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POOLING AND SERVICING AGREEMENT
by and among
NATIONAL FINANCIAL AUTO FUNDING TRUST,
AS TRANSFEROR,
NATIONAL AUTO FINANCE COMPANY L.P.
AS MASTER SERVICER,
and
XXXXXX TRUST AND SAVINGS BANK
NOT IN ITS INDIVIDUAL CAPACITY BUT SOLELY AS TRUSTEE
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Dated as of October 1, 1995
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National Auto Finance 1995-1 Trust
6.36% Automobile Loan Asset-Backed Certificates
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TABLE OF CONTENTS
ARTICLE I
Definitions
Section 1.01. Definitions.................................................. 1
Section 1.02. Calculations as to Principal and Interest in Respect of
Contracts.................................................... 21
Section 1.03. Material Adverse Effect...................................... 21
ARTICLE II
Creation of Trust;
Transfer of Trust Estate;
Original Issuance of Certificates
Section 2.01. Creation of Trust: Transfer of Trust Estate.................. 22
Section 2.02. Acceptance by Trustee........................................ 24
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Transferor.................................. 24
Section 2.04. Execution and Authentication of Certificates................. 35
Section 2.05. Restriction on Transfer of Transferor Interest............... 35
Section 2.06. Transfers of Additional Contracts............................ 36
ARTICLE III
Administration and Servicing of Contracts;
Establishment and Administration of Accounts
Section 3.01. Master Servicer to Act as Servicer........................... 38
Section 3.02. Subservicing Agreements between Master Servicer and the
Subservicers................................................. 41
Section 3.03. Obligations of the Master Servicer........................... 42
Section 3.04. No Contractual Relationship between a Subservicer
and Trustee or Certificateholders............................ 42
Section 3.05. Assumption or Termination of Subservicing Agreement by
Trustee...................................................... 42
Section 3.06. Collection of Contract Payments.............................. 43
Section 3.07. Maintenance of Comprehensive and Collision Insurance......... 44
Section 3.08. Realization upon Defaulted Contracts......................... 44
Section 3.09. Master Servicing and Other Compensation...................... 45
Section 3.10. The Collection Account....................................... 45
Section 3.11. The Certificate Account...................................... 46
Section 3.12. Pre-Funding Period Reserve Account........................... 47
Section 3.13. The Revolving Account........................................ 48
Section 3.14. Pre-Funding Account.......................................... 49
Section 3.15. Administration of Accounts................................... 49
Section 3.16. [Reserved]................................................... 50
Section 3.17. Reports to the Trustee and the Transferor Certificate
Account Statements; Reports to the Master Servicer,
the Certificate Insurer and Transferor....................... 51
Section 3.18. Annual Statement as to Compliance; Notice of Servicer
Default...................................................... 51
Section 3.19. Custodial Arrangements....................................... 52
Section 3.20. Annual Independent Accountants' Report....................... 52
Section 3.21. Access to Certain Documentation and Information Regarding
Contracts.................................................... 53
Section 3.22. Retention and Termination of Master Servicer................. 53
ARTICLE IV
Payments to Certificateholders
Section 4.01. Distributions................................................ 54
Section 4.02. Statements to Certificateholders............................. 55
Section 4.03. Specification of Certain Tax Matters......................... 55
Section 4.04. Withdrawals from Spread Account; Claims Under Certificate
Policy....................................................... 56
Section 4.05. Preference Claims............................................ 58
Section 4.06. Retirement of Certificates................................... 59
Section 4.07. Spread Account............................................... 59
ARTICLE V
The Certificates
Section 5.01. The Certificates............................................. 59
Section 5.02. Registration of Transfer and Exchange of Certificates........ 59
Section 5.03. Mutilated, Destroyed Lost or Stolen Certificates............. 61
Section 5.04. Persons Deemed Owner......................................... 62
Section 5.05. Appointment of Paying Agent.................................. 62
ARTICLE VI
The Transferor and the Master Servicer
Section 6.01. Respective Liabilities of the Transferor and the
Master Servicer.............................................. 62
Section 6.02. Existence of Transferor and Master Servicer; Merger or
Consolidation of the Master Servicer; Assignment of
Rights and Delegation of Duties by Master Servicer........... 63
Section 6.03. Limitation on Liability of the Transferor, the Master
Servicer and Others.......................................... 63
Section 6.04. Transfer of Duties of Master Servicer........................ 65
Section 6.05. Master Servicer May Own Certificates......................... 65
ARTICLE VII
Default
Section 7.01. Servicer Defaults............................................ 66
Section 7.02. Trustee to Act; Appointment of Successor..................... 68
Section 7.03. Notification to Certificateholders........................... 69
Section 7.04. Waiver of Past Defaults...................................... 69
ARTICLE VIII
Concerning the Trustee
Section 8.01. Duties of Trustee............................................ 70
Section 8.02. Certain Matters Affecting the Trustee........................ 71
Section 8.03. Trustee Not Liable for Certificates or Contracts............. 73
Section 8.04. Trustee May Own Certificates................................. 73
Section 8.05. Eligibility Requirements for Trustee......................... 73
Section 8.06. Resignation and Removal of the Trustee....................... 74
Section 8.07. Successor Trustee............................................ 75
Section 8.08. Merger or Consolidation of Trustee........................... 75
Section 8.09. Appointment of Co-Trustee or Separate Trustee................ 76
Section 8.10. Appointment of Office or Agency.............................. 77
Section 8.11. Trustee's Compensation and Reimbursement..................... 77
Section 8.12. Trustee May Enforce Claims Without Possession Of
Certificates................................................. 78
Section 8.13. Suits for Enforcement........................................ 78
Section 8.14. Rights of Direct Trustee..................................... 79
ARTICLE IX
Termination
Section 9.01. Termination upon Retransfer to the Transferor or
Liquidation of All Contracts................................. 79
Section 9.02. Disposition of Contracts upon Bankruptcy Event............... 81
ARTICLE X
Miscellaneous Provisions
Section 10.01. Amendment.................................................... 82
Section 10.02. Recordation of Agreement..................................... 83
Section 10.03. Limitation on Rights of Certificateholders................... 84
Section 10.04. GOVERNING LAW................................................ 85
Section 10.05. Notices...................................................... 85
Section 10.06. Intention of the Parties..................................... 86
Section 10.07. Severability of Provisions................................... 86
Section 10.08. Protection of Title to Interest.............................. 86
Section 10.09. Assignment................................................... 87
Section 10.10. Certificates Nonassessable and Fully Paid.................... 87
Section 10.11. Third-party Beneficiaries.................................... 88
Section 10.12. Financial Security as Controlling Party...................... 88
Section 10.13. Limitation of Liability of Trustee........................... 88
Section 10.14. Limitation of Liability of Chase............................. 88
Section 10.15. Matters Relating to Purchase Agreement....................... 89
Section 10.16. No Petition.................................................. 89
Section 10.17. Submission to Jurisdiction................................... 89
Section 10.18. Waiver of Jury Trial......................................... 90
Section 10.19. Counterparts................................................. 90
Exhibit 2.01 Form of Transfer Agreement
Exhibit 2.06A Officer's Certificate of National Auto Finance Company L.P.
Exhibit 2.06B Officer's Certificate of the Transferor
Exhibit 3.17 Form of Master Servicer Report
Exhibit 4.02 Form of Distribution Date Report
Exhibit 5.01 Form of Certificate
Exhibit 5.02 Form of Transferee Letter
Exhibit A Form of Subservicing Agreement
Exhibit B Form of Purchase Agreement
Exhibit C Form of Financial Guaranty Insurance Policy
Exhibit D Form of Insurance and Indemnity Agreement
Exhibit E Form of Spread Account Agreement
Schedule 1 Contract Schedule
Schedule 2 Trustee's Fee Schedule
This Pooling and Servicing Agreement is entered into effective as of
October 1, 1995, among NATIONAL FINANCIAL AUTO FUNDING TRUST, as Transferor,
NATIONAL AUTO FINANCE COMPANY L.P., as Master Servicer, and XXXXXX TRUST AND
SAVINGS BANK, an Illinois banking corporation, not in its individual capacity
but solely as Trustee (the "Trustee").
W I T N E S S E T H T H A T
In consideration of the mutual agreements herein contained, the
Transferor, the Master Servicer and the Trustee agree as follows:
ARTICLE I
Definitions
Section 1.01. Definitions.
Whenever used in this Agreement, the following words and phrase, unless
the context otherwise requires, shall have the meanings specified in this
Article.
Account Property: The moneys and Permitted Investments held in the
Accounts from time to time.
Accounts: The Collection Account, the Certificate Account, the Pre-Funding
Account, the Pre-Funding Period Reserve Account and the Revolving Account.
Actuarial Method: The method of allocating a fixed level payment between
principal and interest, pursuant to which the portion of such payment that is
allocated to interest is the product of the fixed rate of interest multiplied by
the unpaid principal balance multiplied by the fixed period of time (expressed
as a fraction of a year) between scheduled payments.
Additional Contract: Each Contract transferred and assigned to the Trust
on a Subsequent Transfer Date pursuant to the procedures set forth in Section
2.06.
Additional Contract Transfer Percentage: 91%, in the case of Additional
Contracts with respect to which funds were released therefor from the
Pre-Funding Account, and (y) 100%, in the case of Additional Contracts with
respect to which funds were released therefor from the Revolving Account.
Agreement: This Pooling and Servicing Agreement and all amendments hereof
and supplements hereto.
Amortization Event: The occurrence of (i) any event described in Section
5.01(a) through (e) or Section 5.01(i) through (j) of the Insurance Agreement,
or (ii) a withdrawal from the Spread Account pursuant to Section 4.04(a) hereof.
Assignment: With respect to a Contract, collectively (i) the original
instrument of assignment of such Contract and all other documents securing such
Contract made by the Person originating such Contract to NAFCO, which is in a
form sufficient under the laws of the jurisdiction in which the related Financed
Vehicle is located to permit the assignee to exercise all rights granted by the
Obligor under such Contract and such other documents and all rights available
under applicable law to the obligee under such Contract and which, in each case,
may, to the extent permitted by the laws of the state in which the related
Financed Vehicle is located, be a blanket instrument of assignment covering
other Contracts as well.
Assignment Agreement: The Assignment Agreement, dated of even date
herewith, between the Master Trust and the Transferor and all amendments thereof
and supplements thereto.
Available Amount: With respect to any Distribution Date, an amount equal
to (i) the amount on deposit in the Certificate Account on the preceding
Distribution Date after giving effect to all withdrawals therefrom on such
preceding Distribution Date, plus (ii) the amount, if any, to be transferred by
the Trustee to the Certificate Account from the Pre-Funding Period Reserve
Account, the Revolving Account and/or the Pre-Funding Account on such
Distribution Date pursuant to Section 3.12(b), Section 3.13(b) or Section
3.14(b), as applicable, plus (iii) the amount to be transferred by the Trustee
to the Certificate Account from the Collection Account on such Distribution Date
pursuant to Section 3.10(b), plus (iv) any amounts paid by the Certificate
Insurer to the Trustee pursuant to Section 4.04(e) hereof for distribution to
the Certificateholders on such Distribution Date.
Average Default Rate: With respect to any Distribution Date, the
arithmetic average of the Default Rates for each of the three Due Periods
immediately preceding the Due Period in which such Distribution Date occurs.
Average Delinquency Ratio: With respect to any Distribution Date, the
arithmetic average of the Delinquency Ratios for each of the three Due Periods
immediately preceding the Due Period in which such Distribution Date occurs.
Average Net Loss Rate: With respect to any Distribution Date, the
arithmetic average of the Net Loss Rates for each of the three Due Periods
immediately preceding the Due Period in which such Distribution Date occurs.
Bankruptcy Event: The occurrence of either of the following with respect
to either NAFCO or the Transferor:
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(a) a case or other proceeding shall be commenced, without the application
or consent of such Person, in any court, seeking the liquidation,
reorganization, debt arrangement, dissolution, winding up, or composition or
readjustment of debts of such Person, the appointment of a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or for
any substantial part of its assets, or any similar action with respect to such
Person under any law (foreign or domestic) relating to bankruptcy, insolvency,
receivership, reorganization, winding up or composition or adjustment of debts,
and such case or proceeding shall continue undismissed, or unstayed and in
effect, for a period of 60 (sixty) days or an order for relief in respect of
such Person shall be entered in an involuntary case under the federal bankruptcy
laws or other similar laws (foreign or domestic) now or hereafter in effect; or
(b) such Person shall commence a voluntary case or other proceeding under
any applicable bankruptcy, insolvency, receivership, reorganization, debt
arrangement, dissolution or other similar law now or hereafter in effect, or
shall consent to the appointment of or taking possession by a trustee, receiver,
custodian, liquidator, assignee, sequestrator or the like for such Person or for
any substantial part of its assets, or shall make any general assignment for the
benefit of creditors, or shall fail to, or admit in writing its inability to,
pay its debts generally as they become due.
Bankruptcy Loss: With respect to a Contract, if a court of appropriate
jurisdiction in a bankruptcy or insolvency proceeding shall have issued an order
reducing the amount owed on a Contract or otherwise modifying or restructuring
the scheduled payments to be made on a Contract, an amount equal to the excess
of the principal balance of such Contract immediately prior to such order over
the principal balance of such Contract as so reduced or the net present value
(using as the discount rate the higher of the Contract Rate on such Contract or
the rate of interest, if any, specified by the court in such order) of the
scheduled payments as so modified or restructured. A "Bankruptcy Loss" shall be
deemed to have occurred on the date of issuance of such order.
Business Day: Any day other than (i) a Saturday or a Sunday or (ii) a day
on which commercial banks in Florida, Illinois or the state in which the
Subservicer Account is maintained are authorized or obligated by law or
executive order to be closed.
Certificate: Any one of the Certificates executed by the Trust and
authenticated by the Trustee in substantially the form set forth in Exhibit 5.01
hereto evidencing a fractional undivided interest in the Trust Estate.
Certificate Account: The segregated account created and maintained by the
Trustee in its Corporate Trust Office for the benefit of the Certificateholders
and the Certificate Insurer in accordance with Section 3.11.
Certificate Balance: Initially, the aggregate principal amount of
Certificates issued on the Closing Date and, thereafter, such principal amount
reduced by all amounts distributed to the Certificateholders in respect of the
Certificate Principal Distributable Amount.
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Certificate Distributable Amount: On any Distribution Date, the sum of the
Certificate Principal Distributable Amount and the Certificate Interest
Distributable Amount.
Certificate Factor: As of any Distribution Date, a fraction, expressed as
a decimal carried to seven places, the numerator of which is the Certificate
Balance as of such Distribution Date (after giving effect to any distributions
reducing the Certificate Balance of the Certificates on such Distribution Date)
and the denominator of which is the aggregate principal amount of Certificates
issued on the Closing Date.
Certificate Insurer: Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or any
successor thereto, as issuer of the Certificate Policy.
Certificate Insurer Default: Any one of the following events shall have
occurred and be continuing:
(i) the Certificate Insurer fails to make a payment required under
the Certificate Policy in accordance with its terms;
(ii) the Certificate Insurer (A) files a petition or commences any
case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (B)
makes a general assignment for the benefit of its creditors, or (C) has an
order for relief entered against it under the United States Bankruptcy
Code or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization which is final
and nonappealable; or
(iii) a court of competent jurisdiction, the New York Department of
Insurance or other competent regulatory authority enters a final and
nonappealable order, judgment or decree (1) appointing a custodian,
trustee, agent or receiver for the Certificate Insurer or for all or any
material portion of its property or (2) authorizing the taking of
possession by a custodian, trustee, agent or receiver of the Certificate
Insurer (or the taking of possession of all or any material portion of the
property of the Certificate Insurer).
Certificate Interest Carryover Shortfall: With respect to any Distribution
Date, the excess of (a) the Certificate Interest Distributable Amount for the
preceding Distribution Date plus any outstanding Certificate Interest Carryover
Shortfall with respect to the preceding Distribution Date over (b) the amount of
interest that the holders of the Certificates actually received on such
preceding Distribution Date.
Certificate Interest Distributable Amount: For any Distribution Date, the
sum of (i) thirty (30) days of interest at the Certificate Rate on the
Certificate Balance on such Distribution
4
Date (before reduction of the Certificate Balance by any distributions made on
such Distribution Date), (ii) the Certificate Interest Carryover Shortfall and
(iii) interest on the Certificate Interest Carryover Shortfall at the
Certificate Rate from the preceding Distribution Date through the current
Distribution Date, to the extent permitted by law.
Certificate Percentage: 91%.
Certificate Policy: The financial guaranty insurance policy number 50410-N
issued by the Certificate Insurer to the Trustee for the benefit of the
Certificateholders on the Closing Date, including any endorsements thereto.
Certificate Principal Carryover Shortfall: With respect to any
Distribution Date, the excess of (i) the Certificate Principal Distributable
Amount for the preceding Distribution Date plus any outstanding Certificate
Principal Carryover Shortfall with respect to the preceding Distribution Date
over (ii) the amount of principal that the holders of the Certificates actually
received on such preceding Distribution Date.
Certificate Principal Distributable Amount: With respect to (i) any
Distribution Date prior to the Final Scheduled Distribution Date, the sum of (a)
the Certificate Percentage of the Principal Distributable Amount, (b) amounts
transferred from the Pre-Funding Account to the Certificate Account on such
Distribution Date, if any, pursuant to Section 3.14(b) less any undistributed
income or gain from investments on deposit in the Pre-Funding Account so
transferred, and (c) the Certificate Principal Carryover Shortfall with respect
to such Distribution Date, and (ii) the Final Scheduled Distribution Date, the
Certificate Balance (before giving effect to any distribution on the
Certificates on such Final Scheduled Distribution Date).
Certificate Rate: 6.36% per annum, any regular monthly computation of
interest at such rate being based upon annual interest at such rate on the
applicable amount divided by twelve; provided that if a Registration Statement
on Form S-3 with respect to the Certificates is not declared effective within
120 days of the Closing Date, the Certificate Rate shall be 6.61% per annum from
the Distribution Date next succeeding expiration of such 120 day period.
Certificate Register: The register maintained pursuant to Section 5.02.
Certificateholder or Holder: The Person in whose name a Certificate is
registered in the Certificate Register, except that, solely for the purpose of
giving any consent pursuant to this Agreement, any Certificate registered in the
name of the Transferor, the Master Servicer or any affiliate thereof shall be
deemed not to be outstanding and the Percentage Interest evidenced thereby shall
not be taken into account in determining whether the requisite amount of
Percentage Interests necessary to effect any such consent has been obtained;
provided however, that for purposes of determining whether the Trustee shall be
protected in conclusively relying upon any such consent, only Certificates which
a Responsible Officer of the Trustee actually knows are so registered shall not
be so taken into account.
5
Chase: The Chase Manhattan Bank (USA), as trustee.
Closing Date: The date on which the Certificates are originally issued.
Collateral Agent: Xxxxxx Trust and Savings Bank, not in its individual
capacity but solely as collateral agent under the Spread Account Agreement, or
any successor thereto acting as such under the Spread Account Agreement.
Collection Account: The segregated account created and maintained by the
Trustee in its trust capacity for the benefit of Certificateholders and the
Certificate Insurer in accordance with Section 3.10.
Contract: Each motor vehicle retail installment sale contract and security
agreement (including any and all rights to receive payments thereunder on and
after the applicable Cut-off Date and security interests in the Financed Vehicle
securing such contract or note) assigned and transferred to the Trustee
hereunder as of the Closing Date or a Subsequent Transfer Date, as the case may
be, and not reassigned, retransferred or otherwise released from the Trust
Estate in accordance herewith, each such Contract being identified in a Contract
Schedule attached to a Transfer Agreement.
Contract Documents: With respect to a Contract, all Contract papers and
documents (including those contained in the Contract File) and all other papers
and records (including computerized data) of whatever kind or description,
whether developed or originated by NAFCO, a Dealer, the Master Servicer or
another Person, required to document the Contract or to service the Contract.
Contract File: With respect to a Contract, the fully executed original of
such Contract; the Assignment of such Contract; the original Title Document or
UCC financing statement evidencing that the security interest in a financed
vehicle granted to NAFCO under such Contract has been perfected under applicable
state law (except for any Title Documents or UCC financing statements not
returned from the applicable public records office, in which case the Transferor
or Master Servicer will deliver, on the Closing Date or the applicable
Subsequent Transfer Date, as the case may be, an Officer's Certificate
indicating that the original of such Title Document has been applied for at, or
the original of such UCC financing statement was delivered to, such public
office and shows NAFCO, as agent, as the lienholder or secured party and that
the Transferor or Master Servicer will deliver the originals thereof when
returned from such office); the original of any assumption agreement or any
modification, extension or refinancing and agreement; and the original
application of the related Obligor to obtain the financing extended by such
Contract, fully executed by such Obligor.
Contract Rate: The annual percentage rate (as such term is used with
respect to the federal Truth-in-Lending Act) of interest borne by, and indicated
on, a Contract.
6
Contract Schedule: The schedule of Contracts delivered concurrently with
the execution and delivery of a Transfer Agreement to the Trustee and attached
thereto as Schedule 1, such schedule identifying each Contract being transferred
and assigned to the Trust pursuant to such Transfer Agreement by the name of the
Obligor and setting forth as to each such Contract its Individual Sold Balance
as of the applicable Cut-off Date, loan number, Contract Rate, scheduled monthly
payment of principal and interest, final maturity date and original principal
amount.
Conveyance: As defined in Section 2.3(b) of the Purchase Agreement.
Corporate Trust Office: The principal office of the Trustee in the City of
Chicago, Illinois at which at any particular time its corporate business shall
be administered, which office at the date of the execution of this instrument is
located at 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000,
Attention: Indenture Trust Division.
Custodial Agreement: The Custodial Agreement, dated as of November 21,
1995, between NAFCO and OFSA, as assigned to the Trust pursuant to Section 3.19
hereof.
Custodian: OFSA or any successor custodian for the Contract Files
appointed pursuant to Section 3.19.
Cut-off Date: With respect to an Initial Contract, the Initial Cut-off
Date, and with respect to any Additional Contract, the related Subsequent
Cut-off Date.
Dealer: A retail motor vehicle dealer that originated one or more
Contracts and sold the respective Contract to NAFCO.
Dealer Agreement: Each of the respective agreements entered into by a
Dealer and NAFCO whereby the Dealer sold Contracts to NAFCO.
Default Rate: With respect to any Due Period, the product of (i) twelve
and (ii) the quotient, expressed as a percentage, obtained by dividing (a) the
sum of (x) the aggregate Outstanding Principal Balance of all Defaulted
Contracts which became Defaulted Contracts during such Due Period and (y) the
Outstanding Principal Balance of all Contracts that became Retransferred
Contracts during such Due Period and were 30 days or more past due as of the
date such Contracts were retransferred hereunder by (b) the arithmetic average
of the Pool Outstanding Principal Balance as of the end of such Due Period and
the Pool Outstanding Principal Balance as of the end of the preceding Due
Period.
Defaulted Contract: With respect to any Due Period, a Contract with
respect to which any of the following has occurred during such Due Period: (i)
all or a part of any scheduled payment is 90 days or more delinquent as of the
end of such Due Period, (ii) such Contract is in default and the Master Servicer
(or a Subservicer) has in good faith determined that payments thereunder are not
likely to be resumed or (iii) the Financed Vehicle that secures the Contract
7
has been repossessed without reinstatement of the Contract on or before the last
day of such Due Period and any applicable redemption period has expired.
Deficiency Notice: as defined in Section 4.04(a) hereof.
Deficiency Claim Amount: as defined in Section 4.04(a) hereof.
Delinquency Ratio: With respect to any Due Period, the quotient, expressed
as a percentage, obtained by dividing (a) the aggregate Outstanding Principal
Balance of all Contracts in the Trust Estate on which a scheduled payment is 30
or more days past due as of the end of such Due Period, by (b) the Pool
Outstanding Principal Balance as of the end of such Due Period.
Delivery: When used with respect to Account Property means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC (other
than certificated securities) and are susceptible of physical delivery,
transfer thereof to the Trustee by physical delivery to the Trustee,
indorsed to, or registered in the name of, the Trustee or its nominee or
indorsed in blank and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Account Property to the Trustee free and clear of any adverse
claims, consistent with changes in applicable law or regulations or the
interpretation thereof;
(b) with respect to a "certificated security" (as defined in Section
8-102(1)(a) of the UCC), transfer thereof:
(i) by physical delivery of such certificated security to the
Trustee, provided that if the certificated security is in registered form,
it shall be indorsed to, or registered in the name of, the Trustee or
indorsed in blank;
(ii) by physical delivery of such certificated security to a
"financial intermediary" (as defined in Section 8-313(4) of the UCC) of
the Trustee specially indorsed to or issued in the name of the Trustee;
(iii) by the sending by a financial intermediary, not a "clearing
corporation" (as defined in Section 8-102(3) of the UCC), of a
confirmation of the purchase and the making by such financial intermediary
of entries on its books and records identifying as belonging to the
Trustee of (A) a specific certificated security in the financial
intermediary's possession, (B) a quantity of securities that constitute or
are part of a fungible bulk of certificated securities in the financial
intermediary's possession, or (C) a quantity of securities that constitute
or are part of a fungible bulk of securities shown
8
on the account of the financial intermediary on the books of another
financial intermediary; or
(iv) by the making by a clearing corporation of appropriate entries
on its books reducing the appropriate securities account of the transferor
and increasing the appropriate securities account of the Trustee or a
person designated by the Trustee by the amount of such certificated
security, provided that in each case: (A) the clearing corporation
identifies such certificated security for the sole and exclusive account
of the Trustee or the person designated by the Trustee, (B) such
certificated security shall be subject to the clearing corporation's
exclusive control, (C) such certificated security is in bearer form or
indorsed in blank or registered in the name of the clearing corporation or
custodian bank or a nominee of either of them, (D) custody of such
certificated security shall be maintained by such clearing corporation or
a "custodian bank" (as defined in Section 8-102(4) of the UCC) or the
nominee of either subject to the control of the clearing corporation and
(E) such certificated security is shown on the account of the transferor
thereof on the books of the clearing corporation prior to the making of
such entries; and such additional or alternative procedures as may
hereafter become appropriate to effect the complete transfer of ownership
of any such Account Property to the Trustee free and clear of any adverse
claims, consistent with changes in applicable law or regulations or the
interpretation thereof;
(c) with respect to any security issued by the U.S. Treasury, the Federal
Home Loan Mortgage Corporation or by the Federal National Mortgage Association
that is a book-entry security held through the Federal Reserve System pursuant
to Federal book entry regulations, the following procedures, all in accordance
with applicable law, including applicable federal regulations and Articles 8 and
9 of the UCC: book-entry registration of such property to an appropriate
book-entry account maintained with a Federal Reserve Bank by a financial
intermediary which is also a "depositary" pursuant to applicable federal
regulations and issuance by such financial intermediary of a deposit advice or
other written confirmation of such book-entry registration to the Trustee of the
purchase by the financial intermediary on behalf of the Trustee of such
book-entry security; the making by such financial intermediary of entries in its
books and records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging to the
Trustee and indicating that such financial intermediary holds such book-entry
security solely an agent for the Trustee; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Account Property to the Trustee free of any adverse
claims, consistent with changes in applicable law or regulations or the
interpretation thereof;
(d) with respect to any item of Account Property that is an
"uncertificated security" (as defined in Section 8-102(1)(b) of the UCC) and
that is not governed by clause (c) above, transfer thereof:
(i) by registration of the transfer thereof to the Trustee, on the
books and records of the issuer thereof;
9
(ii) by the sending of a confirmation by a financial intermediary of
the purchase, and the making by such financial intermediary of entries on
its books and records identifying as belonging to the Trustee (A) a
quantity of securities which constitute or are part of a fungible bulk of
uncertificated securities registered in the name of the financial
intermediary or (B) a quantity of securities which constitute or are part
of a fungible bulk of securities shown on the account of the financial
intermediary on the books of another financial intermediary; or
(iii) by the making by a clearing corporation of appropriate entries
on its books reducing the appropriate account of the transferor and
increasing the account of the Trustee or a person designated by the
Trustee by the amount of such uncertificated security, provided that in
each case: (A) the clearing corporation identifies such uncertificated
security for the sole and exclusive use of the Trustee or the person
designated by the Trustee, (B) such uncertificated security is registered
in the name of the clearing corporation or a custodian bank or a nominee
of either, and (C) such uncertificated security is shown on the account of
the transferor on the books of the clearing corporation prior to the
making of such entries; and
(e) in each case of delivery contemplated herein, the Trustee shall make
appropriate notations on its records, and shall cause same to be made of the
records of its nominees, indicating that such securities are held in trust
pursuant to and as provided in this Agreement.
Determination Date: With respect to a Distribution Date, the last day of
the related Due Period.
Distribution Date: The 21st day of any month, commencing November 21,
1995, or, if such 21st day is not a Business Day, the Business Day immediately
following.
Draw Date: With respect to a Distribution Date, the fourth Business Day
immediately preceding such Distribution Date.
Due Date: With respect to a Contract, the date in each Due Period on which
a scheduled payment on such Contract is due.
Due Period: With respect to a Distribution Date, the period from and
including the first day of the calendar month preceding the month in which such
Distribution Date occurs to and including the last day of the calendar month
preceding the month of such Distribution Date.
