Execution Copy
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INSURANCE AND INDEMNITY AGREEMENT
among
FINANCIAL SECURITY ASSURANCE INC.,
NATIONAL FINANCIAL AUTO FUNDING TRUST,
and
NATIONAL AUTO FINANCE COMPANY L.P.
Dated as of November 21, 1995
National Auto Finance 1995-1 Trust
6.36% Automobile Loan Asset-Backed Certificates
$38,220,000
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TABLE OF CONTENTS
Page
----
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions............................................... 2
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of NAFCO
and the Transferor........................................ 2
Section 2.02. Affirmative Covenants of NAFCO and the
Transferor................................................ 10
Section 2.03. Negative Covenants of NAFCO and the
Transferor................................................ 19
Section 2.04. Representations and Warranties of NAFCO
and the Transferor with respect to the
Master Trust.............................................. 22
Section 2.05. Affirmative Covenants of NAFCO and
the Transferor with respect to the
Master Trust.............................................. 22
Section 2.06. Negative Covenants of NAFCO and
the Transferor with respect to the
Master Trust.............................................. 24
ARTICLE III.
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy.................................... 24
Section 3.02. Payment of Fees and Premium............................... 24
Section 3.03. Reimbursement Obligation.................................. 26
Section 3.04. Indemnification........................................... 27
Section 3.05. Subrogation............................................... 30
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ARTICLE IV.
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement......................... 30
Section 4.02. Obligation Absolute....................................... 31
Section 4.03. Assignments; Reinsurance; Third-Party Rights.............. 32
Section 4.04. Liability of Financial Security........................... 33
ARTICLE V.
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default......................................... 34
Section 5.02. Remedies; Waivers......................................... 36
ARTICLE VI.
MISCELLANEOUS
Section 6.01. Amendments, Etc. ......................................... 37
Section 6.02. Notices................................................... 37
Section 6.03. Payment Procedure......................................... 39
Section 6.04. Confidentiality........................................... 39
Section 6.05. Severability.............................................. 40
Section 6.06. Governing Law............................................. 40
Section 6.07. Consent to Jurisdiction................................... 40
Section 6.08. Consent of Financial Security............................. 41
Section 6.09. Counterparts.............................................. 41
Section 6.10. Trial by Jury Waived...................................... 41
Section 6.11. Limited Liability......................................... 41
Section 6.12. Entire Agreement.......................................... 42
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INSURANCE AND INDEMNITY AGREEMENT
INSURANCE AND INDEMNITY AGREEMENT dated as of November 21, 1995, by
and among FINANCIAL SECURITY ASSURANCE INC. ("Financial Security"), NATIONAL
FINANCIAL AUTO FUNDING TRUST (the "Transferor") and NATIONAL AUTO FINANCE
COMPANY L.P. ("NAFCO", and in its capacity as Master Servicer, the "Master
Servicer").
INTRODUCTORY STATEMENTS
A. On the Closing Date, the Transferor will acquire the Initial
Contracts and certain other property related thereto from the Master Trust and
will simultaneously sell to the Trust all of its right, title and interest in
and to the Initial Contracts and such other property related thereto pursuant
to the Pooling and Servicing Agreement.
B. Subsequent to the Closing Date, the Transferor proposes to acquire
Additional Contracts and certain other property related thereto from NAFCO, and
to simultaneously sell to the Trust all of its right, title and interest in and
to such Additional Contracts and such other property related thereto pursuant
to the Pooling and Servicing Agreement.
C. The Securities will evidence in the aggregate an undivided
ownership interest of 91% of the Trust. The Transferor has requested that
Financial Security issue a financial guaranty insurance policy guarantying
certain distributions of the principal of and interest on the Securities
(including any such distributions subsequently avoided as a preference under
applicable bankruptcy law) upon the terms and subject to the conditions
provided herein.
D. NAFCO and the Transferor may in the future enter into one or more
pooling and servicing agreements or sale and servicing agreements with a trust
pursuant to which the Transferor will sell all of its right, title and interest
in and to contracts and other trust property and in connection therewith
Financial Security may in the future issue additional policies with respect to
certain guaranteed distributions on the corresponding securities issued by the
trust.
E. The parties hereto desire to specify the conditions
precedent to the issuance of the Policy, the terms of payment of
premium in respect of the Policy, the indemnity and reimbursement
to be provided to Financial Security in respect of amounts paid
by Financial Security under the Policy or otherwise and certain
other matters.
In consideration of the premises and of the agreements herein
contained, Financial Security, NAFCO and the Transferor hereby agree as
follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. All terms defined in the Pooling and
Servicing Agreement or in the Spread Account Agreement shall have the same
meanings in this Insurance Agreement. Unless otherwise specified, if a word or
phrase defined in the Pooling and Servicing Agreement or in the Spread Account
Agreement can be applied with respect to one or more Series, such a word or
phrase shall be used herein as applied to Series 1995-1. In addition,
capitalized terms used herein shall have the meanings provided in Appendix I
hereto unless the context otherwise requires.
ARTICLE II.
REPRESENTATIONS, WARRANTIES AND COVENANTS
Section 2.01. Representations and Warranties of NAFCO and the
Transferor. NAFCO represents, warrants and covenants, as of the date hereof,
the Date of Issuance, each Subsequent Transfer Date and the Date of Public
Offering, with respect to itself, with respect to the Transferor and otherwise
as follows, and the Transferor represents, warrants and covenants, as of the
date hereof, the Date of Issuance, each Subsequent Transfer Date and the Date
of Public Offering, with respect to itself and otherwise, as follows:
(a) Due Organization and Qualification. NAFCO is a limited
partnership, duly organized, validly existing and in good standing
under the laws of the state of Delaware. The Transferor is a business
trust, duly organized, validly existing and in good standing under the
laws of the state of Delaware. Each of NAFCO and the Transferor is
duly qualified to do business, is in good standing and has obtained
all necessary licenses, permits, charters, registrations and approvals
(together, "approvals") necessary for the conduct of its business as
currently
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conducted and as described in the Offering Document and the
performance of its obligations under the Transaction Documents, the
Subservicing Agreement and the Master Trust Transaction Documents, in
each jurisdiction in which the failure to be so qualified or to obtain
such approvals would render any Contract unenforceable in any respect
or would otherwise have a material adverse effect upon the
Transaction.
(b) Power and Authority. Each of NAFCO and the Transferor has
all necessary power and authority to conduct its business as currently
conducted and as described in the Offering Document, to execute,
deliver and perform its obligations under the Transaction Documents,
the Subservicing Agreement and the Master Trust Transaction Documents
and to consummate the Transaction.
(c) Due Authorization. The execution, delivery and
performance of the Transaction Documents, the Subservicing Agreement
and the Master Trust Transaction Documents by each of NAFCO and the
Transferor have been duly authorized by all necessary action and do
not require any additional approvals or consents or other action by or
any notice to or filing with any Person.
(d) Noncontravention. None of the execution and delivery of
the Transaction Documents, the Subservicing Agreement or the Master
Trust Transaction Documents by the Transferor or by NAFCO, the
consummation of the transactions contemplated thereby or the
satisfaction of the terms and conditions of the Transaction Documents,
the Subservicing Agreement or the Master Trust Transaction Documents,
(i) conflicts with or results in any breach or
violation of any provision of the trust agreement or
agreement of limited partnership of the Transferor or of
NAFCO, respectively, or any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award
currently in effect having applicability to the Transferor or
NAFCO, as the case may be, or any of their respective
properties, including regulations issued by an administrative
agency or other governmental authority having supervisory
powers over the Transferor or NAFCO, as the case may be,
(ii) constitutes a default by the Transferor or
NAFCO, as the case may be, under or a breach of any
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provision of any loan agreement, mortgage, indenture or other
agreement or instrument to which the Transferor or NAFCO, as
the case may be, or any of their respective Subsidiaries is a
party or by which it or any of its or their properties is or
may be bound or affected, or
(iii) results in or requires the creation of any
Lien upon or in respect of any of the assets of the
Transferor or NAFCO or any of their respective Subsidiaries
except as otherwise expressly contemplated by the Transaction
Documents.
(e) Legal Proceedings. There is no action, proceeding or
investigation by or before any court, governmental or administrative
agency or arbitrator against or affecting all or any of the Contracts,
NAFCO, the Transferor or any of their respective Subsidiaries, or any
properties or rights of NAFCO, the Transferor or any of their
respective Subsidiaries, pending or threatened, which, in any case, if
decided adversely, would result in a Material Adverse Change with
respect to NAFCO, the Transferor or any Contract.
(f) Valid and Binding Obligations. Each of the Transaction
Documents and the Master Trust Transaction Documents to which either
NAFCO or the Transferor is a party when executed and delivered by
NAFCO or by the Transferor, as the case may be, and the Subservicing
Agreement when executed and delivered by NAFCO will constitute the
legal, valid and binding obligations of such Person, enforceable in
accordance with their respective terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally and
general equitable principles. The Securities, when executed,
authenticated and delivered in accordance with the Pooling and
Servicing Agreement, will be validly issued and outstanding and
entitled to the benefits of the Pooling and Servicing Agreement and,
together with the Retained Interest, will evidence the entire
beneficial ownership interest in the Trust.
(g) Financial Statements. The Financial Statements of each of
the Transferor and NAFCO, copies of which have been furnished to
Financial Security, (i) are, as of the dates and for the periods
referred to therein, complete and correct in all material respects,
(ii) present fairly the financial condition and results of operations
of each of the
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Transferor and NAFCO as of the dates and for the periods indicated and
(iii) have been prepared in accordance with generally accepted
accounting principles consistently applied, except as noted therein
(subject as to interim statements to normal year-end adjustments).
Since the date of the most recent Financial Statements, there has been
no material adverse change in such financial condition or results of
operations. Except as disclosed in the Financial Statements, neither
the Transferor nor NAFCO is subject to any contingent liabilities or
commitments that, individually or in the aggregate, have a material
possibility of causing a Material Adverse Change in respect of the
Transferor or NAFCO, as the case may be.
