perfected by filing a financing statement, as evidenced
by an Opinion of Counsel delivered by the Transferor to the Controlling Party),
as may be approved by the Controlling Party and (ii) take Delivery of and
maintain the Spread Account Permitted Investments and all records and documents
relating thereto at its offices within the State of New York. The Collateral
Agent shall keep all Collateral and related documentation in its possession
separate and apart from all other property that it is holding in its possession
and from its own general assets and shall maintain accurate records pertaining
to the Spread Account Permitted Investments and Spread Accounts included in the
Collateral in such a manner as shall enable the Collateral Agent and the Secured
Parties to verify the accuracy of such record-keeping. The Collateral Agent's
books and records shall at all times show that the Collateral is held by the
Collateral Agent as agent of the Secured Parties and is not the property of the
Collateral Agent. The Collateral Agent will promptly report to each Secured
Party and the Transferor any failure on its part to hold the Collateral as
provided in this Section 2.06(a) and will promptly take appropriate action to
remedy any such failure.
(b) Access. The Collateral Agent shall permit each of the Secured Parties,
the Reversionary Holders or their respective duly authorized representatives,
attorneys, auditors or designees, to inspect the Collateral in the possession of
or otherwise under the control of the Collateral Agent pursuant hereto at such
reasonable times during normal business hours as any such Secured Party or
Reversionary Holder may reasonably request upon not less than two Business Days'
prior written notice. The costs and expenses associated with any such inspection
will be paid by the party making such inspection.
Section 2.07. Termination and Release of Rights.
(a) On the Insurer Termination Date relating to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon Financial
Security pursuant to this Agreement in respect of the Collateral related to such
Series (and, to the extent provided herein, in respect of Collateral related to
other Series) shall terminate and be of no further force and effect and all
rights, remedies, powers, duties, authority and obligations of Financial
Security with respect to such Collateral shall be automatically released;
provided that any indemnity provided to or by Financial Security herein shall
survive such Insurer Termination Date. If Financial Security is acting as
Controlling Party with respect to a Series on the related Insurer Termination
Date, Financial Security agrees, at the expense of the Transferor, to execute
and deliver such instruments as the successor Controlling Party may reasonably
request to effect such
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release, and any such instruments so executed and delivered shall be fully
binding on Financial Security and any Person claiming by, through or under
Financial Security.
(b) On the Trustee Termination Date related to a Series, the rights,
remedies, powers, duties, authority and obligations, if any, conferred upon the
Trustee pursuant to this Agreement in respect of the Collateral related to such
Series (and, to the extent provided herein, in respect of Collateral related to
other Series) shall terminate and be of no further force and effect and all such
rights, remedies, powers, duties, authority and obligations of the Trustee with
respect to such Collateral shall be automatically released; provided that any
indemnity provided to the Trustee herein shall survive such Trustee Termination
Date. If the Trustee is acting as Controlling Party with respect to a Series on
the related Trustee Termination Date, the Trustee agrees, at the expense of the
Transferor, to execute and deliver such instruments as the Transferor may
reasonably request to effectuate such release, and any such instruments so
executed and delivered shall be fully binding on the Trustee.
(c) On the Final Termination Date with respect to a Series, the rights,
remedies, powers, duties, authority and obligations conferred upon the
Collateral Agent and each Secured Party pursuant to this Agreement shall
terminate and be of no further force and effect and all rights, remedies,
powers, duties, authority and obligations of the Collateral Agent and each
Secured Party with respect to the Collateral related to such Series (and, to the
extent provided herein, in respect of Collateral related to other Series) shall
be automatically released, subject to the application of such amounts for
indemnity payments and all other amounts due and payable hereunder. On the Final
Termination Date with respect to a Series, the Collateral Agent agrees, and each
Secured Party agrees, at the expense of the Transferor, to execute such
instruments of release, in recordable form if necessary, in favor of the
Transferor as the Transferor may reasonably request, to deliver any Collateral
related to such Series in its possession to the Transferor or as otherwise
provided in the related Securitization Agreement, and to otherwise release the
lien of this Agreement and release and deliver to the Transferor or as otherwise
provided in the related Securitization Agreement the Collateral related to such
Series.
Section 2.08. Non-Recourse Obligations of Transferor and the Reversionary
Holders. Notwithstanding anything herein or in the other Transaction Documents
to the contrary, the parties hereto agree that the obligations of the Transferor
and the Reversionary Holders hereunder shall be recourse only to the extent of
amounts deposited in the Spread Accounts. The Transferor agrees that it shall
not declare or make payment of
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(i) any dividend or other distribution on or in respect of any beneficial
interests in the Transferor or (ii) any payment on account of the purchase,
redemption, retirement or acquisition of (x) any beneficial interest in the
Transferor or (y) any option, warrant or other right to acquire any beneficial
interest in the Transferor or (z) any payment of any loan made by NAFCO to the
Transferor, unless (in each case) at the time of such declaration or payment
(and after giving effect thereto) no amount payable by the Transferor or any
Reversionary Holder under any Transaction Document is then due and owing but
unpaid.
ARTICLE III.
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits into
Spread Accounts.
(a) On or prior to the Closing Date relating to Series 1996-1, the
Collateral Agent shall establish with respect to such Series, at its office or
at another depository institution or trust company an Eligible Account,
designated, "Spread Account National Auto Finance Series 1996-1 Trust - Xxxxxx
Trust and Savings Bank, as Collateral Agent for Financial Security Assurance
Inc. and another Secured Party" (the "Spread Account", and, with respect to the
Series 1996-1 Certificates, the "Series 1996-1 Spread Account"). All Spread
Accounts established under this Agreement from time to time shall be maintained
at the same depository institution (which depository institution may be changed
from time to time in accordance with this Agreement). If any Spread Account
maintained or established with respect to a Series ceases to be an Eligible
Account, the Collateral Agent shall, within five Business Days, establish a new
Eligible Account for such Series.
(b) No withdrawals may be made of funds in any Spread Account except as
provided in Section 3.03 of this Agreement. Except as specifically provided in
this Agreement, funds in a Spread Account established with respect to a Series
shall not be commingled with funds in a Spread Account established with respect
to another Series or with any other moneys. All moneys deposited from time to
time in such Spread Account and all investments made with such moneys shall be
held by the Collateral Agent as part of the Collateral with respect to such
Series.
(c) On the Closing Date with respect to a Series, the Collateral Agent
shall deposit the Initial Spread Account Deposit with respect to such Series, if
any, received from the Transferor
into the related Spread Account.
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(d) Each Spread Account shall be separate from each Trust, and amounts on
deposit therein will not constitute a part of the Trust Estate of any Trust.
Each Spread Account shall be maintained by the Collateral Agent at all times
separate and apart from any other account of the Transferor, the Servicer or the
Trust. All income or loss on investments of funds in any Spread Account shall be
reported by the applicable Reversionary Holder as taxable income or loss of such
Reversionary Holder.
Section 3.02. Investments.