Eligible Account: (i) A segregated trust account that is maintained with
the corporate trust department of a depository institution or trust company
acceptable to the Certificate Insurer (unless a Certificate Insurer Default has
occurred and is continuing, in which case such institution shall be one subject
to regulations regarding fiduciary funds on deposit substantially similar to 12
CFR Section 9.10(b)), (ii) a segregated direct deposit account maintained with a
depository institution or trust company organized under the laws of the United
States of
10
America, or any of the States thereof, or the District of Columbia, having a
certificate of deposit, short-term deposit or commercial paper rating of at
least "A-1+" from Standard & Poor's and "P-1" from Moody's and (unless a
Certificate Insurer Default has occurred and is continuing) acceptable to the
Certificate Insurer, or (iii) a segregated direct deposit account maintained
with a depository institution or trust company and fully insured by the Federal
Deposit Insurance Corporation and, unless a Certificate Insurer Default has
occurred and is continuing, acceptable to the Certificate Insurer.
Eligible Servicer: The Master Servicer, the Standby Servicer or another
Person that, at the time of its appointment as Master Servicer, (i) is servicing
a portfolio of motor vehicle retail installment sales contracts and/or motor
vehicle installment loans, (ii) is legally qualified and has the capacity to
service the Contracts and (iii) has demonstrated the ability professionally and
competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Contracts with
reasonable skill and care.
Final Scheduled Distribution Date: The Distribution Date occurring in
September, 2001.
Financed Vehicle: The new or used automobile, light-duty truck, van or
minivan, together with all accessories thereto, securing the indebtedness of the
Obligor under the related Contract.
First Union: First Union Capital Markets Corp.
Governmental Authority: (a) Any federal, state, county, municipal or
foreign government, or political subdivision thereof, (b) any governmental or
quasi-governmental agency, authority, board, bureau, commission, department,
instrumentality or public body, (c) any court or administrative tribunal or (d)
with respect to any Person, any arbitration tribunal or other non-governmental
authority to the jurisdiction of which such Person has consented.
Grant: To grant, bargain, sell, warrant, alienate, devise, release,
convey, assign, transfer, mortgage, pledge, create and grant a security interest
in and right of set-off against, deposit, set over and confirm.
Guaranteed Distributions: As defined in the Certificate Policy.
Indemnification Agreement: The Indemnification Agreement dated as of the
Closing Date among the Certificate Insurer, the Transferor and First Union.
Individual Sold Balance: With respect to any Contract, the original
principal balance of such Contract reduced by the portion of each payment
received thereon before the applicable Cut-off Date that would represent
principal if such payments were allocated to the principal of and interest on
such Contract based on the amortization method provided in such Contract.
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Initial Contract: Each Contract transferred and assigned to the Trust on
the Closing Date.
Initial Cut-off Date: September 30, 1995.
Initial Spread Account Deposit: As defined in the Spread Account
Agreement.
Insurance Agreement: The Insurance and Indemnity Agreement, dated as of
the Closing Date, among the Transferor, NAFCO and the Certificate Insurer, as
amended or supplemented in accordance with the provisions thereof.
Insurance Agreement Event of Default: An "Event of Default" as defined in
the Insurance Agreement.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any insurance
policy covering a Financed Vehicle or the related Obligor.
Internal Revenue Code: The Internal Revenue Code of 1986.
Liquidated Contract: With respect to any Due Period, a Contract with
respect to which any of the following has occurred during such Due Period: (i)
90 days have elapsed since Repossession of the related Financed Vehicle, (ii)
the Master Servicer (or a Subservicer) has in good faith determined that all
amounts that it expects to recover under such Contract have been received, or
(iii) 90% of any scheduled payment on such Contract is 120 days or more
delinquent as of the end of such Due Period.
Liquidation Expenses: Reasonable out-of-pocket expenses which are incurred
by the Master Servicer or any Subservicer in connection with the liquidation of
any Defaulted Contract. Such expenses shall include, without limitation, legal
fees and expenses, any unreimbursed amount expended by the Master Servicer or
any Subservicer pursuant to Section 3.08 (to the extent such amount is
reimbursable under the terms of Section 3.08) respecting the related Contract,
and any related and unreimbursed expenditures for property restoration or
preservation.
Liquidation Proceeds: With respect to a Liquidated Contract, all amounts
(including, without limitation, Insurance Proceeds) realized with respect to
such Contract net of amounts that are required to be refunded to the Obligor on
such Contract; provided however, that the Liquidation Proceeds with respect to
any Contract shall in no event be less than zero.
Lockbox Account: Any bank account maintained at a Lockbox Bank into which
collections under the Contracts are deposited in accordance with Section 3.06.
Lockbox Agreement: A letter agreement among a Lockbox Bank, the
Transferor, NAFCO, the Trustee, the Master Servicer and, if applicable, any
Subservicer, relating to one
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or more Lockbox Accounts, as the same may be amended, supplemented, amended and
restated or otherwise modified from time to time. So long as no Certificate
Insurer Default shall have occurred and be continuing, any Lockbox Agreement is
also required to be acceptable to the Certificate Insurer.
Lockbox Bank: Any bank at which a Lockbox Account is maintained from time
to time and whose short-term debt securities are rated A-1+ by S&P and P-1 by
Moody's. So long as no Certificate Insurer Default shall have occurred and be
continuing, any Lockbox Bank is also required to be acceptable to the
Certificate Insurer.
Master Servicer: NAFCO, or its successor in interest, or any successor
Master Servicer appointed as provided in Section 7.01 or 7.02.
Master Servicing Fee: As to any Due Period, the monthly fee payable to the
Master Servicer, which, as long as either NAFCO or the Standby Servicer is the
Master Servicer, shall be equal to 1/12 of the product of (i) 2.0 percent and
(ii) the Pool Outstanding Principal Balance as of the close of business on the
last Business Day of the preceding Due Period. The Master Servicing Fee for any
successor Master Servicer other than the Standby Servicer shall be determined as
provided in Section 7.02.
Master Trust: National Financial Auto Receivables Master Trust.
Monthly Interest: For any Distribution Date, thirty (30) days of interest
at the Certificate Rate on the Certificate Balance on such Distribution Date
(before reduction of the Certificate Balance by any distributions made on such
Distribution Date).
Moody's: Xxxxx'x Investors Service, Inc., a corporation organized and
existing under the laws of the State of Delaware, its successors and their
assigns, and if such corporation shall for any reason no longer perform the
functions of a securities rating agency, Moody's shall be deemed to refer to any
other nationally recognized statistical rating organization designated by the
Certificate Insurer.
NAFCO: National Auto Finance Company L.P., a Delaware limited partnership.
Net Loss Rate: With respect to any Due Period, the product, expressed as a
percentage, of (i) twelve and (ii) a fraction, the numerator of which equals the
excess of (A) the sum of (1) the aggregate Outstanding Principal Balances of all
Contracts that became Liquidated Contracts in such Due Period and (2) accrued
and unpaid interest on such Outstanding Principal Balances at the related
Contract Rates through the end of such Due Period and (3) the amount of any
Bankruptcy Losses, over (B) the Liquidation Proceeds received by the Trust
during such Due Period with respect to all Liquidated Contracts in the Trust
(including Liquidated Contracts that became Liquidated Contracts in a prior Due
Period) less all Liquidation Expenses incurred during such Due Period and the
denominator of which equals the arithmetic average of the Pool
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Outstanding Principal Balance as of the end of such Due Period and the Pool
Outstanding Principal Balance as of the last day of the preceding Due Period.
Non-Simple Interest Contract: A Contract which is not a Simple Interest
Contract.
Notice of Claim: The notice required to file a claim under the Certificate
Policy.
Obligor: The purchaser or the co-purchasers of the Financed Vehicle and
any other Person or Persons who are primarily or secondarily obligated to make
the payments required by a Contract.
Officer's Certificate: A certificate signed by a Co-Trustee of the
Transferor or the Chairman of the Board, President, Executive Vice President,
Senior Vice President, Vice President, or Assistant Vice President of the
Custodian, NAFCO or by a Servicing Official, as the case may be, and delivered
to the Trustee, as required by this Agreement.
OFSA: Omni Financial Services of America, Inc., a Florida corporation, or
any substitute Subservicer performing substantially the same services on behalf
of the Master Servicer as OFSA performs pursuant to the Subservicing Agreement,
dated as of December 8, 1994, as amended as of the Closing Date, between the
Master Servicer and OFSA.
Opinion of Counsel: A written opinion in form reasonably satisfactory to
the Trustee (and the Certificate Insurer if such opinion is addressed to the
Certificate Insurer) of counsel reasonably satisfactory to the Trustee (and the
Certificate Insurer if such opinion is addressed to the Certificate Insurer).
Any such counsel may be counsel to the Transferor.
Original Pool Outstanding Principal Balance: The aggregate Individual Sold
Balances of all of the Contracts as of their respective Cut-off Dates.
Outstanding Principal Balance: As of any date and with respect to any
Contract, the outstanding principal balance of such Contract as of such date
which shall be computed by reducing the Individual Sold Balance thereof on the
applicable Cut-off Date (i) by the principal portion of each payment applied to
such Contract on or after the applicable Cut-off Date in accordance with the
terms of such Contract and processed by the Master Servicer or a Subservicer on
or before such date and (ii) by any Bankruptcy Loss in respect of such Contract;
provided however, that for any date following the Due Period in which the
remaining principal balance of such Contract was included in the Principal
Distributable Amount as a Liquidated Contract or was subject to a Principal
Prepayment in Full (including a retransfer pursuant to Sections 2.02, 2.03 or
3.01), the Outstanding Principal Balance for such Contract shall be zero.
Paying Agent: The Person, if any, appointed as such pursuant to Section
5.05.
Percentage Interest: As to any Certificate, the percentage interest
evidenced thereby in distributions required to be made with respect to the
Certificates, such percentage interest being
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equal to the percentage obtained by dividing the denomination of such
Certificate by the aggregate of the denominations of all Certificates.
Permitted Investments: One or more of the following:
(a) (i) direct interest-bearing obligations of, and interest-bearing
obligations guaranteed as to timely payment of principal and interest by,
the United States or any agency or instrumentality of the United States
the obligations of which are backed by the full faith and credit of the
United States; or (ii) direct interest-bearing obligations of, and
interest-bearing obligations guaranteed as to timely payment of principal
and interest by, the Federal National Mortgage Association or the Federal
Home Loan Mortgage Corporation, but only if, at the time of investment,
such obligations are assigned the highest credit rating by each Rating
Agency;
(b) demand or time deposits in, certificates of deposit of, or
bankers' acceptances issued by any depository institution or trust company
organized under the laws of the United States or any State and subject to
supervision and examination by federal and/or State banking authorities
(including, if applicable, the Trustee or any agent of the Trustee acting
in its commercial capacities); provided that the short-term unsecured debt
obligations of such depository institution or trust company at the time of
such investment, or contractual commitment providing for such investment,
are assigned the highest credit rating by each Rating Agency;
(c) repurchase obligations pursuant to a written agreement (i) with
respect to any obligation described in clause (a) above, where the Trustee
has taken actual or constructive delivery of such obligation, and (ii)
entered into with the corporate trust department of a depository
institution or trust company organized under the laws of the United States
or any State thereof, the deposits of which are insured by the Federal
Deposit Insurance Corporation and the short-term unsecured debt
obligations of which are rated "A-1+" by Standard & Poor's and "P-1" by
Moody's (including, if applicable, the Trustee or any agent of the Trustee
acting in its respective commercial capacities);
(d) securities bearing interest or sold at a discount issued by any
corporation incorporated under the laws of the United States or any State
whose long-term unsecured debt obligations are assigned the highest credit
rating by each Rating Agency at the time of such investment or contractual
commitment providing for such investment; provided however, that
securities issued by any particular corporation will not be Permitted
Investments to the extent that an investment therein will cause the then
outstanding principal amount of securities issued by such corporation and
held in the Accounts to exceed 10% of the Permitted Investments held in
the Accounts (with Permitted Investments held in the Accounts valued at
par);
(e) commercial paper that (i) is payable in United States dollars
and (ii) is rated in the highest credit rating category by each Rating
Agency; and
15
(f) (i) money market mutual funds rated in the highest rating
category of each Rating Agency and investing only in other Permitted
Investments, any such market funds which provide for demand withdrawals
being conclusively deemed to satisfy any maturity requirements for
Permitted Investments set forth in this Agreement, and (ii) any other
demand or time deposit, obligations security or investment, provided in
the case of either (i) or (ii) such investments shall be acceptable to the
Certificate Insurer, as evidenced by the prior written consent of the
Certificate Insurer (or if a Certificate Insurer Default has occurred and
is continuing, each Rating Agency), as may from time to time be confirmed
in writing to the Trustee by the Certificate Insurer or the Rating
Agencies, as applicable.
Person: Any individual, corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
Physical Property: The "instruments" and "certificated securities"
described in subparagraphs (a) and (b) of the definition of "Delivery" in this
Article I.
Placement Agent Agreement: The Placement Agent Agreement dated as of the
Closing Date by and between the Transferor and First Union.
Policy Claim Amount: As defined in Section 4.04(b).
Pool Outstanding Principal Balance: As to any Distribution Date, the
aggregate Outstanding Principal Balances of the Contracts at the end of the Due
Period preceding such Distribution Date and, as of the Initial Cut-off Date, the
aggregate Individual Sold Balances of the Initial Contracts on the Initial
Cut-off Date.
Pre-Funding Account: The segregated account created and maintained by the
Trustee in its trust capacity for the benefit of the Certificateholders in
accordance with Section 3.14.
Pre-Funding Period: The period from the Closing Date until the earliest of
(i) the occurrence of an Amortization Event, (ii) the date on which the balance
of funds on deposit in the Pre-Funding Account is reduced to zero and (iii) the
close of business on December 31, 1995.
Pre-Funding Period Reserve Account: The segregated account created and
maintained by the Trustee in its trust capacity for the benefit of the
Certificateholders in accordance with Section 3.12.
Preference Claim: As defined in Section 4.05(b).
Principal Distributable Amount:
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(i) With respect to any Distribution Date following the calendar month in
which the Revolving Period terminates (other than the Final Scheduled
Distribution Date), the sum of (a) that portion of all collections on the
Contracts (other than Liquidated Contracts, Retransferred Contracts and, to the
extent included in clause (d) below, Retransfer Default Contracts) allocable to
principal, including all full and partial principal prepayments, on deposit in
the Collection Account at the close of business of the last day of the related
Due Period, (b) the Outstanding Principal Balance of all Contracts that became
Liquidated Contracts during the related Due Period (other than Liquidated
Contracts that became Retransferred Contracts during such Due Period and, to the
extent included in clause (d) below, the Outstanding Principal Balance of
Retransfer Default Contracts), (c) the portion of the Retransfer Amount
allocable to principal of all Contracts that became Retransferred Contracts on
or prior to the related Reporting Date and subsequent to the preceding Reporting
Date, (d) in the sole discretion of the Certificate Insurer, the Outstanding
Principal Balance as of the related Reporting Date of all Retransfer Default
Contracts, (e) the aggregate amount of Bankruptcy Losses that occurred during
the related Due Period, (f) the amount, if any, transferred by the Trustee to
the Certificate Account from the Revolving Account pursuant to Section 3.13(b).
(ii) With respect to any Distribution Date occurring prior to or during
the calendar month in which the Revolving Period terminates, the sum of (a) the
aggregate Outstanding Principal Balance of all Contracts that became Liquidated
Contracts during the related Due Period and (b) the amount, if any, transferred
by the Trustee to the Certificate Account from the Revolving Account on such
Distribution Date pursuant to Section 3.13(b).
Principal Prepayment in Full: Any prepayment of the entire principal
balance of a Contract. Contracts required to be retransferred to the Transferor
pursuant to Section 2.02 or 2.03 during a Due Period shall be deemed to have
been subject to a Principal Prepayment in Full during such Due Period.
Purchase Agreement: The Purchase and Contribution Agreement, dated October
1, 1995, between the Transferor and NAFCO and all amendments thereof and
supplements thereto.
Purchase Agreements: The Purchase Agreement and the Assignment Agreement.
Rating Agencies: Standard & Poor's and Moody's.
Record Date: With respect to any Distribution Date, the last day of the
preceding calendar month.
Registrar of Titles: The agency, department or office having the
responsibility for maintaining records of titles to motor vehicles and issuing
documents evidencing such titles in the jurisdiction in which a particular
Financed Vehicle is registered.
Registration Rights Agreement: The Registration Rights Agreement to be
entered into between the Transferor and the initial Certificateholders.
17
Reporting Date: With respect to a Distribution Date, the earlier of (i)
the 15th day of the calendar month in which such Distribution Date occurs and
(ii) the fourth Business Day preceding such Distribution Date.
Repossession: Any action taken or to be taken pursuant to the UCC or other
applicable laws in connection with recovery on a defaulted Contract (including
any Liquidated Contract), including repossession of the related Financed Vehicle
with or without judicial proceedings, sale of such Financed Vehicle at public or
private sale, retention of such Financed Vehicle in satisfaction of the
Obligor's obligations under such defaulted Contract, or a levy on and sheriff's
sale of the related Financed Vehicle in enforcement of a judgment on such
defaulted Contract or by voluntary surrender or otherwise.
Required Reserve Amount: With respect to any Distribution Date, an amount
equal to the product of (i) a per annum rate equal to the Certificate Rate less
250 basis points (2.50%), (ii) the amount of funds on deposit in the Pre-Funding
Account after giving effect to any withdrawals therefrom on such Distribution
Date and (iii) a fraction, the numerator of which is the number of days from and
including such Distribution Date to (but excluding) December 31, 1995, and the
denominator of which is 360.
Requisite Amount: As defined in the Spread Account Agreement.
Responsible Officer: With respect to the Trustee, any officer within the
Corporate Trust Office of the Trustee including any Vice President, Assistant
Vice President, Secretary or Assistant Secretary, or any other officer of the
Trustee customarily performing functions similar to those performed by any of
the above designated officers and also, with respect to a particular matter, any
other officer to whom such matter is referred because of such officer's
knowledge of and familiarity with the particular subject.
Retransfer Amount: With respect to any Contract required to be
retransferred to the Transferor pursuant to Section 2.02 or 2.03 or the Master
Servicer pursuant to Section 3.01, an amount equal to the sum of (i) 100% of the
Outstanding Principal Balance thereof on the date of retransfer and (ii) unpaid
accrued interest at the applicable Contract Rate on the Outstanding Principal
Balance thereof on the date of retransfer from the date to which interest was
last paid by the Obligor to the Due Date in the Due Period in which such
retransfer occurs. For purposes of determining the Retransfer Amount of any
Contract, the Outstanding Principal Balance thereof on the date of retransfer
shall not be reduced to zero as a result of its classification as a Liquidated
Contract.
Retransferred Contract: Any Contract retransferred to the Transferor or
the Master Servicer pursuant to Section 2.02, Section 2.03 or Section 3.01
hereof.
Retransfer Default Contract: Any Contract with respect to which the
Transferor or the Master Servicer is required to deposit in the Collection
Account the related Retransfer Amount pursuant to Section 2.02, Section 2.03 or
Section 3.01 and has not so deposited such amount on
18
the Reporting Date on which it is required to repurchase such Contract following
receipt of notice from the Trustee that such Contract is required to be
retransferred.
Revolving Account: The segregated account created and maintained by the
Trustee in its trust capacity for the benefit of the Certificateholders and the
Certificate Insurer in accordance with Section 3.13.
Revolving Period: The period from and including the Closing Date until the
earlier of (i) the date on which an Amortization Event occurs and (ii) the close
of business on April 30, 1996.
Rule of 78's Method: The method of allocating a fixed level payment
between principal and interest based upon the "sum of periodic balances" or "sum
of monthly payments" method.
Servicer Default: As defined in Section 7.01.
Servicing Official: Any employee of the Master Servicer involved in, or
responsible for, the administration and servicing of the Contracts whose name
appears on a list of servicing employees furnished to the Trustee and the
Certificate Insurer by the Master Servicer, as such list may from time to time
be amended.
Simple Interest Method: The method of allocating a fixed level payment
between principal and interest, pursuant to which the portion of such payment
that is allocated to interest is the product of a fixed rate of interest
multiplied by the unpaid principal balance multiplied by the period of time
(expressed as a fraction of a year) between (a) the date such payment is
received and (b) the date the prior scheduled payment was received, or in the
case of the first payment, the date of the Contract.
Spread Account: The Spread Account established and maintained pursuant to
the Spread Account Agreement. The Spread Account shall in no event be deemed
part of the Trust Estate.
Spread Account Agreement: The Master Spread Account Agreement, dated as of
the Closing Date, among the Transferor, the Certificate Insurer, the Collateral
Agent and the Trustee substantially in the form attached hereto as Exhibit E, as
the same may be amended, supplemented or otherwise modified in accordance with
the terms thereof.
Standard & Poor's: Standard & Poor's Ratings Service, its successors and
their assigns, and if Standard & Poor's Ratings Service shall for any reason no
longer perform the functions of a securities rating agency, "Standard & Poor's"
shall be deemed to refer to any other nationally recognized statistical rating
organization designated by the Certificate Insurer.
Standby Servicer: Xxxxxx Trust and Savings Bank, or any successor thereto
under the Standby Servicing Agreement.
19
Subsequent Cut-off Date: With respect to any Subsequent Transfer Date, the
third Business Day prior thereto.
Subsequent Transfer Date. Any day on which Additional Contracts are
transferred and assigned to the Trust pursuant to Section 2.06.
Subservicer: Any Person that is subservicing a Contract pursuant to a
Subservicing Agreement pursuant to Section 3.02.
Subservicer Account: The account maintained by OFSA with Mellon Financial
Services to which Obligors have been or will be instructed to remit payments in
respect of the Contracts.
Subservicing Agreement: The written contract between the Master Servicer
and any Subservicer relating to the servicing and/or administration of certain
Contracts as provided in Section 3.02.
Supplemental Servicing Fee: With respect to any Due Period, any payments
received from an Obligor or a Dealer in connection with any application fees,
tax processing fees, wire transfer fees, express mail fees, insurance premiums,
late charges, taxes, fees or other charges imposed by any Governmental
Authority.
Taxes: Motor vehicle registration fees or taxes, personal property or
other ad valorem taxes, and all other similar fees and taxes imposed by a
governmental unit with respect to the ownership or use of a Financed Vehicle.
Title Documents: With respect to any Financed Vehicle, the actual motor
vehicle title or certificate of title for such Financed Vehicle issued by the
Registrar of Titles or other government agency in the jurisdiction in which such
Financed Vehicle is registered; alternatively, in those certain jurisdictions
whose law requires that the original of the actual motor vehicle title or
certificate of title be possessed by the Obligor, then, in lieu of the actual
title or certificate of title, Title Documents shall mean such duplicate titles,
certificates or other documents as are permitted, required and/or contemplated
to be possessed by the secured party under the laws of such jurisdiction.
Total Retransfer Amount: As defined in Section 9.01.
Transaction Documents: This Agreement, the Assignment Agreement, the
Purchase Agreement, the Certificates, the Insurance Agreement, the
Indemnification Agreement, each Conveyance, the Spread Account Agreement, the
Placement Agent Agreement, the Custodial Agreement, the Premium Letter, and any
Transfer Agreement.
Transfer Agreement: As defined in Section 2.01(b).
Transferor: National Financial Auto Funding Trust, a Delaware business
trust.
20
Transferor Interest: The interest in the Trust held by the Transferor
evidencing the right of the Transferor to all distributions pursuant to Section
4.01(b)(xi) hereof and to any assets remaining in the Trust upon termination of
this Agreement and the Insurance Agreement.
Transferor Trust Agreement: The First Amended and Restated Trust
Agreement, dated as of December 8, 1994, as amended as of the Closing Date
between the Transferor and The Chase Manhattan Bank (USA), as trustee.
Trigger Event: As defined in the Spread Account Agreement.
Trust: The National Auto Finance 1995-1 Trust created by this Agreement.
Trust Estate: The corpus of the Trust, consisting of (i) the Contracts,
(ii) all monies paid or payable thereunder on or after the applicable Cut-off
Date, (iii) the Contract Files, (iv) such assets as shall from time to time be
identified as deposited in the Collection Account, the Certificate Account, the
Pre-Funding Account, the Pre-Funding Period Reserve Account and the Revolving
Account, (v) property that secured a Contract and that has been acquired by
Repossession or otherwise, (vi) all rights to Insurance Proceeds and Liquidation
Proceeds, (vii) the Transferor's right, title and interest in, to and under the
Purchase Agreements, (viii) the Certificate Policy, (ix) NAFCO's rights against
Dealers under the Dealer Agreements in respect of the representations and
warranties made by the Dealer thereunder with regard to the related Contracts
and (x) the proceeds of the foregoing and the rights to enforce the foregoing.
UCC: The Uniform Commercial Code as in effect in the relevant
jurisdiction.
Unearned Finance Charge: With respect to any Contract, the amount of the
add-on finance charge that, under the term of such Contract, would be required
to be refunded or credited to the related Obligor in accordance with such
Contract if such Contract were then prepaid in full.
Section 1.02. Calculations as to Principal and Interest in Respect of
Contracts. For all purposes of this Agreement the allocation of a payment on a
Contract between principal and interest shall be made based upon the
amortization method provided in such Contract. For purposes of allocating a
pay-ahead payment on a Contract between principal and interest, the pay-ahead
shall be deemed to have been received on the date it was actually due. For all
purposes of this Agreement, no amount shall be treated as collected under a
Contract until such amount has been deposited into the Collection Account.
Section 1.03. Material Adverse Effect. Whenever a determination is to be
made under this Agreement as to whether a given event, action, course of conduct
or set of facts or circumstances could or would have a material adverse effect
on the Certificateholders (or any similar or analogous determination), such
determination shall be made without taking into account the insurance provided
by the Certificate Policy.
21
ARTICLE II
Creation of Trust;
Transfer of Trust Estate;
Original Issuance of Certificates
Section 2.01. Creation of Trust: Transfer of Trust Estate.
(a) The Trust hereby is created. The Transferor hereby appoints the
Trustee as trustee of the Trust effective as of the Closing Date, and the
Trustee hereby acknowledges and accepts such appointment. The Trust shall be
administered pursuant to the provisions of this Agreement for the benefit of the
Certificateholders, the Certificate Insurer and the Transferor. The Trustee is
hereby specifically empowered to conduct any business dealings with the
Transferor and the Master Servicer on behalf of the Trust, and shall have all
the rights, powers and duties of the Trustee set forth in this Agreement. The
parties hereto intend that the Trust constitute a trust under the laws of the
State of New York.
(b) The Transferor does hereby transfer, assign, set-over and
otherwise convey to the Trustee, without recourse (except as otherwise
specifically provided in this Agreement), and does hereby grant to the Trustee,
in trust for the exclusive use and benefit of all present and future
Certificateholders and the Certificate Insurer, all the right, title and
interest of the Transferor in and to the Contracts and all other items in the
Trust Estate (other than the Certificate Policy), whether now owned or hereafter
acquired. The foregoing transfer and assignment does not constitute and is not
intended to result in an assumption by the Trustee, any Certificateholder or the
Certificate Insurer of any obligation of the Transferor or the Master Servicer
to the Obligors, Dealers, insurers or any other Person in connection with the
Contracts, the Contract Files, or the insurance policies or any agreements or
instruments relating to any of them. In connection with each transfer of
Contracts by the Transferor to the Trust, the Transferor agrees, at its own
expense, on or before the Closing Date or the applicable Subsequent Transfer
Date, to deliver to the Trustee and the Certificate Insurer a written assignment
(including an acceptance by the Trustee on behalf of the Trust) covering such
Contracts in substantially the form of Exhibit 2.01 (each, a "Transfer
Agreement").
(c) The Transferor intends that the transfer and assignment of
Contracts by the Transferor to the Trust constitute an absolute transfer to the
Trust of all the Transferor's right, title, and interest in and to the Contracts
and the remainder of the Trust Estate (other than the Certificate Policy);
provided that, in the event that, notwithstanding the intent of the Transferor,
the transfer is not held to be a sale, then it is intended that the conveyance
shall be deemed to be a grant of a security interest in the Contracts and the
remainder of the Trust Estate. By the transfer, assignment and set-over
contemplated by this Section 2.01, the Transferor further grants and transfers
to the Trustee, for the benefit of all Certificateholders, and the Certificate
Insurer a first priority, perfected security interest, as their respective
interests appear in Section 4.01, in all of the Transferor's right, title and
interest in, to and under the Contracts and the remainder of the Trust Estate,
whether now existing or hereafter acquired, and
22
agrees that this Agreement shall also constitute a security agreement under
applicable law. On or prior to the Closing Date, the Transferor shall have filed
a UCC financing statement or statements, appropriate under the applicable UCC,
to reflect the assignment of the Contracts and the remainder of the Trust Estate
(other than the Certificate Policy) by the Transferor to the Trustee and the
Certificate Insurer and to protect the Certificateholders' and the Certificate
Insurer's interest in the Contracts, their proceeds and the Financed Vehicles,
against all other Persons and shall thereafter file any appropriate continuation
statements in respect thereof. During the term of this Agreement, the Transferor
shall not change its name, identity or structure or relocate its chief executive
office or principal place of business without first giving at least 30 days'
advance written notice to the Trustee, the Master Servicer and the Certificate
Insurer; provided however, that the Trustee, the Master Servicer and the
Certificate Insurer shall, subject to the last sentence of this paragraph, have
no right or power to prohibit a change in the Transferor's name, identity or
structure or a relocation of, its chief executive office or principal place of
business. If any change in the Transferor's name, identity or structure or the
relocation of its chief executive office or principal place of business would
make any financing or continuation statement or notice of lien filed in
connection with this Agreement misleading within the meaning of applicable
provisions of the UCC or any title statute, the Transferor, promptly but in no
event later than thirty days after the effective date of such change, shall file
such amendments or take such other actions as may be required to preserve and
protect the Trustee's interest in the Contract and proceeds thereof and the
Financed Vehicles and the remainder of the Trust Estate. Promptly after filing
such amendments or taking such other action, the Transferor shall deliver to the
Trustee and the Certificate Insurer an Opinion of Counsel stating that all
financing statements, continuation statements or amendments thereto necessary to
continue the perfection of the interest of the Trustee in the Trust Estate have
been filed and reciting the details thereof.