(h) ERISA. Each of the Transferor and NAFCO is in compliance
with ERISA and has not incurred and does not reasonably expect to
incur any liabilities to the PBGC under ERISA in connection with any
Plan or Multiemployer Plan or to contribute now or in the future in
respect of any Plan or Multiemployer Plan.
(i) Accuracy of Information. None of the Provided Documents
contain any statement of a material fact with respect to NAFCO, the
Transferor or the Transaction that was untrue or misleading in any
material respect when made. Since the furnishing of the Provided
Documents, there has been no change, nor any development or event
involving a prospective change known to NAFCO or to the Transferor,
that would render any of the Provided Documents untrue or misleading
in any material respect. There is no fact known to NAFCO or to the
Transferor which has a material possibility of causing a Material
Adverse Change with respect to NAFCO, the Transferor or the Contracts.
(j) Compliance With Securities Laws. The offer and sale of
the Securities comply in all material respects with all requirements
of law, including all applicable registration requirements of
securities laws. Without limitation of the foregoing, the Offering
Document does not contain any untrue statement of a material fact and
does not omit to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the
circumstances under which they were made, not misleading; provided
that no representation is made with respect to information included in
an Offering Document and furnished by Financial Security in writing
expressly for use therein (all such information so furnished being
referred to herein as "Financial Security Information"), it being
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understood that, in respect of the initial Offering Document, the
Financial Security Information is limited to the information included
under the caption "The Certificate Insurer" and the financial
statements of Financial Security appended thereto. Neither the Trust
nor the Trust Estate is required to be registered as an "investment
company" under the Investment Company Act. The Pooling and Servicing
Agreement is not required to be qualified under the Trust Indenture
Act.
(k) Transaction Documents. Each of the representations and
warranties of NAFCO or of the Transferor contained in the Transaction
Documents is true and correct in all material respects and each of
NAFCO and the Transferor hereby makes each such representation and
warranty made by it to, and for the benefit of, Financial Security as
if the same were set forth in full herein.
(l) No Consents. No consent, license, approval or
authorization from, or registration, filing or declaration with, any
regulatory body, administrative agency, or other governmental
instrumentality, nor any consent, approval, waiver or notification of
any creditor, lessor or other nongovernmental person, is required in
connection with the execution, delivery and performance by NAFCO or by
the Transferor of this Insurance Agreement or of any other Transaction
Document to which such Person is a party, except (in each case) such
as have been obtained and are in full force and effect (other than,
with respect to the Date of Issuance, the UCC financing statements
required to be filed pursuant to the Transaction Documents by NAFCO,
the Transferor and the Master Trust, which shall be filed no later
than one Business Day after the Date of Issuance).
(m) Compliance With Law, Etc. No practice, procedure or
policy employed or proposed to be employed by NAFCO or by the
Transferor in the conduct of their respective businesses violates any
law, regulation, judgment, agreement, order or decree applicable to it
which, if enforced, would result in a Material Adverse Change with
respect to such Person.
(n) Special Purpose Entity.
(i) The capital of the Transferor is adequate
for the business and undertakings of the Transferor.
(ii) Other than with respect to the purchase by
NAFCO and its affiliates of all of the beneficial
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ownership interests of the Transferor and the transactions as
provided in (a) the Purchase Agreement, (b) each Conveyance,
(c) the Pooling and Servicing Agreement, (d) each Transfer
Agreement and (e) the case of the Date of Issuance only, the
Pooling and Administration Agreement and the Receivables
Purchase Agreement, the Transferor is not engaged in any
business transactions with NAFCO or any of its affiliates.
(iii) At least one co-trustee of the Transferor
shall be a person who is not, and will not be, a director,
officer, employee or holder of any partnership interests or
equity securities of NAFCO or any of its affiliates.
(iv) The Transferor's funds and assets are not,
and will not be, commingled with the funds of any other
person.
(v) The trust agreement of the Transferor requires
it to maintain (A) correct and complete books and records of
account, and (B) minutes of the meetings and other
proceedings of its holders of beneficial ownership interests
and trustees (including any co-trustees).
(o) Solvency; Fraudulent Conveyance. Each of NAFCO and the
Transferor is solvent and will not be rendered insolvent by the
Transaction and, after giving effect to such Transaction, neither
NAFCO nor the Transferor will be left with an unreasonably small
amount of capital with which to engage in its business. Neither NAFCO
nor the Transferor intends to incur, or believes that it has incurred,
debts beyond its ability to pay such debts as they mature. Neither
NAFCO nor the Transferor is contemplating the commencement of
insolvency, bankruptcy, liquidation or consolidation proceedings or
the appointment of a receiver, liquidator, conservator, trustee or
similar official in respect of NAFCO or the Transferor, as the case
may be, or any of its respective assets. The amount of consideration
being received by the Transferor upon the sale of the Securities
constitutes reasonably equivalent value and fair consideration for the
interest in the portion of the Trust Estate evidenced by the
Securities. The amount of consideration being received by the Master
Trust upon the sale of the Initial Contracts to the Transferor and
thereafter upon the sale of any Additional Contracts by the
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Master Trust to the Transferor constitutes reasonably equivalent value
and fair consideration for such Contracts. The amount of consideration
being received by NAFCO upon the sale of any Additional Contracts by
NAFCO or the sale of any of its interest in the Initial Contracts to
the Transferor constitutes reasonably equivalent value and fair
consideration for the Additional Contracts. Neither (i) the Master
Trust, with respect to Initial Contracts transferred by it to the
Transferor, nor (ii) NAFCO, with respect to any Additional Contracts
or any interest in the Initial Contracts transferred by it to the
Transferor, is transferring any of the above-mentioned Contracts or
interests with any intent to hinder, delay or defraud any of their
respective creditors. The Transferor is not transferring the Contracts
to the Trust or selling the Securities, as provided in the Transaction
Documents, with any intent to hinder, delay or defraud any of the
Transferor's creditors.
(p) Investment Company Act Compliance. Neither NAFCO nor the
Transferor is required to be registered as an investment company"
under the Investment Company Act.
(q) Good Title; Valid Transfer; Absence of Liens; Security
Interest. Immediately prior to the sale of the Initial Contracts and
related Other Trust Property to the Trust pursuant to the Pooling and
Servicing Agreement and the related Transfer Agreement on the Closing
Date and immediately prior to the sale of Additional Contracts and
related Other Trust Property to the Trust pursuant to the Pooling and
Servicing Agreement and the related Transfer Agreement on any
Subsequent Transfer Date, the Transferor was the owner of, and had
good and marketable title to, such property free and clear of all
Liens and Restrictions on Transferability, and had full right, power
and lawful authority to assign, transfer and pledge such Contracts and
related Other Trust Property. The Pooling and Servicing Agreement and
the related Transfer Agreement constitute a valid sale, transfer and
assignment of the Initial Contracts and related Other Trust Property
to the Trust and the Pooling and Servicing Agreement and each Transfer
Agreement constitute a valid sale, transfer and assignment of the
related Additional Contracts and related Other Trust Property to the
Trust, in each case enforceable against creditors of and purchasers of
the Transferor. In the event that, in contravention of the intention
of the parties, the transfer of the Contracts and related Other Trust
Property by the Transferor to the Trust is characterized as other
8
than a sale, such transfer shall be characterized as a secured
financing, and the Trust shall have a valid and perfected first
priority security interest in the Contracts and related Other Trust
Property free and clear of all Liens and Restrictions on
Transferability.
(r) Perfection of Liens and Security Interest. On the Closing
Date, the Lien and security interest in favor of the Trustee with
respect to the Trust Estate will be perfected by the delivery of the
Contracts to the Custodian, which Contracts the Custodian will hold on
behalf of the Trustee, the filing of financing statements on Form
UCC-l in each jurisdiction where such recording or filing is necessary
for the perfection of the security interest in favor of the Trustee
and the establishment of the Collection Account, the Certificate
Account, the Pre-Funding Period Reserve Account, the Pre-Funding
Account and the Revolving Account in accordance with the provisions of
the Transaction Documents, and no other filings in any jurisdiction or
any other actions (except as expressly provided herein) are necessary
to perfect the Trustee's first priority Lien on and security interest
in the Trust Estate as against any third parties.
(s) Security Interest in Funds and Investments. Assuming the
retention of funds in the Trust Accounts and the acquisition of
Permitted Investments in accordance with the Transaction Documents,
such funds and Permitted Investments will be subject to a valid and
perfected, first priority security interest in favor of the Trustee.
Assuming the retention of funds in the Spread Account and the
acquisition of Permitted Investments in accordance with the Spread
Account Agreement, such funds and Permitted Investments will be
subject to a valid and perfected, first priority security interest in
favor of the Collateral Agent on behalf of Financial Security.
(t) Taxes. Each of NAFCO and the Transferor have and each of
their respective Subsidiaries have filed all federal and state tax
returns which are required to be filed and paid all taxes, including
any assessments received by it, to the extent that such taxes have
become due. Any taxes, fees and other governmental charges payable by
the Transferor or NAFCO in connection with the Transaction, the
execution and delivery of the Transaction Documents and the issuance
of the Securities have been paid or shall have been paid at or prior
to the Date of Issuance. Any taxes, fees and other governmental
charges payable by the Transferor or NAFCO in connection with the
transactions contemplated by the
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Registration Rights Agreement have been paid or shall have been paid
at or prior to the Date of Public Offering.
(u) Additional Contracts. With respect to the transfer by
NAFCO of Additional Contracts on any Subsequent Transfer Date,
immediately prior to the sale of such Additional Contracts and related
Other Trust Property to the Transferor pursuant to the Purchase
Agreement and the related Conveyance, NAFCO was the owner of, and had
good and marketable title to, such property free and clear of all
Liens and Restrictions on Transferability, and had full right,
corporate power and lawful authority to assign, transfer and pledge
such Additional Contracts and related Other Trust Property. The
Purchase Agreement and the related Conveyance constitute a valid sale,
transfer and assignment of the related Additional Contracts and
related Other Trust Property to the Transferor enforceable against
creditors of and purchasers of NAFCO. In the event that, in
contravention of the intention of the parties, the transfer of such
Additional Contracts and related Other Trust Property by NAFCO to the
Transferor is characterized as other than a sale, such transfer shall
be characterized as a secured financing, and the Transferor shall have
a valid and perfected first priority security interest in such
Additional Contracts and related Other Trust Property free and clear
of all Liens and Restrictions on Transferability.