(a) Funds which may at any time be held in the Spread Account established
with respect to a Series shall be invested and reinvested by the Collateral
Agent, at the written direction (including, subject to the provisions hereof,
general standing instructions) of the Transferor (unless a Default actually
known to a Authorized Officer of the Collateral Agent shall have occurred and be
continuing, in which case at the written direction of the Controlling Party) or
its designee received by the Collateral Agent by 1:00 P.M. New York City time on
the Business Day prior to the date on which such investment shall be made, in
one or more Spread Account Permitted Investments in the manner specified in
Section 3.02(c) hereof. If no written direction with respect to any portion of
such Spread Account is received by the Collateral Agent, the Collateral Agent
shall invest such funds overnight in such Permitted Investments as the
Collateral Agent may select, provided that the Collateral Agent shall not be
liable for any loss or absence of income resulting from such investments or for
investments made pursuant to written instructions received in accordance with
this Section 3.02(a).
(b) Each investment made pursuant to this Section 3.02 on any date shall
mature not later than the Business Day immediately preceding the Distribution
Date next succeeding the day such investment is made, except that any investment
made on the day preceding a Distribution Date shall mature on such Distribution
Date; provided that any investment of funds in any Spread Account maintained
with the Collateral Agent (which shall be qualified as a Spread Account
Permitted Investment) in any investment as to which the Collateral Agent is the
obligor, if otherwise qualified as an Permitted Investment (including any
repurchase agreement on which the Collateral Agent in its commercial capacity is
liable as principal) may mature on the Distribution Date next succeeding the
date of such investment.
(c) Subject to the other provisions hereof, the Collateral Agent shall
have sole control over each such investment and the income thereon, and any
certificate or other instrument evidencing any such investment, if any, shall be
delivered directly to the Collateral Agent or its agent, together with each
document of transfer, if any, necessary to transfer title to such
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investment to the Collateral Agent in a manner complying with Section 2.06
hereof and the requirements of the definition of "Spread Account Permitted
Investments."
(d) If amounts on deposit in any Spread Account are at any time invested
in a Spread Account Permitted Investment payable on demand, the Collateral Agent
shall (i) consistent with any notice required to be given thereunder, demand
that payment thereon be made on the last day such Spread Account Permitted
Investment is permitted to mature under the provisions hereof and (ii) demand
payment of all amounts due thereunder promptly upon receipt of written notice
from the Controlling Party to the effect that such investment does not
constitute a Spread Account Permitted Investment.
(e) All moneys on deposit in a Spread Account together with any deposits
or securities in which such moneys may be invested or reinvested, and any gains
from such investments, shall constitute Collateral hereunder with respect to the
related Series subject to the Security Interests of the Secured Parties.
(f) Subject to Section 4.03 hereof, the Collateral Agent shall not be
liable by reason of any insufficiency in any Spread Account resulting from any
loss on any Permitted Investment included therein except for losses attributable
to the Collateral Agent's failure to make payments on Permitted Investments as
to which the Collateral Agent, in its commercial capacity, is obligated to make.
Section 3.03. Distributions; Priority of Payments.
(a) On or before each Delinquency Claim Date with respect to any Series,
the Collateral Agent will make the following calculations on the basis of
information (including, without limitation, the amount of any Deficiency Claim
Amount with respect to any Series) received pursuant to Section 3.17 of the
applicable Securitization Agreement (or other section referenced in the related
Series Supplement), with respect to each such Series from the Servicer
thereunder; provided, however, that if the Collateral Agent receives notice from
Financial Security of the occurrence of an Insurance Agreement Event of Default
with respect to any Series, such notice shall be determinative for the purposes
of determining the Requisite Amount for such Series:
FIRST, determine the amounts to be on deposit in the respective
Spread Accounts (taking into account amounts to be deposited into the
related Spread Accounts) on the next succeeding Distribution Date which
will be available to satisfy any Deficiency Claim Amount.
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SECOND, determine (i) the amounts, if any, to be distributed from
each Spread Account related to each Series with respect to which there
exists a Deficiency Claim Amount, and (ii) whether, following distribution
from the related Spread Accounts to the respective Trustees for deposit
into the respective Certificate Account with respect to which there exists
a Deficiency Claim Amount, a Deficiency Claim Amount will continue to
exist with respect to one or more Series.
THIRD, if a Deficiency Claim Amount will continue to exist with
respect to one or more Series other than the Series 1996-1 Certificates
following the distributions from the related Spread Accounts contemplated
by paragraph SECOND above, determine the amount, if any, to be distributed
to the Trustee with respect to each Series from unrelated Spread Accounts
other than the Series 1996-1 Spread Account in respect of such Deficiency
Claim Amount(s). This determination shall be made in accordance with the
distribution priority scheme set forth in Section 3.03(b) below.
On such Delinquency Claim Date related to a Series, the Collateral Agent
shall deliver a certificate to each Trustee in respect of which the Collateral
Agent has received a Deficiency Notice stating the amount, if any, to be
distributed to such Trustee on the next Distribution Date in respect of such
Deficiency Claim Amount.
(b) On each Distribution Date, following the deposit into the respective
Spread Accounts of the amounts required to be deposited therein pursuant to the
respective Securitization Agreements and if the Trustee has received a
Deficiency Notice with respect to one or more such Series, or with respect to
priority SIXTH below to the extent the amount referred to therein is due and
owing, the Collateral Agent shall make the following distributions in the
following order of priority:
FIRST, if with respect to any Series there exists a Deficiency Claim
Amount, from the Spread Account related to such Series, to the Trustee for
deposit in the related Certificate Account the amount of such Deficiency
Claim Amount.
SECOND, if with respect to any Series other than the Series 1996-1
Certificates there continues to exist a Deficiency Claim Amount after
deposit into the Certificate Account of amounts distributed pursuant to
priority FIRST of this Section 3.03(b), from amounts, if any, on deposit
in each unrelated Spread Account other than the Series 1996-1 Spread
Account in excess of the related Requisite Amount, an
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amount in the aggregate up to the aggregate of the Deficiency Claim
Amounts for all Series other than the Series 1996-1 Certificates, for
deposit in the respective Certificate Accounts pro rata in accordance with
the respective Deficiency Claim Amounts.
THIRD, if with respect to any Series other than the Series 1996-1
Certificates there continues to exist a Deficiency Claim Amount after
deposit into the Certificate Account of amounts distributed pursuant to
priority FIRST and SECOND of this Section 3.03(b), from each unrelated
Spread Account other than the Series 1996-1 Spread Account pro rata in
accordance with amounts on deposit therein, an amount up to the aggregate
of the remaining Deficiency Claim Amounts for all Series other than the
Series 1996-1 Certificates, to the respective Trustees for deposit in the
respective Certificate Accounts pro rata in accordance with the respective
Deficiency Claim Amounts.
FOURTH, if with respect to one or more Series other than the Series
1996-1 Certificates there exists a Spread Account Shortfall, from amounts,
if any, (1) on deposit in each Spread Account other than the Series 1996-1
Spread Account in excess of the related Requisite Amount or (2) on deposit
in any Spread Account other than the Series 1996-1 Spread Account with
respect to which the Final Termination Date shall have occurred on such
Distribution Date or a prior Distribution Date, an amount in the aggregate
up to the aggregate of the Spread Account Shortfalls for all Series other
than the Series 1996-1 Certificates for deposit into each Spread Account
other than the Series 1996-1 Spread Account pro rata in accordance with
the respective Spread Account Shortfalls.