(d) The Master Servicer shall be responsible for maintaining, and
shall maintain and cause the respective Subservicers, if any, to maintain, a
complete set of books and records (including tapes and disks for computer use)
for each Contract to the extent that such books and records were delivered to
the Master Servicer or such Subservicer or were developed by it during the
course of servicing such Contract. The Master Servicer shall, and shall cause
the respective Subservicers to, maintain such books of account and other records
as will enable the Trustee to determine the ownership status of each Contract;
provided however, that neither the Master Servicer nor any Subservicer shall be
required to physically xxxx or segregate any Contracts or other Contract
Documents to indicate such ownership status. Promptly after the Closing Date and
each Subsequent Transfer Date, the Transferor and the Master Servicer shall
deliver to the Custodian all Contract Documents in its possession or under its
control, and shall promptly deliver to the Custodian any Contract Documents that
subsequently come into its possession or within its control. NAFCO hereby
warrants, represents and covenants to and with the Trustee and the Certificate
Insurer that recordation of the name of NAFCO as lienholder in the Title
Documents respecting any Financed Vehicle as well as such lien itself is
maintained by NAFCO as agent for the Trustee for the benefit of the Trust and
NAFCO has no equitable ownership in the Contracts, except as it may have by
virtue of ownership of a Certificate or an equity interest in the Transferor or
any Certificateholder.
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(e) On the Closing Date, the Transferor shall deliver to the Trustee
for deposit in the Collection Account, or to the extent received by the Master
Servicer or any Subservicer, cause the Master Servicer to deliver or cause to be
delivered to the Trustee for deposit in the Collection Account, all payments
received on the Contracts on or after the Initial Cut-off Date and on or before
the second Business Day preceding the Closing Date. Within two Business Days
after a Subsequent Transfer Date, the Transferor shall deliver to the Trustee
for deposit in the Collection Account, or to the extent received by the Master
Servicer or any Subservicer, cause the Master Servicer to deliver or cause to be
delivered to the Trustee for deposit in the Collection Account, all payments
received on the Contracts on or after the applicable Cut-off Date and on or
before such Subsequent Transfer Date.
Section 2.02. Acceptance by Trustee. The Trustee, based solely upon the
representations of the Custodian, acknowledges receipt by the Custodian as of
the Closing Date and each Subsequent Transfer Date, as the case may be, of a
Contract File relating to each Contract. It is understood and agreed that OFSA
makes no representation as to the contents of the Contract File. If the Master
Servicer or any such Subservicer subsequently finds any document or documents
constituting a part of a Contract File to be missing or defective in any
material respect, the Master Servicer or such Subservicer shall promptly so
notify the Trustee, the Certificate Insurer and the Transferor in writing, and
the Master Servicer shall add such item to the exceptions list. The Transferor
shall use best efforts to cure each such omission or defect on the exceptions
list. If the Transferor does not correct or cure any such omission or defect
within sixty (60) days from the date the Trustee was notified of such omission
or defect, then the Transferor shall promptly accept a retransfer of the related
Contract from the Trustee. The Retransfer Amount for the retransferred Contract
shall be delivered by the Transferor to the Trustee for deposit in the
Collection Account and upon receipt of the Retransfer Amount by the Trustee and
its receipt of written notice thereof, the Trustee shall cause the Custodian to
release to the Transferor the related Contract File and the Trustee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be reasonably necessary to vest in the Transferor or
its designee any Contract released pursuant hereto. It is understood and agreed
that the obligation of the Transferor to accept a retransfer of any Contract as
to which a material defect in or omission of a constituent document exists shall
constitute the sole remedy respecting such defect or omission available to
Certificateholders or the Trustee on behalf of Certificateholders.
Section 2.03. Representations, Warranties and Covenants of the Master
Servicer and the Transferor. (a) The Master Servicer hereby represents, warrants
and covenants to the Trustee and the Certificate Insurer that as of the Closing
Date and each Subsequent Transfer Date:
(i) the Master Servicer is duly organized, validly existing and in
good standing under the laws of the state of its organization and is
qualified to transact business in and is in good standing under the laws
of each state in which it is necessary for it to be so qualified in order
to carry on its business as now being conducted and has all licenses
necessary to carry on its business as now being conducted; the Master
Servicer has the full power and authority to own its property, to carry on
its business as presently
24
conducted, and to execute, deliver and perform each of the Transaction
Documents to which it is a party; the execution, delivery and performance
of each of the Transaction Documents to which it is a party (including all
instruments of transfer to be delivered pursuant to any such Transaction
Documents to which it is a party) by the Master Servicer and the
consummation of the transactions contemplated hereby and thereby have been
duly and validly authorized; each of the Transaction Documents to which it
is a party evidences the valid, binding and enforceable obligation of the
Master Servicer (subject to applicable bankruptcy and insolvency laws and
other similar laws affecting the enforcement of creditors' rights
generally and to general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law) and all
requisite partnership action has been taken by the Master Servicer to make
each of the Transaction Documents to which it is a party valid and binding
upon the Master Servicer (subject as aforesaid in the preceding clause);
(ii) the Master Servicer is not required to obtain the consent of
any other party or obtain the consent, license, approval or authorization
of, or make any registration or declaration with, any governmental
authority, bureau or agency in connection with the execution, delivery,
performance, validity or enforceability of each of the Transaction
Documents to which it is a party;
(iii) the consummation of the transactions contemplated by the
Transaction Documents will not result in the breach of any term or
provision of the partnership agreement of the Master Servicer or result in
the breach of any term or provision of, or conflict with or constitute a
default (with or without notice, lapse of time or both) under or result in
the acceleration of any obligation under, any agreement, indenture or loan
or credit agreement or other instrument to which the Master Servicer or
its property is subject, or result in the creation or imposition of any
Lien upon any of the properties pursuant to the terms of any such
agreement indenture or loan or credit agreement or other instrument (aside
from the lien created pursuant to this Agreement) or result in the
violation of any law, rule, regulation, order, judgment or decree to which
the Master Servicer or its property or the Contracts are subject;
(iv) the Master Servicer is not a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or subject to
or in violation of any statute, order or regulation of any court,
regulatory body, administrative agency or governmental body having
jurisdiction over it, which materially and adversely affects, or may in
the future materially and adversely affect, the ability of the Master
Servicer to perform its obligations under this Agreement or the interest
of the Certificateholders, the Trust or the Certificate Insurer in any
material respect;
(v) there are no actions, suits, proceedings or investigations
pending or, to the Master Servicer's knowledge, threatened against the
Master Servicer, before any court, regulatory body, administrative agency
or other tribunal or governmental instrumentality (A) asserting the
invalidity of this Agreement or any of the Transaction Documents, (B)
25
seeking to prevent the issuance of the Certificates or the consummation of
any of the transactions contemplated by the Transaction Documents, (C)
seeking any determination or ruling that might materially and adversely
affect the performance by the Master Servicer of its obligations under, or
the validity or enforceability of, this Agreement or any of the
Transaction Documents, (D) involving the Master Servicer and which might
adversely affect the federal income tax or other federal, state or local
tax attributes of the Certificates, or (E) that could have a material
adverse effect on the Contracts. To the Master Servicer's knowledge, there
are no proceedings or investigations pending or threatened against the
Master Servicer, before any court, regulatory body, administrative agency
or other tribunal or governmental instrumentality having jurisdiction over
the Master Servicer or its properties relating to the Master Servicer
which might adversely affect the federal income tax or other federal,
state or local tax attributes of the Certificates;
(vi) the chief executive office of the Master Servicer is located at
One Park Place, 000 XX 00xx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000; and
(vii) the Subservicing Agreement is enforceable against the Master
Servicer and has been duly authorized by all necessary corporate action of
the Master Servicer and has been duly executed and delivered by the Master
Servicer.
It is understood and agreed that the representations and warranties set
forth in this Section 2.03(a) shall survive delivery of the respective Contract
Files to the Custodian and the Subservicers, if any, on behalf of the Trustee
and shall survive as long as any Certificate shall be outstanding or this
Agreement has not been terminated. Upon discovery by the Transferor, the Master
Servicer or a Responsible Officer of the Trustee of a breach of any of the
representations and warranties set forth in this Section 2.03(a) which
materially and adversely affects the interests of the Certificateholders or the
Certificate Insurer in any Contract, the party discovering such breach shall
give prompt written notice thereof to the other parties and to the Certificate
Insurer. In addition to the foregoing, the Master Servicer shall indemnify the
Transferor, the Trustee, the Certificate Insurer, the Trust and the
Certificateholders against all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel, which may be
asserted against or incurred by any of them as a result of third party claims
arising out of the events or facts giving rise to a breach of the covenants or
representations and warranties set forth in Section 2.03(a).
(b) The Transferor hereby represents, warrants and covenants to the
Trustee, the Certificate Insurer and the Master Servicer that as of the Closing
Date and each Subsequent Transfer Date:
(i) the Transferor is a Delaware business trust duly organized,
validly existing, and in good standing under the laws of the State of
Delaware and has all licenses and approvals necessary to carry on its
business as now being conducted and shall appoint and employ agents or
attorneys in each jurisdiction where it shall be
26
necessary to take action under this Agreement and the other Transaction
Documents; the Transferor has the full power and authority to own its
property, to carry on its business as presently conducted, and to execute,
deliver and perform this Agreement (including all instruments of transfer
to be delivered pursuant to this Agreement) and the other Transaction
Documents by the Transferor and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized;
this Agreement evidences the valid, binding and enforceable obligations of
the Transferor (subject to applicable bankruptcy and insolvency laws and
other similar laws affecting the enforcement of creditors' rights
generally whether enforcement is sought in a proceeding in equity or at
law); and all requisite action has been taken by the Transferor to make
this Agreement and the other Transaction Documents valid and binding upon
the Transferor (subject as aforesaid in the preceding clause);
(ii) the Transferor is not required to obtain the consent of any
other party or obtain the consent, license, approval or authorization of,
or make any registration or declaration with, any governmental authority,
bureau or agency in connection with the execution, delivery, performance,
validity or enforceability of this Agreement or any other Transaction
Documents;
(iii) the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents will not result in the
breach of any term or provision of the trust agreement of the Transferor
or result in the breach of any term or provision of, or conflict with or
constitute a default (with or without notice, lapse of time or both) under
or result in the acceleration of any obligation under, any agreement,
indenture or loan or credit agreement or other instrument to which the
Transferor or its property is subject or result in the creation or
imposition of any Lien upon any of its properties pursuant to the terms of
any such agreement, indenture or loan or credit agreement or other
instruments (aside from the lien created pursuant to this Agreement), or
result in the violation of any law (including, without limitation, any
bulk transfer or similar law), rule, regulation, order, judgment or decree
to which the Transferor or its property or the Contracts are subject;
(iv) no statement, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transaction
contemplated hereby contains or will, when furnished, contain any untrue
statement of a material fact or omits or will, when furnished, omit to
state a material fact necessary to make the statements contained therein
not misleading, in light of the circumstances under which they were made;
(v) neither the Transferor nor any of its subsidiaries or affiliates
is a party to, bound by or in breach or violation of any indenture or
other agreement or instrument, or subject to or in violation of any
statute, order or regulation of any court, regulatory body, administrative
agency or governmental body having jurisdiction over it, which materially
and adversely affects, or may in the future materially and adversely
affect, the
27
ability of the Transferor to perform its obligations under this Agreement
or any other Transaction Document;
(vi) this Agreement and each Transfer Agreement, when duly executed
and delivered, shall effect a valid sale, transfer and assignment of the
Contracts and the remaining Trust Estate, enforceable against the
Transferor and creditors of and purchasers from the Transferor;
(vii) there are no proceedings or investigations pending or, to the
Transferor's knowledge, threatened against the Transferor or NAFCO, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality having jurisdiction over the Transferor or
its properties (a) asserting the invalidity of this Agreement or any of
the Transaction Documents, (b) seeking to prevent the issuance of the
Certificates or the consummation of any of the transactions contemplated
by this Agreement or any of the Transaction Documents, (c) seeking any
determination or ruling that might materially and adversely affect the
performance by the Transferor of its obligations under, or the validity or
enforceability of, this Agreement or any of the Transaction Documents, (d)
involving the Transferor and which might adversely affect the federal
income tax or other federal, state or local tax attributes of the
Certificates, or (e) that could have a material adverse effect on the
Contracts.
(viii) the Transferor has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
non-governmental persons, in each case, in connection with the execution
and delivery of this Agreement and the other Transaction Documents, and
the consummation of all the transactions herein and therein contemplated;
(ix) the Transferor shall not take any action to impair the
Trustee's rights on behalf of the Certificateholder and the Certificate
Insurer in any Contract;
(x) the Transferor has filed all federal, state, county, local and
foreign income, franchise and other tax returns required to be filed by it
through the date hereof, and has paid all taxes reflected as due thereon;
(xi) since the date of its organization, the Transferor has
maintained its chief executive office in the State of Florida or the State
of Delaware, and there have been no other locations of the Transferor's
chief executive office during the four (4) months preceding the Closing
Date;
(xii) Transferor is solvent and will not become insolvent after
giving effect to the transactions contemplated hereunder; Transferor is
paying its debts as they become due; Transferor, after giving effect to
the contemplated transactions, will have adequate capital to conduct its
business;
28
(xiii) since February 1995, "National Financial Auto Funding Trust"
is the only trade name under which the Transferor has operated its
business and, prior to such date, NAFCO Funding Trust was the only trade
name under which the Transferor operated its business;
(xiv) the Transferor shall not engage in any business or activity
other than in connection with or relating to the purchase of auto loan
receivables and the issuance of securities secured by, or evidencing
beneficial interests in, such auto loan receivables;
(xv) the Transferor is not and shall not be involved in the
day-to-day or other management of its parent or any of its affiliates;
(xvi) the Transferor's financial statements shall reflect its
separate legal existence from any of its affiliates;
(xvii) the Transferor shall maintain records and books of account of
the Transferor and shall not commingle such records and books of account
with the records and books of account of any Person;
(xviii) the Transferor shall act solely in its own name and through
the duly authorized trustees or agents in the conduct of its business, and
shall conduct its business so as not to mislead others as to the identity
of the entity with which they are concerned;
(xix) at all times, except in the case of a temporary vacancy, which
shall promptly be filled, the Transferor shall have at least one trustee
who qualifies as an "Independent Trustee" as such term is defined in the
Transferor Trust Agreement as in effect on the date hereof;
(xx) the Transferor shall execute and deliver the Registration
Rights Agreement as soon as practicable after the Closing Date and in any
event no later than November 27, 1995. Pursuant to such Registration
Rights Agreement the initial Certificateholders can require the Transferor
to register the Certificates on a Form S-3 registration statement under
the Securities Act, and the Transferor will undertake in the Registration
Rights Agreement to use its best efforts to have such Form S-3
registration statement declared effective by the Securities and Exchange
Commission on or prior to 120 days following the Closing Date. In the
event such a registration statement is not declared effective by such date
the Certificate Rate shall increase by 25 basis points (0.25%) and
interest on the Certificates will commence accruing at such increased
Certificate Rate as of the Distribution Date next succeeding expiration of
such 120 days period.
The Transferor shall indemnify the Trustee, the Certificate Insurer, the
Master Servicer, and each Certificateholder and hold each of them harmless
against any and all damages (including all expenses and legal fees) resulting
from a breach of the representations and warranties set forth in this Section
2.03(b).
29
(c) The Transferor hereby represents and warrants to the Trustee on
behalf of the Certificateholders and the Certificate Insurer as of the Closing
Date with respect to the Initial Contracts transferred to the Trust on the
Closing Date and as of each Subsequent Transfer Date with respect to the
Additional Contracts transferred to the Trust on such Subsequent Transfer Date
(unless another date or time period is otherwise specified or indicated in the
particular representation or warranty):
(i) immediately prior to the Closing Date or the Subsequent Transfer
Date, at the case may be, the Transferor had a valid and enforceable
security interest in the related Financed Vehicle, and such security
interest had been duly perfected and was prior to all other present and
future liens and security interests (except future tax liens and liens
that, by statute, may be granted priority over previously perfected
security interests) that now exist or may hereafter arise, and the
Transferor had the full right to assign such security interest to the
Trustee;
(ii) on and after the Closing Date or the Subsequent Transfer Date,
as the case may be, there shall exist under the Contract a valid,
subsisting and enforceable first priority perfected security interest in
the Financed Vehicle securing such Contract (other than, as to the
priority of such security interest, any statutory lien arising by
operation of law after the Closing Date or the Subsequent Transfer Date,
as the case may be, which is prior to such interest) and at such time as
enforcement of such security interest is sought there shall exist a valid,
subsisting and enforceable first priority perfected security interest in
such Financed Vehicle in favor of the Trustee (other than, as to the
priority of such security interest, any statutory lien arising by
operation of law after the Closing Date or the Subsequent Transfer Date,
as the case may be, which is prior to such interest);
(iii) no Contract has been sold, assigned or pledged to any other
Person other than an endorsement to the Master Servicer for purposes of
servicing or any such pledge has been released; immediately prior to the
transfer and assignment herein contemplated, the Transferor has good and
marketable title thereto free and clear of any lien, encumbrance, equity,
pledge, charge, claim or security interest and is the sole owner thereof
and has full right to transfer such Contract to the Trustee. No Dealer has
a participation in, or other right to receive, proceeds of any Contract.
None of NAFCO, the Master Trust nor the Transferor has taken any action to
convey any right to any Person that would result in such Person having a
right to payments received under the related insurance policies or Dealer
Agreements or to payments due under such Contract;
(iv) upon the transfers pursuant to Section 2.01, the Trustee will
have a first priority ownership or security interest in each such Contract
free and clear of any encumbrance, lien, pledge, charge, claim, security
interest or rights of others; the purchase of each such Contract by NAFCO
from a Dealer was not an extension of financing to such Dealer;
30
(v) no such Contract is delinquent for more than thirty days in
payment as to any scheduled payment;
(vi) there is no lien against any related Financed Vehicle for
delinquent taxes;
(vii) there is no right of rescission, offset, defense or
counterclaim to the obligation of the related Obligor to pay the unpaid
principal or interest due under such Contract; the operation of the terms
of such Contract or the exercise of any right thereunder will not render
such Contract unenforceable in whole or in part or subject to any right of
rescission, offset, defense or counterclaim, and no such right of
rescission, offset, defense or counterclaim has been asserted;
(viii) no Contract is assumable by another Person in a manner which
would release the Obligor thereon from such Obligor's obligations to the
Transferor with respect to such Contract;
(ix) there are no prior liens or claims for work, labor or material
affecting any related Financed Vehicle which are or may become a lien
prior to or equal with the security interest granted by such Contract;
(x) each such Contract, and the sale of the Financed Vehicle
securing such Contract, where applicable, complied, at the time it was
made and as of the Closing Date or related Subsequent Transfer Date, as
applicable, in all material respects with applicable state and federal
laws (and regulations thereunder), including, without limitation, usury,
disclosure and consumer protection laws, equal credit opportunity, fair
credit reporting, truth-in-lending or other similar law, the Federal Trade
Commission Act, and applicable state laws regulating retail installment
sales contracts and loans in general and motor vehicle retail installment
sales contracts and loans in particular, and the transfer of such Contract
to the Trust will not violate any such laws;
(xi) each such Contract is a legal, valid and binding obligation of
the Obligor thereunder and is enforceable in accordance with its terms,
except only as such enforcement may be limited by laws affecting the
enforcement of creditors' rights generally whether enforcement is sought
in a proceeding in equity or at law, and all parties to such Contract had
full legal capacity to execute such Contract and all documents related
thereto and to grant the security interest purported to be granted thereby
at the time of execution and grant;
(xii) as of the Closing Date or such Subsequent Transfer Date, as
the case may be, the terms of each such Contract have not been impaired,
waived, altered or modified in any respect, except by written instruments
that are part of the Contract Documents, and no such Contract has been
satisfied, subordinated or rescinded;
31
(xiii) at the time of origination of each such Contract, the
proceeds of such Contract were fully disbursed, there is no requirement
for future advances thereunder, and all fees and expenses in connection
with the origination of such Contract have been paid;
(xiv) there is no default, breach, violation or event of
acceleration existing under any such Contract (except payment
delinquencies permitted by subparagraph (v) above) and no event which,
with the passage of time or with notice or with both, would constitute a
default, breach, violation or event of acceleration under any such
Contract or would otherwise affect the value or marketability of such
contract; neither NAFCO nor the Transferor has waived any such default,
breach, violation or event of acceleration; and as of the applicable
Cut-Off Date, the related Financed Vehicle has not been repossessed;
(xv) at the origination date of each such Contract, the related
Financed Vehicle was covered by a comprehensive and collision insurance
policy (i) in an amount at least equal to the lesser of (a) the actual
cash value of the related Financed Vehicle or (b) the unpaid balance owing
of such Contract, less the related Unearned Finance Charge, (ii) naming
NAFCO as a loss payee and (iii) insuring against loss and damage due to
fire, theft, transportation, collision and other risks generally covered
by comprehensive and collision coverage; each Contract requires the
Obligor to maintain physical loss and damage insurance, naming NAFCO as an
additional insured party;
(xvi) each such Contract was acquired by NAFCO from a Dealer with
which it ordinarily does business; such Dealer had full right to assign to
NAFCO such Contract and the security interest in the related Financed
Vehicle and the Dealer's assignment thereof to NAFCO is legal, valid and
binding and NAFCO had full right to assign to the Transferor such Contract
and the security interest in the related Financed Vehicle and NAFCO's
assignment thereof to the Transferor is legal, valid and binding;
(xvii) each such Contract contains customary and enforceable
provisions such as to render the rights and remedies of the holder thereof
adequate for the realization against the related Financed Vehicle of the
benefits of the security;
(xiii) scheduled payments under each such Contract are due monthly
(or, in the case of the first payment, no later than the forty-fifth day
after the date of the Contract) in substantially equal amounts to
maturity, and will be sufficient to fully amortize such Contract at
maturity, assuming that each scheduled payment is made on its Due Date;
such scheduled payments are applicable only to payment of principal and
interest on such Contract and not to the payment of any insurance premiums
(although the proceeds of the extension of credit on such Contract may
have been used to pay insurance premiums); and the original term to
maturity of each such Contract was not more than 60 months;
32
(xix) the collection practices used with respect to each such
Contract have been in all material respects legal, proper, prudent and
customary in the automobile installment sales contract or installment loan
servicing business;
(xx) there is only one original of each such Contract, the Master
Servicer or a Subservicer is currently in possession of the Contract
Documents for such Contract and there are no custodial agreements in
effect adversely affecting the rights of the Transferor to make the
deliveries required hereunder on the Closing Date or the Subsequent
Transfer Date, as the case may be;
(xxi) as of the Cut-off Date or Subsequent Cut-off Date, as
applicable, no Obligor was the subject of a current bankruptcy proceeding;
(xxii) with respect to each Due Period, the aggregate of the
interest due on all the Contracts in such Due Period from scheduled
payments is in excess of the sum of (i) the Master Servicing Fee due and
any fees due to the Trustee and the Certificate Insurer, each with respect
to such Due Period and (ii) the amount of interest payable on the
Certificates with respect to such Due Period, in each case assuming that
each scheduled payment is made on its Due Date;
(xxiii) the Contracts constitute "chattel paper" within the meaning
of the UCC as in effect in the applicable jurisdiction and all filings
(including without limitation, UCC filings) required to be made and all
actions required to be taken or performed by any Person in any
jurisdiction to give the Trustee a first priority perfected lien on, or
ownership interest in, the Contracts and the proceeds thereof and the
remaining Trust Estate have been made, taken or performed;
(xxiv) the information regarding such Contracts set forth in the
applicable Contract Schedule is true and correct in all material respects
at the applicable Cut-off Date and the Closing Date or Subsequent Closing
Date, as applicable; each Contract was originated in the United States of
America and at the time of origination, materially conformed to all
requirements of the NAFCO underwriting policies and guidelines then in
effect; and no Obligor is the United States of America or any state or any
agency, department, subdivision or instrumentality thereof;
(xxv) by the Closing Date and prior to each Subsequent Transfer
Date, as applicable, NAFCO will have caused the portions of NAFCO's
servicing records relating to the Contracts to be clearly and
unambiguously marked to show that the Contracts constitute part of the
Trust Estate and are owned by the Trust in accordance with the terms of
this Agreement;
(xxvi) the computer tape or listing made available by NAFCO to the
Trustee on the Closing Date and on each Subsequent Transfer Date was
complete and accurate as
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of the applicable Cut-off Date, and includes a description of the same
Contracts that are described in the applicable Contract Schedule;
(xxvii) no Contract was originated in, or is subject to the laws of,
any jurisdiction the laws of which would make unlawful, void or voidable
the sale, transfer and assignment of such Contract under this Agreement or
the Transfer Agreement, as applicable, or pursuant to transfers of the
Certificates. The Transferor has not entered into any agreement with any
account debtor that prohibits, restricts or conditions the assignment of
any portion of the Contracts;
(xxviii) no selection procedures adverse to the Certificateholders
or to the Certificate Insurer have been utilized in selecting such
Contract from all other similar Contracts originated by NAFCO; and
(xxix) as of the Initial Cut-off Date, the weighted average annual
percentage rate, as such term is used with respect to the Federal
Truth-in-Lending Act ("APR") of the Initial Contracts was approximately
18.32% and the weighted average remaining scheduled maturity on the
Initial Contracts was approximately 50.49 months and the percentage of the
aggregate outstanding balance of the Initial Contracts relating to the
financing of used Financed Vehicles was 60.61%. The final scheduled
payment date on the Initial Contract with the latest maturity is October
7, 2000. Each Contract amortizes based on a Rule of 78s Method, Simple
Interest Method or Actuarial Method; and
(xx) No Contract provides for a prepayment penalty.
The representations and warranties set forth in this Section 2.03(c) shall
survive assignment of the Contracts to the Trustee and shall survive as long as
any Certificate shall be outstanding or this Agreement has not been terminated.
Upon discovery by the Transferor, the Master Servicer, a Responsible Officer of
the Trustee or any Subservicer of a breach of any of the representations and
warranties set forth in this section 2.03(c) which materially and adversely
affects the interests of the Certificateholders or the Certificate Insurer in
the related Contract, the party discovering such breach shall give prompt
written notice thereof to the other parties and the Certificate Insurer (any
Subservicer being so obligated under a Subservicing Agreement). In addition,
with respect to any Contract in respect of which the Title Document was being
applied for on the Closing Date or the related Subsequent Transfer Date, as
applicable, if such Title Document has not been received by the Master Servicer
within 180 days after the Closing Date or such Subsequent Transfer Date, as
applicable, the Master Servicer shall give the Trustee, the Certificate Insurer
and Transferor written notice of such fact. If the Transferor does not correct
or cure such breach (including delivery of such Title Document, if applicable)
by the Reporting Date occurring during the second full calendar month following
the calendar month in which the Trustee was notified or the Transferor, Master
Servicer or Subservicer became aware, if earlier, of such breach (including
failure to deliver such Title Document), then the Transferor shall promptly
accept a retransfer of such Contract from the Trust. Any such retransfer by the
Transferor shall be in exchange for the delivery by the Transferor to the Trust
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of the Retransfer Amount and shall be accomplished in the manner set forth in
Section 2.02. Except as expressly provided in Section 6.03, it is understood and
agreed that the obligation of the Transferor to accept a retransfer of any
Contract as to which such a breach has occurred and is continuing as described
above shall constitute the sole remedy respecting such breach available to the
Master Servicer, Certificateholders, the Certificate Insurer or the Trustee on
behalf of Certificateholders.
In addition to the foregoing and notwithstanding whether the related
Contract shall have been purchased by the Transferor or NAFCO, the Transferor
shall indemnify the Trustee, the Certificate Insurer and the Certificateholders
against all costs, expenses, losses, damages, claims and liabilities, including
reasonable fees and expenses of counsel, which may be asserted against or
incurred by any of them as a result of third party claims arising out of the
events or facts giving rise to a breach of the representations and warranties
set forth in Section 2.03(c))(vii) and (x).
Section 2.04. Execution and Authentication of Certificates. The Trustee
acknowledges the assignment to it of the Initial Contracts and the remainder of
the Trust Estate, on behalf of the Certificateholders and the Certificate
Insurer, and, concurrently with such delivery, has caused to be authenticated
and delivered to or upon the order of the Transferor, in exchange for the
Initial Contracts and the remainder of the Trust Estate, Certificates in
authorized denominations evidencing an undivided interest in the entire Trust
Estate.