Section 2.02. Affirmative Covenants of NAFCO and the Transferor. NAFCO
hereby agrees with respect to itself and with respect to the Transferor and the
Transferor hereby agrees with respect to itself that during the Term of the
Agreement, unless Financial Security shall otherwise expressly consent in
writing:
(a) Compliance With Agreements and Applicable Laws. Each of
the Transferor and NAFCO shall perform each of its respective
obligations under the Transaction Documents and the Master Trust
Transaction Documents and shall comply with all material requirements
of, and the Securities shall be offered and sold in accordance with,
any law, rule or regulation applicable to it or thereto, or that are
required in connection with its performance under any of the
Transaction Documents or the Master Trust Transaction Documents.
(b) Financial Statements; Accountants' Reports; Other
Information. Each of NAFCO and the Transferor shall keep or
cause to be kept in reasonable detail books and records of
account of its assets and business and, in the case of
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NAFCO, shall clearly reflect therein the transfer of Additional
Contracts to the Transferor, and, in the case of the Transferor, shall
clearly reflect therein the transfer of the Contracts to the Trust.
Each of NAFCO and the Transferor shall furnish or cause to be
furnished to Financial Security:
(i) Annual Financial Statements. As soon as
available, and in any event within 90 days after the close of
each fiscal year of NAFCO and the Transferor, the audited
balance sheets of NAFCO and the Transferor, as the case may
be, as of the end of such fiscal year and the audited
statements of income, changes in equity and cash flows of
NAFCO and the Transferor, as the case may be, for such fiscal
year, all in reasonable detail and stating in comparative
form the respective figures for the corresponding date and
period in the preceding fiscal year, prepared in accordance
with generally accepted accounting principles, consistently
applied, and accompanied by the certificate of NAFCO's and
the Transferor's independent accountants (who shall be, in
each case, a nationally recognized firm or otherwise
acceptable to Financial Security) and by the certificate
Specified in Section 2.02(c) hereof.
(ii) Quarterly Financial Statements. As soon as
available, and in any event within 45 days after the close of
each of the first three quarters of each fiscal year of NAFCO
and the Transferor, as the case may be, the unaudited balance
sheets of NAFCO and the Transferor, as the case may be, as of
the end of such quarter and the unaudited statements of
income, changes in equity and cash flows of NAFCO and the
Transferor, as the case may be, for the portion of the fiscal
year then ended, all in reasonable detail and stating in
comparative form the respective figures for the corresponding
date and period in the preceding fiscal year, prepared in
accordance with generally accepted accounting principles,
consistently applied (subject to normal year-end
adjustments), and accompanied by the certificate specified in
Section 2.02(c) hereof if such certificate is required to be
provided pursuant to such Section.
(iii) Accountants' Reports. If a Special Event
has occurred, copies of any reports submitted to NAFCO
or the Transferor by their respective independent
accountants in connection with any examination of the
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financial statements of NAFCO or the Transferor, promptly
upon receipt thereof.
(iv) Other Information. Promptly upon receipt
thereof, copies of all reports, statements, certifications,
schedules, or other similar items delivered to or by NAFCO or
the Transferor pursuant to the terms of the Transaction
Documents and, promptly upon request, such other data as
Financial Security may reasonably request; provided, however,
that NAFCO shall not be required to deliver any such items if
provision by some other party to Financial Security is
required under the Transaction Documents unless such other
party wrongfully fails to deliver such item. NAFCO and the
Transferor shall, upon the request of Financial Security,
permit Financial Security or its authorized agents (A) to
inspect the books and records of NAFCO and the Transferor as
they may relate to the Securities, the Contracts and the
Other Trust Property, the obligations of NAFCO or of the
Transferor under the Transaction Documents, the Transaction
and, but only following the occurrence of a Special Event,
NAFCO's business; (B) to discuss the affairs, finances and
accounts of NAFCO or the Transferor with its respective Chief
Operating Officer and Chief Financial Officer, no more
frequently than annually, unless a Special Event has
occurred; and (C) to discuss the affairs, finances and
accounts of NAFCO or the Transferor with its independent
accountants, provided that an officer of NAFCO or the
Transferor, as the case may be, shall have the right to be
present during such discussions. Such inspections and
discussions shall be conducted during normal business hours
and shall not unreasonably disrupt the business of NAFCO or
the Transferor, as the case may be. In addition, NAFCO shall
promptly (but in no case more than 30 days following issuance
or receipt by a Commonly Controlled Entity) provide to
Financial Security a copy of all correspondence between a
Commonly Controlled Entity and the PBGC, IRS, Department of
Labor or the administrators of a Multiemployer Plan relating
to any Reportable Event or the underfunded status,
termination or possible termination of a Plan or a
Multiemployer Plan. The books and records of NAFCO and the
Transferor will be maintained at the respective addresses
designated herein for receipt of notices, unless NAFCO or the
Transferor shall otherwise advise the parties hereto in
writing.
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(v) NAFCO shall provide or cause to be provided to
Financial Security an executed original copy of each document
executed in connection with the Transaction within 10 days
after the date of closing.
(vi) Subject to clause (1) of this Section 2.02,
promptly after the filing or sending thereof, copies of all
proxy statements, financial statements, reports and
registration statements which NAFCO or the Transferor files,
or delivers to, the IRS, the Commission, or any other
federal, state or foreign government agency, authority or
body which supervises the issuance of securities by NAFCO or
the Transferor or any national securities exchange.
(c) Compliance Certificate. Each of NAFCO and the Transferor
shall deliver to Financial Security concurrently with the delivery of
the financial statements required pursuant to Section 2.02(b) (i)
hereof and concurrently with the delivery of the financial statements
required pursuant to Section 2.02(b) (ii) hereof, a certificate signed
by the Chief Financial Officer of each of NAFCO and the Transferor
stating that:
(i) a review of NAFCO's and the Transferor's
respective performance under the Transaction Documents during
such period has been made under such officer's supervision;
(ii) to the best of such individual's knowledge, no
Special Event, Default or Event of Default has occurred, or
if a Special Event, Default or Event of Default has occurred,
specifying the nature thereof and, if NAFCO or the Transferor
has a right to cure any such Default or Event of Default
pursuant to Section 5.01, stating in reasonable detail the
steps, if any, being taken by NAFCO or the Transferor, as the
case may be, to cure such Default or Event of Default or to
otherwise comply with the terms of the agreement to which
such Default or Event of Default relates; and
(iii) the attached financial reports submitted in
accordance with Section 2.02(b) (i) or (ii) hereof, as
applicable, are complete and correct in all material respects
and present fairly the financial condition and results of
operations of NAFCO or the Transferor, as the case may be, as
of the dates and for the periods indicated, in accordance
with generally accepted
13
accounting principles consistently applied (subject as to
interim statements to normal year-end adjustments).
(d) Notice of Material Events. Each of NAFCO and the
Transferor shall promptly inform (unless, in the case of clause (i)
only, prohibited by applicable law) Financial Security in writing of
the occurrence of any of the following:
(i) the submission of any claim or the initiation
of any legal process, litigation or administrative or
judicial investigation (A) against NAFCO or the Transferor
pertaining to the Contracts in general, (B) with respect to a
material portion of the Contracts or (C) in which a request
has been made for certification as a class action (or
equivalent relief) that would involve a material portion of
the Contracts;
(ii) any change in the location of NAFCO's or
the Transferor's principal office or any change in the
location of NAFCO's or of the Transferor's books and
records;
(iii) the occurrence of any Default, Event of
Default or Special Event; or
(iv) any other event, circumstance or condition
that has resulted, or has a material possibility of
resulting, in a Material Adverse Change in respect of NAFCO
or of the Transferor.
(e) Further Assurances. Each of NAFCO and the Transferor will
file or cause to be filed all necessary financing statements,
assignments or other instruments, and any amendments or continuation
statements relating thereto, necessary to be kept and filed in such
manner and in such places as may be required by law to preserve and
protect fully the Lien on and first priority security interest in, and
all rights of the Trustee for the benefit of the Certificateholders
and Financial Security with respect to the Contracts, under the
Pooling and Servicing Agreement. In addition, each of NAFCO and the
Transferor shall, upon the request of Financial Security, from time to
time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, within ten (10) days of such request, such
amendments hereto and such further instruments and take such further
action as may be reasonably necessary to effectuate the intention,
performance and provisions of
14
the Transaction Documents or to protect the interest of the Trustee,
for the benefit of the Certificateholders and Financial Security, in
the Contracts, free and clear of all Liens and Restrictions on
Transferability except the Lien in favor of the Trustee, for the
benefit of the Certificateholders and Financial Security, and the
Restrictions on Transferability imposed by the Pooling and Servicing
Agreement. In addition, each of NAFCO and the Transferor agrees to
cooperate with S&P and Xxxxx'x in connection with any review of the
Transaction which may be undertaken by S&P and Xxxxx'x after the date
hereof.
(f) Retirement of Securities. NAFCO or the Transferor shall
cause the Trustee, upon retirement of the Securities pursuant to the
Pooling and Servicing Agreement or otherwise, to furnish to Financial
Security a notice of such retirement, and, upon retirement of the
Securities and the expiration of the term of the Policy, to surrender
the Policy to Financial Security for cancellation.
(g) Third-Party Beneficiary. Each of NAFCO and the Transferor
agrees that Financial Security shall have all rights of a third-party
beneficiary in respect of the Pooling and Servicing Agreement, the
Purchase Agreement, the Registration Rights Agreement, each Transfer
Agreement, the Assignment Agreement, the Custodial Agreement and each
Conveyance and hereby incorporates and restates its representations,
warranties and covenants as set forth therein for the benefit of
Financial Security.