FIFTH, if with respect to one or more Series, amounts have been
withdrawn from the related Spread Account pursuant to priority THIRD of
this Section 3.03(b) on such Distribution Date and/or prior Distribution
Dates and such amounts have not been redeposited in full into such Spread
Account pursuant to this priority FIFTH (such amounts in the aggregate for
a Series "Unreimbursed Amounts"), from amounts, if any, (1) on deposit in
each Spread Account other than the Series 1996-1 Spread Account in excess
of the related Requisite Amount; or (2) on deposit in any Spread Account
other than the Series 1996-1 Spread Account with respect to which the
Final Termination Date shall have occurred on such Distribution Date or a
prior Distribution Date, an amount up to the aggregate of the Unreimbursed
Amounts for all such Series for deposit into each Spread Account other
than the Series 1996-1 Spread Account with
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respect to which there exist Unreimbursed Amounts pro rata in accordance
with the respective Unreimbursed Amounts.
SIXTH, if any amounts are owed to the Trustee, Collateral Agent or
Standby Servicer for reasonable out-of-pocket expenses in connection with
the administration of the Trust, including the expenses incurred in the
transition to a successor Servicer and such amounts have not been paid,
then from amounts (if any) on deposit in the related Spread Account, an
amount up to the amount so owed, to be paid to the Trustee, the Collateral
Agent and the Standby Servicer.
SEVENTH, any funds in a Spread Account in excess of the applicable
Requisite Amount and any funds in a Spread Account with respect to a
Series for which the Final Termination Date shall have occurred after
distribution pursuant to priorities FIRST through SIXTH will be released
to the Reversionary Holders as provided in the related Securitization
Agreement (or, if the related Securitization Agreement does not so
provide, to the Transferor), in each case, free and clear of the Lien
established hereunder.
Section 3.04. General Provisions Regarding Spread Accounts.
(a) Promptly upon the establishment (initially or upon any relocation) of
a Spread Account hereunder, the Collateral Agent shall advise the Transferor and
each Secured Party in writing of the name and address of the depository
institution or trust company where such Spread Account has been established (if
not Xxxxxx Trust and Savings Bank or any successor Collateral Agent in its
commercial banking capacity), the name of the officer of the depository
institution responsible for overseeing such Spread Account, the account number
and the individuals whose names appear on the signature cards for such Spread
Account. The Transferor shall cause each such depository institution or trust
company to execute a written agreement, in form and substance satisfactory to
the Controlling Party, waiving, and the Collateral Agent by its execution of
this Agreement hereby waives (except to the extent expressly provided herein),
in each case to the extent permitted under applicable law, (i) any banker's or
other statutory or similar Lien, and (ii) any right of set-off or other similar
right under applicable law with respect to such Spread Account, and any other
Spread Account, and agreeing, and the Collateral Agent by its execution of this
Agreement hereby agrees, to notify the Transferor, the Collateral Agent, and
each Secured Party of any charge or claim against or with respect to such Spread
Account. The Collateral Agent shall give the Transferor and each Secured Party
at least ten (10) Business Days' prior written notice of any change in the
location of such Spread Account or in any related account information. If the
Collateral Agent changes the location of any Spread Account, it
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shall change the location of the other Spread Accounts, so that all Spread
Accounts shall at all times be located at the same depository institution.
Anything herein to the contrary notwithstanding, unless otherwise consented to
by the Controlling Party in writing, the Collateral Agent shall have no right to
change the location of any Spread Account.
(b) Upon the written request of the Controlling Party, the Transferor, or
any Reversionary Holder, the Collateral Agent shall cause, at the expense of the
Transferor, the depository institution at which any Spread Account is located to
forward to the requesting party copies of all monthly account statements for
such Spread Account.
(c) If at any time any Spread Account ceases to be an Eligible Account,
the Collateral Agent shall notify the Controlling Party of such fact and shall
establish within five (5) Business Days of such determination in accordance with
paragraph (a) of this Section, a successor Spread Account thereto, which shall
be an Eligible Account, at another depository institution or trust company
acceptable to the Controlling Party and shall establish successor Spread
Accounts with respect to all other Spread Accounts, each of which shall be an
Eligible Account, at the same depository institution. The Transferor shall cause
such depository institution to execute a written agreement under terms provided
for in paragraph (a) of this Section.
(d) No passbook, certificate of deposit or other similar instrument
evidencing a Spread Account shall be issued, and all contracts, receipts and
other papers, if any, governing or evidencing a Spread Account shall be held by
the Collateral Agent.
Section 3.05. Reports by the Collateral Agent. The Collateral Agent shall
report to the Transferor, Financial Security, the Trustee and the Servicer on a
monthly basis no later than each Distribution Date with respect to the amount on
deposit in each Spread Account and the identity of the investments included
therein as of the last day of the related Monthly Period, and shall provide
accountings of deposits into and withdrawals from the Spread Accounts, and of
the investments made therein, upon the request of the Transferor, Financial
Security or the Servicer.
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ARTICLE IV.
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers. Subject to the terms and conditions
hereof, each of the Secured Parties hereby appoints Xxxxxx Trust and Savings
Bank as the Collateral Agent with respect to the Series 1996-1 Collateral and
the related Collateral subsequently specified in a Series Supplement, and Xxxxxx
Trust and Savings Bank hereby accepts such appointment and agrees to act as
Collateral Agent with respect to the Series 1996-1 Collateral, and upon
execution of any Series Supplement, shall be deemed to accept such appointment,
and agree to act as Collateral Agent with respect to such Collateral, in each
case, for the Secured Parties, to maintain custody and possession of such
Collateral (except as otherwise provided hereunder) and to perform the other
duties of the Collateral Agent in accordance with the provisions of this
Agreement. Each Secured Party hereby authorizes the Collateral Agent to take
such action on its behalf, and to exercise such rights, remedies, powers and
privileges hereunder, as the Controlling Party may direct and as are
specifically authorized to be exercised by the Collateral Agent by the terms
hereof, together with such actions, rights, remedies, powers and privileges as
are reasonably incidental thereto. The Collateral Agent shall act upon and in
compliance with the written instructions of the Controlling Party delivered
pursuant to this Agreement promptly following receipt of such written
instructions; provided, however, that the Collateral Agent shall not act in
accordance with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Agreement, (ii) which are in violation of
any applicable law, rule or regulation or (iii) for which the Collateral Agent
has not received reasonable indemnity. Receipt of such instructions shall not be
a condition to the exercise by the Collateral Agent of its express duties
hereunder, except where this Agreement provides that the Collateral Agent is
permitted to act only following and in accordance with such instructions.
Section 4.02. Performance of Duties. The Collateral Agent shall have no
duties or responsibilities except those expressly set forth in this Agreement
and the other Transaction Documents to which the Collateral Agent is a party as
Collateral Agent or as directed by the Controlling Party in accordance with this
Agreement. The Collateral Agent shall not be required to take any discretionary
actions hereunder except at the written direction and with the indemnification
of the Controlling Party.