Section 2.05. Restriction on Transfer of Transferor Interest. The
Transferor and any subsequent transferee under this Section 2.05 may not and
shall not transfer or assign the Transferor Interest unless (i) the Transferor
shall have given each Rating Agency, the Certificate Insurer and the Trustee
prior written notice of such proposed transfer, (ii) the Certificate Insurer
shall have consented in writing thereto (or, if a Certificate Insurer Default
shall have occurred and be continuing, each Rating Agency shall have notified
the Transferor and the Trustee that such proposed transfer will not result in
the downgrading or withdrawal of the rating then assigned by such Rating Agency
to the Certificates) and (iii) the Transferor shall have delivered to the
Trustee and the Certificate Insurer a ruling of the Internal Revenue Service or
an Opinion of Counsel, which, in either case, shall be to the effect that the
proposed transfer (A) will not result in the arrangement contemplated by this
Agreement being treated as an association taxable as a corporation under the
Internal Revenue Code and (B) will not have an adverse effect on the federal
income taxation of the Trust or the Certificateholders. Further, no transfer of
the Transferor Interest or any interest therein shall be made unless the
transferee thereof shall have given the Trustee a written certification that
such transferee is not, and is not purchasing such Transferor Interest or any
interest therein directly or indirectly on behalf of, (i) an employee benefit
plan or other retirement arrangement, Individual Retirement Account or Xxxxx
Plan subject to either Title I of ERISA or Section 4975 of the Code (each, a
"Plan"), or an entity whose assets are deemed to include Plan assets as a result
of a Plan's investment in such entity (each, a "Plan Entity") or (ii) a "Party
in Interest" or "Disqualified Person," as defined in Section 3(14) of ERISA and
Section 4975 of the Code, respectively, with respect to a Plan or
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a Plan Entity that holds any security of the Transferor or the Trust or an
affiliate of any such "Party in Interest" or "Disqualified Person."
Section 2.06. Transfers of Additional Contracts. (a) During the Revolving
Period, upon the Transferor's written direction to the Trustee and the Master
Servicer from time to time (but not more often than once during each calendar
month or as more frequently consented to in writing by the Certificate Insurer)
and subject to the terms and conditions hereof, amounts on deposit in the
Revolving Account shall be transferred to the Transferor pursuant to Section
3.13(b) in exchange for the transfer and assignment of Additional Contracts and
related Trust Estate to the Trust. In addition, during the Pre-Funding Period,
upon the Transferor's written direction to the Trustee and the Master Servicer
from time to time (but not more often than once each calendar month or as more
frequently consented to in writing by the Certificate Insurer) and subject to
the terms and conditions hereof, amounts on deposit in the Pre-Funding Account
shall be transferred to the Transferor pursuant to Section 3.14(b) in exchange
for the transfer and assignment of Additional Contracts and related Trust Estate
to the Trust. Not later than 10 days prior to each Subsequent Transfer Date, the
Transferor shall give the Trustee, the Rating Agencies, the Certificate Insurer
and the Master Servicer written notice of the proposed transfer and assignment
of Additional Contracts to the Trust on such Subsequent Transfer Date,
specifying the aggregate Individual Sold Balances of the Additional Contracts to
be transferred and assigned to the Trust on such Subsequent Transfer Date as of
the applicable Cut-off Date. On the related Subsequent Transfer Date, the Trust
will release funds in the Revolving Account and/or the Pre-Funding Account, as
specified in the Transferor's written direction to the Trustee and the Master
Servicer, to the Transferor in an amount equal to the product of (i) the
Additional Contract Transfer Percentage and (ii) the aggregate Individual Sold
Balance of the Additional Contracts so transferred as of the related Subsequent
Cut-Off Date, and the Transferor will transfer and assign to the Trust, without
recourse, the Transferor's entire right, title and interest in and to such
Additional Contracts and related Trust Estate pursuant to the related Transfer
Agreement.
(b) Any transfer of Additional Contracts and related Trust Estate to
the Trust on a Subsequent Transfer Date shall be subject to the following
conditions:
(i) the representations and warranties made by the Master Servicer
and the Transferor in Sections, 2.01(e), 2.03(a) and 2.03(b) shall be true
and correct on and as of such Subsequent Transfer Date and the
representations and warranties made by the Transferor in Section 2.03(c)
with respect to each such Additional Contract being transferred to the
Trust on such Subsequent Transfer Date shall be true and correct on and as
of such Subsequent Transfer Date and the representations and warranties
made by NAFCO in Section 4.1 of the Purchase Agreement shall be true and
correct on and as of such Subsequent Transfer Date;
(ii) no Amortization Event shall have occurred and be continuing on
and as of such Subsequent Transfer Date;
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(iii) the Contracts then in the Trust, together with the Additional
Contracts to be transferred to the Trust on such Subsequent Transfer Date,
shall meet the following criteria (computed based on the characteristics
of the Initial Contracts as of the Initial-Cut-off Date and the
characteristics of any Additional Contracts as of the applicable
Subsequent Cut-off Date): (A) the weighed average Contract Rate of the
Contracts shall not be less than 18.0%, (B) the weighted average remaining
term of the Contracts shall not be greater than 55 months, and (C) not
more than 70% of the aggregate Outstanding Principal Balance Contracts
shall represent loans to finance the purchase of used Financed Vehicles
and (D) the final scheduled payment date on the Contract with the latest
maturity shall not be later than April 30, 2001;
(iv) the Transferor shall have delivered the Contract Schedule for
the Additional Contracts to be transferred to the Trust on such Subsequent
Transfer Date to each Rating Agency and the Certificate Insurer at least
three Business Days prior to such Subsequent Transfer Date, and the
Trustee and the Certificate Insurer shall have received, prior to 10:00
a.m., New York City time, on such Subsequent Transfer Date, written notice
from each Rating Agency to the effect that such transfer will result in
the downgrade or withdrawal of the rating then assigned by such Rating
Agency to the Certificates;
i (v) the Certificate Insurer (so long as a Certificate Insurer
Default shall not have occurred and be continuing) shall, in its sole and
absolute discretion, have given its prior written approval to the transfer
of such Additional Contracts to the Trust and shall have received an
executed Transfer Agreement; and
(vi) on or before such Subsequent Transfer Date, the Transferor
shall deliver to the Trustee (with copies to the Certificate Insurer) (A)
an Officer's Certificate of NAFCO substantially in the form attached
hereto as Exhibit 2.06A, (B) an Officer's certificate of the Transferor
substantially in the form attached hereto as Exhibit 2.06B, (C) a Transfer
Agreement executed by the Transferor and including, as an attachment
thereto, a Contract Schedule identifying the Additional Contracts being
transferred and assigned to the Trust on such Subsequent Transfer Date.
(vii) on or before such Subsequent Transfer Date, the Transferor
shall have provided any information reasonably requested by the Rating
Agencies, the Certificate Insurer or the Trustee with respect to such
Additional Contracts.
(c) Within ten Business Days after the later of the last day of the
Pre-Funding Period and the last day of the Revolving Period, the Transferor
shall, at its cost and expense, cause KPMG Peat Marwick or such other nationally
recognized firm of public accountants as may be acceptable to the Certificate
Insurer to deliver to the Certificate Insurer a report covering the Contracts
then in the Trust and addressing such procedures as the Transferor and the
Certificate Insurer may agree upon.
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ARTICLE III
Administration and Servicing of Contracts;
Establishment and Administration of Accounts
Section 3.01. Master Servicer to Act as Servicer.
(a) The Master Servicer shall service and administer the Contracts on
behalf of the Trust and shall have full power and authority, acting alone and/or
through Subservicers as provided in Section 3.02, to do any and all things which
it may deem necessary or desirable in connection with such servicing and
administration and which are consistent with this Agreement. Consistent with the
terms of this Agreement, the Master Servicer may waive, modify or vary any term
of any Contract or consent to the postponement of strict compliance with any
such term or in any manner, grant indulgence to any Obligor if, in the Master
Servicer's sole determination, which shall be conclusive and binding, such
waiver, modification, postponement or indulgence is not materially adverse to
the Certificateholders or the Certificate Insurer; provided however, that the
Master Servicer may not permit any modification with respect to any Contract
that would change its Contract Rate, defer the payment of any principal or
interest (except to the extent permitted by Section 3.06(a)), reduce the
outstanding principal balance (except for actual payments of principal), or
extend (except to the extent permitted by Section 3.06(a)) the final maturity
date on such Contract. Without limiting the generality of the foregoing, the
Master Servicer in its own name or in the name of the Transferor is hereby
authorized and empowered by the Trustee when the Master Servicer believes it
appropriate in its best judgment to execute and deliver, on behalf of the Trust,
any and all instruments of satisfaction or cancellation, or of partial or full
release or discharge and all other comparable instruments, with respect to the
Contracts and with respect to the Financed Vehicles; provided however, that
notwithstanding the foregoing, the Master Servicer shall not, except pursuant to
an order from a Court of competent jurisdiction, release an Obligor from payment
of any unpaid amount under any Contract or waive the right to collect the unpaid
balance of any Contract from the Obligor, except that the Master Servicer may
forego collection efforts if the amount subject to collection is de minimis and
if it would forego collection in accordance with its customary procedures. If
any Contract contains a "due-on-sale" provision allowing the holder thereof to
accelerate the Contract upon sale of the Financed Vehicle financed thereunder,
the Master Servicer shall take reasonable steps under the circumstances to
enforce such due on sale provision if a Financed Vehicle is sold as soon as
practicable after determining that such Financed Vehicle has been sold; provided
however, that the Master Servicer shall not be obligated to take any legal
action to enforce such provision.
(b) The Master Servicer shall service and administer the Contracts by
employing procedures (including collection procedures) and a degree of care
consistent with prudent industry standards and as are customarily employed by
servicers in servicing and administering motor vehicle retail installment sales
contracts and notes comparable to the Contracts. The Master Servicer shall take
all actions (other than those required to be taken by the Transferor pursuant to
this Agreement) that are necessary or desirable to maintain continuous
perfection and
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first priority of security interests granted by the obligors in the Financed
Vehicles to NAFCO and to maintain continuous perfection of the security release
created by each Contract in the related Finance Vehicle on behalf of the
Trustee, including, but not limited to, using reasonable efforts to obtain
execution by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all Title Documents (it being understood that
Title Documents have not been and need not be endorsed or delivered to the
Trustee and do not and need not identify the Trustee as the secured party or
lienholder with respect to the Contracts), security agreements, financing
statements, continuation statements or other instruments as are necessary to
maintain the security interests granted by the Obligors under the respective
Contracts on behalf of the Trustee; provided however, that the Master Servicer
is not required to expend any of its own funds to remove any security interest,
lien or other encumbrance on any Financed Vehicle. The Master Servicer shall not
take any action to impair the Trust's rights in any Contract, except to the
extent allowed pursuant to this Agreement or required by law. The Financed
Vehicle securing each Contract shall not be released in whole or in part from
the security interest granted by the Contract, except upon payment in full of
the Contract or as otherwise contemplated herein. The Master Servicer shall not
extend or otherwise amend the terms of any Contract, except in accordance with
Section 3.01(a). Upon discovery by either the Master Servicer, a Responsible
Officer of the Trustee or any Subservicer of a default by the Master Servicer in
the performance of its obligations under this Section 3.01(b) which materially
and adversely affects the interests of the Certificateholders or the Certificate
Insurer in the related Contract, the party discovering such breach shall give
prompt written notice thereof to the other parties and the Certificate Insurer.
If the Master Servicer does not correct or cure such default by the Reporting
Date occurring during the second full calendar month following the calendar
month in which the Trustee was notified or the Master Servicer, the Trustee or
the Subservicer became aware, if earlier, of such default, then the Master
Servicer shall promptly purchase such Contract from the Trust. Any such purchase
by the Master Servicer shall be in exchange for the delivery by the Master
Servicer to the Trust of the Retransfer Amount and shall be accomplished in the
manner set forth in Section 2.02. Except as expressly provided in Section 6.03
and subject to Section 7.01, it is understood and agreed that the obligation of
the Master Servicer to repurchase any Contract as to which such a default has
occurred and is continuing as described above shall constitute the sole remedy
respecting such default available to the Transferor, Certificateholders, the
Certificate Insurer or the Trustee on behalf of Certificateholders.
(c) So long as a Certificate Insurer Default shall not have occurred and
be continuing, upon the occurrence of an Insurance Agreement Event of Default
pursuant to Section 5.01(b), (c), (d), (e) or (i) of the Insurance Agreement,
the Certificate Insurer may instruct the Trustee and the Master Servicer to take
or cause to be taken such action as may, in the opinion of counsel to the
Certificate Insurer, be necessary to desirable to perfect or re-perfect the
security interests in the Financed Vehicles securing the Contracts in the name
of the Trustee on behalf of the Trust by amending the title documents of such
Financed Vehicles or by such other reasonable means as may, in the opinion of
counsel to the Certificate Insurer, be necessary or prudent. If a Certificate
Insurer Default shall have occurred and be continuing, upon the occurrence of a
Servicer Default, the Trustee and the Master Servicer shall take or cause to be
39
taken such action as may, in the opinion of counsel to the Trustee, be necessary
to perfect or re-perfect the security interests in the Financed Vehicles
securing the Contracts in the name of the Trustee on behalf of the Trust by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Trustee, be necessary
or prudent. NAFCO hereby agrees to pay all expenses related to such perfection
or re-perfection and to take all action necessary therefor. In addition, prior
to the occurrence of an Insurance Agreement Event of Default, the Certificate
Insurer may (unless a Certificate Insurer Default shall have occurred and be
continuing) instruct the Trustee and the Master Servicer to take or cause to be
taken such action as may, in the opinion of counsel to the Certificate Insurer,
be necessary to perfect or re-perfect the security interest in the Financed
Vehicles underlying the Contracts in the name of the Trustee, including by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Certificate Insurer,
be necessary or prudent; provided however, that (unless a Certificate Insurer
Default shall have occurred and be continuing) if the Certificate Insurer
requests that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Master
Servicer or the Trustee in connection with such action shall be reimbursed to
the Master Servicer or the Trustee, as applicable, by the Certificate Insurer.
(d) The Master Servicer may perform any of its duties pursuant to this
Agreement, including those delegated to it by the Trustee pursuant to this
Agreement, through Persons appointed by the Master Servicer. Such Persons may
include affiliates of the Master Servicer and may include the Transferor and its
affiliates. Notwithstanding any such delegation of a duty, the Master Servicer
shall remain obligated and liable for the performance of such duty as if the
Master Servicer were performing such duty.
(e) Upon the execution and delivery of this Agreement, the Master Servicer
shall deliver to the Trustee and the Certificate Insurer a list of officers and
employees of the Master Servicer, upon which the Trustee may conclusively rely,
involved in, or responsible for, the administration and servicing of the
Contracts, which list shall from time to time be updated by the Master Servicer
as additional officers and employees of the Master Servicer become involved, or
responsible for, the administration and servicing of the Contracts or officers
or employees of the Master Servicer previously identified on any such list
become disassociated with the administration and servicing of the Contracts.
(f) The Master Servicer may take such actions as are necessary to
discharge its duties as Master Servicer in accordance with this Agreement,
including the power to execute and deliver on behalf of the Trust such
instruments and documents as may be customary, necessary or desirable in
connection with the performance of the Master Servicer's duties under this
Agreement (including consents, waivers and discharges relating to the Contracts
and the Financed Vehicles and such instruments or documents as may be necessary
to effect foreclosure or other conversion of the ownership of any Financed
Vehicle). In furtherance thereof, the Trustee hereby irrevocably appoints the
Master Servicer as its attorney-in-fact, such appointment being coupled with an
interest, to execute on its behalf such documents or instruments as are
necessary to effect the Repossession of Financed Vehicles, to deliver applicable
Contract
40
Documents, Title Documents and the Contract Files to the Transferor upon the
transfer of a Contract to the Transferor under this Agreement and to deliver
applicable Contract Documents, Title Documents and the Contract Files upon
liquidation or final payment of a Contract. The Trustee, upon receipt of a
certificate of a Servicing Official requesting the same be accepted by the
Trustee and certifying as to the reasons such documents are required, shall
furnish the Master Servicer with any other powers of attorney or other documents
reasonably necessary or appropriate which the Trustee may legally execute to
enable the Master Servicer to carry out its servicing and administrative duties
hereunder. Neither the Master Servicer nor any of its directors, officers,
employees or agents will be under any liability to the Trust, the Trustee, the
Certificate Insurer, any Certificateholder, or the Transferor for the
consequences of any delay resulting from having to obtain such documents from
the Trustee, provided that the Master Servicer furnished such certificate to the
Trustee reasonably promptly after determining the necessity therefor in the
particular instance.
(g) The Master Servicer warrants, represents and covenants to and with the
Trustee that recordation of the name of the Master Servicer as lienholder in
Title Documents respecting any Financed Vehicle is maintained by the Master
Servicer as agent for the Trust and that the Master Servicer has no equitable
ownership in the Contracts, except as it may have by virtue of ownership of a
Certificate or an equity interest in the Transferor or any Certificateholder.
The Master Servicer acknowledges that it is holding the Contract Documents
coming into its possession and any other property constituting a part of the
Trust Estate held by it, in trust, for the benefit of the Certificateholders and
the Certificate Insurer.
Section 3.02. Subservicing Agreements between Master Servicer and the
Subservicers. The Master Servicer may enter into Subservicing Agreements with
one or more Subservicers for the servicing and administration of certain of the
Contracts; provided however, that the Master Servicer shall not enter into any
such Subservicing Agreement with any Subservicer other than OFSA, without the
prior written consent of the Certificate Insurer (so long as a Certificate
Insurer Default shall not have occurred and be continuing), which consent shall
not be unreasonably withheld; provided further that the Master Servicer shall
not amend any Subservicing Agreement without (i) with respect to a material
amendment, the consent of the Certificate Insurer and (ii) with respect to all
other amendments, upon five (5) days prior written notice of such amendment.
References in this Agreement to actions taken or to be taken by the Master
Servicer in servicing the Contracts include actions taken or to be taken by a
Subservicer on behalf of the Master Servicer. Each Servicing Agreement shall be
upon such terms and conditions as are not inconsistent with this Agreement and
as the Master Servicer and the Subservicer have agreed. Each Subservicing
Agreement shall require that the related Subservicer acknowledge that it is
holding the Contract Documents for the related Contracts coming into its
possession and any other property constituting a part of the Trust Estate held
by it, in trust, for the benefit of the Certificateholders and the Certificate
Insurer. The Master Servicer and a Subservicer may enter into amendments
thereto; provided however, that any such amendments or different forms shall be
consistent with and not violate the provisions of this Agreement. The Master
Servicer shall notify each Rating Agency, the Trustee and the Certificate
Insurer upon entering into any Subservicing Agreement.
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Section 3.03. Obligations of the Master Servicer. Notwithstanding any
Subservicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Master Servicer or a Subservicer or
reference to actions taken through a Subservicer or otherwise, the Master
Servicer shall remain obligated for the servicing and administering of the
Contracts in accordance with the provisions of Section 3.01 and this Agreement
without diminution of such obligation or liability by virtue of such
Subservicing Agreements or arrangements or by virtue of indemnification from a
Subservicer and to the same extent and under the same terms and conditions as if
the Master Servicer alone were servicing and administering the Contracts. The
Master Servicer shall be entitled to enter into any agreement with a Subservicer
for indemnification of the Master Servicer, and nothing contained in this
Agreement shall be deemed to limit or modify such indemnification.
Section 3.04. No Contractual Relationship between a Subservicer and
Trustee or Certificateholders. Any Subservicing Agreement that may be entered
into and any other transactions or services relating to the Contracts involving
a subservicer in its capacity as such and not as an originator shall be deemed
to be between a Subservicer and the Master Servicer alone and the Trustee, the
Trust, the Certificate Insurer and Certificateholders shall not be deemed
parties thereto and shall have no claims, rights, obligations, duties or
liabilities with respect to a Subservicer except as expressly set forth in
Section 3.05 or in the applicable Subservicing Agreement; provided that, if the
Master Servicer is deemed terminated, the Subservicer may be terminated. Master
Servicer shall promptly provide to the Trustee and the Certificate Insurer any
notice received from a Subservicer.
Section 3.05. Assumption or Termination of Subservicing Agreement by
Trustee. In the event the Master Servicer shall for any reason no longer be the
servicer of the Contracts (including by reason of a Servicer Default), the
Trustee, its designee or any successor Master Servicer will thereupon assume all
of the rights and obligations of the Master Servicer under one or more
Subservicing Agreements that may have been entered into by giving notice of such
assumption to the related Subservicer or Subservicers within ten (10) Business
Days of the termination of the Master Servicer as servicer of the Contracts.
Upon the giving of such notice, the Trustee, its designee or the successor
Master Servicer, shall be deemed to have assumed all of the Master Servicer's
interest therein and to have replaced the Master Servicer as a party to the
Subservicing Agreement to the same extent as if the Subservicing Agreement had
been assigned to the assuming party except that the Master Servicer and the
Subservicer, if any, shall not thereby be relieved of any accrued liability or
obligations under the Subservicing Agreement and the Subservicer, if any, shall
not be relieved of any liability or obligation to the Master Servicer that
survives the assignment or termination of the Subservicing Agreement. The
Trustee shall notify each Rating Agency and the Certificate Insurer if any
Subservicing Agreement is assumed by the Trustee, its designee or the successor
Master Servicer.
The Master Servicer shall, upon request of the Trustee but at the expense
of the Master Servicer, deliver to the assuming party all documents and records
relating to the Subservicing Agreement and the Contracts then being serviced and
an accounting of amounts collected and
42
held by it and otherwise use its reasonable efforts to effect the orderly and
efficient transfer of the Subservicing Agreement to the assuming party.
Section 3.06. Collection of Contract Payments. (a) The Master Servicer
shall proceed diligently to collect all payments called for under the terms and
provisions of the Contracts, and shall service the Contracts in a manner
consistent with the servicing standards and procedures generally accepted in the
financial services industry for similar contracts, and as otherwise expressly
provided by this Agreement. Consistent with the foregoing, the Master Servicer
may in its discretion (i) waive any late payment charge and (ii) extend the then
current maturity date of a Contract by two months once during each calendar year
at the request of the related Obligor on account of the Obligor's adverse
financial circumstances that affect the Obligor's ability to make payments under
such Contract; provided however, that the Master Servicer may not so extend the
then current maturity date of Contract more than twice during the life of such
Contract; provided further, that the aggregate number of contracts that have
been so extended during any twelve month period shall not exceed the product of
(i) 3.5% (0.035) and (i) the aggregate number of outstanding Contracts as of the
beginning of such twelve month period.
(b) The Master Servicer shall instruct (or shall cause the Subservicer to
instruct) all Obligors to make all payments due in respect of the Contracts to
the Subservicer Account. The Master Servicer shall, pursuant to the Subservicing
Agreement, cause the Subservicer to use any amounts other than collections in
respect of motor vehicle financing obligations serviced by the Subservicer. The
Master Servicer shall cause the Subservicer to use its best efforts to transfer
to the Collection Account all collected funds on deposit in the Subservicer
Account that constitute part of the Trust Estate within one Business Day, and in
any event within two Business Days of receipt thereof. If the Master Servicer,
the Transferor, NAFCO or any Subservicer receives collections under or other
payments in respect of the Contracts, each such Person shall as soon as
practicable, but no later than two Business Days following receipt of such item
by such Person, cause such payment to be remitted to the Trustee for deposit to
the Collection Account. If the Master Servicer determines that any amount that
is not a part of the Trust Estate has been deposited in any Account, the Master
Servicer shall promptly instruct the Trustee by facsimile (with prompt telephone
confirmation) to segregate such amount, and shall therein direct the Trustee to
turn over such amounts to the Person entitled thereto within two Business Days.
A copy of any such direction shall be delivered by the Master Servicer to the
Certificate Insurer.
(c) The Master Servicer shall cause OFSA to maintain the Subservicer
Account or a comparable account, and shall cause any other Subservicer to
maintain an account comparable to the Subservicer Account, to which Obligors
shall have been directed to remit payments in respect of the Contracts. If the
Subservicer Account or any comparable account maintained by a Subservicer is
terminated for any reason prior to the establishment of, and notification to
Obligors to remit payments to, a replacement servicing account comparable to the
Subservicer Account, the Master Servicer shall promptly, and in any event within
30 days of termination of such Subservicer Account or comparable account,
establish a Lockbox Account pursuant to a
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Lockbox Agreement and notify all Obligors to remit payments in respect of the
Contracts to such Lockbox Account.
(d) Notwithstanding any Lockbox Agreement, or any of the provisions of
this Agreement relating to a Lockbox Agreement, a Lockbox Bank or a Lockbox
Account, the Master Servicer shall remain obligated an liable to the Trustee and
the certificateholders for servicing and administering the Contracts and the
rest of the Trust Estate in accordance with the provisions of this Agreement
without diminution of such obligations or liability by virtue thereof.
Section 3.07. Maintenance of Comprehensive and Collision Insurance. The
Master Servicer shall use its reasonable efforts to cause each Obligor to
maintain on the related Financed Vehicle a comprehensive and collision policy
providing coverage at least equal to the lesser of (i) the actual cash value of
such Financed Vehicle and (ii) the unpaid balance owing on the related Contract,
less Unearned Finance Charges; provided however, that the Master Servicer shall
not be obligated to expend its own funds to pay any insurance premiums or obtain
or maintain any such policy. Pursuant to Section 3.06, any amounts collected by
the Master Servicer under any such policies (other than amounts to be applied to
the restoration or repair of the related Financed Vehicles or amounts released
to the Obligor in accordance with the Master Servicer's normal servicing
procedures) shall be deposited in the Collection Account. All policies required
by this paragraph shall be endorsed with clauses providing for loss payable to
the Master Servicer or the related Subservicer and its successors and assigns.
Master Servicer shall maintain and keep in place a vendor's single interest
insurance policy.
Section 3.08. Realization upon Defaulted Contracts. In the event that a
Contract becomes and continues to be a Defaulted Contract, the Master Servicer
shall take all reasonable and lawful steps necessary for Repossession; provided
however, that the Master Servicer shall not be obligated to institute any action
for Repossession through judicial proceedings unless it determines in its good
faith judgment, which determination will be conclusive and binding, that
Insurance Proceeds or Liquidation Proceeds that would be realized in connection
therewith or amounts payable pursuant to the last sentence of this Section 3.08
would be sufficient for the reimbursement in full of its out-of-pocket expenses
pursuant to this Agreement. In connection with such Repossession, the Master
Servicer shall follow such practices and procedures required by Section 3.01 and
make advances of its own funds for any out-of-pocket expenses incurred. The
Master Servicer shall be reimbursed for Liquidation Expenses (including
advances) by retention of the required reimbursement from the first Liquidation
Proceeds or Insurance Proceeds received with respect to such Defaulted Contract.
The Master Servicer shall be entitled to receive the following amounts, which
shall be distributable pursuant to Sections 3.11(b)(i) with respect to any
Contract the Obligor of which has filed bankruptcy or against whom a petition
for involuntary bankruptcy has been filed: a one time fee of $200 in respect of
those Contracts not referred to outside legal counsel, or, in the case of those
Contracts that are so referred, reimbursement of the fees and expenses of
outside legal counsel, if their retention was necessary in the reasonable
judgment of the Master Servicer.
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Section 3.09. Master Servicing and Other Compensation. The Master
Servicer, as compensation for its activities hereunder, shall be entitled to
receive the Master Servicing Fee and amounts, if any, described in Section
3.11(b)(ii). The Master Servicer shall be required to pay all expenses incurred
by it in connection with its servicing activities hereunder (including payment
of the fees and expenses of any Subservicer) and shall not be entitled to
reimbursement therefor except as specifically provided in Sections 3.08, 3.11
and 4.01, 6.03 and 10.01.
Section 3.10. The Collection Account. (a) The Trustee shall establish and
shall thereafter maintain the Collection Account for the Trust. The Collection
Account shall be an Eligible Account. The Collection Account shall be entitled
"Xxxxxx Trust and Savings Bank, as Trustee, for the benefit of registered
holders of National Auto Finance 1995-1 Trust and the Certificate Insurer." The
Trustee shall deposit the following amounts into the Collection Account upon
receipt:
(i) All amounts withdrawn by a Subservicer from the Subservicer
Account and all amounts received by the Master Servicer, the Transferor,
NAFCO or any Subservicer and transferred to the Trustee pursuant to
Section 3.06(b);
(ii) The Retransfer Amount received in respect of any Retransferred
Contracts pursuant to Sections 2.02, 2.03 and 3.01;
(iii) All income and gain from investments of funds in the
Collection Account; and
(iv) All Liquidation Proceeds (net of Liquidation Expenses retained
by the Master Servicer or Subservicer) and other amounts with respect to
the Trust Estate, if any, received from the Transferor, the Master
Servicer or any Subservicer.
(b) No later than each Distribution Date, the Trustee shall, at the
written direction of the Master Servicer, withdraw from the Collection Account
and deposit in the Certificate Account the amount on deposit in the Collection
Account as of the close of business on the related Determination Date and any
amount deposited to the Collection Account in respect of Retransferred Contracts
on or prior to the related Reporting Date and subsequent to the preceding
Reporting Date, less the sum of (i) the Supplemental Servicing Fee collected
with respect to the Contracts on deposit in the Collection Account as of such
Determination Date, (ii) any income and gain on investments of deposits in the
Collection Account as of such Determination Date, (iii) the amount, if any,
required to be transferred by the Trustee from the Collection Account to the
Revolving Account pursuant to the last sentence of this Section 3.10(b) and (iv)
any collection or other amounts deposited to the Collection Account in respect
of Retransferred Contracts other than the related Retransfer Amounts. In
addition, on each Distribution Date, the Trustee shall, at the written direction
of the Master Servicer, withdraw from the Collection Account and shall pay (i)
to the Transferor any income and gain on investments then on deposit in the
Collection Account and all late payment fees then on deposit in the Collection
Account and (ii) to pay to the Transferor with respect to each Contract or
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property acquired in respect thereof that has been retransferred to the
Transferor pursuant to Sections 2.02, 2.03 or 9.01, all amounts received thereon
and not distributed as of, or received after, the date on which the related
Outstanding Principal Balance or Retransfer Amount is determined. On or prior to
the close of business on each Business Day during the Revolving Period and on
the first Business Day thereafter, the Trustee, at the written direction of the
Master Servicer or a Subservicer pursuant to Section 3.17(a), shall withdraw
from the Collection Account and transfer to the Revolving Account all amounts
representing principal collections on the Contracts deposited into the
Collection Account during the previous Business Day.