(h) Corporate Existence. Each of NAFCO and the Transferor
shall maintain its existence as a limited partnership and as a
business trust, respectively, and shall at all times continue to be
duly organized under the laws of the jurisdiction of its formation and
duly qualified and duly authorized (as described in Sections 2.01(a),
(b) and (c) hereof) and shall conduct its business in accordance with
the terms of its agreement of limited partnership or trust agreement,
as the case may be.
(i) Disclosure Document. (1) Each Offering Document delivered
with respect to the Securities shall clearly disclose that the Policy
is not covered by the property/ casualty insurance security fund
specified in Article 76 of the New York Insurance Law. In addition,
each Offering Document delivered with respect to the Securities which
includes financial statements of Financial Security prepared in
accordance with generally accepted accounting principles
15
shall include the following statement immediately preceding
such financial statements:
The New York State Insurance Department recognizes
only statutory accounting practices for determining
and reporting the financial condition and results of
operations of an insurance company, for determining
its solvency under the New York Insurance Law, and
for determining whether its financial condition
warrants the payment of a dividend to its
stockholders. No consideration is given by the New
York State Insurance Department to financial
statements prepared in accordance with generally
accepted accounting principles in making such
determinations.
(2) Each Offering Document (other than the Preliminary
Private Placement Memorandum dated as of November 7, 1995 and the
Private Placement Memorandum dated as of November 16, 1995) delivered
with respect to the Securities subsequent to the Date of Issuance
shall be in form and substance satisfactory to Financial Security in
its sole discretion as evidenced by Financial Security's prior written
consent to the use thereof.
(j) Special Purpose Entity.
(i) The Transferor shall conduct its business
solely in its own name through its duly authorized officers
or agents so as not to mislead others as to the identity of
the entity with which those officers are concerned, and
particularly will use its best efforts to avoid the
appearance of conducting business on behalf of NAFCO or any
affiliate thereof or that the assets of the Transferor are
available to pay the creditors of NAFCO or any affiliate
thereof. Without limiting the generality of the foregoing,
all oral and written communications, including, without
limitation, letters, invoices, purchase orders, contracts,
statements and loan applications, will be made solely in the
name of the Transferor.
(ii) The Transferor shall maintain records and
books of account separate from those of NAFCO and the
affiliates thereof. The Transferor's books and records
16
shall clearly reflect the transfer of the Contracts to the
Trust and the sale of the Securities each as a sale of the
Transferor's interest in the Contracts. The books and records
of the Transferor will be maintained at the address
designated herein for receipt of notices, unless the
Transferor shall otherwise advise the parties hereto in
writing.
(iii) The Transferor shall obtain proper
authorization of all action requiring approval of the
co-trustees or holders of beneficial ownership interests of
the Transferor, as the case may be. Meetings of the holders
of beneficial ownership interests of the Transferor shall be
held not less frequently than one time per annum and copies
of each such authorization and the minutes of each such
meeting shall be delivered to Financial Security within two
weeks of such authorization or meeting, as the case may be.
(iv) Although the organizational expenses of the
Transferor have been paid by NAFCO, operating expenses and
liabilities of the Transferor shall be paid from its own
funds.
(v) The annual financial statements of the
Transferor shall disclose the effects of the Transferor's
transactions in accordance with generally accepted accounting
principles and shall disclose that the assets of the
Transferor are not available to pay creditors of NAFCO or any
affiliate thereof.
(vi) The resolutions, agreements and other
instruments of the Transferor underlying the transactions
described in this Agreement, the other Transaction Documents
and the Master Trust Transaction Documents shall be
continuously maintained by the Transferor as official records
of the Transferor separately identified and held apart from
the records of NAFCO and each affiliate thereof.
(vii) The Transferor shall maintain an arm's- length
relationship with NAFCO and the affiliates thereof and will
not hold itself out as being liable for the debts of NAFCO or
any affiliate thereof.
(viii) The Transferor shall keep its assets and
its liabilities wholly separate from those of all other
17
entities, including, but not limited to NAFCO and the
affiliates thereof.
(k) Maintenance of Licenses. NAFCO and the Transferor shall
each maintain all licenses, permits, charters and registrations which
are material to the performance by NAFCO or the Transferor, as the
case may be, of its business or of its respective obligations under
this Agreement, each other Transaction Document and the Master Trust
Transaction Documents.
(l) Registration Statements for the Securities. Each of NAFCO
and the Transferor shall (i) provide Financial Security with written
notice at least 30 days prior to the filing of any registration
statement relating to the Securities, (ii) provide Financial Security
with a copy of such registration statement within one Business Day of
such filing, (iii) prior to the effectiveness of any such registration
statement, obtain the written consent of Financial Security with
respect to the form of such registration statement and (iv) provide
Financial Security with any opinions of counsel as Financial Security
may request in connection with the registration of the Securities
under the Securities Act, which opinions shall be addressed to
Financial Security and shall be in form and substance satisfactory to
Financial Security.
(m) Master Trust Transactions. NAFCO shall, not later than
the fourteenth (14) day subsequent to the Date of Issuance (the
"Assumption Date"), form a special purpose entity and cause such
entity to assume in writing all of the Transferor's duties,
obligations and liabilities under, or arising in connection with, the
Master Trust Transaction Documents. Any such writing shall be in form
and substance satisfactory to Financial Security. In addition, each of
NAFCO and the Transferor shall, not later than the Assumption Date,
cause each creditor of the Transferor, including without limitation,
each creditor of the Master Trust, to release and discharge the
Transferor from any existing, and all future, liability, indebtedness
or obligation to such creditor. Each such release and discharge shall
be in writing and in form and substance satisfactory to Financial
Security. Each of NAFCO and the Transferor shall, not later than the
Assumption Date, cause any and all financing statements, registrations
or other filings, in effect with respect to the Transferor (as debtor
or secured party) prior to the Assumption Date, to be terminated. Each
of NAFCO and the Transferor shall cause
18
(i) evidence of such termination to be delivered to Financial Security
on or prior to the Assumption Date and (ii) each release and discharge
executed under this Section 2.02(m) to name Financial Security as a
third party beneficiary thereunder.
Section 2.03. Negative Covenants of NAFCO and the Transferor. NAFCO
hereby agrees with respect to itself and with respect to the Transferor and the
Transferor hereby agrees with respect to itself that during the Term of the
Agreement, unless Financial Security shall otherwise expressly consent in
writing:
(a) Restrictions on Liens. Neither NAFCO nor the Transferor
shall (i) create, incur or suffer to exist, or agree to create, incur
or suffer to exist, or consent to cause or permit in the future (upon
the happening of a contingency or otherwise) the creation, incurrence
or existence of any Lien or Restriction on Transferability on the
Contracts except for the Lien in favor of the Trustee, for the benefit
of the Certificateholders and Financial Security, and the Restrictions
on Transferability imposed by the Pooling and Servicing Agreement or
(ii) with respect to the Contracts, sign or file under the Uniform
Commercial Code of any jurisdiction any financing statement which
names either NAFCO or the Transferor as a debtor, or sign any security
agreement authorizing any secured party thereunder to file such
financing statement, except in each case any such instrument solely
securing the rights and preserving the Lien of the Trustee, for the
benefit of the Certificateholders and Financial Security.
(b) Impairment of Rights. Neither NAFCO nor the Transferor
shall take any action, or fail to take any action, if such action or
failure to take action may (i) interfere with the enforcement of any
rights under the Transaction Documents or the Master Trust Transaction
Documents that are material to the rights, benefits or obligations of
the Trustee, the Certificateholders or Financial Security, (ii) result
in a Material Adverse Change in respect of the Contracts or (iii)
impair the ability of NAFCO or of the Transferor to perform its
obligations under the Transaction Documents or the Master Trust
Transaction Documents, including any consolidation or merger with any
Person or any transfer of all or any material amount of NAFCO's assets
to any other Person if such consolidation, merger or transfer would
materially impair the net worth of NAFCO or any successor Person
obligated, after such event,
19
to perform NAFCO's obligations under the Transaction Documents or the
Master Trust Transaction Documents.
(c) Waiver, Amendments, Etc. Neither NAFCO nor the Transferor
shall waive, modify or amend, or consent to any waiver, modification
or amendment of, any of the provisions of any of the Transaction
Documents or the Transferor's trust agreement.
(d) Successors. Neither NAFCO nor the Transferor shall
terminate or designate, or consent to the termination or designation
of, the Master Servicer, the Custodian, the Standby Servicer, the
Trustee, the Subservicer or Collateral Agent or any successor thereto
without the prior written approval of Financial Security.
(e) Creation of Indebtedness; Guarantees. The Transferor
shall not create, incur, assume or suffer to exist any indebtedness
other than indebtedness guaranteed or approved in writing by Financial
Security. Without the prior written consent of Financial Security, the
Transferor shall not assume guarantee, endorse or otherwise be or
become directly or contingently liable for the obligations of any
Person by, among other things, agreeing to purchase any obligation of
another Person, agreeing to advance funds to such Person or causing or
assisting such Person to maintain any amount of capital.
(f) Subsidiaries. The Transferor shall not form, or cause to
be formed, any Subsidiaries.
(g) Issuance of Additional Beneficial Ownership Interests.
The Transferor shall not issue or allow the issuance of any additional
beneficial ownership interests or securities convertible into or
exchangeable for beneficial ownership interests in the Transferor.
(h) No Mergers. (a) The Transferor shall not consolidate with
or merge into any Person or transfer all or any material portion of
its assets to any Person or liquidate or dissolve; and (b) NAFCO shall
not consolidate with or merge into any Person unless it complies with
the procedures set forth in Section 6.02 of the Pooling and Servicing
Agreement with respect to the merger or consolidation of the Master
Servicer or transfer all or any material portion of its assets to any
Person or liquidate or dissolve.
20
(i) Other Activities. The Transferor shall not:
(i) sell, transfer, exchange or otherwise
dispose of any of its assets except as permitted under
the Transaction Documents; or
(ii) engage in any business or activity other than
in connection with (a) the Pooling and Servicing Agreement,
the Purchase Agreement, each Transfer Agreement, each
Conveyance, the Assignment Agreement and the Spread Account
Agreement and (b) the Pooling and Administration Agreement
and the Receivables Purchase Agreement prior to the
Assumption Date only, and as permitted under its trust
agreement.