Section 4.03. Limitation on Liability. Neither the Collateral Agent nor
any of its directors, officers or employees, shall be liable for any action
taken or omitted to be taken by it or them hereunder, or in connection herewith,
except that the
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Collateral Agent shall be liable for its gross negligence, bad faith or willful
misconduct; nor shall the Collateral Agent be responsible for the validity,
effectiveness, value, sufficiency or enforceability against the Transferor of
this Agreement or any of the Collateral (or any part thereof). Notwithstanding
any term or provision of this Agreement, the Collateral Agent shall incur no
liability to the Transferor or the Secured Parties for any action taken or
omitted by the Collateral Agent in connection with the Collateral, except for
the negligence, bad faith or willful misconduct on the part of the Collateral
Agent, and, further, shall incur no liability to the Secured Parties except for
negligence, bad faith or willful misconduct in carrying out its duties to the
Secured Parties. Subject to Section 4.04 hereof, the Collateral Agent shall be
protected and shall incur no liability to any such party in relying upon the
accuracy, acting in reliance upon the contents, and assuming the genuineness of
any notice, demand, certificate, signature, instrument or other document
reasonably believed by the Collateral Agent to be genuine and to have been duly
executed by the appropriate signatory, and (absent actual knowledge to the
contrary) the Collateral Agent shall not be required to make any independent
investigation with respect thereto. The Collateral Agent shall at all times be
free independently to establish to its reasonable satisfaction, but shall have
no duty to independently verify, the existence or nonexistence of facts that are
a condition to the exercise or enforcement of any right or remedy hereunder or
under any of the Transaction Documents. The Collateral Agent may consult with
counsel, and shall not be liable for any action taken or omitted to be taken by
it hereunder in good faith and in accordance with the written advice of such
counsel. The Collateral Agent shall not be under any obligation to exercise any
of the remedial rights or powers vested in it by this Agreement or to follow any
direction from the Controlling Party unless it shall have received reasonable
security or indemnity satisfactory to the Collateral Agent against the costs,
expenses and liabilities which might be incurred by it in the exercise thereof.
Section 4.04. Reliance upon Documents. In the absence of negligence, bad
faith or willful misconduct on its part, the Collateral Agent shall be entitled
to conclusively rely on any communication, instrument, paper or other document
reasonably believed by it to be genuine and correct and to have been signed or
sent by the proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reliance upon any
statement or opinion contained in any such document or instrument.
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Section 4.05. Successor Collateral Agent.
(a) Merger. Any Person into which the Collateral Agent may be converted or
merged, or with which it may be consolidated, or to which it may sell or
transfer its trust business and assets as a whole or substantially as a whole,
or any Person resulting from any such conversion, merger, consolidation, sale or
transfer to which the Collateral Agent is a party, shall (provided it is
otherwise qualified to serve as the Collateral Agent hereunder) be and become a
successor Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor without the
execution or filing of any instrument or any further act, deed or conveyance on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding, except to the extent, if any, that any such action is necessary
to perfect, or continue the perfection of, the security interest of the Secured
Parties in the Collateral.
(b) Resignation. The Collateral Agent and any successor Collateral Agent
may resign only (i) upon a determination that by reason of a change in legal
requirements, the performance of its duties under this Agreement would cause it
to be in violation of such legal requirements in a manner which would result in
a material adverse effect on the Collateral Agent, and the Controlling Party
does not elect to waive the Collateral Agent's obligation to perform those
duties which render it legally unable to act or elect to delegate those duties
to another Person, or (ii) with the prior written consent of the Controlling
Party. The Collateral Agent shall give not less than 60 days' prior written
notice of any such permitted resignation by registered or certified mail to the
other Secured Party and the Transferor; provided, that such resignation shall
take effect only upon the date which is the latest of (i) the effective date of
the appointment of a successor Collateral Agent and the acceptance in writing by
such successor Collateral Agent of such appointment and of its obligation to
perform its duties hereunder in accordance with the provisions hereof, (ii)
delivery of the Collateral to such successor to be held in accordance with the
procedures specified in Article II hereof, and (iii) receipt by the Controlling
Party of an Opinion of Counsel to the effect described in Section 5.02 hereof.
Notwithstanding the preceding sentence, if, by the contemplated date of
resignation specified in the written notice of resignation delivered as
described above, no successor Collateral Agent or temporary successor Collateral
Agent has been appointed Collateral Agent or becomes the Collateral Agent
pursuant to subsection (d) hereof, the resigning Collateral Agent may petition a
court of competent jurisdiction in New York, New York for the appointment of a
successor.
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(c) Removal. The Collateral Agent may be removed by the Controlling Party
at any time, with or without cause, by an instrument or concurrent instruments
in writing delivered to the Collateral Agent, the other Secured Party and the
Transferor. A temporary successor may be removed at any time to allow a
successor Collateral Agent to be appointed pursuant to subsection (d) below. Any
removal pursuant to the provisions of this subsection (c) shall take effect only
upon the date which is the latest of (i) the effective date of the appointment
of a successor Collateral Agent and the acceptance in writing by such successor
Collateral Agent of such appointment and of its obligation to perform its duties
hereunder in accordance with the provisions hereof, (ii) delivery of the
Collateral to such successor to be held in accordance with the procedures
specified in Article II hereof and (iii) receipt by the Controlling Party of an
Opinion of Counsel to the effect described in Section 5.02 hereof.
(d) Acceptance by Successor. The Controlling Party shall have the sole
right to appoint each successor Collateral Agent. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and to each Secured Party and the Transferor an
instrument in writing accepting such appointment hereunder and the relevant
predecessor shall execute, acknowledge and deliver such other documents and
instruments as will effectuate the delivery of all Collateral to the successor
Collateral Agent to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act, deed or
conveyance, shall become fully vested with all the estates, properties, rights,
powers, duties and obligations of its predecessor. Such predecessor shall,
nevertheless, on the written request of either Secured Party or the Transferor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Transferor or a Secured Party is
reasonably required by a successor Collateral Agent to more fully and certainly
vest in such successor the estates, properties, rights, powers, duties and
obligations vested or intended to be vested hereunder in the Collateral Agent,
any and all such written instruments shall, at the request of the temporary or
permanent successor Collateral Agent, be forthwith executed, acknowledged and
delivered by the Transferor. The designation of any successor Collateral Agent
and the instrument or instruments removing any Collateral Agent and appointing a
successor hereunder, together with all other instruments provided for herein,
shall be maintained with the records relating to the Collateral and, to the
extent required by applicable law, filed or recorded by the successor Collateral
Agent in each place where such filing or recording is necessary to effect the
transfer of
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the Collateral to the successor Collateral Agent or to protect or continue the
perfection of the security interests granted hereunder.
(e) Any resignation or removal of a Collateral Agent and appointment of a
successor Collateral Agent shall be effected with respect to this Agreement and
all Series Supplements simultaneously, so that at no time is there more than one
Collateral Agent acting hereunder and under all Series Supplements.
Section 4.06. Indemnification. The Transferor shall indemnify the
Collateral Agent, its directors, officers, employees and agents for, and hold
the Collateral Agent, its directors, officers, employees and agents harmless
against, any loss, liability or expense (including the costs and expenses of
defending against any claim of liability) arising out of or in connection with
the Collateral Agent's acting as Collateral Agent hereunder, except such loss,
liability or expense as shall result from the negligence, bad faith or willful
misconduct of the Collateral Agent or its officers or agents. The obligation of
the Transferor under this Section shall survive the termination of this
Agreement and the resignation or removal of the Collateral Agent. The Collateral
Agent covenants and agrees that the obligations of the Transferor hereunder and
under Section 4.07 hereof shall be limited to the extent provided in Section
2.08 hereof, and further covenants not to take any action to enforce its rights
to indemnification hereunder with respect to the Transferor and to payment under
Section 4.07 hereof except in accordance with the provisions of Section 8.05
hereof, or otherwise to assert any Lien or take any other action in respect of
the Collateral or the Trust Estate of a Series until the applicable Final
Termination Date.