(c) In the event the Master Servicer, any Subservicer or the Trustee shall
deposit in the Collection Account any amount in error and such amount is not
required to be deposited therein, the Trustee may withdraw at any time, on its
own behalf if the erroneous deposit was made by the Trustee and on behalf of the
Master Servicer or Subservicer if the erroneous deposit was made by the Master
Servicer or Subservicer promptly after receipt of an Officer's Certificate
setting forth the reason for such withdrawal, such amount from the Collection
Account, any provision herein to the contrary notwithstanding.
Section 3.11. The Certificate Account. (a) The Trustee shall establish and
thereafter maintain the Certificate Account for the Trust. The Certificate
Account shall be an Eligible Account. The Certificate Account shall be entitled
"Xxxxxx Trust and Savings Bank, as Trustee, for the benefit of registered
holders of National Auto Finance 1995-1 Trust Automobile Loan Asset-Backed
Certificates, and the Certificate Insurer-Certificate Account." The Trustee
shall deposit the following amounts into the Certificate Account upon receipt:
(i) Amounts received, if any, from the Transferor for deposit in the
Certificate Account;
(ii) Amounts received, if any, from the Master Servicer or any
Subservicer for deposit in the Certificate Account;
(iii) Any withdrawals made from the Pre-Funding Period Reserve
Account or Spread Account for deposit in the Certificate Account pursuant
to Section 3.12(b) or Section 4.04;
(iv) All proceeds of any Contracts or property acquired in respect
thereof, received by the Trustee, pursuant to Section 9.01 or Section
9.02;
(v) All income and gain from investments of funds in the Certificate
Account;
(vi) Any withdrawals made from the Collection Account for deposit in
the Certificate Account pursuant to Section 3.10(b);
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(vii) All amounts received from the Certificate Insurer (A) in
respect of claims made under the Certificate Policy and required to be
deposited therein pursuant to Section 4.04(a) or 4.05 or (B) pursuant to
Section 4.04(e) and required by such Section 4.04(e) to be deposited
therein; and
(viii) Any withdrawal from the Revolving Account or Pre-Funding
Account for deposit in the Certificate Account pursuant to Section 3.13(b)
or Section 3.14(b).
(b) On each Distribution Date, the Trustee shall, at the written direction
of the Master Servicer, make withdrawals from the Certificate Account for the
following purposes:
(i) to make payments as provided in Section 4.01;
(ii) upon the final Distribution Date, to clear and terminate the
Certificate Account pursuant to Section 9.01.
Distributions of amounts withdrawn from the Certificate Account under this
Section 3.11 shall be made in accordance with the priorities set forth in
Section 4.01.
Since, in connection with withdrawals pursuant to subclauses (ii) and
(iii), the Master Servicer's or Transferor's entitlement thereto is limited to
collections or other recoveries on the related Contract, the Master Servicer
shall keep and maintain a separate accounting, on a Contract by Contract basis,
for the purpose of justifying any withdrawal from the Certificate Account
pursuant to such subclauses (ii) and (iii).
(c) In the event the Master Servicer, any Subservicer or the Trustee shall
deposit in the Certificate Account any amount in error and such amount is not
required to be deposited therein, the Trustee may withdraw at any time, on its
own behalf if the erroneous deposit was made by the Trustee and on behalf of the
Master Servicer or Subservicer if the erroneous deposit was made by the Master
Servicer or Subservicer promptly after receipt of an Officer's Certificate
setting forth the reason for such withdrawal, such amount from the Certificate
Account, any provision herein to the contrary notwithstanding.
Section 3.12. Pre-Funding Period Reserve Account. (a) The Trustee shall
establish and thereafter maintain the Pre-Funding Period Reserve Account for the
Trust. The Pre-Funding Period Reserve Account shall be an Eligible Account. The
Pre-Funding Period Reserve Account shall be entitled "Xxxxxx Trust and Savings
Bank", as Trustee, for the benefit of registered holders of National Auto
Finance 1995-1 Trust Automobile Loan Asset-Backed Certificates, and the
Certificate Insurer -- Pre-Funding Period Reserve Account." On the Closing Date,
the Transferor shall deliver to the Trustee for deposit in the Pre-Funding
Period Reserve Account immediately available funds in the amount of $74,766.38.
The Trustee shall deposit the foregoing amount in the Pre-Funding Period Reserve
Account immediately upon its receipt thereof. In addition, on each Distribution
Date during the Pre-Funding Period, the Trustee shall
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deposit into the Pre-Funding Period Reserve Account the amount required to be
deposited therein pursuant to Section 4.01(b). The Trustee also shall deposit
into the Pre-Funding Period Reserve Account any income or gain earned from the
investment of amounts on deposit in the Pre-Funding Period Reserve Account as
received.
(b) On each Distribution Date occurring on or prior to the Distribution
date next Succeeding Termination of the Pre-Funding Period, the Trustee will
withdraw from the Pre-Funding Period Reserve Account and transfer to the
Certificate Account an amount equal to the excess,if any, of (i) the product of
(a) 1/12th, (b) the Certificate Rate and (c) the average daily balance of funds
on deposit in the Pre-Funding Account from and including the preceding
Distribution Date (or, in the case of the first Distribution Date, the Closing
Date) to but not including the current Distribution Date, over (ii) the amount
of interest accrued on Permitted Investments on deposit in the Pre-Funding
Account from and including the preceding Distribution Date (or, in the case of
the first Distribution Date, the Closing Date) to but not including the current
Distribution Date. If after making any required transfer from the Pre-Funding
Period Reserve Account to the Certificate Account on any Distribution Date the
amount of funds on deposit in the Pre-Funding Period Reserve Account exceeds the
Required Reserve Amount, the Trustee shall withdraw such excess amount and
distribute it to the Transferor. On the first Distribution Date related to the
Reporting Date next succeeding termination of the Pre-Funding Period after
payment on the Certificates on such date the Trustee shall withdraw from the
Pre-Funding Period Reserve Account and distribute to the Transferor the balance
of any funds on deposit therein.
Section 3.13. The Revolving Account. (a) The Trustee shall establish and
thereafter maintain the Revolving Account. The Revolving Account shall be a
segregated trust account created and maintained by the Trustee in its corporate
trust department for the benefit of the Certificateholders and the Certificate
Insurer, and shall be an Eligible Account. The Revolving Account shall be
entitled "Xxxxxx Trust and Savings Bank, as Trustee, for the benefit of the
registered holders of National Auto Finance 1995-1 Trust Automobile Loan
Asset-Backed Certificates, and the Certificate Insurer -- Revolving Account." On
each Business Day during the Revolving Period and on the first Business Day
thereafter, the Trustee shall deposit into the Revolving Account the amount
withdrawn by the Trustee from the Collection Account for deposit therein on such
Business Day pursuant to Section 3.10(b). The Trustee also shall deposit into
the Revolving Account any income or gain earned from the investment of amount on
deposit in the Revolving Account as received.
(b) On each Subsequent Transfer Date, upon satisfaction of each of the
conditions set forth in Section 2.06 with respect to the transfer of Additional
Contracts to the Trust on such Subsequent Transfer Date, the Trustee shall
withdraw from the Revolving Account and pay to the Transferor the amount
designated in the Transferor's written direction to the Trustee and the Master
Servicer delivered pursuant to Section 2.06. On each Distribution Date, any
income and gain earned from the investment of amounts on deposit in the
Revolving Account since the previous Distribution Date (or the Closing Date, in
the case of the first Distribution Date) shall be deposited to the Certificate
Account. On the Distribution Date relating to the Reporting Date
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next succeeding the termination of the Revolving Period, the Trustee shall
withdraw from the Revolving Account and deposit in the Certificate Account the
amount on deposit in the Revolving Account as of the close of business on the
first Business Day following the end of the Revolving Period. In addition, the
Trustee shall on or prior to each Distribution Date occurring during the
Revolving Period withdraw from the Revolving Account and deposit in the
Certificate Account the amount, if any, by which the amount on deposit in the
Revolving Account at the close of business on the last day of the preceding
calendar month, less any undistributed income or gain from investments on
deposit therein, exceeds $1,500,000.
Section 3.14. Pre-Funding Account. (a) The Trustee shall establish and
shall thereafter maintain the Pre-Funding Account. The Pre-Funding Account shall
be an Eligible Account. The Pre-Funding Account shall be entitled "Xxxxxx Trust
and Savings Bank, as Trustee, for the benefit of registered holders of National
Auto Trust Automobile Loan Asset-Backed Certificates, and the Certificate
Insurer -- Pre-Funding Account." On the Closing Date, the Transferor shall
deliver $7,747,810.67 to the Trustee for deposit in the Pre-Funding Account and
the Trustee shall deposit such amount therein upon its receipt thereof. The
Trustee also shall deposit into the Pre-Funding Account any income or gain
earned from the investment of amounts on deposit in the Pre-Funding Account as
received.
(b) On each Subsequent Transfer Date, upon satisfaction of each of the
conditions set forth in Section 2.06 with respect to the transfer of Additional
Contracts to the Trust on such Subsequent Transfer Date, the Trustee shall
withdraw from the Pre-Funding Account and pay to the Transferor the amount
designated in the Transferor's written direction to the Trustee and the Master
Servicer delivered pursuant to Section 2.06. On each Distribution Date, any
income and gain earned from the investment of amounts on deposit in the
Pre-Funding Account since the previous Distribution Date (or the Closing Date,
in the case of the first Distribution Date) shall be deposited to the
Certificate Account. On the Distribution Date related to the Reporting Date next
succeeding termination of the Pre-Funding Period, the Trustee shall withdraw
from the Pre-Funding Account and deposit in the Certificate Account the amount
on deposit in the Pre-Funding Account as of the close of business on the last
day of the Pre-Funding Period.
Section 3.15. Administration of Accounts. (a) Funds deposited in the
Accounts other than the Pre-Funding Account and the Revolving Account shall be
invested by the Trustee pursuant to written instructions from the Transferor in
Permitted Investments that mature no later than the Business Day next preceding
the Distribution Date next succeeding the date of such investment (or on such
Distribution Date if such Permitted Investment in an obligation of the
institution maintaining the Account), and no such investment shall be sold prior
to its maturity. Funds deposited in the Pre-Funding Account and the Revolving
Account shall be invested by the Trustee pursuant to written instructions from
the Transferor in Permitted Investments that mature no later than the Business
Day next preceding the earlier of the date on which such funds are expected to
be needed and the Distribution Date next succeeding the date of such investment
(or on such date or such Distribution Date, as the case may be, if such
Permitted Investment is an obligation of the institution maintaining such
Account), and no such investment shall be sold prior to its maturity.
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(b) Any Account Property that is held in deposit accounts shall be held
solely in the name of the Trustee in its trust capacity in an Eligible Account.
Each such deposit account shall be subject to the exclusive custody and control
of the Trustee, and the Trustee shall have sole signature authority with respect
thereto. Any Account Property that constitutes Physical Property shall be
delivered to the Trustee in accordance with paragraph (a) or (b) of the
definition of "Delivery" and shall be held, pending maturity or disposition, in
the State of Illinois solely by the Trustee or shall be held in the State of
Illinois or the State of New York through a financial intermediary or clearing
corporation (as defined and described in paragraph (b) of the definition of
"Delivery") or the clearing corporation's nominee, in each case acting for the
Trustee. Any Account Property that is a book-entry security held through the
Federal Reserve System pursuant to federal book-entry regulations shall be
delivered in accordance with paragraph (c) of the definition of "Delivery" and
shall be maintained by the Trustee, pending maturity or disposition, through
continued book-entry registration of such Account Property as described in such
paragraph. Any Account Property that is an "uncertificated security" (as defined
in Section 8- 102(1)(b) of the UCC) and that is not governed by the third
sentence of this Section 3.15(b) shall be delivered and held in accordance with
paragraph (d) of the definition of "Delivery" and shall be maintained by the
Trustee, pending maturity or disposition. The Trustee, or any agent of the
Trustee acting in the name of and on behalf of the Trustee, shall have absolute
control over each investment of funds in the applicable Account, the income
thereon and the proceeds thereof. The proceeds of an investment at maturity or
upon demand shall be remitted by the issuer thereof or its agent directly to the
Trustee or its agent for deposit in the applicable Account and all earnings on
such investments shall be added to the corpus of the applicable Account and
distributed as provided herein.
(c) Effective upon Delivery of any Account Property in the form of
Physical Property, book-entry securities, or uncertificated securities, the
Trustee shall represent that at the time it submitted the purchase order for
such Account Property a Responsible Officer of the Trustee had no actual notice
of any adverse claim with respect thereto; provided that if a Responsible
Officer of the Trustee has actual notice of an adverse claim prior to submitting
the purchase order, the Trustee shall notify the Transferor and request that the
adverse claim be resolved prior to any such purchase. Additionally, each
instruction as to Permitted Investments to the Trustee from the Transferor shall
be accompanied by a statement from the Transferor to the effect that the
proposed purchase is made in good faith, for value and without any notice of
adverse claim thereto. As used herein, the term "notice" shall have the meaning
ascribed to it in the UCC.
(d) The Trustee shall not enter into any subordination or intercreditor
agreement with respect to the Account Property.
Section 3.16. [Reserved].
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Section 3.17. Reports to the Trustee and the Transferor Certificate
Account Statements; Reports to the Master Servicer, the
Certificate Insurer and Transferor.
(a) Not later than the Reporting Date, the Master Servicer shall forward
to the Collateral Agent, the Trustee, each Rating Agency, the Certificate
Insurer and the Transferor a statement substantially in the form attached hereto
as Exhibit 3.17 (as such form may be modified from time to time by agreement
between the Trustee and Master Servicer with the prior written consent of the
Certificate Insurer), certified by an officer of the Master Servicer. In
addition to the information required by Exhibit 3.17, the Master Servicer shall
include in the copy of such statement delivered to the Certificate Insurer (i)
the Delinquency Ratio, Average Delinquency Ratio, Default Rate, Average Default
Rate, Net Loss Rate and Average Net Loss Rate for such Reporting Date, (ii)
whether any Trigger Event has occurred as of such Reporting Date, (iii) whether
any Trigger Event that may have occurred as of a prior Reporting Date is deemed
cured as of such Reporting Date, and (iv) whether to the knowledge of the Master
Servicer an Insurance Agreement Event of Default has occurred.
(b) On the first Business Day after each Determination Date, the Trustee
shall forward by telecopier to the Master Servicer, the Certificate Insurer and
the Transferor a statement (and shall also mail a Copy to the Master Servicer,
the Certificate Insurer and the Transferor) setting forth the amount, if any, on
deposit in the Collection Account, the Certificate Account, the Pre-Funding
Account, the Revolving Account and the Pre-Funding Reserve Account as of such
Determination Date. Not later than the close of business on the fourth Business
Day prior to each Distribution Date, the Trustee shall forward by telecopier to
the Collateral Agent and the Certificate Insurer a copy of the statement
required to be delivered to Certificateholders on such Distribution Date
pursuant to Section 4.02, prepared assuming that the Certificate Insurer will
not exercise its right under Section 4.04(e). Not later than five days after
each Determination Date, the Trustee shall forward to the Master Servicer, the
Certificate Insurer and the Transferor a statement showing, for the previous
Distribution Date, the aggregate of withdrawals from the Certificate Account for
each category of withdrawal specified in Section 3.11(b) and the withdrawals
from and deposits to the Spread Account.
Section 3.18. Annual Statement as to Compliance; Notice of Servicer
Default. (a) The Master Servicer will deliver to each Rating Agency the Trustee
and the Certificate Insurer on or before April 30 of each year, beginning with
the first April 30 that occurs at least six months after the Initial Cut-off
Date, an Officer's Certificate stating, that (i) a review of the activities of
the Master Servicer during the preceding calendar year and of performance under
this Agreement has been made under such officer's supervision, (ii) to the best
of such officer's knowledge, based on such review, the Master Servicer has
fulfilled all its obligations under this Agreement throughout such year, or, if
there has been a default in the fulfillment of any such obligation, specifying
each such default known to such officer and the nature and status thereof and
(iii) to the best of such officer's knowledge, each Subservicer has fulfilled
its obligations under its Subservicing Agreement in all material respects, or if
there has been a material default in the fulfillment of such obligations,
specifying such default known to such employee and the nature and status
thereof.
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(b) The Master Servicer shall deliver to the Trustee, the Certificate
Insurer, the Certificateholders and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than two Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become a Servicer Default
under Section 7.01.
Section 3.19. Custodial Arrangements. (a) The Custodian shall maintain
custody and possession of the Contract Files as custodian and bailee for in
accordance with and pursuant to the Custodial Agreement dated as of the Closing
Date by and between the Master Servicer and OFSA. The Master Servicer hereby
assigns all of its right, title and interest in and to such Custodial Agreement
to the Trustee. To the extent the Master Servicer receives any notices with
respect to the Custodial Agreement, the Master Servicer will forward a copy of
such notice to the Trustee and the Certificate Insurer.
Section 3.20. Annual Independent Accountants' Report. (a) The Master
Servicer shall, at its expense, cause a firm of nationally recognized
independent certified public accountants (the "Independent Accountants"), who
may also render other services to the Master Servicer or to the Transferor, to
deliver to the Trustee, the Certificate Insurer, and each Rating Agency, on or
before March 30 (or 90 days after the end of the Master Servicer's fiscal year,
if other than March 30) of each year, beginning on the first March 30 (or other
applicable date) after the date that is six months after the Closing Date with
respect to the twelve months ended the immediately preceding December 31 (or
other applicable date), a statement (the "Accountant's Report") addressed to the
general partner of the Master Servicer, to the Trustee, and the Certificate
Insurer, to the effect that such firm has audited the financial statements of
the Master Servicer and issued its report thereon and that such audit (1) was
made in accordance with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other auditing procedures
as such firm considered necessary in the circumstances; (2) included an
examination of documents and records relating to the servicing of automobile
installment sales contracts under pooling and servicing agreements substantially
similar one to another (such Accountant's Report to have attached thereto a
schedule setting forth the pooling and servicing agreements covered thereby,
including this Agreement); (3) included an examination of the delinquency and
loss statistics relating to the Trust's portfolio of automobile installment
sales contracts; and (4) except as described in the Accountant's Report,
disclosed no exceptions or errors in the records relating to the automobile and
light truck loans serviced that, in the firm's opinion, generally accepted
auditing standards requires such firm to report. The Accountants' Report shall
further state that (1) a review in accordance with agreed upon procedures was
made of three randomly selected Servicer's Certificates for the Trust; and (2)
except as disclosed in the Report, no exceptions or errors in the Servicer's
Certificates so examined were found.
(b) The Accountants' Report shall also indicate that the firm is
independent of the Transferor and the Master Servicer within the meaning of the
Code of Professional Ethics of the American Institute of Certified Public
Accountants.
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(c) A copy of the Accountants' Report may be obtained by any
Certificateholder by a request in writing to the Trustee addressed to its
Corporate Trust Office.
Section 3.21. Access to Certain Documentation and Information Regarding
Contracts. The Master Servicer shall provide to representatives of the Trustee
and the Certificate Insurer reasonable access to the documentation regarding the
Contracts. Each of the Transferor and Master Servicer will permit any authorized
representative or agent designated by the Certificate Insurer to visit and
inspect any of the properties of the Transferor or Master Servicer, as the case
may be, to examine the corporate books and financial records of the Transferor
or Master Servicer, as the case may be, its records relating to the Contracts,
and make copies thereof or extracts therefrom and to discuss the affairs,
finances, and accounts of the Transferor or Master Servicer, as the case may be,
with its principal officers, as applicable, and its independent accountants. Any
expense incident to the exercise by the Certificate Insurer of any right under
this Section 3.21 shall be borne by NAFCO, so long as NAFCO is the Master
Servicer. In each case, such access shall be afforded without charge but only
upon reasonable request and during normal business hours.
Section 3.22. Retention and Termination of Master Servicer. The Master
Servicer hereby covenants and agrees to act as such under the Agreement for an
initial term, commencing on the Closing Date and ending on December 31, 1995,
which term shall be extendible by the Certificate Insurer for successive
quarterly terms ending on each successive March 31, June 30, September 30 and
December 31 (or, pursuant to revocable written standing instructions from time
to time to the Master Servicer and the Trustee, for any specified number of
terms greater than one), until the termination of the Trust. Each such notice
(including each notice pursuant to standing instructions, which shall be deemed
delivered at the end of successive quarterly terms for so long as such
instructions are in effect) (a "Master Servicer Extension Notice") shall be
delivered by the Certificate Insurer to the Trustee and the Master Servicer. The
Master Servicer hereby agrees that, as of the date hereof and upon its receipt
of any such Master Servicer Extension Notice, the Master Servicer shall become
bound, for the initial term beginning on the date hereof and for the duration of
the term covered by such Notice, to continue as the Master Servicer subject to
and in accordance with the other provisions of this Agreement. Until such time
as a Certificate Insurer Default shall have occurred and be continuing, the
Trustee agrees that if as of the fifteenth day prior to the last day of any term
of the Master Servicer the Trustee shall not have received any Master Servicer
Extension Notice from the Certificate Insurer, the Trustee will, within five
days thereafter, give written notice of such non-receipt to the Certificate
Insurer, and the Master Servicer and the Master Servicer's terms shall not be
extended unless a Master Servicer Extension Notice is received on or before the
last day of such term.
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ARTICLE IV
Payments to Certificateholders
Section 4.01. Distributions.
(a) The Trustee shall, based upon a certificate delivered to the Trustee
and the Certificate Insurer by the Master Servicer not later than the Reporting
Date, calculate the Available Amount and the Certificate Distributable Amount
for the related Distribution Date and, based upon such determinations and the
distributions to be made on such Distribution Date, as described below, the
amount of any withdrawal required to be made from the Spread Account and/or any
Policy Claim Amount, in each case with respect to such Distribution Date.
(b) On each Distribution Date the Trustee will, to the extent of the
Available Amount together with (i) funds withdrawn from the Spread Account, if
any, (ii) the Policy Claim Amount, if any, and (iii) any amount deposited to the
Certificate Account pursuant to Section 4.04(e) (such amounts so deposited to be
applied only as directed by the Certificate Insurer) make the following payments
(in case of the withdrawals from the Spread Account, for payments of the Master
Servicing Fee and the Certificate Distributable Amount, only, and in the case of
the Policy Claim Amount, for Guaranteed Distributions only, from the Certificate
Account in the following order of priority:
(i) first, to the Master Servicer, the amount of the Master
Servicing Fee payable in respect of the related Due Period and any unpaid
Master Servicing Fees from prior Due Periods to the extent not previously
paid;
(ii) second, accrued and unpaid fees owing to the Trustee,
Collateral Agent to the standby Servicer or the Custodian, to the extent
not paid by the Master Servicer;
(iii) to the Certificateholders, to be applied first to the
Certificate Interest Distributable Amount and then to the Certificate
Principal Distributable Amount, the Certificate Distributable Amount;
(iv) fourth, to the Certificate Insurer (or any designee thereof),
any amounts then due to the Certificate Insurer under the Insurance
Agreement or this Agreement;
(v) fifth, to the Collateral Agent for deposit in the Spread
Account, the amount, if any, required to cause the balance deposited
therein to equal the Requisite Amount;
(vi) sixth, to the Pre-Funding Period Reserve Account, the amount by
which the Required Reserve Amount exceeds the amount of funds on deposit
therein after giving effect to any withdrawals from the Pre-Funding Period
Reserve Account on such Distribution Date;
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(vii) seventh, to the Trustee to reimburse the Trustee for any
unreimbursed expenses incurred by it under this Agreement and to pay any
indemnities owed by the Transferor to the Trustee under Section 2.03(b),
Section 6.03 and Section 8.11;
(viii) eighth, to reimburse the Master Servicer any expense of an
Opinion of Counsel described in Section 10.01, and any expenses described
in the last sentence of Section 3.08;
(ix) ninth, to reimburse the Standby Servicer for expenses incurred
by the Standby Servicer and to reimburse the Master Servicer for expenses
incurred by and reimbursable, or any indemnities payable by the
Transferor, to the Master Servicer pursuant to Sections 2.03(b), 6.03 and
7.01;
(x) tenth, to reimburse the Transferor for expenses incurred by and
reimbursable to the Transferor pursuant to Section 6.03; and
(xi) eleventh, to the holder of the Transferor Interest, the balance
of any funds remaining in the Certificate Account after application
pursuant to the preceding clauses (i) through (x).
(c) Distributions to Certificateholders on a Distribution Date shall be
made on the basis of the Percentage Interests evidenced by Certificates held by
the Holders and shall be made to each Certificateholder of record on the next
preceding Record Date (other than as provided in Section 9.01 respecting the
final distribution), either in immediately available funds (by wire transfer or
otherwise) to the account of such Certificateholder at a bank or other entity
having appropriate facilities therefor, if such Certificateholder holds
Certificates having an aggregate denomination of at least $1,000,000.00 and has
provided appropriate wire or other transfer information to the Trustee, or, if
such Certificateholder does not hold Certificates with such aggregate
denomination or holds such aggregate denomination but does not so notify the
Trustee, by check mailed to such Certificateholder at the address of such Holder
appearing in the Certificate Register.
Section 4.02. Statements to Certificateholders. Concurrently with each
distribution charged to the Certificate Account, the Trustee shall forward by
mail to each Holder of a Certificate, the Transferor, the Master Servicer, the
Certificate Insurer and each Rating Agency a written statement prepared by the
Master Servicer substantially in the form attached hereto as Exhibit 4.02.
Section 4.03. Specification of Certain Tax Matters.
(a) Each Certificateholder shall provide the Trustee with a completed and
executed Form W-9 prior to purchasing a Certificate. The Trustee shall comply
with all requirements of the Internal Revenue Code, and applicable state and
local law with respect to the withholding from any distributions made to any
Certificateholder of any applicable withholding taxes imposed
55
thereon and with respect to any applicable reporting requirements in connection
therewith. The Transferor and each Certificateholder, by acceptance of its
Certificate, agree for purposes of such withholding (and for all other federal,
state, and local income and franchise tax purposes) to recognize and treat the
Certificates as indebtedness of the Transferor.
(b) On or before the last day of February of each calendar year beginning
with calendar year 1996, the Master Servicer shall furnish to each Person who at
any time during the preceding calendar year was Certificateholder a statement
prepared by the Master Servicer setting forth the amount of interest and
principal distributed to such Person during the preceding calendar year and such
other information required to be provided by an issuer of indebtedness under the
Internal Revenue Code and such other customary information (consistent with the
treatment of the Certificates as debt, as provided in Section 10.06) as the
Master Servicer deems necessary or desirable to enable the Certificateholders to
prepare their tax returns. Such obligations of the Master Servicer shall be
deemed to have been satisfied to the extent that substantially comparable
information shall be provided to the Certificateholder by the Transferor
pursuant to any requirements of the Internal Revenue Code.
Section 4.04. Withdrawals from Spread Account; Claims Under Certificate
Policy.
(a) The Master Servicer shall determine on the Business Day prior to each
Draw Date whether the sum of (i) the Available Amount for the related
Distribution Date and (ii) the amount, if any, to be paid by the Certificate
Insurer to the Trustee with respect to such Distribution Date pursuant to
Section 4.04(e), is sufficient to pay the amounts required to be distributed on
the related Distribution Date pursuant to clauses (i) through (iii), inclusive,
of subsection 4.01(b) and shall send written notice of such determination to the
Trustee and the Certificate Insurer on such Business Day. The Trustee
independently shall verify the accuracy of such determination, and in the event
that such sum is not sufficient to pay such amounts required to be distributed
pursuant to clauses (i) through (iii), inclusive, of subsection 4.01(b), the
Trustee shall, for the benefit of the Certificateholders, deliver to the
Collateral Agent, the Certificate Insurer and the Servicer, no later than 12:00
noon, New York City time, on the day preceding such Draw Date, a written notice
(a "Deficiency Notice") specifying the amount of the shortfall (the amount of
any such shortfall being hereinafter referred to as the "Deficiency Claim
Amount"). Such Deficiency Notice shall direct the Collateral Agent to remit such
Deficiency Claim Amount (to the extent of the funds available to be distributed
pursuant to the Spread Account Agreement) to the Trustee. Amounts paid by the
Collateral Agent to the Trustee pursuant to a claim submitted under this Section
4.04(a) shall be deposited by the Trustee into the Certificate Account for
payment to Certificateholders on the related Distribution Date.