(j) Insolvency. Neither NAFCO nor the Transferor shall
commence with respect to the Transferor any case, proceeding or other
action (A) under any existing or future law of any jurisdiction,
domestic or foreign, relating to the bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for
relief entered with respect to it, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation, dissolution,
corporation or other relief with respect to it or (B) seeking
appointment of a receiver, trustee, custodian or other similar
official for it or for all or any substantial part of its assets, or
make a general assignment for the benefit of its creditors. Neither
NAFCO nor the Transferor shall take any action in furtherance, of, or
indicating the consent to, approval of, or acquiescence in any of the
acts set forth above. The Transferor shall not admit in writing its
inability to pay its debts.
(k) ERISA. The Transferor shall not contribute or incur any
obligation to contribute to, or incur any liability in respect of, any
Plan or Multiemployer Plan.
(l) Distributions. The Transferor shall not declare or make
payment of (i) any distribution on or in respect of any of its
beneficial ownership interests, or (ii) any payment on account of the
purchase, redemption, retirement or acquisition of any opt ion,
warrant or other right to acquire its beneficial ownership interests
unless (in each case) at the time of such declaration or payment (and
after giving effect thereto) no amount payable by the Transferor under
any Transaction Document with respect to any Series is then due and
owing but unpaid.
21
(m) Transfer of Retained Interest. The Transferor shall not
sell, transfer, assign, convey or pledge the Retained Interest to any
Person (including, without limitation, NAFCO).
Section 2.04. Representations and Warranties of NAFCO and the
Transferor with respect to the Master Trust. Each of the Transferor and NAFCO
represents, warrants and covenants, as of the date hereof, as of the Date of
Issuance, as of each Subsequent Transfer Date and as of the Date of Public
Offering, with respect to itself, with respect to the Master Trust and
otherwise, as follows:
(a) Good Title; Valid Transfer; Absence of Liens; Security
Interest. Immediately prior to the sale of the Initial Contracts and
related Other Trust Property to the Transferor pursuant to the
Assignment Agreement on the Closing Date, the Master Trust was the
owner of, and had good and marketable title to, such property free and
clear of all Liens and Restrictions on Transferability, and had full
right, power and lawful authority to assign, transfer and pledge such
Contracts and related Other Trust Property. The Assignment Agreement
constitutes a valid sale, transfer and assignment of the Initial
Contracts and related Other Trust Property to the Transferor
enforceable against creditors of and purchasers of the Master Trust.
In the event that, in contravention of the intention of the parties,
the transfer of such Contracts and related Other Trust Property by the
Master Trust to the Transferor is characterized as other than a sale,
such transfer shall be characterized as a secured financing, and the
Transferor shall have a valid and perfected first priority security
interest in such Contracts and related Other Trust Property free and
clear of all Liens and Restrictions on Transferability.
(b) Compliance With Agreements and Applicable Laws. The
Master Trust has performed each of its obligations under the
Assignment Agreement and is in compliance with all material
requirements of, any law, rule or regulation applicable to it, or that
are required in connection with its performance under the Assignment
Agreement. The Master Trust has not taken any action that would
interfere with the enforcement of any rights under the Assignment
Agreement.
Section 2.05. Affirmative Covenants of NAFCO and the Transferor with
respect to the Master Trust. Each of NAFCO and the Transferor hereby agrees
with respect to itself and with
22
respect to the Master Trust that during the Term of the Agreement, unless
Financial Security shall otherwise expressly consent in writing:
(a) Notice of Material Events. Each of NAFCO and the
Transferor shall promptly inform Financial Security in writing of the
occurrence of any of the following:
(i) the submission of any claim or the initiation
of any legal.process, litigation or administrative or
judicial investigation (A) against the Master Trust, (B) with
respect to any of the Contracts transferred by the Master
Trust to the Transferor or (C) in which a request has been
made for certification as a class action (or equivalent
relief) that would involve any of the Contracts transferred
by the Master Trust to the Transferor;
(ii) the occurrence of any Amortization Event or
Administrator Default (as such terms are defined in the
Pooling and Administration Agreement) prior to the Assumption
Date with respect to the Master Trust; or
(iii) any other event, circumstance or condition
that has resulted in a material adverse change in the ability
of the Master Trust to perform its obligations under the
Assignment Agreement.
(b) Further Assurances. Each of NAFCO and the Transferor will
file all necessary termination statements, assignments or other
instruments, and any amendments or continuation statements relating
thereto, necessary to be kept and filed in such manner and in such
places as may be required by law to release the Lien and security
interest of the Master Trust in any Contracts transferred by the
Master Trust to the Transferor. In addition, each of NAFCO and the
Transferor shall, upon the written request of Financial Security, from
time to time, execute, acknowledge and deliver, or cause to be
executed, acknowledged and delivered, within ten (10) days of such
request, such further instruments and take such further action as may
be reasonably commercially necessary to protect the interest of the
Transferor in the Contracts transferred by the Master Trust to the
Transferor, free and clear of all Liens and Restrictions on
Transferability created by or for the benefit of the Master Trust.
23
(c) Third-Party Beneficiary. The Transferor agrees that
Financial Security shall have all rights of a third-party beneficiary
in respect of the Assignment Agreement and each of NAFCO and the
Transferor hereby restates the representations, warranties and
covenants of the Master Trust as set forth therein for the benefit of
Financial Security.
Section 2.06. Negative Covenants of NAFCO and the Transferor with
respect to the Master Trust. Each of NAFCO and the Transferor hereby agrees
with respect to itself and with respect to the Master Trust that during the
Term of the Agreement, unless Financial Security shall otherwise expressly
consent in writing:
(a) Restrictions on Liens. Neither NAFCO nor the Transferor
shall permit the execution or filing under the Uniform Commercial Code
of any jurisdiction any financing statement naming the Master Trust as
a debtor, or the execution of any security agreement authorizing any
secured party thereunder to file such financing statement, with
respect to the Contracts transferred by the Master Trust to the
Transferor, except in each case any such instrument solely securing
the rights and preserving the Lien of the Trustee, for the benefit of
the Certificateholders and Financial Security.
ARTICLE III.
THE POLICY; REIMBURSEMENT; INDEMNIFICATION
Section 3.01. Issuance of the Policy. Financial Security agrees to
issue the Policy subject to satisfaction of the conditions precedent set forth
in Appendix II hereto.
Section 3.02. Payment of Fees and Premium.
(a) Inducement Letter Fees and Expenses. On the Date of
Issuance, NAFCO and the Transferor agree to pay or cause to be paid
the amounts specified with respect to fees, expenses and disbursements
in the Inducement Letter unless otherwise agreed between NAFCO and
Financial Security.
(b) Legal Fees. On the Date of Issuance, NAFCO shall
pay or cause to be paid legal fees and disbursements
incurred by Financial Security in connection with the
issuance of the Policy.
24
(c) Rating Agency Fees. The initial fees of S&P and Moody's
with respect to the Securities and the transactions contemplated
hereby shall be paid by the Transferor in full on the Date of
Issuance, or otherwise provided for to the satisfaction of Financial
Security. All periodic and subsequent fees of S&P or Moody's with
respect to, and directly allocable to, the Securities shall be for the
account of, and shall be billed to, the Transferor. The fees for any
other rating agency shall be paid by the party requesting such other
agency's rating, unless such other agency is a substitute for S&P or
Moody's in the event that S&P or Xxxxx'x is no longer rating the
Securities, in which case the cost for such agency shall be paid by
the Transferor.
(d) Auditors' Fees. The Transferor shall pay on demand any
additional fees of Financial Security's auditors payable in respect of
any Offering Document that are incurred after the Date of Issuance. It
is understood that Financial Security's auditors shall not incur any
additional fees in respect of future Offering Documents except at the
request of or with the consent of the Transferor.
(e) Premium. In consideration of the issuance by Financial
Security of the Policy, Financial Security shall be entitled to
receive the Premium as and when due in accordance with the terms of
the Premium Letter (i) in the case of Premium due on or before the
Date of Issuance, directly from the Transferor and (ii) in the case of
Premium due after the Date of Issuance, first, from monies available
for such payment in accordance with Section 4.01 of the Pooling and
Servicing Agreement and second, to the extent that such monies are
insufficient, from NAFCO. The Premium paid hereunder or under the
Pooling and Servicing Agreement shall be nonrefundable without regard
to whether Financial Security makes any payment under the Policy or
any other circumstances relating to the Securities or provision being
made for payment of the Securities prior to maturity. Although the
Premium is fully earned by Financial Security as of the Closing Date,
the Premium shall be payable in periodic installments as provided in
the Premium Letter. Anything herein or in any of the Transaction
Documents notwithstanding, upon the occurrence of an Event of Default,
the entire out standing balance of further installments of the Premium
shall be immediately due and payable. All payments of Premium shall be
made by wire transfer to an account designated from time to time by
Financial Security by written notice to the Transferor and NAFCO.