Section 4.07. Compensation and Reimbursement. The Transferor agrees for
the benefit of the Secured Parties and as part of the Secured Obligations (a) to
pay to the Collateral Agent, on each Distribution Date, the Collateral Agent Fee
for all services rendered by it hereunder (which compensation shall not be
limited by any provision of law in regard to the compensation of a collateral
trustee); and (b) to reimburse the Collateral Agent upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Collateral Agent in accordance with any provision of, or carrying out its duties
and obligations under, this Agreement (including the reasonable compensation and
fees and the expenses and disbursements of its agents, any independent certified
public accountants and independent counsel), except any expense, disbursement or
advances as may be attributable to negligence, bad faith or willful misconduct
on the part of the Collateral Agent.
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Section 4.08. Representations and Warranties of the Collateral Agent. The
Collateral Agent represents and warrants to the Transferor and to each Secured
Party as follows:
(a) Due Organization. The Collateral Agent is an Illinois banking
corporation, duly organized, validly existing and in good standing under the
laws of the State of Illinois, and is duly authorized and licensed under
applicable law to conduct its business as presently conducted.
(b) Corporate Power. The Collateral Agent has all requisite right, power
and authority to execute and deliver this Agreement and to perform all of its
duties as Collateral Agent hereunder.
(c) Due Authorization. The execution and delivery by the Collateral Agent
of this Agreement and the other Transaction Documents to which it is a party,
and the performance by the Collateral Agent of its duties hereunder and
thereunder, have been duly authorized by all necessary corporate proceedings and
no further approvals or filings, including any governmental approvals, are
required for the valid execution and delivery by the Collateral Agent, or the
performance by the Collateral Agent, of this Agreement and such other
Transaction Documents.
(d) Valid and Binding Agreement. The Collateral Agent has duly executed
and delivered this Agreement and each other Transaction Document to which it is
a party, and each of this Agreement and each such other Transaction Document
constitutes the legal, valid and binding obligation of the Collateral Agent,
enforceable against the Collateral Agent in accordance with its terms, except as
(i) such enforceability may be limited by bankruptcy, insolvency, reorganization
and similar laws relating to or affecting the enforcement of the rights of
creditors of federally insured depository institutions, rights generally and
(ii) the availability of equitable remedies may be limited by equitable
principles of general applicability.
Section 4.09. Waiver of Setoffs. The Collateral Agent hereby expressly
waives any and all rights of setoff that the Collateral Agent may otherwise at
any time have under applicable law with respect to any Spread Account and agrees
that amounts in the Spread Accounts shall at all times be held and applied
solely in accordance with the provisions hereof.
Section 4.10. Control by the Controlling Party. The Collateral Agent shall
comply with notices and instructions given by the Transferor only if accompanied
by the written consent of the Controlling Party, except that if any Default
shall have occurred and be continuing, the Collateral Agent shall act upon
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and comply with notices and instructions given by the Controlling Party alone in
the place and stead of the Transferor.
ARTICLE V.
COVENANTS OF THE Transferor
Section 5.01. Preservation of Collateral. Subject to the rights, powers
and authorities granted to the Collateral Agent and the Controlling Party in
this Agreement, the Transferor, on behalf of itself and as the agent of the
Reversionary Holders, shall take such action as is necessary and proper with
respect to the Collateral in order to preserve and maintain such Collateral. The
Transferor will do, execute, acknowledge and deliver, or cause to be done by the
Reversionary Holders, or others, executed, acknowledged and delivered, such
instruments of transfer or take such other steps or actions as may be necessary,
or required by the Controlling Party, to perfect the Security Interests granted
hereunder in the Collateral, to ensure that such Security Interests rank prior
to all other Liens and to preserve the priority of such Security Interests and
the validity and enforceability thereof. Upon any delivery or substitution of
Collateral, the Transferor, on behalf of itself and as the agent of the
Reversionary Holders, shall be obligated to execute such documents and perform
such actions (or cause the Reversionary Holders to so execute and perform) as
are necessary to create in the Collateral Agent for the benefit of the Secured
Parties a valid first priority Lien on, and valid and perfected, first priority
security interest in, the Collateral so delivered and to deliver such Collateral
to the Collateral Agent, free and clear of any other Lien, together with
satisfactory assurances thereof, and to pay any reasonable costs incurred by any
of the Secured Parties or the Collateral Agent (including its agents) or
otherwise in connection with such delivery.
Section 5.02. Opinions as to Collateral. Not more than 90 days nor less
than 30 days prior to (i) each anniversary of the date hereof during the term of
this Agreement and (ii) each date on which the Transferor proposes to take any
action contemplated by Section 5.06 hereof, the Transferor shall, at its own
cost and expense, furnish to each Secured Party and the Collateral Agent an
Opinion of Counsel with respect to each Series either (a) stating that, in the
opinion of such counsel, such action has been taken with respect to the
execution and filing of any financing statements and continuation statements and
other actions as are necessary to perfect, maintain and protect the lien and
security interest of the Collateral Agent (and the priority thereof), on behalf
of the Secured Parties, with respect to such Collateral against all creditors
of, and purchasers from, the Transferor and the Reversionary Holders and
reciting the
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details of such action, or (b) stating that, in the opinion of such counsel, no
such action is necessary to maintain such perfected lien and security interest.
Such Opinion of Counsel shall further describe each execution and filing of any
financing statements and continuation statements and such other actions as will,
in the opinion of such counsel, be required to perfect, maintain and protect the
lien and security interest of the Collateral Agent, on behalf of the Secured
Parties, with respect to such Collateral against all creditors of, and
purchasers from, the Transferor and the Reversionary Holders for a period,
specified in such Opinion, continuing until a date not earlier than eighteen
months from the date of such Opinion.
Section 5.03. Notices. In the event that the Transferor acquires knowledge
of the occurrence and continuance of any Insurance Agreement Event of Default or
Servicer Default or of any event of default or like event, howsoever described
or called, under any of the Transaction Documents, the Transferor shall
immediately give notice thereof to the Collateral Agent and each Secured Party.
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of Assets. The
Transferor, on behalf of itself and as agent for the Reversionary Holders,
covenants, to the fullest extent permitted by applicable law, that neither it
nor any Reversionary Holder will at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any appraisement,
valuation, stay, extension or redemption law wherever enacted, now or at any
time hereafter in force, in order to prevent or hinder the enforcement of this
Agreement or any absolute sale of the Collateral or any part thereof, or the
possession thereof by any purchaser at any sale under Article VII of this
Agreement; and the Transferor, on behalf of itself and as agent for the
Reversionary Holders, to the fullest extent permitted by applicable law, for
itself, each Reversionary Holder, and all who may claim under it or them, hereby
waives the benefit of all such laws, and covenants that neither it nor any
Reversionary Holder will hinder, delay or impede the execution of any power
herein granted to the Collateral Agent, but will suffer and permit the execution
of every such power as though no such law had been enacted. The Transferor, for
itself, each Reversionary Holder, and all who may claim under it or them,
waives, to the fullest extent permitted by applicable law, all right to have the
Collateral marshalled upon any foreclosure or other disposition thereof.