(b) In the event that the Trustee has delivered a Deficiency Notice with
respect to any Distribution Date, the Trustee shall determine on the related
Draw Date whether the sum of (i) the Available Amount for the related
Distribution Date, and (ii) the amount of the Deficiency Claim Amount, if any,
to be delivered by the Collateral Agent to the Trustee pursuant to a Deficiency
Notice delivered with respect to such Distribution Date would be insufficient to
pay
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the Guaranteed Distributions for the related Distribution Date. In the event the
Trustee determines that the amounts described in clauses (i) through (iii),
inclusive, of the preceding sentence would be insufficient to pay the Guaranteed
Distributions for the related Distribution Date, then in such event the Trustee
shall furnish to the Certificate Insurer no later than 12:00 noon, New York City
time, on such Draw Date, a completed Notice of Claim in the amount of the
shortfall the amount of such shortfall being hereinafter referred to as the
"Policy Claim Amount"). Any notice delivered by the Trustee to the Certificate
Insurer shall specify the Policy Claim Amount claimed under the Certificate
Policy and shall constitute a "Notice of Claim" under the Certificate Policy. In
accordance with the provisions of the Certificate Policy, the Certificate
Insurer is required to pay to the Trustee the Policy Claim Amount properly
claimed thereunder by 12:00 noon, New York City time, on the later of (i) the
third Business Day (as defined in the Certificate Policy) following receipt on a
Business Day (as defined in the Certificate Policy) of the Notice of Claim, and
(ii) the applicable Distribution Date. Any payment made by the Certificate
Insurer under the Certificate Policy shall be applied solely to the payment of
the Guaranteed Distributions, and for no other purpose.
(c) The Trustee shall (i) receive as attorney-in-fact of each
Certificateholder any Policy Claim Amount from the Certificate Insurer and (ii)
deposit the same in the Certificate Account for disbursement to the
Certificateholders as set forth in Section 4.01(b)(iii). Any and all Policy
Claim Amounts disbursed by the Trustee from claims made under the Certificate
Policy shall not be considered payment by the Trust or from the Spread Account
with respect to such Certificates, and shall not discharge the obligations of
the Trust to make such payment. The Certificate Insurer shall, to the extent it
makes any payment with respect to the Certificates, become subrogated to the
rights of the recipients of such payment, to the extent of such payments.
Subject to and conditioned upon any payment with respect to the Certificates by
or on behalf of the Certificate Insurer, the Trustee shall assign to the
Certificate Insurer all rights to the payment of interest or principal with
respect to the Certificates which are then due for payment to the extent of all
payments made by the Certificate Insurer and the Certificate Insurer may
exercise any option, vote, right, power or the like with respect to the
Certificates to the extent that it has made payment pursuant to the Certificate
Policy. The Trustee agrees that the Certificate Insurer shall be subrogated to
all of the rights of payment of the Certificateholders or in relation thereto to
the extent that any such payment was made to such Certificateholders with
payments made under the Certificate Policy. To evidence such subrogation, the
Trustee shall note the Certificate Insurer's rights as subrogee upon the
Certificate Register upon receipt from the Certificate Insurer of proof of
payment by the Certificate Insurer of any Guaranteed Distributions.
(d) The Trustee shall be entitled to enforce on behalf of the
Certificateholders the obligations of the Certificate Insurer under the
Certificate Policy. Notwithstanding any other provision of this Agreement, the
Certificateholders are not entitled to institute proceedings directly against
the Certificate Insurer.
(e) The Certificate Insurer shall have the right, but not the obligation,
to pay to the Trustee for deposit into the Certificate Account with respect to
any Distribution Date all or any
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part of the amount, distributable pursuant to clauses (i) through (iii),
inclusive, of subsection 4.01(b) for such Distribution Date. To exercise such
right, the Certificate Insurer must cause written notice thereof to be delivered
to the Trustee prior to the close of business on the second Business Day prior
to the applicable Distribution Date and must cause the amount to be paid to be
delivered (in immediately available funds) to the Trustee on or prior to 12:00
noon, New York City time, on the applicable Distribution Date. Any amount so
paid to the Trustee shall be deposited by the Trustee in the Certificate
Account.
(f) The Certificate Insurer shall have the right, but not the obligation,
to pay to the Trustee from time to time for deposit in the Spread Account an
amount equal to the amount, if any, by which the Requisite Amount exceeds the
amount on deposit in the Spread Account at the time. To exercise such right, the
Certificate Insurer or its designee must deliver to the Collateral Agent the
amount to be paid, in immediately available funds, and written notice to deposit
such amount in the Spread Account. Any amount so paid to the Collateral Agent
shall be deposited by the Collateral Agent in the Spread Account.
Section 4.05. Preference Claims.
(a) In the event that the Trustee has received a certified copy of an
order of an appropriate court that any Guaranteed Distributions paid on a
Certificate has been avoided in whole or in part as a preference payment under
applicable bankruptcy law, the Trustee shall so notify the Certificate Insurer,
shall comply with the provisions of the Certificate Policy to obtain payment by
the Certificate Insurer of such avoided payment, and shall, at the time it
provides notice to the Certificate Insurer notify Holders of the Certificates by
mail that, in the event that any Certificateholder's payment is so recoverable,
such Certificateholder will be entitled to payment pursuant to the terms of the
Certificate Policy. Pursuant to the terms of the Certificate Policy, the
Certificate Insurer will make such payment on behalf of the Certificateholder to
the receiver, conservator, debtor-in-possession or trustee in bankruptcy named
in the Order (as defined in the Certificate Policy) and not to the Trustee or
any Certificateholder directly (unless a Certificateholder has previously paid
such payment to the receiver, conservator, debtor-in-possession or trustee in
bankruptcy, in which case the Certificate Insurer will make such payment to the
Trustee for distribution to such Certificateholder upon proof of such payment
reasonably satisfactory to the Certificate Insurer).
(b) The Trustee shall promptly notify the Certificate Insurer of any
proceeding or the institution of any action (of which a Responsible Officer of
the Trustee has actual knowledge) seeking the avoidance as a preferential
transfer under applicable bankruptcy, insolvency, receivership, rehabilitation
or similar law (a "Preference Claim") of any distribution made with respect to
the Certificates. Each Holder, by its purchase of Certificates, and the Trustee
hereby agree that so long as a Certificate Insurer Default shall not have
occurred and be continuing, the Certificate Insurer may at any time during the
continuation of any proceeding relating to a Preference Claim direct all matters
relating to such Preference Claim including, without limitation, (i) the
direction of any appeal of any order relating to any Preference Claim and (ii)
the posting of any surety, supersede or performance bond pending any such appeal
at the
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expense of the Certificate Insurer, but subject to reimbursement as provided in
the Insurance Agreement. In addition, and without limitation of the foregoing,
as set forth in Section 4.04(c), the Certificate Insurer shall be subrogated to,
and each Certificateholder and the Trustee hereby delegate and assign, to the
fullest extent permitted by law, the rights of the Trustee and each
Certificateholder in the conduct of any proceeding with respect to a Preference
Claim, including, without limitation, all rights of any party to an adversary
proceeding action with respect to any court order issued in connection with any
such Preference Claim.
Section 4.06. Retirement of Certificates. The Trustee, upon termination of
the Trust Estate pursuant to Section 9.01 or Section 9.02, shall furnish to the
Certificate Insurer a notice of such termination, and, upon retirement of the
Certificates and the expiration of the term of the Certificate Policy, shall
surrender the Certificate Policy to the Certificate Insurer for cancellation.
Section 4.07. Spread Account. The Transferor agrees, simultaneously with
the execution and delivery of this Agreement, to execute and deliver the Spread
Account Agreement, and pursuant to the terms thereof, to deposit the Initial
Spread Account Deposit in the Spread Account.
ARTICLE V
The Certificates
Section 5.01. The Certificates. The Certificates shall be substantially in
the form set forth in Exhibit 5.01 attached hereto and shall, on original issue,
be executed and delivered by the Trustee to or upon the order of the Transferor
upon receipt by the Master Servicer and the Subservicers, on behalf of the
Trustee, of the documents specified in Section 2.01. The Certificates shall be
issuable in the aggregate original Certificate Balance of $38,220,000 in
denominations of $20,000, and in integral multiples of $1,000 in excess thereof.
The Certificates shall be executed by manual or facsimile signature on behalf of
the Trustee by an authorized officer under its seal imprinted thereon. No
Certificate shall be entitled to any benefit under this Agreement, or be valid
for any purpose, unless such Certificate shall have been executed by the Trustee
by manual signature of an authorized signatory of the Trustee and such execution
shall be conclusive evidence, and the only evidence, that such Certificate has
been duly delivered and entitled to the benefits hereof. All Certificates shall
be dated the date of their authentication.
Section 5.02. Registration of Transfer and Exchange of Certificates. (a)
The Trustee shall cause to be kept at one of its offices or agencies in Chicago,
Illinois a Certificate Register in which, subject to such reasonable regulations
as it may prescribe, the Trustee shall provide for the registration of
Certificates and of transfers and exchanges of Certificates as herein provided.
The office of Xxxxxx Trust and Savings Bank, 000 Xxxx Xxxxxx Xxxxxx, 00xx xxxxx,
Xxxxxxx, Xxxxxxxx 00000, Attention: Bond Services Unit, is initially appointed
such office for the purpose of registering Certificates and transfers and
exchanges of Certificates as herein provided.
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(b) No transfer of any Certificate shall be made unless that transfer is
made pursuant to an effective registration statement under the Securities Act,
and effective registration or qualification under applicable state securities
laws, or is made in a transaction which does not require such registration or
qualification. If such a transfer of any Certificate (other than in connection
with the initial issuance thereof) is to be made without registration under the
Securities Act, then the Certificate Registrar shall require, in order to assure
compliance with such laws, receipt of: (i) if such transfer is purportedly being
made in reliance upon Rule 144A under the Securities Act, a certificate from the
Certificateholder desiring to effect such transfer substantially in the form
attached as Exhibit 5.02(a) hereto, or (ii) in all other cases, a certificate
from the transferee substantially in the form of Exhibit 5.02(b) that the
transferee is an institutional "accredited investor" within the meaning of Rule
501(a)(1), (2), (3) or (7) of the Securities Act and, with respect to (ii) only,
an Opinion of Counsel satisfactory to the Certificate Registrar to the effect
that such transfer may be made without such registration (which Opinion of
Counsel shall not be an expense of the Trust or of the Transferor, the Master
Servicer, the Trustee or the Certificate Registrar in their respective
capacities as such); provided that no such opinion shall be required after the
expiration of the three-year period referred to in Rule 144(k) of the Securities
Act. None of the Transferor, the Trustee or the Certificate Registrar is
obligated to register or qualify the Certificates under the Securities Act or
any other securities law or to take any action not otherwise required under this
Agreement to permit the transfer of any Certificate without registration or
qualification. Any Holder of a Certificate desiring to effect such a transfer
shall, and does hereby agree to, indemnify the Transferor, the Trustee, the
Master Servicer and the Certificate Registrar against any liability that may
result if the transfer is not so exempt or is not made in accordance with such
federal and state laws.
So long as the Certificates are "restricted securities" within the meaning
of Rule 144(a)(3) of the Securities Act, the Transferor covenants to furnish or
cause to be furnished, promptly upon the written request of a Certificateholder,
the following information ("Rule 144A Information") to such Certificateholder or
to a prospective transferee of a Certificate (or interests in such Certificate)
designated by such Certificateholder, as the case may be, in connection with the
resale of such Certificate or such interests by such Certificateholder pursuant
to Rule 144A: (i) a copy of this Agreement and any amendments thereto to date,
(ii) a copy of all Statements to Certificateholders furnished to such date by
the Trustee to Certificateholders and (iii) any other materials provided by the
Transferor to the Trustee with a written request that such information be sent
to such Certificateholder or prospective transferees as additional Rule 144A
Information. The Trustee may place its disclaimer on any such Rule 144A
Information.
(c) No transfer of any Certificate or interest therein shall be made (i)
to any employee benefit plan or other retirement arrangement, including
individual retirement accounts and annuities, Xxxxx plans and collective
investment funds and separate accounts in which such plans, accounts or
arrangements are invested, that is subject to ERISA or the Code (each, a
"Plan"), or (ii) to any person who is directly or indirectly purchasing such
Certificate or interest therein on behalf of, as named fiduciary of, as trustee
of, or with assets of a Plan, unless the prospective transferee provides the
Certificate Registrar with a certificate of facts acceptable to the Certificate
Registrar which establishes that such transfer will not cause the assets of the
Trust
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to be assets of any "Benefit Plan Investor" (as defined in 29 C.F.R. Section
2510.3-101 or any successor provision) (assuming that Benefit Plan Investors
hold less than 25% of the Percentage Interests of the Certificates) and the
purchase and holding of the Certificates by the transferee will not give rise to
a non-exempt prohibited transaction under Section 406 of ERISA or Section 4975
of the Code. In addition, no transfer of a Certificate will be permitted if the
Certificate Registrar makes a good faith determination, that, as a result of
such transfer, 25% or more in Percentage Interest of the Certificates would be
held by Benefit Plan Investors. For purposes of the immediately preceding
sentence, in determining the total Percentage Interest of the Certificates, any
Certificates held by a Person (other than a Benefit Plan Investor) who has
discretionary authority or control with respect to the assets of the Trust or
any Person who provides investment advice for a fee (direct or indirect) with
respect to such assets, or an affiliate of such a Person, shall be disregarded.
If the prospective transferee is not a Plan, the Certificate Registrar shall be
entitled to receive a certificate in form acceptable to it from such prospective
transferee establishing that such transferee is not a Plan, or acting on behalf
of or with the assets of a Plan, and shall be entitled to rely exclusively
thereon.
Upon surrender for registration of transfer of any Certificate at any
office or agency of the Trustee maintained for such purpose pursuant to this
Section 5.02 and upon satisfaction of the conditions set forth below, the
Transferor shall execute and the Trustee shall authenticate and deliver, in the
name of the designated transferee or transferees, one or more new Certificates
of a like aggregate Percentage Interest.
At the option of the Certificateholders, Certificates may be exchanged for
other Certificates of authorized denomination of a like aggregate Percentage
Interest, upon surrender of the Certificates to be exchanged at any such office
or agency. Whenever any Certificates are so surrendered for exchange, the
Transferor shall execute and the Trustee shall authenticate and deliver the
Certificates which the Certificateholder making the exchange is entitled to
receive. Every Certificate presented or surrendered for transfer or exchange
shall (if so required by the Trustee) be duly endorsed by, or be accompanied by
a written instrument of transfer in form satisfactory to the Trustee duly
executed by, the Holder thereof or his attorney-in-fact duly authorized in
writing.
No service charge shall be made for any transfer or exchange of
Certificates, but the Trustee may require payment of a sum sufficient to cover
any tax or governmental charge that may be imposed in connection with any
transfer or exchange of certificates.
All Certificates surrendered for transfer and exchange shall be cancelled
and returned to the Transferor.
Section 5.03. Mutilated, Destroyed Lost or Stolen Certificates. If (i) any
mutilated Certificate is surrendered to the Trustee or the Trustee receives
evidence to its satisfaction of the destruction, loss or theft of any
Certificate, and (ii) there is delivered to the Trustee and the Transferor such
security or indemnity as may be required by the Transferor or the Trustee to
hold them harmless, then, in the absence of written notice to the Trustee that
such Certificate
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has been acquired by a bona fide purchaser, the Transferor shall execute and the
Trustee shall authenticate and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
tenor and Percentage Interest. Upon the issuance of any new Certificate under
this Section, the Trustee may require the payment of a sum sufficient to cover
any tax or other governmental charge that may be imposed in relation thereto and
any other expenses (including the fees and expenses of the Trustee and the
Transferor) connected therewith. Any duplicate Certificate issued pursuant to
this Section shall constitute complete and indefeasible evidence of ownership in
the Trust Estate, as if originally issued, whether or not the lost, stolen or
destroyed Certificate shall be found at any time. The Trustee may appoint an
affiliate of the Master Servicer to perform its duties under this Section,
subject to the agreement of such affiliate (including as to compensation
indemnity and the other terms of such appointment).
Section 5.04. Persons Deemed Owner. Prior to due presentation of a
Certificate for registration of transfer, the Transferor, the Master Servicer,
the Trustee and any agent of the Transferor, the Master Servicer, or the Trustee
may treat the Person in whose name any Certificate is registered as the owner of
such Certificate for the purpose of receiving distributions pursuant to Section
4.01 and for all other purposes whatsoever, and neither the Transferor, the
Master Servicer, the Trustee nor any agent of the Transferor, the Master
Servicer or the Trustee shall be affected by notice to the contrary.
Section 5.05. Appointment of Paying Agent. The Transferor may appoint a
Paying Agent, which shall be acceptable to the Transferor and the Certificate
Insurer (unless a Certificate Insurer Default has occurred and is continuing),
for the purpose of making distributions to Certificateholders pursuant to
Section 4.01. In the event of any such appointment, on or prior to each
Distribution Date, the Trustee shall deposit or cause to be deposited with the
Paying Agent a sum sufficient to make the payments to Certificateholders in the
amounts and in the manner provided for in Section 4.01, such sum to be held, in
trust, for the benefit of Certificateholders. The Transferor hereby initially
appoints the Trustee as Paying Agent for the Certificates.
The Trustee shall cause each Paying Agent to execute and deliver to the
Trustee an instrument in which such Paying Agent shall agree with the Trustee
that such Paying Agent will hold all sums held by it for the payment to
Certificateholders, in trust, for the benefit of the Certificateholders entitled
thereto until such sums shall be paid to such Certificateholders.
ARTICLE VI
The Transferor and the Master Servicer
Section 6.01. Respective Liabilities of the Transferor and the Master
Servicer. The Transferor and the Master Servicer shall each be liable in
accordance herewith only to the extent of the obligations specifically and
respectively imposed upon and undertaken by the Transferor
62
and the Master Servicer herein and the representations made by the Transferor or
the Master Servicer.
Section 6.02. Existence of Transferor and Master Servicer; Merger or
Consolidation of the Master Servicer; Assignment of Rights and Delegation of
Duties by Master Servicer. Subject to the following paragraph, the Transferor
and the Master Servicer each will keep in full effect its existence, rights and
franchises under the laws of the jurisdiction of its organization, and each will
obtain and preserve its qualification to do business, or employ agents qualified
to do business, in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, the
Certificates or any of the Contracts and to perform its respective duties under
this Agreement.
The Master Servicer may be merged or consolidated with or into any Person,
or transfer substantially all of its assets to any Person, in which case any
Person resulting from any merger or consolidation to which the Master Servicer
shall be a party, or any Person succeeding to the business of the Master
Servicer, shall be the successor of the Master Servicer hereunder, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding; provided
however, that the successor or surviving person to the Master Servicer shall be
an Eligible Servicer and each successor to the Master Servicer by virtue of its
acquisition of substantially all of the Master Servicer's assets shall be deemed
to have made the representations and warranties set forth in Section 2.03(a)
hereof and shall agree in writing to be bound by each of the Master Servicer's
obligations hereunder; provided further, that, (i) no representation or warranty
of the Master Servicer is breached at the time of merger, (ii) no event has
occurred that, after notice or lapse of time or both, would be an Insurance
Agreement Event of Default and (iii) an opinion of counsel to the effect that
all conditions precedent to merger have been satisfied and a security interest
opinion have been provided. The Master Servicer shall provide notice of any such
merger, consolidation or transfer of substantially all of its assets to the
Certificate Insurer, the Trustee and the Rating Agencies. The Transferor may not
be merged or consolidated with or into any Person or transfer substantially all
of its assets to any Person.
Section 6.03. Limitation on Liability of the Transferor, the Master
Servicer and Others. The Master Servicer will defend and indemnify the Trustee,
the Certificate Insurer and their respective officers, directors, employees and
agents and the Certificateholders against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation, arising out of or resulting from the use or
operation of any Financed Vehicle by the Master Servicer or any Subservicer. In
addition, the Master Servicer will defend and indemnify the Trustee, the
Certificate Insurer and their respective officers, directors, employees and
agents and the Certificateholders against any and all costs, expenses, losses,
damages, claims and liabilities, including reasonable fees and expenses of
counsel and expenses of litigation, arising from a breach of its obligations to
service the Contracts in accordance with this Agreement; provided however, that
the Master Servicer shall not be liable for any such costs, expenses, losses,
damages, claims or liabilities to the extent that any thereof resulted from the
negligence or willful misconduct of the Trustee, its
63
officers, directors, employees and agents; and provided further that the Master
Servicer will not be liable for any such amount that resulted from any act or
omission to act by it done in conformity with the written instruction of the
Trustee. If the Master Servicer or Transferor has made any indemnity payments to
the Certificateholders or the Trustee, the Certificate Insurer or their
respective officers, directors, employees or agents pursuant to this paragraph,
and the Trustee, the Certificate Insurer or their respective officers,
directors, employees or agents thereafter collects any of the amounts which gave
rise to such indemnity payments from others or any such amounts are received by
the Trustee or its officers, directors, employees or agents, the Trustee or its
officers, directors, employees or agents shall repay such amounts collected to
the Master Servicer or Transferor who made such indemnity payment. These
indemnities of the Master Servicer and the Transferor will survive any transfer
of the respective rights, duties and obligations of the Master Servicer or the
Transferor hereunder to another Person, the termination of this Agreement
pursuant to Section 9.01 hereof, any Servicer Default, the termination of the
Trust Estate or the resignation or replacement of the Trustee for acts accruing
prior to the transfer, termination of the Trust Estate or the resignation or
replacement of the Trustee, but will not cover actions or omissions of any
successor Master Servicer after a Servicer Default. Neither the Master Servicer
nor any of its directors, officers, employees or agents shall be under any
liability to the Trust Estate, the Trustee, any Certificateholder, the
Certificate Insurer or the Transferor for any action taken by the Master
Servicer in its capacity as such (and not in any other capacity) in good faith
or for errors in judgment except for any action taken or errors committed which
caused a breach of a representation or warranty of the Master Servicer under
Section 2.03(a). The Transferor, the Master Servicer and any director, officer,
employee or agent of any Transferor or the Master Servicer may rely in good
faith on any document of any kind prima facie properly executed and submitted by
any Person respecting any matters arising hereunder.
The Transferor, the Master Servicer and any director, officer, employee or
agent of the Transferor or the Master Servicer shall be indemnified by the Trust
Estate and held harmless against any loss, liability or expense incurred in
connection with any legal action relating to this Agreement or the Certificates,
other than any loss, liability or expense for which the Transferor or Master
Servicer provides an indemnity as provided in the preceding paragraph (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement). Neither the Transferor nor the Master Servicer shall be under
any obligation to appear in, prosecute or defend any legal action which is not
in its reasonable judgment incidental to its respective duties under this
Agreement and which in its reasonable judgment may subject it to any expense or
liability; provided however, that the Master Servicer may in its discretion
undertake any such action which it may deem necessary or desirable in respect to
this Agreement and the rights and duties of the parties hereto and the interest
of the Certificateholders hereunder. In such event, the legal expenses and costs
of such action and any liability resulting therefrom shall be expenses, costs
and liabilities of the Trust Estate, and the Master Servicer shall be entitled
to be reimbursed therefor out of the Certificate Account as provided by Section
3.11(b) and Section 4.01(b)(ix). The rights of the Master Servicer to indemnity,
reimbursement or limitation on its liability pursuant to this Section 6.03 shall
survive the transfer of the rights, duties and obligations of the Master
Servicer to another Person or any Servicer Default.
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The Master Servicer shall defend, indemnify and hold harmless the Trust,
the Trustee, the Certificate Insurer, their respective officers, directors,
agents and employees, and the Certificateholders from and against any taxes that
may at any time be asserted against the Trust, the Trustee or the
Certificateholders with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but not
including any taxes asserted with respect to, and as of the date of, the sale of
the Contracts and the other Trust Estate to the Trustee or the issuance and
original sale of the Certificates, or asserted with respect to ownership of the
Contracts, or federal or other income taxes arising out of distributions on the
Certificates) and costs and expenses in defending against the same.
The Master Servicer shall indemnify, defend and hold harmless the Trust,
the Trustee, the Certificate Insurer, their respective officers, directors,
agents and employees and the Certificateholders from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or was
imposed upon the Trustee, the Trust, the Certificate Insurer or the
Certificateholders through the breach of this Agreement, the negligence, willful
misfeasance, or bad faith of the Master Servicer in the performance of its
duties under this Agreement or by reason of reckless disregard of its
obligations and duties under this Agreement.
Section 6.04. Transfer of Duties of Master Servicer. Subject to the
provisions of Section 6.02, the Master Servicer shall not resign from the
obligations and duties imposed on it by this Agreement as Master Servicer except
upon a determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in violation
of such legal requirements in a manner which would have a material adverse
effect on the Master Servicer, and the Certificate Insurer (which shall be
required so long as a Certificate Insurer Default shall not have occurred and be
continuing) does not elect to waive the obligation of the Master Servicer to
perform the duties which render it legally unable to act or to delegate those
duties to another Person. Any such determination permitting the resignation of
the Master Servicer shall be evidenced by an Opinion of Counsel to such effect
delivered and acceptable to the Trustee and the Certificate Insurer (unless a
Certificate Insurer Default shall have occurred and be continuing). No
resignation of the Master Servicer shall become effective until, so long as no
Certificate Insurer Default shall have occurred and be continuing, the Standby
Servicer, or an entity acceptable to the Certificate Insurer shall have assumed
the responsibilities and obligations of the Master Servicer or, if a Certificate
Insurer Default shall have occurred and be continuing, a Person that is an
Eligible Servicer shall have assumed the responsibilities and obligations of the
Master Servicer.
Section 6.05. Master Servicer May Own Certificates. The Master Servicer in
its individual or any other capacity may become the owner or pledgee of
Certificates with the same rights it would have if it were not the Master
Servicer. The Master Servicer shall notify the Trustee and the Certificate
Insurer promptly after it becomes the owner or pledgee of a Certificate.
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ARTICLE VII
Default
Section 7.01. Servicer Defaults. "Servicer Default," wherever used herein,
means any one of the following events (whatever the reason for such Servicer
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) the Master Servicer shall fail, or fail to cause any Subservicer, to
deliver to the Trustee for distribution to Certificateholders or deposit in the
Spread Account any proceeds or payments required to be so delivered by the
Master Servicer or Subservicer under the terms of the Certificates or this
Agreement (including deposits of the Retransfer Amounts) and such failure shall
continue unremedied for two Business Days after written notice is received by
the Master Servicer from the Trustee or (unless a Certificate Insurer Default
shall have occurred and be continuing) the Certificate Insurer or after
discovery of such failure by a Servicing Official; or
(b) the Master Servicer shall fail to observe or perform any other of the
covenants or agreements on the part of the Master Servicer in this Agreement,
which failure (i) materially and adversely affects the rights of
Certificateholders (determined without regard to the availability of funds under
the Certificate Policy) or of the Certificate Insurer (unless a Certificate
Insurer Default shall have occurred and be continuing), and (ii) continues
unremedied for a period of thirty days after the date on which written notice of
such failure, requiring the same to be remedied, shall have been given to the
Master Servicer by the Trustee, or to the Master Servicer and the Trustee by the
Certificate Insurer (or, if a Certificate Insurer Default has occurred and is
continuing, Certificateholders evidencing in the aggregate not less than 25% of
the Percentage Interest); or
(c) there shall have occurred a Bankruptcy Event with respect to the
Master Servicer; or
(d) the Master Servicer shall have breached any of the representations and
warranties set forth in this Agreement which breach materially and adversely
affects the interests of the Certificateholders in any Contract determined
without regard to the availability of funds under the Certificate Policy or of
the Certificate Insurer (or, if NAFCO is the Master Servicer, the Transferor)
and the Master Servicer shall have failed to cure such breach in all material
respects within thirty days of its receipt of a notice of such breach; or
(e) there shall have occurred an Insurance Agreement Event of Default or
an event of default under any other insurance agreement to which the Certificate
Insurer and NAFCO and/or the Transferor are party; or
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(f) a claim is made under the Certificate Policy; or
(g) the Master Servicer fails to deliver the report required to be
delivered by the Master Servicer pursuant to Section 3.17 and such failure
remains unremedied for a period of five days.
(h) so long as a Certificate Insurer Default shall not have occurred and
be continuing, the Certificate Insurer shall not have delivered a Master
Servicer Extension Notice pursuant to Section 3.22.
If a Servicer Default shall occur, then, and in each and every such case,
so long as such Servicer Default shall not have been remedied, the Trustee may,
with the written consent of the Certificate Insurer (unless a Certificate
Insurer Default has occurred and is continuing), and at the written direction of
the Certificate Insurer (or, if a Certificate Insurer Default has occurred and
is continuing, Certificateholders evidencing in the aggregate not less than 51%
of the Percentage Interests), the Trustee shall, by notice in writing to the
Master Servicer, the Transferor and the Standby Servicer, (i) terminate all of
the rights and obligations of the Master Servicer under this Agreement and in
and to any Contracts and the proceeds thereof, subject to compensation, rights
of reimbursement, indemnity and limitation on liability to which the Master
Servicer is then entitled and the rights of indemnity to which the Trustee and
the Certificate Insurer are then entitled pursuant to Section 6.03 hereof, and
(ii) subject to 7.02, appoint the Standby Servicer as the successor Master
Servicer. Such notice shall specify, to the extent possible, the timing and
method of transition of the servicing of the Contracts from the Master Servicer
to the Standby Servicer or another successor Master Servicer appointed pursuant
to Section 7.02. On and after the receipt by the Master Servicer of such written
notice and upon the effective date of the transfer to the Standby Servicer or
such other successor Master Servicer specified in such notice, all authority and
power of the Master Servicer under this Agreement, whether with respect to the
Certificates or the Contracts or otherwise, shall pass to and be vested in the
Standby Servicer or such other successor Master Servicer, pursuant to and under
this Section; and, without limitation, such Person is hereby authorized and
empowered to execute and deliver, on behalf of the Master Servicer, an
attorney-in-fact or otherwise, any and all documents and other instruments, and
to do or accomplish all other acts or things necessary or appropriate to effect
the purposes of such notice of termination, whether to complete the transfer and
endorsement or assignment of the Contracts and related documents, or otherwise.