25
Section 3.03. Reimbursement Obligation. Notwithstanding any of the
following provisions of this Section 3.03 to the contrary, the payment
obligations set forth in Sections 3.03(a), (b), (c) and (d)(v) (to the extent
of advances to the Trust in respect of distributions on the Securities) shall
be non-recourse obligations with respect to NAFCO and shall be payable only
from monies available for such payment in accordance with Section 4.01 of the
Pooling and Servicing Agreement (except to the extent that any such payment
obligation arises from a failure to perform or default of NAFCO, the Transferor
or any affiliate thereof under any Transaction Document or by reason of
negligence, willful misconduct or bad faith on the part of NAFCO or the
Transferor in the performance of its duties and obligations thereunder or
reckless disregard by NAFCO or the Transferor of its duties and obligations
thereunder). NAFCO and the Transferor agree to pay to Financial Security the
following amounts as and when incurred:
(a) a sum equal to the total of all amounts paid by Financial
Security under the Policy;
(b) interest on any and all amounts described in this Section
3.03 or Section 3.02(e) from the date due to Financial Security
pursuant to the provisions hereof until payment thereof in full,
payable to Financial Security at the Late Payment Rate per annum;
(c) any payments made by Financial Security on behalf of, or
advanced to, NAFCO, in its capacity as Master Servicer, the Trust or
the Trustee, including, without limitation, any amounts payable by
NAFCO, in its capacity as Master Servicer, the Trust or the Trustee
pursuant to the Securities or any other Transaction Documents or the
Subservicing Agreement; and any payments made by Financial Security
as, or in lieu of, any servicing, management, trustee, custodial or
administrative fees payable, in the sole discretion of Financial
Security to third parties in connection with the Transaction; and
(d) any and all out-of-pocket charges, fees, costs and
expenses which Financial Security may reasonably pay or incur,
including, but not limited to, attorneys' and accountants' fees and
expenses, in connection with (i) in the event of payments under the
Policy, any accounts established to facilitate payments under the
Policy, to the extent Financial Security has not been immediately
reimbursed on the date that any amount is paid by Financial Security
under the Policy, or other administrative expenses relating to such
payments under the Policy, (ii) the
26
administration, enforcement, defense or preservation of any rights in
respect of any of the Transaction Documents or the Master Trust
Transaction Documents, including defending, monitoring or
participating in any litigation or proceeding (including any
insolvency or bankruptcy proceeding in respect of any Transaction
participant or any affiliate thereof) relating to any of the
Transaction Documents or the Master Trust Transaction Documents, any
party to any of the Transaction Documents, the Master Trust
Transaction Documents or the Transaction, (iii) any amendment, waiver
or other action with respect to, or related to, any Transaction
Document or the Master Trust Transaction Documents whether or not
executed or completed, (iv) any review or investigation made by
Financial Security in those circumstances where its approval or
consent is sought under any of the Transaction Documents or the Master
Trust Transaction Documents, (v) the foreclosure against, sale or
other disposition of any collateral securing any obligations under any
of the Transaction Documents or otherwise in the discretion of
Financial Security, or pursuit of any other remedies under any of the
Transaction Documents, to the extent such costs and expenses are not
recovered from such foreclosure, sale or other disposition, (vi)
preparation of bound volumes of the Transaction Documents, (vii) the
transfer of Additional Contracts to the Trust and (viii) transactions
contemplated by the Registration Rights Agreement whether or not such
transactions are consummated, including without limitation, the
registration of the Securities under the Securities Act. Financial
Security reserves the right to charge a reasonable fee as a condition
to executing any amendment, waiver or consent proposed in respect of
any of the Transaction Documents.
Section 3.04. Indemnification.
(a) Indemnification by NAFCO and the Transferor. In addition
to any and all rights of reimbursement, indemnification, subrogation
and any other rights pursuant hereto or under law or in equity, each
of NAFCO and the Transferor, jointly and severally, agrees to pay, and
to protect, indemnify and save harmless, Financial Security and its
officers, directors, shareholders, employees, agents and each Person,
if any, who controls Financial Security within the meaning of either
Section 15 of the Securities Act or Section 20 of the Securities
Exchange Act from and against any and all claims, losses, liabilities
(including penalties), actions, suits, judgments, demands, damages,
costs or expenses (including, without limitation, fees and
27
expenses of attorneys, consultants and auditors and reasonable costs
of investigations) of any nature arising out of or relating to the
transactions contemplated by the Transaction Documents by reason of:
(i) any statement, omission or action (other
than of or by Financial Security) in connection with
the offering, issuance, sale, remarketing or delivery
of the Securities;
(ii) the negligence, bad faith, willful
misconduct, misfeasance, malfeasance or theft committed
by any director, officer, employee or agent of the
Transferor or NAFCO, as the case may be;
(iii) the breach by the Transferor or NAFCO, as the
case may be, of any representation, warranty or covenant
under any of the Transaction Documents (other than a
representation or warranty set forth in Section 2.03(c), for
which the remedy with respect to a breach thereof is set
forth in the Pooling and Servicing Agreement) or the
occurrence, in respect of the Transferor or NAFCO, as the
case may be, under any of the Transaction Documents of any
"event of default" or any event which, with the giving of
notice or the lapse of time or both, would constitute any
"event of default";
(iv) the violation by the Transferor or NAFCO of
any federal, state or foreign law, rule or regulation,
or any judgment, order or decree applicable to it; or
(v) any untrue statement or alleged untrue
statement of a material fact contained in any Offering
Document or any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as
such claims arise out of or are based upon any untrue
statement or omission in the Financial Security Information,
it being understood that in respect of the initial Offering
Document, the Financial Security Information is limited to
information included under the caption "The Certificate
Insurer" and the financial statements of Financial Security
appended thereto.
(b) Conduct of Actions or Proceedings. If any action or
proceeding (including any governmental investigation)
28
shall be brought or asserted against Financial Security, any officer,
director, shareholder, employee or agent of Financial Security or any
Person controlling Financial Security (individually, an "Indemnified
Party" and, collectively, the "Indemnified Parties") in respect of
which indemnity may be sought from the Transferor and NAFCO (the
"Indemnifying Party") hereunder, Financial Security shall promptly
notify the Indemnifying Party in writing, and the Indemnifying Party
shall assume the defense thereof, including the employment of counsel
satisfactory to Financial Security and the payment of all expenses. An
Indemnified Party shall have the right to employ separate counsel in
any such action and to participate in the defense thereof at the
expense of the Indemnified Party; provided, however, that the fees and
expenses of such separate counsel shall be at the expense of the
Indemnifying Party if (i) the Indemnifying Party has agreed to pay
such fees and expenses, (ii) the Indemnifying Party shall have failed
to assume the defense of such action or proceeding and employ counsel
satisfactory to Financial Security in any such action or proceeding or
(iii) the named parties to any such action or proceeding (including
any impleaded parties) include both the Indemnified Party and the
Indemnifying Party, and the Indemnified Party shall have been advised
by counsel that (A) there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party and (B) the representation of the Indemnifying
Party and the Indemnified Party by the same counsel would be
inappropriate or contrary to prudent practice (in which case, if the
Indemnified Party notifies the Indemnifying Party in writing that it
elects to employ separate counsel at the expense of the Indemnifying
Party, the Indemnifying Party shall not have the right to assume the
defense of such action or proceeding on behalf of such Indemnified
Party, it being understood, however, that the Indemnifying Party shall
not, in connection with any one such action or proceeding or separate
but substantially similar or related actions or proceedings in the
same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of more
than one separate firm of attorneys at any time for the Indemnified
Parties, which firm shall be designated in writing by Financial
Security). The Indemnifying Party shall not be liable for any
settlement of any such action or proceeding effected without its
written consent to the extent that any such settlement shall be
prejudicial to the Indemnifying Party but, if settled with its written
consent, or if there be a final judgment for the
29
plaintiff in any such action or proceeding with respect to which the
Indemnifying Party shall have received notice in accordance with this
subsection (b), the Indemnifying Party agrees to indemnify and hold
the Indemnified Parties harmless from and against any loss or
liability by reason of such settlement or judgment.
(c) Contribution. To provide for just and equitable
contribution if the indemnification provided by the Indemnifying Party
is determined to be unavailable for any Indemnified Party (other than
due to application of this Section), the Indemnifying Party shall
contribute to the losses incurred by the Indemnified Party on the
basis of the relative fault of the Indemnifying Party, on the one
hand, and the Indemnified Party, on the other hand.
Section 3.05. Subrogation. Subject only to the priority of payment
provisions of the Pooling and Servicing Agreement, each of the Transferor and
NAFCO acknowledges that, to the extent of any payment made by Financial
Security pursuant to the Policy, Financial Security is to be fully subrogated
to the extent of such payment and any additional interest due on any late
payment, to the rights of the Certificateholders to any moneys paid or payable
in respect of the Securities under the Transaction Documents or otherwise. Each
of the Transferor and NAFCO agrees to such subrogation and, further, agrees to
execute such instruments and to take such actions as, in the sole judgment of
Financial Security, are necessary to evidence such subrogation and to perfect
the rights of Financial Security to receive any moneys paid or payable in
respect of the Securities under the Transaction Documents or otherwise.
ARTICLE IV.
FURTHER AGREEMENTS
Section 4.01. Effective Date; Term of Agreement. This Agreement shall
take effect on the Date of Issuance and shall remain in effect until the later
of (a) such time as Financial Security is no longer subject to a claim under
the Policy and the Policy shall have been surrendered to Financial Security for
cancellation and (b) all amounts payable to Financial Security and the
Certificateholders under the Transaction Documents and under the Securities
have been paid in full; provided, however, that the provisions of Sections
3.02, 3.03 and 3.04 hereof shall survive any termination of this Agreement.
30
Section 4.02. Obligation Absolute. (a) The payment obligations of the
Transferor and NAFCO hereunder shall be absolute and unconditional, and shall
be paid strictly in accordance with this Agreement under all circumstances
irrespective of the following:
(i) any lack of validity or enforceability of, or
any amendment or other modifications of, or waiver with
respect to, any of the Transaction Documents, the Master
Trust Transaction Documents, the Securities or the Policy;
(ii) any exchange or release of any other
obligations hereunder;
(iii) the existence of any claim, setoff, defense,
reduction, abatement or other right which the Transferor or
NAFCO may have at any time against Financial Security or any
other Person;
(iv) any document presented in connection with the
Policy proving to be forged, fraudulent, invalid or
insufficient in any respect, including any failure to
strictly comply with the terms of the Policy, or any
statement therein being untrue or inaccurate in any respect;
(v) any failure of the Transferor to receive
the proceeds from the sale of the Securities;
(vi) any breach by the Transferor or NAFCO of
any representation, warranty or covenant contained in
any of the Transaction Documents or the Master Trust
Transaction Documents; or
(vii) any other circumstances, other than payment in
full, which might otherwise constitute a defense available
to, or discharge of the Transferor or NAFCO in respect of any
Transaction Document.