Section 5.05. Noninterference, etc. The Transferor, on behalf of itself
and as agent for the Reversionary Holders, agrees that neither the Transferor
nor any Reversionary Holder shall (i) waive or alter any of its rights under the
Collateral (or any agreement or instrument relating thereto) without the
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prior written consent of the Controlling Party; or (ii) fail to pay any tax,
assessment, charge or fee levied or assessed against the Collateral, or to
defend any action, if such failure to pay or defend may adversely affect the
priority or enforceability of the Transferor's or any Reversionary Holder's
right, title or interest in and to the Collateral or the Collateral Agent's lien
on, and security interest in, the Collateral for the benefit of the Secured
Parties; or (iii) take any action, or fail to take any action, if such action or
failure to take action would interfere with the enforcement of any rights under
the Transaction Documents.
Section 5.06. Transferor Changes.
(a) Change in Name, Structure, etc. The Transferor shall not change its
name, identity or corporate structure unless it shall have given each Secured
Party and the Collateral Agent at least 60 days' prior written notice thereof,
shall have effected any necessary or appropriate assignments or amendments
thereto and filings of financing statements or amendments thereto, and shall
have delivered to the Collateral Agent and each Secured Party an Opinion of
Counsel of the type described in Section 5.02 hereof.
(b) Relocation of the Transferor. Neither NAFCO nor the Transferor shall
change its principal executive office unless it gives each Secured Party and the
Collateral Agent at least 90 days' prior written notice of any relocation of its
principal executive office. If the Transferor relocates its principal executive
office or principal place of business from Florida, the Transferor shall give
prior notice thereof to the Controlling Party and the Collateral Agent and shall
effect such appropriate recordations and filings as are necessary and shall
provide an Opinion of Counsel to the Controlling Party and the Collateral Agent,
to the effect that, upon the recording of any necessary assignments or
amendments to previously-recorded assignments and filing of any necessary
amendments to the previously filed financing or continuation statements or upon
the filing of one or more specified new financing statements, and the taking of
such other actions as may be specified in such opinion, the security interests
in the Collateral shall remain, after such relocation, valid and perfected and
first in priority.
ARTICLE VI.
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party. From and after the Closing
Date of a Series until the Insurer Termination Date related to such Series,
Financial Security shall be the
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Controlling Party with respect to such Series and shall be entitled to exercise
all the rights given the Controlling Party hereunder with respect to such
Series. From and after the Insurer Termination Date related to such Series until
the Trustee Termination Date related to such Series, the Trustee shall be the
Controlling Party with respect to such Series. Notwithstanding the foregoing, in
the event that a Financial Security Default shall have occurred and be
continuing, the Trustee shall be the Controlling Party with respect to such
Series until the applicable Trustee Termination Date. If prior to an Insurer
Termination Date, the Trustee shall have become the Controlling Party with
respect to a Series as a result of the occurrence of a Financial Security
Default and either such Financial Security Default is cured or for any other
reason ceases to exist or the Trustee Termination Date with respect to a Series
occurs, then upon such cure or other cessation or on such Trustee Termination
Date, as the case may be, Financial Security shall, upon notice thereof being
duly given to the Collateral Agent, again be the Controlling Party with respect
to such Series.
Section 6.02. Controlling Party's Authority.
(a) The Transferor hereby irrevocably appoints the Controlling Party, and
any successor to the Controlling Party appointed pursuant to Section 6.01
hereof, its true and lawful attorney, with full power of substitution, in the
name of the Transferor, the Secured Parties or otherwise, at the expense of the
Transferor, to the extent permitted by law to exercise, at any time and from
time to time while any Insurance Agreement Event of Default has occurred and is
continuing, any or all of the following powers with respect to all or any of the
Collateral related to the relevant Series: (i) to demand, xxx for, collect,
receive and give acquittance for any and all monies due or to become due upon or
by virtue thereof, (ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto, (iii) to direct the Collateral Agent
to sell, transfer, assign or otherwise deal with the same or the proceeds
thereof as fully and effectively as if the Collateral Agent were the absolute
owner thereof, and (iv) to extend the time of payment of any or all thereof and
to make any allowance or other adjustments with respect thereto.
(b) With respect to each Series and the related Collateral, each Secured
Party hereby irrevocably and unconditionally constitutes and appoints the
Controlling Party with respect to such Series, and any successor to such
Controlling Party appointed pursuant to Section 6.01 hereof from time to time,
as the true and lawful attorney-in-fact of such Secured Party for so long as
such Secured Party is the Non-Controlling Party, with full power of
substitution, to execute, acknowledge and deliver any notice, document,
certificate, paper, pleading or instrument
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and to do in the name of the Controlling Party as well as in the name, place and
stead of such Secured Party such acts, things and deeds for and on behalf of and
in the name of such Secured Party under this Agreement with respect to such
Series which such Secured Party could or might do or which may be necessary,
desirable or convenient in such Controlling Party's sole discretion to effect
the purposes contemplated hereunder and, without limitation, exercise full
right, power and authority to take, or defer from taking, any and all acts with
respect to the administration of the Collateral related to such Series, and the
enforcement of the rights of the Secured Parties hereunder with respect to such
Series, on behalf of and for the benefit of such Controlling Party and such
Non-Controlling Party, as their interests may appear.
Section 6.03. Rights of Secured Parties. With respect to each Series of
Certificates and the related Collateral, the Non-Controlling Party at any time
expressly agrees that it shall not assert any rights that it may otherwise have,
as a Secured Party with respect to the Collateral, to direct the maintenance,
sale or other disposition of the Collateral or any portion thereof,
notwithstanding the occurrence and continuance of any Insurance Agreement Event
of Default or Servicer Default with respect to such Series or any
non-performance by the Transferor or any Reversionary Holder of any obligation
owed to such Secured Party hereunder or under any other Transaction Document,
and each party hereto agrees that the Controlling Party shall be the only Person
entitled to assert and exercise such rights.
Section 6.04. Degree of Care.
(a) Controlling Party. Notwithstanding any term or provision of this
Agreement, the Controlling Party shall incur no liability to the Transferor or
any Reversionary Holder for any action taken or omitted by the Controlling Party
in connection with the Collateral, except for any gross negligence, bad faith or
willful misconduct on the part of the Controlling Party and, further, shall
incur no liability to the Non-Controlling Party except for a breach of the terms
of this Agreement or for gross negligence, bad faith or willful misconduct in
carrying out its duties, if any, to the Non-Controlling Party. The Controlling
Party shall be protected and shall incur no liability to any such party in
relying upon the accuracy, acting in reliance upon the contents and assuming the
genuineness of any notice, demand, certificate, signature, instrument or other
document believed by the Controlling Party to be genuine and to have been duly
executed by the appropriate signatory, and (absent manifest error or actual
knowledge to the contrary) the Controlling Party shall not be required to make
any independent investigation with respect thereto. The Controlling Party shall,
at all times, be free independently to establish to its reasonable satisfaction
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the existence or nonexistence, as the case may be, of any fact the existence or
nonexistence of which shall be a condition to the exercise or enforcement of any
right or remedy under this Agreement or any of the Transaction Documents.