The Master Servicer agrees to cooperate with such Person in effecting the
termination of the Master Servicer's responsibilities and rights hereunder,
including, without limitation, the transfer to such party for administration by
is of all cash amounts which shall thereafter be received with respect to the
Contracts.
The Trustee shall not be charged with knowledge of any event referred to
in clauses (a) through (d) above unless a Responsible Officer of the Trustee at
the Corporate Trust Office obtains actual knowledge of such event or receives
written notice of such event from the Master Servicer, the Certificate Insurer
or from a Certificateholder. The Trustee promptly shall send
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written notice to each Rating Agency and the Certificate Insurer of each
Servicer Default of which it is charged with knowledge in accordance with the
preceding sentence.
If the Master Servicer is terminated pursuant to this Section 7.01, then
the Master Servicer shall bear all of the costs and expenses of transferring the
duties and obligations of the Master Servicer to a successor Master Servicer and
except as otherwise agreed by the Certificate Insurer such costs and expenses
shall not be reimbursable from the Trust Estate nor payable by the Transferor or
the Trustee. To the extent not borne by the Master Servicer as described above,
such costs and expenses (including attorney's fees and expenses) shall be borne
by the Trust Estate in accordance with Section 4.01(b)(ix).
Section 7.02. Trustee to Act; Appointment of Successor. On and after the
time the Master Servicer receives a notice of termination pursuant to Section
7.01, the Standby Servicer shall be the successor in all respects to the Master
Servicer in its capacity as Master Servicer under this Agreement and the
transactions set forth or provided for herein and shall be subject to all the
responsibilities, duties and liabilities relating thereto placed on the Master
Servicer by the terms and provisions hereof; provided however, that in the event
that the Standby Servicer refuses or is unable to act as successor Master
Servicer, the Trustee or a successor Master Servicer appointed pursuant to this
Section 7.02 shall be the successor Master Servicer hereunder and provided
further, however, that if no Certificate Insurer Default shall have occurred and
be continuing the Certificate Insurer, by written notice to the Trustee, the
Transferor, the Master Servicer and the Standby Servicer, may designate another
Person to act as successor Master Servicer hereunder. As compensation therefor,
the Trustee, its designee, or other successor Master Servicer, as the case may
be, shall be entitled to all funds relating to the Contracts which the Master
Servicer would have been entitled to charge to the Certificate Account if the
Master Servicer had continued to act hereunder. If the Standby Servicer refuses
or is unable to act as successor Master Servicer hereunder, the Trustee may, if
it shall be unwilling to so act, or shall, if it is unable to so act, appoint,
or petition a court of competent jurisdiction to appoint, any experienced
servicer of motor vehicle installment sales contracts and notes having a net
worth of not less than $10,000,000 as the successor to the Master Servicer
hereunder in the assumption of all or any part of the responsibilities, duties
or liabilities of the Master Servicer hereunder. The Trustee shall obtain the
prior written consent of the Certificate Insurer (unless a Certificate Insurer
Default has occurred and is continuing) before appointing a successor Master
Servicer other than the Standby Servicer, and any successor Master Servicer
other than the Standby Servicer shall be satisfactory to the Certificate Insurer
(unless a Certificate Insurer Default has occurred and is continuing). Pending
appointment of a successor to the Master Servicer hereunder, the Trustee shall
act in such capacity as hereinabove provided. In connection with such
appointment and assumption, the Trustee may make such arrangements for the
compensation of such successor out of payments on Contracts as it and such
successor shall agree; provided however, that no such compensation to the
Trustee shall be in excess of that permitted the Master Servicer hereunder
unless (A) the Trustee and the Certificate Insurer (or if a Certificate Insurer
Default has occurred and is continuing, holders of Certificates evidencing a
majority in Percentage Interests of the Certificates) agree in writing to a
larger Master Servicing Fee and (B) each Rating Agency delivers a letter to the
Trustee to the effect that such
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larger Master Servicing Fee will not result in a reduction or the withdrawal of
the rating assigned by such Rating Agency to the Certificates; and provided
further, however, that the Master Servicing Fee to a successor Master Servicer,
including the Trustee, shall not exceed a monthly fee equal to 1/12th of the
product of (i) the aggregate amount of the Outstanding Principal Balances of all
Contracts outstanding as of the last day of the related Due Period and (ii) two
percent (2%). The Transferor, the Trustee, any Subservicer and such successor
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession.
If the Trustee shall succeed to the Master Servicer's duties as Master
Servicer of the Contracts as provided herein, it shall do so in its individual
capacity and not in its capacity as Trustee and, accordingly, the provisions of
Article VIII shall be inapplicable to the Trustee and its duties in its capacity
as a successor Master Servicer to the Master Servicer and the servicing of the
Contracts. In the event that the Trustee shall not seek to appoint a successor
Master Servicer within three months of its succession to the Master Servicer's
duties as servicer, it shall resign as Trustee pursuant to Section 8.06 and the
Transferor shall, with the written consent of the Certificate Insurer (unless a
Certificate Insurer Default shall have occurred and be continuing), appoint, or
the Trustee shall petition a court to appoint, a successor trustee pursuant to
such Section 8.06. To the extent a successor Master Servicer is appointed, the
Trustee shall not be liable for the acts or omissions of such successor Master
Servicer.
Section 7.03. Notification to Certificateholders.
(a) Upon any such termination or appointment of a successor to the Master
Servicer, the Trustee shall give prompt written notice thereof to
Certificateholders at their respective addresses appearing in the Certificate
Register.
(b) Within 60 days after the occurrence of any Servicer Default, the
Trustee shall transmit by mail to all Holders of Certificates notice of each
such Servicer Default hereunder actually known to a Responsible Officer of the
Trustee, unless such Servicer Default shall have been cured or waived.
Section 7.04. Waiver of Past Defaults. The Certificate Insurer (or, if a
Certificate Insurer Default shall have occurred and be continuing, the Holders
of Certificates representing in the aggregate at least 51% of the Percentage
Interests) may, on behalf of all Holders of Certificates, waive any default by
the Master Servicer in the performance of its obligations hereunder and its
consequences. Upon any such waiver of a past default, such default shall cease
to exist, and any Servicer Default arising therefrom shall be deemed to have
been remedied for every purpose of this Agreement. No such waiver shall extend
to any subsequent or other default or impair any right consequent thereon.
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ARTICLE VIII
Concerning the Trustee
Section 8.01. Duties of Trustee. The Trustee, prior to the occurrence of a
Servicer Default of which a Responsible Officer of the Trustee has actual
knowledge and after the curing of all Events of Default and Servicer Defaults
which may have occurred, undertakes to perform such duties and only such duties
as are specifically set forth in this Agreement. In case an Event of Default or
Servicer Default has occurred of which a Responsible Officer of the Trustee has
actual knowledge (and which has not been cured), the Trustee shall exercise such
of the rights and powers vested in it by this Agreement, and use the same degree
of care and skill in their exercise as a prudent person would exercise or use
under the circumstances in the conduct of his own affairs.
The Trustee, upon receipt of all resolutions, certificates, statements,
opinions, reports, documents, orders or other instruments furnished to the
Trustee which are specifically required to be furnished pursuant to any
provision of this Agreement, shall examine them to determine whether they
conform to the requirements of this Agreement.
No provision of this Agreement shall be construed to relieve the Trustee
from liability for its own negligent action, its own negligent failure to act or
its own bad faith or willful misconduct; provided however, that:
(i) Prior to the occurrence of a Servicer Default, and after the
curing of all such Events of Default and Servicer Defaults which may have
occurred, the duties and obligations of the Trustee shall be determined
solely by the express provisions of this Agreement, the Trustee shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement, no implied covenant or
obligation shall be read into this Agreement against the Trustee and, in
the absence of bad faith or willful misconduct on the part of the Trustee,
the Trustee may conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon any certificates
or opinions furnished to the Trustee and conforming to the requirements of
this Agreement;
(ii) The Trustee shall not be personally liable for an error of
judgment made in good faith by a Responsible Officer or Responsible
Officers of the Trustee, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(iii) The Trustee shall not be personally liable with respect to any
action taken, suffered or omitted to be taken by it in good faith in
accordance with the direction of the Certificate Insurer (or, if a
Certificate Insurer Default has occurred and is continuing,
Certificateholders holding Certificates which evidence
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not less than 25% of the Percentage Interests) as to the time, method and
place of conducting any proceeding for any remedy available to the
Trustee, or exercising any trust or power conferred upon the Trustee,
under this Agreement, so long as the Trustee shall not have received
directions in a timely manner to the contrary from a larger Percentage
Interest; and
(iv) The Trustee shall not, except as expressly authorized under
this Agreement, take any action reasonably likely to impair the security
interests created or existing under any Contract or Financed Vehicle or to
impair the value of any Contract or Financed Vehicle.
Section 8.02. Certain Matters Affecting the Trustee. Except as otherwise
provided in Section 8.01:
(i) The Trustee may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, Officer's
Certificate, certificate of auditors or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, appraisal,
bond or other paper or document believed by it to be genuine and to have
been signed or presented to it by the proper party or parties;
(ii) The Trustee may consult with counsel and any Opinion of Counsel
or advice of such counsel shall be full and complete authorization and
protection in respect of any action taken or suffered or omitted by it
hereunder in good faith and in accordance with such Opinion of Counsel or
advice;
(iii) The Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Agreement or to institute,
conduct or defend any litigation hereunder or in relation hereto at the
request, order or direction of the Certificate Insurer or any of the
Certificateholders, pursuant to the provisions of this Agreement, unless
the Certificate Insurer or such Certificateholders shall have offered to
the Trustee reasonable security or indemnity against the costs, expenses
and liabilities which may be incurred therein or thereby; nothing
contained herein shall, however, relieve the Trustee of the obligation,
upon the occurrence of a Servicer Default of which a Responsible Officer
has actual knowledge (which has not been cured), to exercise such of the
rights and powers vested in it by this Agreement, and to use the same
degree of care and skill in their exercise as a prudent person would
exercise or use under the circumstances in the conduct of his own affairs;
(iv) The Trustee shall not be personally liable for any action
taken, suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon it
by this Agreement;
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(v) Prior to the occurrence of a Servicer Default hereunder and
after the curing of all Servicer Defaults which may have occurred, the
Trustee shall not be bound to make any investigation into the facts or
matters stated in any resolution, certificate, statement, instrument,
opinion, report, notice, direction, note, request, consent, order,
approval, bond or other paper or document, unless requested in writing to
do so by the Certificate Insurer or, after a Certificate Insurer Default,
Holders of Certificates evidencing not less than 25% of the Percentage
Interests; provided however, that if the prompt payment to the Trustee of
the costs, expenses or liabilities likely to be incurred by it in the
making of such investigation is, in the opinion of the Trustee, not
reasonably assured to the Trustee by the security afforded to it by the
terms of this Agreement, the Trustee may require indemnity satisfactory to
it against such expense or liability as a condition to so proceeding. The
reasonable expense of every such examination shall be paid by the
Transferor, if a Servicer Default shall have occurred and is continuing,
and otherwise by the Certificate Insurer or the Certificateholder
requesting the investigation;
(vi) The Trustee shall not be required to expend or risk its own
funds or otherwise incur any financial liability in the performance of any
of its duties hereunder or in the exercise of any of its rights or powers,
if there is any ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not assured to it,
and none of the provisions contained in this Agreement shall in any event
require the Trustee to perform, or be responsible for the manner of
performance of, any obligations of the Master Servicer under this
Agreement except during such time, if any, as the Trustee shall be the
successor to, and be vested with the rights, duties, powers and privileges
of, the Master Servicer in accordance with the terms of this Agreement;
(vii) Whenever in the administration of this Agreement the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, offering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, conclusively rely upon an Officer's Certificate;
and
(viii) The Trustee may execute any of the trusts or powers hereunder
by or through agents, attorneys, custodians or nominees or perform any
duties hereunder either directly or by or through agents, attorneys,
custodians or nominees and the Trustee shall not be responsible for any
misconduct or negligence on the part of any agent, attorney, custodian or
nominee appointed with due care by it hereunder.
Specifically, and not by way of limitation of the foregoing, the Trustee
may consult with counsel as to the limitations, if any, on interest to be
computed with respect to interest shortfalls in respect of prior distribution
dates, if any, and any Opinion of Counsel with respect thereto
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shall be full and complete authorization and protection in respect of any action
taken, suffered or omitted to be taken with respect thereto by it in good faith
and in accordance with such Opinion of Counsel.
Section 8.03. Trustee Not Liable for Certificates or Contracts. The
recitals contained herein and in the Certificates (other than the certification
of authentication on the Certificates) shall be taken as the statements of the
Transferor or the Master Servicer, as the case may be, and the Trustee assumes
no responsibility for their correctness. The Trustee makes no representations as
to the validity or sufficiency of this Agreement or of the Certificates (except
that the Certificates shall be duly and validly authenticated by it) or of any
Contract or related document. The Trustee shall not be accountable for the use
or application by the Transferor, the Master Servicer or any Subservicers of any
of the Certificates or of the proceeds of such Certificates, or for the use or
application of any funds paid pursuant hereto to the Transferor, the Master
Servicer or any Subservicers in respect of the Contracts or deposited in any
Account (or any other account hereafter established to effectuate the
transactions contemplated herein and in accordance with the terms hereof) by the
Transferor, the Master Servicer or any Subservicers. Subject to Article VII and
Sections 8.01 and 8.02, the Trustee shall have no responsibility or liability
for or with respect to the validity of any security interest in any Financed
Vehicle, the perfection of any such security interest (whether as of the date
hereof or at any future time), the maintenance of or the taking of any action to
maintain such perfection, the existence or validity of any Contract, the
validity of the assignment of any Contract to the Trust Estate or of any
intervening assignment, the review of any Contract or any Contract File (it
being understood that the Trustee has not reviewed and does not intend to review
such matters), the completeness of any Contract File, the receipt by its
custodian of any Contract or Contract File, the performance or enforcement of
any Contract (subject to Section 3.01), the compliance by the Master Servicer or
the Transferor with any covenant or the breach by the Master Servicer or the
Transferor of any warranty or representation made hereunder or in any related
document or the accuracy of any such warranty or representation, the acts or
omissions of the Master Servicer or any Obligor or Dealer, any action of the
Master Servicer or any Subservicer taken in the name of the Trustee or any
action by the Trustee taken at the instruction of the Transferor, the Master
Servicer or any Subservicer.
Section 8.04. Trustee May Own Certificates. The Trustee in its individual
or any other capacity may become the owner or pledgee of Certificates with the
same rights it would have if it were not Trustee.
Section 8.05. Eligibility Requirements for Trustee. The Trustee hereunder
shall at all times be a corporation organized and doing business under the laws
of the United States of America or any state thereof, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least $50,000,000 and subject to supervision or examination by federal or State
authority. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of the aforesaid supervising or examining
authority, then for the purposes of this Section the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent
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report of condition so published. In case at any time the Trustee shall cease to
be eligible in accordance with the provisions of this Section, the Trustee shall
resign immediately in the manner and with the effect specified in Section 8.06.
Section 8.06. Resignation and Removal of the Trustee. The Trustee may at
any time resign and be discharged from the trusts hereby created by giving
written notice thereof to the Transferor and the Certificate Insurer. Upon
receiving such notice of resignation, the Transferor shall with the written
consent of the Certificate Insurer (unless a Certificate Insurer Default has
occurred and is continuing), promptly appoint a successor trustee by written
instrument, in triplicate, one copy of which instrument shall be delivered to
the resigning Trustee, one copy to the Certificate Insurer and one copy to the
successor trustee. If no successor trustee shall have been so appointed and have
accepted appointment within thirty (30) days after the giving of such notice of
resignation, the resigning Trustee may petition any court of competent
jurisdiction for the appointment of a successor trustee. If the Trustee shall
resign voluntarily, for any reason, except lack of eligibility, then the Trustee
shall bear all of its costs and expenses (including without limitation its
attorneys' fees) of transferring the trusteeship to a successor trustee and such
costs and expenses shall not be reimbursable from the Trust Estate nor payable
by the Transferor or the Master Servicer.
If at any time the Trustee shall cease to be eligible in accordance with
the provisions of Section 8.05 and shall fail to resign after written request
therefor by the Transferor, or if at any time the Trustee shall become incapable
of acting, or shall be adjudged a bankrupt or insolvent, or a receiver of the
Trustee or of its property shall be appointed, or any public officer shall take
charge or control of the Trustee or of its property or affairs for the purpose
of rehabilitation, conservation or liquidation, then the Transferor may with the
written consent of the Certificate Insurer (unless a Certificate Insurer Default
has occurred and is continuing), remove the Trustee and appoint a successor
trustee by written instrument, in triplicate, one copy of which instrument shall
be delivered to the Trustee so removed, one copy to the Certificate Insurer and
one copy to the successor trustee.
The Certificate Insurer (or if a Certificate Insurer Default shall have
occurred and be continuing, Certificateholders holding Certificates evidencing
in the aggregate a majority of Percentage Interests) at any time may remove the
Trustee and appoint a successor trustee by written instrument or instruments, in
triplicate, signed by the Certificate Insurer or such Holders, as the case may
be, or their attorneys-in-fact duly authorized, one complete set of which
instruments shall be delivered to the Transferor, one complete set to the
Trustee so removed and one complete set to the successor trustee so appointed.
Any resignation or removal of the Trustee and appointment of a successor
trustee pursuant to any of the provisions of this Section shall become effective
only upon acceptance of appointment by the successor trustee as provided in
Section 8.07. Upon resignation or removal of the Trustee and appointment of a
successor trustee, the predecessor trustee shall transfer the Certificate Policy
to the successor trustee by delivering the Certificate Policy to the successor
trustee.
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The respective obligations of the Transferor and the Master Servicer as
set forth in this Agreement; provided that, such obligations include upon any
removal shall survive the removal or resignation of the Trustee as provided in
this Section (the obligation to pay any amounts owed to the Trustee pursuant to
Section 8.11 of this Agreement which amount shall be due and payable. No Trustee
under this Agreement shall be liable for any acts or omissions of any successor
trustee.
Section 8.07. Successor Trustee. Any successor trustee appointed as
provided in Section 8.06 shall execute, acknowledge and deliver to the
Transferor, the Master Servicer, the Certificate Insurer and to its predecessor
trustee an instrument accepting such appointment hereunder, and thereupon the
resignation or removal of the predecessor trustee and the appointment of such
successor trustee shall become effective and such successor trustee, without any
further act, deed or conveyance, shall become fully vested with all the rights,
powers, duties and obligations of its predecessor hereunder, with the like
effect as if originally named as trustee herein. The predecessor trustee upon
payment of its then unpaid charges, if any, shall execute and deliver an
instrument transferring to such successor trustee all of the rights, powers and
trusts of the predecessor trustee, and shall duly assign, transfer and deliver
to such successor trustee all property and money held by such predecessor
trustee and the Transferor, the Master Servicer and the predecessor trustee
shall execute and deliver such instruments and do such other things as may
reasonably be required for more fully and certainly vesting and confirming in
the successor trustee all such rights, powers, duties and obligations.
No successor trustee shall accept appointment as provided in this Section
unless at the time of such acceptance such successor trustee shall be eligible
under the provisions of Section 8.05.
Upon acceptance of appointment by a successor trustee as provided in this
Section, the successor trustee shall mail notice of the succession of such
trustee hereunder to each Rating Agency and all Holders of Certificates at their
addresses as shown in the Certificate Register. If the successor trustee fails
to mail such notice within ten days after acceptance of appointment by the
successor trustee, the Master Servicer shall cause such notice to be mailed at
the expense of the successor trustee.
Section 8.08. Merger or Consolidation of Trustee. Any corporation into
which the Trustee may be merged or converted or with which it may be
consolidated or any corporation resulting from any merger, conversion or
consolidation to which the Trustee shall be a party, or any corporation
succeeding to the business of the Trustee, shall be the successor of the Trustee
hereunder, provided such corporation shall be eligible under the provisions of
Section 8.05, without the execution or filing of any paper or any further act on
the part of any of the parties hereto, anything herein to the contrary
notwithstanding. The Trustee or its successor hereunder shall provide the Master
Servicer and the Certificate Insurer with prompt notice of any such transaction.
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Section 8.09. Appointment of Co-Trustee or Separate Trustee.
Notwithstanding any other provisions hereof, at any time, for the purpose of
meeting any legal requirements of any jurisdiction in which any part of the
Trust Estate or property securing the same may at the time be located, the
Transferor, the Certificate Insurer (unless a Certificate Insurer Default shall
have occurred and be continuing) and the Trustee acting jointly shall have the
power and shall execute and deliver all instruments to appoint one or more
Persons approved by the Trustee to act as co-trustee or co-trustees, jointly
with the Trustee, or separate trustee or separate trustees, of all or any part
of the Trust Estate, and to vest in such Person or Persons, in such capacity and
for the benefit of the Certificateholders, such title to the Trust Estate, or
any part thereof, and, subject to the other provisions of this Section 8.09,
such powers, duties, obligations, rights and trusts as the Transferor, the
Certificate Insurer and the Trustee may consider necessary or desirable. If the
Transferor and the Certificate Insurer shall not have joined in such appointment
within fifteen (15) days after the receipt by it of a request so to do, or a
Certificate Insurer Default shall have occurred and be continuing, the Trustee
alone shall have the power to make such appointment. No co-trustee or separate
trustee hereunder shall be required to meet the terms of eligibility as a
successor trustee under Section 8.05 hereunder and no notice to Holders of
Certificates of the appointment of a co-trustee or separate trustee shall be
required under Section 8.07.
In the case of any appointment of a co-trustee or separate trustee
pursuant to this Section 8.09, all rights, powers, duties and obligations
conferred or imposed upon the Trustee shall be conferred or imposed upon and
exercised or performed by the Trustee and such separate trustee or co-trustee
jointly (it being understood at such separate trustee or co-trustee is not
authorized to act without the Trustee joining in such act), except to the extent
that under any law of any jurisdiction in which any particular act or acts are
to be performed (whether as Trustee hereunder or as successor to the Master
Servicer hereunder), the Trustee shall be incompetent or unqualified to perform
such act or acts, in which event such rights, powers, duties and obligations
(including the holding of title to the Trust Estate or any portion thereof in
any such jurisdiction) shall be exercised and performed by such separate trustee
or co-trustee at the direction of the Trustee.
No trustee hereunder shall be liable by reason of any act or omission of
any other trustee hereunder. The Master Servicer, the Trustee and, provided no
Certificate Insurer Default shall have occurred, the Certificate Insurer acting
jointly may at any time accept the resignation of or remove any separate trustee
or co-trustee.
Any notice, request or other writing given to the Trustee shall be deemed
to have been given to each of the then separate trustees and co-trustees, as
effectively as if given to each of them. Every instrument appointing any
separate trustee or co-trustee shall refer to this Agreement and the conditions
of this Article VIII. Each separate trustee and co-trustee, upon its acceptance
of the trusts conferred, shall be vested with the estates or property specified
in its instrument of appointment, either jointly with the Trustee or separately,
as may be provided therein, subject to all the provisions of this Agreement,
specifically including every provision
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of this Agreement relating to the conduct of, affecting the liability of, or
affording protection to, the Trustee. Every such instrument shall be filed with
the Trustee.
Any separate trustee or co-trustee may, at any time, constitute the
Trustee its agent or attorney-in-fact, with full power and authority, to the
extent not prohibited by law, to do any lawful act under or in respect of this
Agreement on its behalf and in its name. If any separate trustee or co-trustee
shall die, become incapable of acting, resign or be removed, all of its estates,
properties, rights, remedies and trusts shall vest in and be exercised by the
Trustee, to the extent permitted by law, without the appointment of a new or
successor trustee.
Section 8.10. Appointment of Office or Agency. The Trustee will maintain
an office at the address stated in Section 10.05(c) hereof where notices and
demands to or upon the Trustee in respect of the Certificates may be served.
Section 8.11. Trustee's Compensation and Reimbursement.
(a) The Transferor and NAFCO jointly and severally agree:
(i) to pay the Trustee compensation in any amount computed in
accordance with the Trustee's fee schedule attached hereto as
Schedule 2 (which compensation shall not be limited by any provision
of law relating to the compensation of a trustee of an express
trust);
(ii) except as otherwise expressly provided herein, to
reimburse the Trustee upon its request for all reasonable expenses,
disbursements and advances (including, without limitation, expenses
incurred in connection with notices or other communications to
Certificateholders) incurred or made by the Trustee in accordance
with any provision of this Agreement (including the reasonable
compensation and the expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may be
attributable to its negligence or willful misconduct; and
(iii) to indemnify the Trustee and its officers, directors,
employees and agents for, and to hold them harmless against, any
loss, liability, expense or tax (but not including taxes measured by
income or revenues) incurred without negligence or willful
misconduct on their part, arising out of or in connection with (A)
the acceptance of the Trustee's duties under, or administration of
the Trust Estate in accordance with the terms of, this Agreement,
including the costs and expenses of counsel to defend themselves
against any claim or liability in connection with the exercise or
performance of any of their powers or duties hereunder, or (B) the
Transferor's violation of any federal or state securities laws in
connection with the offering and sale of the Certificates, provided
that:
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(A) with respect to any such claim, the Trustee shall have
given the Transferor written notice thereof promptly after the
Trustee shall have knowledge thereof;
(B) while maintaining absolute control over its own defense,
the Trustee shall, unless its interests are adverse to that of the
Transferor, cooperate and consult fully with the Transferor in
preparing such defense;
(C) notwithstanding any other provision of this Section
8.11(a) the Transferor shall not be liable for settlement of any
such claim by the Trustee entered into without the prior written
consent of the Transferor; and
(D) the Trustee and its agents, as a group, shall be entitled
to counsel separate from the Transferor to the extent the
Transferor's interests are adverse to the Trustee's or the interests
of such agents (to be determined in the sole discretion of the
Trustee).
(b) Notwithstanding that the Transferor and NAFCO agree to pay the
Trustee the amounts set forth in Section 8.11(a), the Trustee shall distribute
to itself its fee described in Section 8.11(a)(i) pursuant to Section 3.11(b)
and Section 4.01 and shall distribute to itself its expenses and amounts
described in Section 8.11(a)(ii) and (iii) pursuant to Section 4.01. To the
extent that amounts are available to pay the Trustee as provided herein, the
Transferor and NAFCO shall not be liable to the Trustee. To the extent that
amounts are not available to pay the Trustee as provided herein, NAFCO, whether
or not it then is acting as Master Servicer, shall pay the Trustee such amounts.
Section 8.12. Trustee May Enforce Claims Without Possession Of
Certificates. All rights of action and claims under this Agreement or the
Certificates may be prosecuted and enforced by the Trustee without the
possession of any of the Certificates or the production thereof in any
proceeding relating thereto, and any such proceedings instituted by the Trustee
shall be brought in its own name as trustee. Any recovery of judgment shall,
after the payment in full of compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel, be for the ratable benefit of the
Certificateholders in respect of which such judgment has been obtained.
Section 8.13. Suits for Enforcement. If a Servicer Default shall occur and
be continuing, the Trustee, in its sole discretion, may proceed to protect and
enforce its rights and the rights of the Certificateholders under this Agreement
by suit, action or proceeding in equity or at law or otherwise, whether for the
specific performance of any covenant or agreement contained in this Agreement or
in aid of the execution of any power granted in this Agreement or for the
enforcement of any other legal, equitable or other remedy as the Trustee, being
advised by counsel, shall deem most effectual to protect and enforce any of the
rights of the Trustee or the Certificateholders. Nothing herein contained shall
be deemed to authorize the Trustee to authorize or consent to or accept or adopt
on behalf of any Certificateholder any plan of
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reorganization, arrangement, adjustment or composition affecting the
Certificates or the rights of any Holder, thereof, or authorize the Trustee to
vote in respect of the claim of any Certificateholder in any such proceeding.
Section 8.14. Rights of Direct Trustee. The Certificate Insurer or, if a
Certificate Insurer Default shall have occurred and be continuing, the Holders
of Certificates evidencing in the aggregate not less than a majority of the
Percentage Interests of the Certificates (the "Majority Certificateholders"),
shall have the right to direct the time, method, and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee; provided however, that the Trustee may decline
to follow any such direction if the Trustee, being advised by counsel,
determines that the action so directed may not lawfully be taken, or if the
Trustee shall determine, in good faith, that the proceedings so directed would
be illegal or involve the Trustee in personal liability or, only if a
Certificate Insurer Default shall have occurred and be continuing, be unduly
prejudicial to the rights to the Certificateholders not giving such direction or
that reasonable security or indemnity against the cost, expenses and liabilities
which may be incurred has not been offered to it; and, provided further that
nothing in this Agreement shall impair the right of the Trustee to take any
action deemed proper by the Trustee and which is not inconsistent with such
direction of the Certificate Insurer or Majority Certificateholders.
ARTICLE IX
Termination
Section 9.01. Termination upon Retransfer to the Transferor or Liquidation
of All Contracts. The respective obligations and responsibilities of the Master
Servicer, the Transferor and the Trustee created hereby (other than the
obligation of the Trustee to make final payments to Certificateholders, the
Master Servicer and the Transferor as herein set forth) shall terminate upon (i)
the retransfer to the Transferor of all Contracts and all property acquired in
respect of any Contract remaining in the Trust Estate in exchange for the
delivery to the Trustee of an amount (the "Total Retransfer Amount") equal to
the sum of (A) 100% of the Certificate Balance as of the Distribution Date upon
which the proceeds of any retransfer are to be distributed, plus (B) one month's
interest at the Certificate Rate on the Certificate Balance on the Distribution
Date upon which the proceeds of any retransfer are to be distributed, (ii) the
sale, liquidation or disposal of the Contracts pursuant to Section 9.02 upon the
occurrence of a Bankruptcy Event with respect to the Transferor or (iii) five
months after the later of the final payment or other liquidation of the last
Contract remaining in the Trust Estate or the disposition of all property
acquired upon Repossession of any Financed Vehicle; provided however, that in no
event shall the trust created hereby continue beyond the expiration of
twenty-one years from the death of the last survivor of the descendants of
Xxxxxx X. Xxxxxxx, former ambassador to the Court of St. Xxxxx, living on the
Closing Date.