(b) The Transferor and NAFCO and any and all others who are
now or may become liable for all or part of the obligations of the
Transferor or NAFCO under this Agreement agree to be bound by this
Agreement and (i) to the extent permitted by law, waive and renounce
any and all redemption and exemption rights and the benefit of all
valuation and appraisement privileges against the indebtedness, if
any, and obligations evidenced by any Transaction Document or by
31
any extension or renewal thereof; (ii) waive presentment and demand
for payment, notices of nonpayment and of dishonor, protest of
dishonor and notice of protest; (iii) waive all notices in connection
with the delivery and acceptance hereof and all other notices in
connection with the performance, default or enforcement of any payment
hereunder except as required by the Transaction Documents; (iv) waive
all rights of abatement, diminution, postponement or deduction, or to
any defense other than payment, or to any right of setoff or
recoupment arising out of any breach under any of the Transaction
Documents, by any party thereto or any beneficiary thereof, or out of
any obligation at any time owing to the Transferor or NAFCO; (v) agree
that any consent, waiver or forbearance hereunder with respect to an
event shall operate only for such event and not for any subsequent
event; (vi) consent to any and all extensions of time that may be
granted by Financial Security with respect to any payment hereunder or
other provisions hereof and to the release of any security at any time
given for any payment hereunder, or any part thereof, with or without
substitution, and to the release of any Person or entity liable for
any such payment; and (vii) consent to the addition of any and all
other makers, endorsers, guarantors and other obligors for any payment
hereunder, and to the acceptance of any and all other security for any
payment hereunder, and agree that the addition of any such obligors or
security shall not affect the liability of the parties hereto for any
payment hereunder.
(c) Nothing herein shall be construed as prohibiting NAFCO or
the Transferor from pursuing any rights or remedies it may have
against any Person other than Financial Security in a separate legal
proceeding.
Section 4.03. Assignments; Reinsurance; Third-Party Rights. (a) This
Agreement shall be a continuing obligation of the parties hereto and shall be
binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither the Transferor nor NAFCO
may assign its rights under this Agreement, or delegate any of its duties
hereunder, without the prior written consent of Financial Security. Any
assignment made in violation of this Agreement shall be null and void.
(b) Financial Security shall have the right to give participations in
its rights under this Agreement and to enter into contracts of reinsurance with
respect to the Policy upon such terms and conditions as Financial Security may
in its
32
discretion determine; provided, however, that no such participation or
reinsurance agreement or arrangement shall relieve Financial Security of any of
its obligations hereunder or under the Policy.
(c) In addition, Financial Security shall be entitled to assign or
pledge to any bank or other lender providing liquidity or credit with respect
to the Transaction or the obligations of Financial Security in connection
therewith any rights of Financial Security under the Transaction Documents, or
with respect to any real or personal property or other interests pledged to
Financial Security, or in which Financial Security has a security interest, in
connection with the Transaction.
(d) Except as provided herein with respect to participants and
reinsurers, nothing in this Agreement shall confer any right, remedy or claim,
express or implied, upon any Person, including, particularly, any
Certificateholder, other than Financial Security, against the Transferor or
NAFCO, and all the terms, covenants, conditions, promises and agreements
contained herein shall be for the sole and exclusive benefit of the parties
hereto and their successors and permitted assigns. Neither the Trustee nor any
Certificateholder shall have any right to payment from any premiums paid or
payable hereunder or from any other amounts paid by NAFCO or the Transferor
pursuant to Section 3.02, 3.03 or 3.04 hereof.
Section 4.04. Liability of Financial Security. Neither Financial
Security nor any of its officers, directors or employees shall be liable or
responsible for: (a) the use which may be made of the Policy by the Trustee or
for any acts or omissions of the Trustee in connection therewith or (b) the
validity, sufficiency, accuracy or genuineness of documents delivered to
Financial Security (or its Fiscal Agent) in connection with any claim under the
Policy, or of any signatures thereon, even if such documents or signatures
should in fact prove to be in any or all respects invalid, insufficient,
fraudulent or forged (unless Financial Security had actual knowledge thereof).
In furtherance and not in limitation of the foregoing, Financial Security (or
its Fiscal Agent) may accept documents that appear on their face to be in
order, without responsibility for further investigation.
33
ARTICLE V.
EVENTS OF DEFAULT; REMEDIES
Section 5.01. Events of Default. The occurrence of any of
the following events shall constitute an Event of Default
hereunder:
(a) any demand for payment shall be made under the
Policy;
(b) any representation or warranty made by the Transferor,
the Master Trust, the Master Servicer or NAFCO under any of the
Transaction Documents, or in any certificate or report furnished under
any of the Transaction Documents, shall prove to be untrue or
incorrect in any material respect; provided, however, that if the
Transferor, the Master Trust, the Master Servicer or NAFCO effectively
cures any such defect in any representation or warranty under any
Transaction Document, or certificate or report furnished under any
Transaction Document, within the time period specified in the relevant
Transaction Document as the cure period therefor, such defect shall
not in and of itself constitute an Event of Default hereunder;
(c) (i) the Transferor, the Master Servicer or NAFCO shall
fail to pay when due any amount payable by the Transferor, the Master
Servicer or NAFCO under any of the Transaction Documents, unless such
amounts are paid in full within any applicable cure period explicitly
provided for under the relevant Transaction Document; (ii) the
Transferor, the Master Servicer or NAFCO shall have asserted that any
of the Transaction Documents to which it is a party is not valid and
binding on the parties thereto; or (iii) any court, governmental
authority or agency having jurisdiction over any of the parties to any
of the Transaction Documents or any property thereof shall find or
rule that any material provision of any of the Transaction Documents
is not valid and binding on the parties thereto;
(d) the Transferor, the Master Servicer, the Master Trust or
NAFCO shall fail to perform or observe any other covenant or agreement
contained in any of the Transaction Documents (except for the
obligations described under clause (c) above and the failure to
register the Securities under the Securities Act pursuant to the
Registration Rights Agreement) and, except in the case of the
covenants and agreements contained in Section 2.02(m) of this
Insurance
34
Agreement, such failure shall continue for a period of 30 days after
written notice given to the Transferor, the Master Servicer or NAFCO
as the case may be;
(e) NAFCO, the Master Servicer or the Transferor shall fail
to pay its debts generally as they come due, or shall admit in writing
its inability to pay its debts generally, or shall make a general
assignment for the benefit of creditors, or shall institute any
proceeding seeking to adjudicate it insolvent or seeking a
liquidation, or shall take advantage of any insolvency act, or shall
commence a case or other proceeding naming it as debtor under the
United States Bankruptcy Code or similar law, domestic or foreign, or
a case or other proceeding shall be commenced against any of NAFCO,
the Master Servicer or the Transferor under the United States
Bankruptcy Code or similar law, domestic or foreign, or any proceeding
shall be instituted against any of NAFCO, the Master Servicer or the
Transferor seeking liquidation of its assets and such Person shall
fail to take appropriate action resulting in the withdrawal or
dismissal of such proceeding within 30 days or there shall be
appointed or any of NAFCO, the Master Servicer or the Transferor shall
consent to, or acquiesce in, the appointment of a receiver,
liquidator, conservator, trustee or similar official in respect of
such Person or the whole or any substantial part of its properties or
assets or such Person shall take any corporate action in furtherance
of any of the foregoing;
(f) the Average Delinquency Ratio as of any Reporting
Date shall have been equal to or greater than 10%;
(g) the Average Default Rate as of any Reporting Date (i)
occurring on or prior to November 14, 1996, is equal to or greater
than 16%, (ii) occurring subsequent to November 14, 1996, and on or
prior to November 14, 1997, is equal to or greater than 22% and (iii)
occurring subsequent to November 14, 1997, is equal to or greater than
16%;
(h) the Average Net Loss Rate as of any Reporting Date (i)
occurring on or prior to November 14, 1996, is equal to or greater
than 8%, (ii) occurring subsequent to November 14, 1996, and on or
prior to November 14, 1997, is equal to or greater than 11% and (iii)
occurring subsequent to November 14, 1997, is equal to or greater than
8%;
(i) the occurrence of a Servicer Default under the
Pooling and Servicing Agreement; and
35
(j) the occurrence of an "Event of Default" under and as
defined in any Insurance and Indemnity Agreement among Financial
Security, the Transferor and NAFCO entered into with respect to
another Series of Certificates, which "Event of Default" is not
defined as a "Portfolio Performance Event of Default" in such
Insurance and Indemnity Agreement.
Section 5.02. Remedies; Waivers. (a) Upon the occurrence of an Event
of Default, Financial Security may exercise any one or more of the rights and
remedies set forth below:
(i) declare the Premium Supplement to be
immediately due and payable, and the same shall thereupon be
immediately due and payable, whether or not Financial
Security shall have declared an "Event of Default" or shall
have exercised, or be entitled to exercise, any other rights
or remedies hereunder;
(ii) exercise any rights and remedies available
under the Transaction Documents in its own capacity or in its
capacity as the Person entitled to exercise the rights of the
Certificateholders in respect of the Securities; or
(iii) take whatever action at law or in equity may
appear necessary or desirable in its judgment to enforce
performance of any obligation of the Transferor or NAFCO
under the Transaction Documents.
(b) Unless otherwise expressly provided, no remedy herein
conferred upon or reserved is intended to be exclusive of any other
available remedy, but each remedy shall be cumulative and shall be in
addition to other remedies given under the Transaction Documents or
existing at law or in equity. No delay or failure to exercise any
right or power accruing under any Transaction Document upon the
occurrence of any Event of Default or otherwise shall impair any such
right or power or shall be construed to be a waiver thereof, but any
such right and power may be exercised from time to time and as often
as may be deemed expedient. In order to entitle Financial Security to
exercise any remedy reserved to Financial Security in this Article, it
shall not be necessary to give any notice, other than such notice as
may be expressly required in this Article.
(c) If any proceeding has been commenced to enforce any right
or remedy under this Agreement and such proceeding
36
has been discontinued or abandoned for any reason, or has been
determined adversely to Financial Security, then and in every such
case the parties hereto shall, subject to any determination in such
proceeding, be restored to their respective former positions
hereunder, and, thereafter, all rights and remedies of Financial
Security shall continue as though no such proceeding had been
instituted.