(b) The Non-Controlling Party. The Non-Controlling Party shall not be
liable to the Transferor or any Reversionary Holder for any action or failure to
act by the Controlling Party or the Collateral Agent in exercising, or failing
to exercise, any rights or remedies hereunder.
ARTICLE VII.
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default. If a Default with respect to a
Series has occurred and is continuing, the Collateral Agent shall, at the
written direction of the Controlling Party, take whatever action at law or in
equity as may appear necessary or desirable in the judgment of the Controlling
Party to collect and satisfy all Secured Obligations, including, but not limited
to, foreclosure upon the Collateral and all other rights available to secured
parties under applicable law or to enforce performance and observance of any
obligation, agreement or covenant under any of the Transaction Documents related
to such Series.
Section 7.02. Waiver of Default. The Controlling Party shall have the sole
right, to be exercised in its complete discretion, to waive any Default by a
writing setting forth the terms, conditions and extent of such waiver signed by
the Controlling Party and delivered to the Collateral Agent, the other Secured
Party and the Transferor. Any such waiver shall be binding upon the
Non-Controlling Party and the Collateral Agent. Unless such writing expressly
provides to the contrary, any waiver so granted shall extend only to the
specific event or occurrence which gave rise to the Default so waived and not to
any other similar event or occurrence occurring subsequent to the date of such
waiver.
Section 7.03. Restoration of Rights and Remedies. If the Collateral Agent
has instituted any proceeding to enforce any right or remedy under this
Agreement, and such proceeding has been discontinued or abandoned for any
reason, or has been determined adversely to such Collateral Agent, then and in
every such case the Transferor, the Collateral Agent and each of the Secured
Parties and each Reversionary Holder shall, subject to any determination in such
proceeding, be restored severally and respectively to their former positions
hereunder, and thereafter
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all rights and remedies of the Secured Parties shall continue as though no such
proceeding had been instituted.
Section 7.04. No Remedy Exclusive. No right or remedy herein conferred
upon or reserved to the Collateral Agent, the Controlling Party or either of the
Secured Parties is intended to be exclusive of any other right or remedy, and
every right or remedy shall, to the extent permitted by law, be cumulative and
in addition to every other right and remedy given hereunder or now or hereafter
existing at law, in equity or otherwise (but, in each case, shall be subject to
the provisions of this Agreement limiting such remedies), and each and every
right, power and remedy whether specifically herein given or otherwise existing
may be exercised from time to time and as often and in such order as may be
deemed expedient by the Controlling Party, and the exercise of or the beginning
of the exercise of any right or power or remedy shall not be construed to be a
waiver of the right to exercise at the same time or thereafter any other right,
power or remedy.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Further Assurances. Each party hereto shall take such action
and deliver such instruments to any other party hereto, in addition to the
actions and instruments specifically provided for herein, as may be reasonably
requested or required to effectuate the purpose or provisions of this Agreement
or to confirm or perfect any transaction described or contemplated herein.
Section 8.02. Waiver. Any waiver by any party of any provision of this
Agreement or any right, remedy or option hereunder shall only prevent and estop
such party from thereafter enforcing such provision, right, remedy or option if
such waiver is given in writing and only as to the specific instance and for the
specific purpose for which such waiver was given. The failure or refusal of any
party hereto to insist in any one or more instances, or in a course of dealing,
upon the strict performance of any of the terms or provisions of this Agreement
by any party hereto or the partial exercise of any right, remedy or option
hereunder shall not be construed as a waiver or relinquishment of any such term
or provision, but the same shall continue in full force and effect.
Section 8.03. Amendments, Waivers. No amendment, modification, waiver or
supplement to this Agreement or any provision of this Agreement shall in any
event be effective unless the same shall have been made or consented to in
writing
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by each of the parties hereto and each Rating Agency shall have confirmed in
writing that such amendment will not cause a reduction or withdrawal of a rating
on any Series; provided, however, that, for so long as Financial Security shall
be the Controlling Party with respect to a Series, amendments, modifications,
waivers or supplements hereto relating to such Series, the related Collateral or
Spread Account or any requirement hereunder to deposit or retain any amounts in
such Spread Account or to distribute any amounts therein as provided in Section
3.03 hereof shall be effective if made or consented to in writing by Financial
Security, the Transferor and the Collateral Agent (the consent of which shall
not be withheld or delayed with respect to any amendment that does not adversely
affect the Collateral Agent) but shall in no circumstances require the consent
of the Trustee or the Certificateholders related to such Series or any other
Series or any Reversionary Holder.
Section 8.04. Severability. In the event that any provision of this
Agreement or the application thereof to any party hereto or to any circumstance
or in any jurisdiction governing this Agreement shall, to any extent, be invalid
or unenforceable under any applicable statute, regulation or rule of law, then
such provision shall be deemed inoperative to the extent that it is invalid or
unenforceable, and the remainder of this Agreement, and the application of any
such invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect the
validity or enforceability of any other provision of this Agreement. The parties
hereto further agree that the holding by any court of competent jurisdiction
that any remedy pursued by the Collateral Agent, or any of the Secured Parties,
hereunder is unavailable or unenforceable shall not affect in any way the
ability of the Collateral Agent or any of the Secured Parties to pursue any
other remedy available to it or them (subject, however, to the provisions of
this Agreement limiting such remedies).
Section 8.05. Nonpetition Covenant. Notwithstanding any prior termination
of this Agreement, each of the parties hereto agrees that it shall not, prior to
one year and one day after the Final Scheduled Distribution Date with respect to
each Series, acquiesce, petition or otherwise invoke or cause the Transferor or
the Trust to invoke the process of the United States of America, any State or
other political subdivision thereof or any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government for the purpose of commencing or sustaining a case by or against
the Transferor or the Trust under a Federal or state bankruptcy, insolvency or
similar law or appointing a receiver, liquidator,
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assignee, trustee, custodian, sequestrator or other similar official of the
Transferor or the Trust or all or any part of their respective properties or
assets or ordering the winding up or liquidation of the affairs of the
Transferor or the Trust. The parties agree that damages will be an inadequate
remedy for breach of this covenant and that this covenant may be specifically
enforced.
Section 8.06. Notices. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Transferor:
National Financial Auto Funding Trust
x/x Xxx Xxxxx Xxxxxxxxx Xxxx (XXX)
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Administration
Telecopier No.: (000) 000-0000
Confirmation No.: (000) 000-0000
with a copy to:
The Chase Manhattan Bank (USA)
x/x Xxx Xxxxx Xxxxxxxxx Bank, N.A.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telecopier No.: (000) 000-0000
Confirmation No.: (000) 000-0000
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(ii) If to Financial Security:
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Re: National Auto Finance 1996-1 Trust
6.33% Asset Backed Certificates
Telecopier No.: (000) 000-0000
(000) 000-0000
Confirmation: (000) 000-0000
(in each case in which notice or other communication to
Financial Security refers to a Default or a claim on the
Policy or in which failure on the part of Financial Security
to respond shall be deemed to constitute consent or
acceptance, then with a copy to the attention of the Senior
Vice President Surveillance)
(iii) If to the Trustee:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Division
Telecopier No.: (000) 000-0000
Confirmation No.: (000) 000-0000
(iv) If to the Collateral Agent:
Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Division
Telecopier No.: (000) 000-0000
Confirmation No.: (000) 000-0000
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(v) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Group
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopier No.: (000) 000-0000
A copy of each notice given hereunder to any party hereto shall also be given to
(without duplication) Financial Security, the Transferor, the Trustee and the
Collateral Agent. Each party hereto may, by notice given in accordance herewith
to each of the other parties hereto, designate any further or different address
to which subsequent notices shall be sent.