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The right of the Transferor to require the retransfer to it of all
Contracts pursuant to (i) above is conditioned upon (a) the Pool Outstanding
Principal Balance as of the Distribution Date upon which the proceeds of such
repurchase are to be distributed being less than ten percent (10%) of the
Original Pool Outstanding Principal Balance, (b) delivery by the Transferor of
written notice of such retransfer to the Trustee and the Master Servicer not
later than the fifteenth day of the month next preceding the month in which such
retransfer will occur and (c) receipt of the prior written consent of the
Certificate Insurer if such retransfer would result in a claim on the
Certificate Policy on such Distribution Date or any Distribution Date thereafter
or would result in any amount owing to the Certificate Insurer under the
Insurance Agreement remaining unpaid. If such right is exercised, the Master
Servicer shall cooperate fully with the Transferor in effecting the retransfer
of the Contracts and related Contract Files and records to the Transferor. In
addition, the Trustee and any Subservicer shall promptly release to the
Transferor the Contract Files pertaining to the Contracts being retransferred.
Notice of any termination pursuant to clause (i) above specifying the
Distribution Date (the "Payment Date") upon which the Certificateholders may
surrender their Certificates to the Trustee for payment of the final
distribution and cancellation, shall be given promptly by the Trustee by letter
to Certificateholders mailed not earlier than the twenty first (21st) day and
not later than the twenty-fifth day of the month next preceding the month of
such final distribution specifying (A) the Distribution Date upon which final
payment of the Certificates will be made upon presentation and surrender of
Certificates at the office or agency appointed by the Trustee for that purpose
at the Corporate Trust Office (B) the amount of any such final payment and (C)
that the Record Date otherwise applicable to such Distribution Date is not
applicable, payments being made only upon presentation and surrender of the
Certificates at the office or agency of the Trustee therein specified. The
Trustee shall give such notice to the Master Servicer, the Certificate Insurer
and the Transferor at the time such notice is given to Certificateholders. The
Transferor shall deposit in the Certificate Account at least one Business Day
prior to the date on which such notice is given an amount equal to the amount
necessary to make the amount on deposit in the Certificate Account on the
Payment Date equal to the Total Retransfer Amount for the Contracts computed as
above provided. Upon presentation and surrender of the Certificates, the Trustee
shall cause to be distributed to Certificateholders the Guaranteed Distribution
Amount. If the Transferor has deposited the Total Retransfer Amount in the
Certificate Account in accordance with this paragraph, no interest shall be
payable in respect of the Certificates after the Payment Date.
If the Trustee is unable to apply any funds in accordance with this
Section by reason of any legal proceeding or by reason of any order or judgment
of any court or governmental authority enjoining, or restraining or otherwise
prohibiting such application, the obligations under this Agreement and the
Certificates shall be revived and restated as though no deposit of funds had
occurred pursuant to this Section and the Transferor shall promptly reassign the
Contracts and Contract Files to the Trustee until such time as the Trustee is
permitted to apply all such funds in accordance with this Section or the
obligations with respect to the Certificates are otherwise satisfied.
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In the event that all of the Certificateholders shall not surrender their
Certificates for cancellation within six months after the time specified in the
above-mentioned written notice, the Trustee shall give a second written notice
to the remaining Certificateholders to surrender their Certificates for
cancellation and receive the final distribution with respect thereto. If within
one year after the second notice all the Certificates shall not have been
surrendered for cancellation, the Trustee may take appropriate steps, or may
appoint an agent to take appropriate steps, to contact the remaining
Certificateholders concerning surrender of their Certificates, and the cost
thereof shall be paid out of the funds and other assets which remain subject
hereto.
Upon final termination of the Trust Estate, the Accounts shall be
terminated and any amounts on deposit therein in excess of those lawfully due
and payable to any Person shall be paid to the Transferor.
Notwithstanding any termination of the Trust Estate pursuant to Section
9.01, the Trustee shall remain obligated to distribute to the Certificateholders
or former Certificateholders entitled thereto any amounts paid by the
Certificate Insurer to the Trustee as Preference Claims pursuant to the
Certificate Policy.
Section 9.02. Disposition of Contracts upon Bankruptcy Event. (a) Upon the
occurrence of a Bankruptcy Event with respect to the Transferor, the Transferor
shall promptly give written notice to the Trustee and the Certificate Insurer of
the occurrence of such Bankruptcy Event and, if the Revolving Period has not
terminated shall immediately cease transferring Additional Contracts to the
Trust. Notwithstanding any cessation of the transfer of Additional Contracts to
the Trust, Contracts transferred to the Trust prior to the occurrence of such
Bankruptcy Event and collections in respect thereof, whenever collected or
accrued on such Contracts, shall continue to be a part of the Trust. Within 15
days after receipt by the Trustee of notice of the occurrence of a Bankruptcy
Event, the Trustee shall (i) publish a notice in either The Wall Street Journal
or The New York Times that a Bankruptcy Event has occurred with respect to the
Transferor and that the Trustee intends to sell, dispose of or otherwise
liquidate the Contracts on commercially reasonable terms and in a commercially
reasonable manner and (ii) give notice to Certificateholders and the Certificate
Insurer describing the provisions of this Section and requesting instructions
from such Holders. If after 90 days from the day notice pursuant to clause (i)
of the preceding sentence is first published (the "Publication Date"), the
Trustee shall not have received written instructions of (x) Holders of
Certificates representing a majority of the Percentage Interests to the effect
that such Certificateholders disapprove of the liquidation of the Contracts, and
(y) the Certificate Insurer to such effect, the Trustee shall, subject to
9.02(c) below, promptly sell, dispose of or otherwise liquidate the Contracts
(other than any Contracts assigned to the Certificate Insurer pursuant to clause
(c) below) in a commercially reasonable manner and on commercially reasonable
terms, which shall include the solicitation of competitive bids. The Trustee
shall promptly notify the Certificate Insurer upon accepting an offer for the
Contracts. The Trustee may obtain a prior determination from any conservator,
receiver or liquidator that the terms and manner of any proposed sale,
disposition or liquidation are commercially reasonable. The provisions of
Section 9.01 and 9.02 shall not be deemed to be mutually exclusive.
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(b) The proceeds from any sale, disposition or liquidation of the
Contracts pursuant to Section 9.01 or subsection (a) above shall be treated as
collections on the Contracts and shall immediately be deposited in the
Collection Account. The Trustee shall determine conclusively the amount of such
proceeds which are deemed to be principal collections and finance charge
collections. Such proceeds and all amounts on deposit in the Collection Account,
the Pre-Funding Account, the Pre-Funding Period Reserve Account and the
Revolving Account shall be distributed pursuant to Section 4.01 on the
Distribution Date following the Due Period in which such sale, liquidation or
disposition occurs and the Trust shall terminate immediately thereafter.
(c) In the event that, based on offers to purchase the Contracts accepted
by the Trustee, the Certificate Insurer would not be reimbursed in full for all
amounts due to it under the Insurance Agreement following the distribution of
the proceeds of such sale and all funds on deposit in the Collection Account,
the Revolving Account, the Pre-Funding Account, the Certificate Account and the
Pre-Funding Reserve Account to the Certificateholders pursuant to Section
9.02(b) of this Agreement, the Certificate Insurer shall be permitted to request
an assignment of Contracts and all funds on deposit in the Revolving Account,
the Pre-Funding Account, the Certificate Account and the Pre-Funding Reserve
Account to it or its designee (including any liquidating or grantor trust
designated by it) in lieu of such a distribution of such sale proceeds. In the
event that the Certificate Insurer elects to request such an assignment,
promptly following receipt by the Trustee of notice of such request, the Trustee
shall file with the Certificate Insurer a Notice of Claim in accordance with the
Certificate Policy in respect of the principal amount, if any, of the
Certificates that are unpaid on the Distribution Date immediately preceding the
date of the receipt by the Trustee of such notice plus accrued interest thereon.
All amounts received by the Trustee from the Certificate Insurer pursuant to
this Section 9.02(c) shall be distributed to the Certificateholders. Immediately
upon payment by the Certificate Insurer of all amounts required to be paid by
the Certificate Insurer pursuant to this Section 9.02(c), the Trustee shall be
deemed to have assigned the Contracts and all funds on deposit in the Revolving
Account, the Pre-Funding Account, the Collection Account, the Certificate
Account and the Pre-Funding Reserve Account to the Certificate Insurer or its
designee. To effect such deemed assignment, the Trustee shall do and perform any
reasonable acts and execute any further instruments reasonably requested by the
Certificate Insurer.
ARTICLE X
Miscellaneous Provisions
Section 10.01. Amendment. This Agreement may be amended from time to time
by the Master Servicer, the Transferor and the Trustee, without the consent of
any of the Certificateholders but with the prior written consent of the
Certificate Insurer (unless a Certificate Insurer Default has occurred and is
continuing), to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein or therein, or
to make any other provisions with respect to matters or questions arising under
this Agreement which shall not be materially inconsistent with the provisions of
this Agreement,
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provided that such action shall not, as evidenced by an Opinion of Counsel,
adversely affect in any material respect the interests of any Certificateholder
or the Certificate Insurer.
In executing or accepting the additional trusts created by any amendment
to this Agreement permitted by this Section, the Trustee shall be entitled to
receive, and shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement. The Trustee may, but shall not be obligated to, enter into any such
amendment which affects the Trustee's own rights, duties or immunities under
this agreement or otherwise. The Master Servicer may, but shall not be obligated
to, enter into any amendment which affects the Master Servicer's own rights,
duties or immunities under this Agreement or otherwise.
This Agreement may also be amended from time to time, with the written
consent of the Certificate Insurer (unless a Certificate Insurer Default has
occurred and is continuing), by the Master Servicer, the Transferor and the
Trustee with the consent of the Holders of Certificates evidencing in the
aggregate not less than a 662/3 Percentage Interest of the Certificates for the
purpose of adding any provisions to or changing in any manner or eliminating any
of the provisions of this Agreement or of modifying in any manner the rights of
the Certificateholders; provided however, that no such amendment shall (i)
reduce in any manner the amount of, or delay the timing of, payments received on
Contracts which are required to be distributed on any Certificate without the
content of the Holder of such Certificate, or (ii) reduce the aforesaid level of
Percentage Interests the Holders of which are required to consent to any such
amendment, without the consent of the Holders of all Certificates then
outstanding. Promptly after the execution of any amendment pursuant to this
paragraph, the Trustee shall furnish written notification of the substance of
such amendment to each Certificateholder. If a Certificate Insurer Default shall
have occurred and be continuing, no amendment to this Agreement that would
materially and adversely affect the interests of the Certificate Insurer shall
be effected without the Certificate Insurer's prior written consent.
It shall not be necessary for the consent of Certificateholders under this
Section 10.01 to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Certificateholders shall be subject to such reasonable
regulations as the Trustee may prescribe. The Transferor shall notify each
Rating Agency prior to executing any amendment of this agreement pursuant to
this Section 10.01.
The expenses of any Opinion of Counsel delivered hereunder shall be paid
for by the Person requesting the opinion and, in the case of the Trustee and the
Certificate Insurer, shall be considered an expense reimbursable as otherwise
provided herein and, in the case of the Master Servicer, shall be reimbursable
under Sections 3.11(b) and 4.01(b).
Section 10.02. Recordation of Agreement. To the extent permitted by
applicable law, this Agreement is subject to recordation in any appropriate
public recording office or elsewhere, such
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recordation to be effected by the Transferor and at its expense upon direction
by the Trustee, but only upon direction accompanied by an Opinion of Counsel at
the Transferor's expense to the effect that such recordation materially and
beneficially affects the interests of the Certificateholders and the Certificate
Insurer. The Trustee shall have no duty to determine whether the recordation of
this Agreement is necessary under applicable law to perfect the interests of the
Certificateholders and the Certificate Insurer in the Trust Estate.
For the purpose of facilitating the recordation of this Agreement as
herein provided and for other purposes, this Agreement may be executed
simultaneously in any number of counterparts, each of which counterparts shall
be deemed to be an original, and such counterparts shall constitute but one and
the same instrument.
Section 10.03. Limitation on Rights of Certificateholders. The death or
incapacity of any Certificateholder shall not operate to terminate this
Agreement or the Trust Estate, nor entitle such Certificateholder's legal
representatives or heirs to claim an accounting or to take any action or
proceeding in any court for a partition or winding up of the Trust Estate, nor
otherwise affect the rights, obligations and liabilities of the parties hereto
or any of them.
No Certificateholder shall have any right to vote (except as provided in
this Agreement) or in any manner otherwise control the operation and management
of the Trust Estate, or the obligations of the parties hereto, nor shall
anything herein set forth, or contained in the terms of the Certificates, be
construed so as to constitute the Certificateholders from time to time as
partners or members of an association; nor, to the extent permitted by law,
shall any Certificateholder be under any liability to any third person by reason
of any action taken by the parties to this Agreement pursuant to any provision
hereof.
So long as no Certificate Insurer Default has occurred and is continuing,
whenever Certificateholder action, consent or approval is required under this
Agreement, such action, consent or approval shall be deemed to have been taken
or given on behalf of, and shall be binding upon, all Certificateholders if the
Certificate Insurer agrees to take such action or give such consent or approval.
No Certificateholder shall have any right by virtue of any provision of this
Agreement to institute any suit, action or proceeding in equity or at law upon
or under or with respect to this Agreement, unless (i) a Certificate Insurer
Default shall have occurred and be continuing and (ii) such Holder previously
shall have given to the Trustee a written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the
Certificateholders evidencing in the aggregate not less than 25% of the
Percentage Interests shall have made written request upon the Trustee to
institute such action, suit or proceeding in its own name as Trustee hereunder
and shall have offered to the Trustee such indemnity as it may require against
the costs, expenses and liabilities to be incurred therein or thereby, and the
Trustee, for sixty days after its receipt of such notice, request and offer of
indemnity, shall have neglected or refused to institute any such action, suit or
proceeding; it being understood and intended, and being expressly covenanted by
each Certificateholder with every other Certificateholder and the Trustee, that
no one or more Certificateholders shall have any right in any manner whatever by
virtue of any provision of this Agreement to affect, disturb or prejudice
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the rights of the Holders of any other of such Certificates, or to obtain or
seek to obtain priority over or preference to any other such Holder, or to
enforce any right under this Agreement, except in the manner herein provided and
for the equal, ratable and common benefit of Certificateholders. For the
protection and enforcement of the provisions of this Section, each and every
Certificateholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
Nothing in this Agreement shall be construed as giving the
Certificateholders any right to make a claim under the Certificate Policy.
Section 10.04. GOVERNING LAW. THIS AGREEMENT AND THE CERTIFICATES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL, SUBSTANTIVE LAWS OF
THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS, PROVIDED THAT THE
IMMUNITIES, STANDARD OF CARE, RIGHTS AND OBLIGATIONS OF THE TRUSTEE IN
CONNECTION WITH THE PERFORMANCE OF ITS DUTIES HEREUNDER SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE JURISDICTION IN WHICH ITS CORPORATE
TRUST OFFICE IS LOCATED.
Section 10.05. Notices. All demands and notices hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered at
or mailed by first class mail, postage prepaid, or delivered by facsimile
transmission, promptly confirmed in writing, to (a) in the case of the
Transferor, One Park Place, Suite 200, 000 XX 00xx Xxxxxx, Xxxx Xxxxx, Xxxxxxx
00000, or such other address as may hereafter be furnished to the Master
Servicer and the Trustee in writing by the Transferor, (b) in the case of the
Master Servicer, Xxx Xxxx Xxxxx, Xxxxx 000, 000 XX 00xx Xxxxxx, Xxxx Xxxxx,
Xxxxxxx 00000, or such other address as may be hereafter furnished to the
Transferor and the Trustee by the Master Servicer in writing, (c) in the case of
the Trustee, 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or
such other address as may hereafter be furnished to the Transferor and the
Master Servicer in writing by the Trustee, (d) in the case of the Certificate
Insurer, to its address at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or its fax
number at (000) 000-0000, Attention: Surveillance Department Re: National Auto
Finance 1995-1 Trust, 6.36% Automobile Loan Asset-Backed Certificates, or such
other address or fax number as may hereafter be furnished to the Transferor, the
Master Servicer and the Trustee in writing by the Certificate Insurer and (e) in
the case of the Collateral Agent, to its address at 000 Xxxx Xxxxxx Xxxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000, or such other address as may hereafter be
furnished to the Transferor, the Master Servicer and the Trustee in writing by
the Collateral Agent. Any notice required or permitted to be mailed to a
Certificateholder shall be given by first class mail, postage prepaid, at the
address of such Holder as shown in the Certificate Register. Any notice so
mailed within the time prescribed in this Agreement shall be conclusively
presumed to have been duly given, whether or not the Certificateholder receives
such notice.
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Section 10.06. Intention of the Parties. The Transferor intends that the
Certificates constitute indebtedness of the Transferor for federal, state and
local income and franchise tax purposes. The Transferor, the Master Servicer and
each Certificateholder, by acceptance of its Certificate, agrees to recognize
and report the Certificates as indebtedness of the Transferor for purposes of
federal, state and local income or franchise taxes and any other tax imposed on
or measured by income, and to report all receipts and repayments relating
thereto in a manner that is consistent with such characterization. The powers
granted and obligations undertaken in this Agreement shall be construed so as to
further such intent.
Section 10.07. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Certificates
or the rights of the Holders thereof.
Section 10.08. Protection of Title to Interest. (a) The Transferor or the
Master Servicer or both shall execute and file such financing statements and
cause to be executed and filed such continuation and other statements, all in
such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Trust, the Trustee and the Certificate
Insurer under this Agreement in the Trust Estate and in the proceeds thereof.
The Transferor or the Master Servicer or both shall deliver (or cause to be
delivered) to the Trustee and the Certificate Insurer file-stamped copies of, or
filing receipts for, any document filed as provided above, as soon as available
following such filing.
(b) Neither the Transferor nor the Master Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed by the Transferor in
accordance with paragraph (a) above seriously misleading within the meaning of
Section 9-402(7) of the UCC, unless it shall have given the Trustee and the
Certificate Insurer (so long as a Certificate Insurer Default shall not have
occurred and be continuing) at least 30 days prior written notice thereof, and
shall promptly file appropriate amendments to all previously filed financing
statements and continuation statements.
(c) Each of the Transferor and the Master Servicer shall give the Trustee
and the Certificate Insurer at least 30 days prior written notice of any
relocation of its principal executive office if, as a result of such relocation,
the applicable provisions of the UCC would require the filing of any amendment
of any previously filed financing or continuation statement or of any new
financing statement. The Master Servicer shall at all times maintain each office
from which it services Contracts and its principal executive office within the
United States of America.
(d) If at any time the Transferor or the Master Servicer proposes to sell,
grant a security interest in, or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the Master
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including
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any restored from backup archives) that, if they refer in any manner whatsoever
to any Contract, indicate clearly that such contract has been sold and is owned
by the Trust unless such Contract has been paid in full or repurchased by NAFCO,
the Transferor or the Master Servicer.
(e) The Master Servicer shall permit the Trustee, the Certificate Insurer,
the Transferor and their respective agents, at any time to inspect, audit and
make copies of and abstracts from the Master Servicer's records regarding any
Contracts or any other portion of the Trust Estate.
(f) The Master Servicer shall furnish to the Trustee, the Transferor and
the Certificate Insurer at any time upon request a list of all Contracts then
held as part of the Trust, together with a reconciliation of such list to the
Contract Schedules and to each of the Master Servicer's statements furnished
before such request indicating removal of Contracts from the Trust. The Trustee
shall hold any such list and Contract Schedules for examination by interested
parties during normal business hours at the Corporate Trust Office upon
reasonable notice by such Persons of their desire to conduct an examination.
(g) The Transferor and Master Servicer shall deliver to the Trustee and
the Certificate Insurer simultaneously with the execution and delivery of this
Agreement and of each amendment thereto and upon the occurrence of the events
giving rise to an obligation to give notice pursuant to Section 10.08(b) or (c),
an Opinion of Counsel (a) stating that, in the opinion of such Counsel, all
financing statements and continuation statements have been executed and filed
that are necessary fully to preserve and protect the interest of the Trustee in
the Contracts and the Trust Estate, and reciting the details of such filing or
referring to prior Opinions of Counsel in which such details are given, (b)
stating that, in the opinion of such counsel, no such action is necessary to
preserve and protect such interest, or (c) stating in the opinion of such
counsel, any action which is necessary to preserve and protect such interest
during the following 12-month period.
(h) The Master Servicer shall deliver to the Trustee and the Certificate
Insurer, within 90 days after the beginning of each calendar year beginning with
calendar year 1996, an Opinion of Counsel, either (a) stating that, in the
opinion of such counsel, all financing statements and continuation statements
have been executed and filed that are necessary fully to preserve and protect
the interest of the Trustee in the Contracts and the Trust Estate, and reciting
the details of such filings or referring to prior Opinions of Counsel in which
such details are given, (b) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
Section 10.09. Assignment. Notwithstanding anything to the contrary
contained in this Agreement, this Agreement may not be assigned by any of the
parties hereto without the prior written consent of the Trustee and the
Certificate Insurer.
Section 10.10. Certificates Nonassessable and Fully Paid.
Certificateholders shall not be personally liable for obligations of the Trust,
the interests in the Trust represented by the
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Certificates shall be nonassessable for any losses or expenses of the Trust or
for any reason whatsoever, and Certificates upon authentication thereof by the
Trustee pursuant to Section 5.01 are and shall be deemed fully paid.
Section 10.11. Third-party Beneficiaries. This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective
successor and permitted assigns. Except as otherwise provided in this Section
10.11, no other Person shall have any right or obligation hereunder. The
Certificate Insurer and its successors and assigns shall be a third-party
beneficiary to the provisions of this Agreement, and shall be entitled to rely
upon and directly enforce such provisions of this Agreement so long as no
Certificate Insurer Default shall have occurred and be continuing. Except as
expressly stated otherwise herein or in the Transaction Documents, any right of
the Certificate Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Certificate
Insurer in its sole and absolute discretion. The Certificate Insurer may
disclaim any of its rights and powers under this Agreement (but not its duties
and obligations under the Certificate Policy) upon delivery of a written notice
to the Trustee.
Section 10.12. Financial Security as Controlling Party. Each
Certificateholder by purchase of the Certificates held by it acknowledges that
the Trustee on behalf of the Trust, as partial consideration of the issuance of
the Policy, has agreed that the Certificate Insurer shall have certain rights
hereunder for so long as no Certificate Insurer Default shall have occurred and
be continuing. So long as a Certificate Insurer Default has occurred and is
continuing, any provision giving the Certificate Insurer the right to direct,
appoint or consent to, approve of, or take any action under this Agreement shall
be inoperative during the period of such Certificate Insurer Default and such
right shall instead vest in the Trustee acting at the direction of the Holders
of Certificates. The Certificate Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the
Certificate Policy) upon delivery of a written notice to the Trustee. The
Certificate Insurer may give or withhold any consent hereunder in its sole and
absolute discretion.
Section 10.13. Limitation of Liability of Trustee. Notwithstanding
anything contained herein to the contrary (i) this Agreement has been accepted
by Xxxxxx Trust and Savings Bank not in its individual capacity but solely as
Trustee and in no event shall Xxxxxx Trust and Savings Bank have any liability
for the representations, warranties, covenants, agreements or other obligations
of the Transferor hereunder or in any of the certificates, notices or agreements
delivered pursuant hereto, as to all of which recourse shall be had solely to
the assets of the Transferor, and (ii) under no circumstances shall Xxxxxx Trust
and Savings Bank be personally liable for the payment of any indebtedness or
expenses arising in connection with this Agreement to the Certificates or
otherwise. Notwithstanding the foregoing, the Trustee shall remain and be liable
for any breach of its duties and obligations hereunder.
Section 10.14. Limitation of Liability of Chase. Notwithstanding anything
contained herein to the contrary (i) this Agreement has been accepted by Chase
not in its individual capacity but solely as owner trustee of the National
Financial Auto Funding Trust and in no
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event shall Chase have any liability for the representations, warranties,
covenants, agreements or other obligations of the Transferor hereunder or in any
of the certificates, notices or agreements delivered pursuant hereto, as to all
of which recourse shall be had solely to the assets of the Transferor, and (ii)
under no circumstances shall Chase be personally liable for the payment of any
indebtedness or expenses arising in connection with this Agreement to the
Certificates or otherwise. Notwithstanding the foregoing, Chase shall remain and
be liable for any breach of its duties and obligations hereunder.
Section 10.15. Matters Relating to Purchase Agreement. To the extent that
it has rights against NAFCO under the Purchase Agreement, the Trustee shall,
subject to Article VIII, diligently pursue and enforce such rights; provided
however, that the Trustee shall not be obligated to file any suit or incur any
expense in connection therewith unless there are sufficient funds available to
reimburse the Trustee in accordance with Section 4.01 or unless the Trustee
receives satisfactory indemnity for such expenses.
Section 10.16. No Petition. Each of the Master Servicer, the Trustee and
the Certificateholders hereby agree for the benefit of the Trust that it will
not institute against the Transferor, or join any other Person is instituting
against the Transferor, any bankruptcy or insolvency proceeding under any
applicable state or federal law so long as any Certificate remains outstanding
or there shall have not elapsed one year plus one day since the date of the
final payment on the Certificates. The foregoing shall not limit the right of
the Master Servicer or the Trustee to file any claim in or otherwise take any
action with respect to any bankruptcy or insolvency proceeding that was
instituted against the Transferor by any Person other than the Trustee or the
Master Servicer.
Section 10.17. Submission to Jurisdiction. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT, AND HEREBY (A) IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
SUCH NEW YORK STATE OR FEDERAL COURT; (B) IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE
MAINTENANCE OF SUCH ACTION OR PROCEEDING; AND (C) IN THE CASE OF THE TRANSFEROR,
IRREVOCABLY APPOINTS NATIONAL FINANCIAL CORP. (THE "PROCESS AGENT"), WITH AN
OFFICE ON THE DATE HEREOF AT 0 XXXX XXXXXX, XXX XXXX, XXX XXXX 00000, XXXXXX
XXXXXX OF AMERICA, AS ITS AGENT TO RECEIVE ON BEHALF OF IT AND ITS PROPERTY
SERVICE OF COPIES OF THE SUMMONS AND COMPLAINT AND ANY OTHER PROCESS WHICH MAY
BE SERVED IN ANY SUCH ACTION OR PROCEEDING. SUCH SERVICE MAY BE MADE BY MAILING
OR DELIVERING A COPY OF SUCH PROCESS TO THE TRANSFEROR IN CARE OF THE PROCESS
AGENT AT THE PROCESS AGENT'S ABOVE ADDRESS, AND TRANSFEROR HEREBY IRREVOCABLY
89
AUTHORIZES AND DIRECTS THE PROCESS AGENT TO ACCEPT SUCH SERVICE ON ITS BEHALF.
NOTHING IN THIS SECTION 10.13 SHALL AFFECT THE RIGHT OF ANY PARTY HERETO TO
BRING ANY ACTION OR PROCEEDING AGAINST ANY OR ALL OF THE OTHER PARTIES HERETO OR
ANY OF THEIR RESPECTIVE PROPERTIES IN THE COURTS OF ANY OTHER JURISDICTION.
Section 10.18. Waiver of Jury Trial. EACH PARTY HERETO WAIVES ANY RIGHT TO
A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS
UNDER OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY
AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE
FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN),
ACTIONS OF ANY OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN
CONNECTION WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES
THAT ANY SUCH ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE
A JURY.
Section 10.19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be an original, but all of which together
shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the Transferor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
NATIONAL FINANCIAL AUTO FUNDING
TRUST, as Transferor
By: THE CHASE MANHATTAN BANK
(USA), not in its individual capacity but
solely as Owner Trustee of the National
Financial Auto Funding Trust
By: [ILLEGIBLE]
------------------------------------------
NATIONAL AUTO FINANCE COMPANY L.P.,
as Master Servicer
By: NATIONAL AUTO FINANCE
CORPORATION, its General Partner
By: __________________________________________
XXXXXX TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Trustee
By: [ILLEGIBLE]
------------------------------------------
IN WITNESS WHEREOF, the Transferor, the Master Servicer and the Trustee
have caused their names to be signed hereto by their respective officers
thereunto duly authorized, all as of the day and year first above written.
NATIONAL FINANCIAL AUTO FUNDING
TRUST, as Transferor
By: THE CHASE MANHATTAN BANK
(USA), not in its individual capacity but
solely as Owner Trustee of the National
Financial Auto Funding Trust
By: __________________________________________
NATIONAL AUTO FINANCE COMPANY L.P.,
as Master Servicer
By: NATIONAL AUTO FINANCE
CORPORATION, its General Partner
By: [ILLEGIBLE]
------------------------------------------
XXXXXX TRUST AND SAVINGS BANK,
not in its individual capacity
but solely as Trustee
By: __________________________________________