(d) Financial Security shall have the right, to be exercised
in its complete discretion, to waive any covenant, Default or Event of
Default by a writing setting forth the terms, conditions and extent of
such waiver signed by Financial Security and delivered to the
Transferor and NAFCO. Any such waiver may only be effected in writing
duly executed by Financial Security, and no other course of conduct
shall constitute a waiver of any provision hereof. Unless such writing
expressly provides to the contrary, any waiver so granted shall extend
only to the specific event or occurrence so waived and not to any
other similar event or occurrence.
ARTICLE VI.
MISCELLANEOUS
Section 6.01. Amendments, Etc. This Agreement may be amended, modified
or terminated only by written instrument or written instruments signed by the
parties hereto. No act or course of dealing shall be deemed to constitute an
amendment, modification or termination hereof.
Section 6.02. Notices. All demands, notices and other communications
to be given hereunder shall be in writing (except as otherwise specifically
provided herein) and shall be mailed by registered mail or personally delivered
or telecopied to the recipient as follows:
(a) To Financial Security: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Surveillance Department
Re: NAFCO Auto Finance 1995-1
Trust, 6.36% Automobile Loan Asset
Backed Certificates
Confirmation: (000) 000-0000
Telecopy Nos.: (000) 000-0000,
(000) 000-0000
37
(in each case in which notice or other
communication to Financial Security
refers to an Event of Default, a claim on
the Policy or with respect to which
failure on the part of Financial Security
to respond shall be deemed to constitute
consent or acceptance, then a copy of
such notice or other communication should
also be sent to the attention of each of
the General Counsel and the Head-
Financial Guaranty Group and shall be
marked to indicate "URGENT MATERIAL
ENCLOSED.")
(b) To the Transferor: National Financial Auto Funding
Trust
x/x Xxx Xxxxx Xxxxxxxxx Xxxx (XXX)
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust
Administration
Telecopy No: (000) 000-0000
Confirmation: (000) 000-0000
with a copy to: The Chase Manhattan Bank (USA)
x/x Xxx Xxxxx Xxxxxxxxx Bank, N.A.
0 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attention: Corporate Trust
Administration
Telecopy No: (000) 000-0000
Confirmation: (000) 000-0000
(c) To NAFCO: National Auto Finance
Company L.P.
One Park Place
000 X.X. 00xx Xxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Telecopy No: (000) 000-0000
Confirmation: (000) 000-0000
38
A party may specify an additional or different address or addresses by
writing mailed or delivered to the other party as aforesaid. All such notices
and other communications shall be effective upon receipt.
Section 6.03. Payment Procedure. In the event of any payment by
Financial Security for which it is entitled to be reimbursed or indemnified as
provided above, each of the Transferor and NAFCO agrees to accept the voucher
or other evidence of payment as prima facie evidence of the propriety thereof
and the liability therefor to Financial Security. All payments to be made to
Financial Security under this Agreement shall be made to Financial Security in
lawful currency of the United States of America in immediately available funds
to the account number provided in the Premium Letter before 1:00 p.m. (New
York, New York time) on the date when due or as Financial Security shall
otherwise direct by written notice to the Transferor and NAFCO. In the event
that the date of any payment to Financial Security or the expiration of any
time period hereunder occurs on a day which is not a Business Day, then such
payment or expiration of time period shall be made or occur on the next
succeeding Business Day with the same force and effect as if such payment was
made or time period expired on the scheduled date of payment or expiration
date. Payments to be made to Financial Security under this Agreement shall bear
interest at the Late Payment Rate from the date due to the date paid.
Section 6.04. Confidentiality. Any information obtained by Financial
Security pursuant to this Insurance Agreement shall be held in confidence by
Financial Security unless (i) such information has become available to the
public other than as a result of a disclosure by or through Financial Security,
(ii) such information was available to Financial Security on a nonconfidential
basis prior to its disclosure to Financial Security hereunder, (iii) Financial
Security shall be required in connection with any legal or regulatory
proceeding to disclose such information, or (iv) Financial Security, in its
sole discretion, deems it necessary to disclose such information to the Rating
Agencies; provided, that, in any such instance, Financial Security will use its
best efforts to notify the Transferor or NAFCO of its intention to make any
such disclosure prior to making any such disclosure and, in the case of
disclosure to a Rating Agency, Financial Security shall notify such Rating
Agency that such information is confidential and should be treated as such by
such Rating Agency.
39
Section 6.05. Severability. In the event that any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, the parties hereto agree that such holding shall not invalidate
or render unenforceable any other provision hereof. The parties hereto further
agree that the holding by any court of competent jurisdiction that any remedy
pursued by any party hereto is unavailable or unenforceable shall not affect in
any way the ability of such party to pursue any other remedy available to it.
Section 6.06. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
Section 6.07. Consent to Jurisdiction. (a) THE PARTIES HERETO HEREBY
IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR
THE SOUTHERN DISTRICT OF NEW YORK AND ANY COURT IN THE STATE OF NEW YORK
LOCATED IN THE CITY AND COUNTY OF NEW YORK, AND ANY APPELLATE COURT FROM ANY
THEREOF, IN ANY ACTION, SUIT OR PROCEEDING BROUGHT AGAINST IT AND TO OR IN
CONNECTION WITH ANY OF THE TRANSACTION DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED THEREUNDER OR FOR RECOGNITION OR ENFORCEMENT OF ANY JUDGMENT, AND
THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY AGREE THAT ALL CLAIMS
IN RESPECT OF ANY SUCH ACTION OR PROCEEDING MAY BE HEARD OR DETERMINED IN SUCH
NEW YORK STATE COURT OR, TO THE EXTENT PERMITTED BY LAW, IN SUCH FEDERAL COURT.
THE PARTIES HERETO AGREE THAT A FINAL JUDGMENT IN ANY SUCH ACTION, SUIT OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. TO THE EXTENT
PERMITTED BY APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND AGREE NOT TO
ASSERT BY WAY OF MOTION, AS A DEFENSE OR OTHERWISE IN ANY SUCH SUIT, ACTION OR
PROCEEDING, ANY CLAIM THAT IT IS NOT PERSONALLY SUBJECT TO THE JURISDICTION OF
SUCH COURTS, THAT THE SUIT, ACTION OR PROCEEDING IS BROUGHT IN AN INCONVENIENT
FORUM, THAT THE VENUE OF THE SUIT, ACTION OR PROCEEDING IS IMPROPER OR THAT THE
TRANSACTION DOCUMENTS OR THE SUBJECT MATTER THEREOF MAY NOT BE LITIGATED IN OR
BY SUCH COURTS.
(b) To the extent permitted by applicable law, the parties hereto
shall not seek and hereby waive the right to any review of the judgment of any
such court by any court of any other nation or jurisdiction which may be called
upon to grant an enforcement of such judgment.
(c) Each of the Transferor and NAFCO hereby irrevocably appoints and
designates CT Corporation System, whose address is 0000 Xxxxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, as its true and lawful
40
attorney and duly authorized agent for acceptance of service of legal process.
Each of the Transferor and NAFCO agrees that service of such process upon such
Person shall constitute personal service of such process upon it.
(d) Nothing contained in the Agreement shall limit or affect Financial
Security's right to serve process in any other manner permitted by law or to
start legal proceedings relating to any of the Transaction Documents against
the Transferor or NAFCO or its respective property in the courts of any
jurisdiction.
Section 6.08. Consent of Financial Security. In the event that
Financial Security's consent is required under any of the Transaction
Documents, the determination whether to grant or withhold such consent shall be
made by Financial Security in its sole discretion without any implied duty
towards any other Person, except as otherwise expressly provided therein.
Section 6.09. Counterparts. This Insurance Agreement may
be executed in counterparts by the parties hereto, and all such
counterparts shall constitute one and the same instrument.
Section 6.10. Trial by Jury Waived. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW, ANY RIGHT TO A TRIAL BY JURY IN RESPECT
OF ANY LITIGATION ARISING DIRECTLY OR INDIRECTLY OUT OF, UNDER OR IN CONNECTION
WITH ANY OF THE TRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED
THEREUNDER. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT IT
WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND
(B) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THE TRANSACTION
DOCUMENTS TO WHICH IT IS A PARTY BY, AMONG OTHER THINGS, THIS WAIVER.
Section 6.11. Limited Liability. No recourse under any Transaction
Document shall be had against, and no personal liability shall attach to, any
officer, employee, director, affiliate or shareholder of any party hereto, as
such, by the enforcement of any assessment or by any legal or equitable
proceeding, by virtue of any statute or otherwise in respect of any of the
Transaction Documents, the Securities or the Policy, it being expressly agreed
and understood that each Transaction Document is solely a corporate obligation
of each party hereto, and that any and all personal liability, either at common
law or in equity, or by statute or constitution, of every such officer,
employee, director, affiliate or shareholder for breaches by any party hereto
of any obligations under any Transaction Document is
41
hereby expressly waived as a condition of and in consideration for the
execution and delivery of this Agreement.
Section 6.12. Entire Agreement. This Agreement, the Premium Letter,
the Inducement Letter and the Policy set forth the entire agreement between the
parties with respect to the subject matter thereof, and this Agreement
supersedes and replaces any agreement or understanding that may have existed
between the parties prior to the date hereof in respect of such subject matter.
42
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By:
------------------------------------
Name:
Title: __________________ of
The Chase Manhattan Bank
(USA), as trustee for National
Financial Auto Funding Trust
NATIONAL AUTO FINANCE COMPANY L.P.
By:
------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------
Name:
Title:
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Title: Second Vice President of
The Chase Manhattan Bank
(USA), as trustee for National
Financial Auto Funding Trust
NATIONAL AUTO FINANCE COMPANY L.P.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name:
Title:
IN WITNESS WHEREOF, the parties hereto have duly executed and
delivered this Agreement, all as of the day and year first above written.
FINANCIAL SECURITY ASSURANCE INC.
By:
------------------------------------
Name:
Title:
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By:
------------------------------------
Name:
Title: __________________ of
The Chase Manhattan Bank
(USA), as trustee for National
Financial Auto Funding Trust
NATIONAL AUTO FINANCE COMPANY L.P.
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Executive Vice President