Section 8.07. Term of this Agreement. This Agreement shall take effect on
the Closing Date of the Series 1996-1 Certificates and shall continue in effect
until the last Final Termination Date to occur with respect to each Series. On
such Final Termination Date, this Agreement shall terminate, all obligations of
the parties hereunder shall cease and terminate and the Collateral, if any, held
hereunder and not to be used or applied in discharge of any obligations of the
Transferor or NAFCO in respect of the Secured Obligations or otherwise under
this Agreement, shall be released to and in favor of the related Reversionary
Holders, or, if not otherwise identified, to the Transferor, provided that the
provisions of Sections 4.06, 4.07 and 8.05 hereof shall survive any termination
of this Agreement and the release of any Collateral upon such termination.
Section 8.08. Assignments, Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the parties hereto
and shall (i) be binding upon the parties and their respective successors and
assigns, and (ii) inure to the benefit of and be enforceable by each Secured
Party and the Collateral Agent, and by their respective successors, transferees
and assigns. The Transferor shall not assign this Agreement, or delegate any of
its duties hereunder, without the prior written consent of the Controlling
Party.
(b) Financial Security shall have the right (unless a Financial Security
Default shall have occurred and be continuing)
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to give participations in its rights under this Agreement and to enter into
contracts of reinsurance with respect to any Policy issued in connection with a
Series of Certificates and each such participant or reinsurer shall be entitled
to the benefit of any representation, warranty, covenant and obligation of each
party (other than Financial Security) hereunder as if such participant or
reinsurer was a party hereto and, subject only to such agreement regarding such
reinsurance or participation, shall have the right to enforce the obligations of
each such other party directly hereunder; provided, however, that no such
reinsurance or participation agreement or arrangement shall relieve Financial
Security of its obligations hereunder, under the Transaction Documents to which
it is a party or under any such Policy, or shall change the status of Financial
Security as a "Controlling Party". In addition, nothing contained herein shall
restrict Financial Security from assigning to any Person pursuant to any
liquidity facility or credit facility any rights of Financial Security under
this Agreement or with respect to any real or personal property or other
interests pledged to Financial Security, or in which Financial Security has a
security interest, in connection with the transactions contemplated hereby. The
terms of any such assignment or participation shall contain an express
acknowledgment by such Person of the condition of this Section and the
limitations of the rights of Financial Security hereunder.
Section 8.09. Consent of Controlling Party. In the event that the
Controlling Party's consent is required under the terms hereof or under the
terms of any Transaction Document, it is understood and agreed that, except as
otherwise provided expressly herein, the determination whether to grant or
withhold such consent shall be made solely by the Controlling Party in its sole
discretion.
Section 8.10. Trial by Jury Waived. Each of the parties hereto waives, to
the fullest extent permitted by law, any right it may have to a trial by jury in
respect of any litigation arising directly or indirectly out of, under or in
connection with this Agreement, any of the other Transaction Documents or any of
the transactions contemplated hereunder or thereunder. Each of the parties
hereto (a) certifies that no representative, agent or attorney of any other
party has represented, expressly or otherwise, that such other party would not,
in the event of litigation, seek to enforce the foregoing waiver and (b)
acknowledges that it has been induced to enter into this Agreement and the other
Transaction Documents to which it is a party, by among other things, this
waiver.
Section 8.11. Governing Law. This Agreement shall be governed by and
construed, and the obligations, rights and
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remedies of the parties hereunder shall be determined, in accordance with the
laws of the State of New York.
Section 8.12. Consents to Jurisdiction. Each of the parties hereto
irrevocably submits to the jurisdiction of the United States District Court for
the Southern District of New York, any court in the state of New York located in
the city and county of New York, and any appellate court from any thereof, in
any action, suit or proceeding brought against it and related to or in
connection with this Agreement, the other Transaction Documents or the
transactions contemplated hereunder or thereunder or for recognition or
enforcement of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or action or
proceeding may be heard or determined in such New York State court or, to the
extent permitted by law, in such federal court. Each of the parties hereto
agrees that a final judgment in any such action, suit or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment or
in any other manner provided by law. To the extent permitted by applicable law,
each of the parties hereby waives and agrees not to assert by way of motion, as
a defense or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the suit,
action or proceeding is brought in an inconvenient forum, that the venue of the
suit, action or proceeding is improper or that this Agreement or any of the
other Transaction Documents or the subject matter hereof or thereof may not be
litigated in or by such courts. The Transferor hereby irrevocably appoints and
designates Xxxxxx Trust and Savings Bank as its true and lawful attorney and
duly authorized agent for acceptance of service of legal process. The Transferor
agrees that service of such process upon such Person shall constitute personal
service of such process upon it. Subject to Section 8.05 hereof, nothing
contained in this Agreement shall limit or affect the rights of any party hereto
to serve process in any other manner permitted by law or to start legal
proceedings relating to any of the Transaction Documents against NAFCO or the
Transferor or their respective property in the courts of any jurisdiction.
Section 8.13. Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) Xxxxxx Trust and Savings Bank is executing
this Agreement not in its individual capacity but solely in its capacities as
collateral agent and trustee of the Trusts pursuant to the Securitization
Agreements and (b) in no case whatsoever shall Xxxxxx Trust and Savings Bank be
personally or corporately liable on, or for any loss in respect of, any of the
statements, representations, warranties, covenants, agreements or obligations of
the Trust hereunder, all such liability, if any, being expressly waived by the
parties hereto.
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Section 8.14. Determination of Adverse Effect. Any determination of an
adverse effect on the interest of the Secured Parties or the Certificateholders
shall be made without consideration of the availability of funds under the
Policies.
Section 8.15. Counterparts. This Agreement may be executed in two or more
counterparts by the parties hereto, and each such counterpart shall be
considered an original and all such counterparts shall constitute one and the
same instrument.
Section 8.16. Headings. The headings of sections and paragraphs and the
Table of Contents contained in this Agreement are provided for convenience only.
They form no part of this Agreement and shall not affect its construction or
interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth on the first page hereof.
NATIONAL FINANCIAL AUTO FUNDING TRUST
By_____________________________________
Name:
Title:____________________ of
Chase Manhattan Bank USA, N.A.
as trustee for National Financial Auto
Funding Trust
FINANCIAL SECURITY ASSURANCE INC.
By_____________________________________
Name:
Title:
XXXXXX TRUST AND SAVINGS BANK,
as Trustee
By_____________________________________
Name:
Title:
XXXXXX TRUST AND SAVINGS BANK,
as Collateral Agent
By_____________________________________
Name:
Title: