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EXHIBIT 10.107
SUBORDINATION AND INTERCREDITOR AGREEMENT
THIS SUBORDINATION AND INTERCREDITOR AGREEMENT (this "AGREEMENT")
dated as of March 31, 1999, is made by and among (a) National Financial Auto
Funding Trust, a Delaware business trust ("BORROWER"); (b) National Auto Finance
1995-1 Trust, National Auto Finance 1996-1 Trust, National Auto Finance 1997-1
Trust and National Auto Finance 1998-1 Trust (collectively, the "ISSUERS"); (c)
National Auto Finance Company, Inc. ("NAFI"); (d) First Union National Bank
("FIRST UNION" or "JUNIOR LIEN HOLDER"); (e) Financial Security Assurance Inc.,
a New York stock insurance company ("FSA"); and (f) Xxxxxx Trust and Savings
Bank, an Illinois banking corporation, as Trustee and Collateral Agent ("SENIOR
LIEN HOLDER"). All capitalized terms used but not otherwise defined herein shall
have the meanings assigned to them in the Credit Agreement (as defined below).
R E C I T A L S
A. FSA is the "Controlling Party" as that term is defined in the
Underlying Transaction Documents.
B. FSA issued insurance policies to Senior Lien Holder in such Senior
Xxxx Xxxxxx'x capacity as the trustee or indenture trustee, as applicable (in
such capacity, the "TRUSTEE") of the Underlying Trusts, to guarantee certain
scheduled payments to holders of notes or certificates, as applicable (the
"NOTEHOLDERS" or "CERTIFICATEHOLDERS") issued by the Issuers (the "INSURER
OBLIGATIONS").
C. Pursuant to that certain Revolving Credit, Term Loan and Security
Agreement ("CREDIT AGREEMENT") dated as of Xxxxx 00, 0000 xxxxx Xxxxxxxx, XXXX
and First Union, First Union will extend certain financial accommodations to the
Borrower to be secured by, among other things, a lien on the Borrower's right,
title and interest in and to the Collateral (as such term is defined in Section
10.1 of the Credit Agreement; for purposes of this Agreement, "SUBORDINATED
COLLATERAL" shall mean all Collateral that is not First Priority Collateral).
The obligations of Borrower and its affiliates to Junior Lien Holder, whether
under the Credit Agreement or otherwise, are referred to herein as the "JUNIOR
LOAN."
D. It is a condition precedent to the Credit Agreement that FSA consent
to a junior lien on the Collateral and FSA is willing to consent solely upon and
in accordance with the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the premises and in order to
induce FSA and Senior Lien Holder to consent, First Union, Senior Lien Holder,
Borrower, the Issuers, and FSA hereby agree as follows:
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ARTICLE I
THE SUBORDINATION
I.1 AGREEMENT TO SUBORDINATE. Junior Lien Holder, each Issuer and
Borrower each agrees that any and every lien and security interest, whether now
existing or hereinafter granted, in the Subordinated Collateral in favor of or
held for the benefit of Senior Lien Holder or FSA has and shall have priority
over any lien or security interest that Junior Lien Holder now has or may
hereafter acquire in the Subordinated Collateral notwithstanding (a) any
statement or provision to the contrary, whether or not contained in any
agreement, instrument or document; (b) irrespective of the time or order of
filing or recording of financing statements, deeds of trust, mortgages or other
notices of security interests, liens or assignments granted pursuant thereto;
(c) irrespective of anything contained in any filing or agreement to which any
party hereto or its respective successors and assigns may now or hereafter be a
party; and (d) irrespective of the ordinary rules for determining priorities
under the UCC or under any other law governing the relative priorities of
secured creditors. The Junior Loan and the Transaction Documents and all
advances made thereunder (without regard to the application of such advances)
are hereby, and shall continue to be, except with respect to First Priority
Collateral, subject and subordinate in lien and in payment to: (a) Senior Lien
Holder, FSA and the Certificateholders and Noteholders; (b) the Underlying
Transaction Documents and all sums due thereunder; and (c) all interest,
premiums and all other sums due to Senior Lien Holder, FSA or the
Certificateholders and Noteholders. All of the terms, covenants and conditions
of the Transaction Documents are hereby, and shall continue to be, subordinate
to all of the terms, covenants and conditions of the Underlying Transaction
Documents.
I.2 SUSPENSION OF REMEDIES OF JUNIOR LIEN HOLDER. For purposes of this
Agreement, the "SENIOR SECURED OBLIGATIONS" shall mean all indebtedness and
other obligations of any kind owed to each of the Underlying Trustees, Senior
Lien Holder, FSA and the Noteholders and Certificateholders in connection with
the Original Underlying Transaction Documents. Until the Senior Secured
Obligations have been fully and indefeasibly paid in full in cash and the Final
Insurance Termination Date shall have occurred:
(a) Junior Lien Holder shall have no right to receive any payment,
dividend or other distribution from Borrower, any Issuer or either Underlying
Trustee from or by way of the Collateral, or enforce any security interest in,
foreclose, levy or execute upon, or collect or attach the Collateral, whether by
private or judicial action or otherwise except with respect to First Priority
Collateral to the extent set forth in this Section 1.2 below;
(b) Junior Lien Holder agrees that any payments, dividends or other
distribution received from Borrower, any Issuer or any Underlying Trustee,
directly or indirectly, in violation of this Agreement, in cash or other
property, by setoff or in any other manner, from or by way of the Subordinated
Collateral, shall be received in trust for the benefit of Senior lien holder,
FSA and the Noteholders and Certificateholders as their interests may appear
pursuant to the Underlying Transaction Documents, shall be held in the same form
in which it is received and shall be immediately turned over to
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Senior Lien Holder for the benefit of the Senior Secured Obligations until the
Senior Secured Obligations have been fully and indefeasibly paid in full in
cash;
(c) Junior Lien Holder agrees not to ask, demand, take or receive from
Borrower, any Issuer or any Underlying Trustee, directly or indirectly, in cash
or other property or by setoff or in any other manner, from or by way of the
Subordinated Collateral, any payment, dividend or other distribution unless and
until the Senior Secured Obligations shall have been fully and indefeasibly
paid in full in cash; and
(d) Junior Lien Holder agrees that it will not take or permit any
action to be taken which would be prejudicial to or inconsistent with the
priority position of Senior Lien Holder, FSA or the Certificateholders or
Noteholders under this Agreement or with Senior Xxxx Xxxxxx'x, FSA's or
Certificateholders' or Noteholders' rights under the Underlying Transaction
Documents.
(e) Nothing contained in this Agreement is intended to or shall be
deemed to restrict the payment of Free Cash Flow as defined in the Irrevocable
Instruction Letter or to restrict Junior Xxxx Xxxxxx'x ability to compel the
payment of Free Cash Flow to the extent Borrower could do so under the
Underlying Transaction Documents or to set off against First Priority
Collateral only; provided that such payments are made strictly in accordance
with, upon the terms and subject to the conditions set forth in the
Underlying Transaction Documents, the Irrevocable Instruction Letter and this
Agreement.
I.3 LOCKBOX ACCOUNT.
(a) First Union, in its capacity of Lockbox Bank, hereby acknowledges
and agrees that any and all Trust Receivables (as defined below) received by
First Union or deposited into the Lockbox Account (as defined below) shall be
transferred by First Union to the Collection Account (as defined in the
Underlying Transaction Documents) to be distributed in accordance with the
Underlying Transaction Documents. First Union further acknowledges and agrees
that it may not exercise, and hereby expressly waives, any rights of set off,
recoupment, banker's lien, statutory lien or any similar rights pursuant to any
applicable law or in equity against the Trust Receivables received by First
Union, in its capacity of Lockbox Bank, or deposited into the Lockbox Account;
provided, however, that if any checks, money orders, drafts, collection
remittances and other instruments (collectively, "CHECKS") relating to Trust
Receivables paid to the Collection Account are returned unpaid or otherwise
dishonored, First Union, in its capacity of Lockbox Bank, shall have the right
to charge any and all such returned or dishonored Checks (together with all
customary service charges and other fees related thereto) against the Lockbox
Account or to demand reimbursement therefor directly from Borrower, or if
neither of the foregoing reimburses First Union, then upon notice delivered to
the Senior Lien Holder and FSA prior to the Final Insurance Termination Date,
First Union, in its capacity of Lockbox Bank, may obtain reimbursement from
the Collection Account, the Master Spread Account or to the extent funds on
account for such dishonored checks actually were received in the Collection
Account, in the Master Spread Account or by FSA.
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(b) First Union, in its capacity of Lockbox Bank, shall send to each
of Senior Lien Holder only upon written request of Senior Lien Holder and FSA
copies of all returned and dishonored Checks relating to Trust Receivables
promptly upon (and, in any event, within ten days following) First Union's
receipt thereof, and upon Senior Xxxx Xxxxxx'x or FSA's request First Union, in
its capacity of Lockbox Bank, shall provide each of Senior Lien Holder and FSA
with copies of the regular monthly bank statements provided to Borrower or its
Affiliates or Issuer or its Affiliate and such other information relating to the
Lockbox Account as shall reasonably be requested by Senior Lien Holder or FSA.
First Union, in its capacity of Lockbox Bank, shall also deliver a copy of all
notices and statements required to be sent pursuant to any agreement governing
or related to the Lockbox Account (including any Lockbox agreements executed in
connection therewith) to Senior Lien Holder and FSA at such times as provided
therein.
(c) For the purposes of this Section 1.3, the term (i) "LOCKBOX
ACCOUNT" shall mean any and all lockbox or other accounts established with First
Union by Borrower, Borrower's Affiliates, the Issuers or the Issuers'
Affiliates, and (ii) "TRUST RECEIVABLES" shall mean each of (A) any and all
payments made or amounts paid in connection with the Contracts, and (B) any and
all proceeds from the repossession or other disposition of any Vehicle made in
connection with a delinquent Contract.
(d) Borrower, NAFI, Senior Lien Holder, and FSA will at any time and
from time to time, promptly execute and deliver all further instruments and
documents, and take all further action that may be necessary or desirable, or
that First Union may request, in order to carry out the provisions of this
Section 1.3, including without limitation, providing all documents and other
information related to returned or dishonored Checks and all customary service
charges and other fees related thereto, all of which shall be at the expense of
Borrower and if Borrower fails to pay, at the expense of NAFI. First Union shall
not be liable for customary service charges and other fees in its capacity as
Lockbox Bank.
I.4 DEFINITION OF PROCEEDING. "Proceeding" as used herein means any
voluntary or involuntary bankruptcy, insolvency, arrangement, reorganization,
receivership, relief or similar proceedings or upon an assignment for the
benefit of creditors or any other marshaling of the assets and liabilities of
any Issuer or Borrower or any other distribution of all or any of the assets of
any Issuer or Borrower to creditors of any Issuer or Borrower upon the
dissolution, winding up, liquidation, arrangement, reorganization, adjustment,
protection, relief or composition of any Issuer or Borrower or its debts. Upon
the occurrence of any Proceeding, any payment or distribution of any kind
(whether in cash, property or securities) which otherwise would be payable or
deliverable upon or with respect to the Subordinated Collateral to Junior Lien
Holder shall be paid or delivered directly to senior lien Holder for application
(in the case of cash) to or as collateral (in the case of noncash property or
securities) for the Senior Secured Obligations until the Senior Secured
Obligations shall have been fully and indefeasibly paid in full in cash.
I.5 NO COMMENCEMENT OF ANY PROCEEDING. Junior Lien Holder agrees
that, prior to the date which one year and one day after the later of: (a) the
date on which all Senior Secured Obligations have been fully and indefeasibly
paid in full in cash and (b) the Final Insurance Termination Date, such Junior
Lien Holder will not
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commence, or join with any creditor in commencing or maintaining, any Proceeding
by or against Borrower, any Issuer or NAFI. This Section 1.5 shall survive the
termination of this Agreement.
I.6 NONASSIGNABILITY OF JUNIOR LOAN AND LIENS CONSENTED TO. This
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors, participants, transferees and assigns
(collectively, "ASSIGNEES") including any Assignee who may be in interest as a
matter of applicable law such as a receiver or trustee or any Assignee
purporting to obtain an interest in violation of the provisions of this
Agreement. Junior Lien Holder hereby covenants and agrees that none of its legal
or beneficial right, title or interest in or to the Subordinated Collateral or
under the Transaction Documents may be sold, assigned, participated, syndicated,
pledged, encumbered or transferred, in whole or in part, absolutely or
collaterally, to any Person without the prior written consent of Senior Lien
Holder and FSA, which consent may be arbitrarily withheld for any reason or for
no reason. Any attempt to transfer, directly or indirectly, all or any portion
of the Junior Loan, the Junior Lien or the First Priority Lien under the Credit
Agreement or any other Transaction Document or to transfer any of Junior Xxxx
Xxxxxx'x interest in the Collateral in violation of this Agreement shall be null
and void, ab initio.
I.7 MARSHALING; PAYMENTS SET ASIDE. None of Senior Lien Holder, FSA,
the Noteholders, or the Certificateholders shall be under any obligation to
marshal any assets in favor of Junior Lien Holder, Borrower, any Issuer or any
other Person or against or in payment of any or all of the Senior Secured
Obligations. Each of Junior Lien Holder, Borrower and each Issuer hereby waives
any and all rights each shall have at any time under any law pertaining to
marshaling of assets, the sale of property in the inverse order of alienation,
the administration of estates of decedents, appraisement, valuation, stay,
extension or redemption or any other similar laws or equitable principles as now
or hereafter in force to the fullest extent permitted by applicable law.
I.8 NO SET-OFFS BY JUNIOR LIEN HOLDER. Until the Final Insurance
Termination Date, Junior Lien Holder hereby agrees that it may not exercise any
right of set off, recoupment, banker's lien, statutory lien or any similar right
under any applicable law or in equity against Borrower. Until the Insurance
Termination Date, Junior Lien Holder hereby agrees that it may not exercise any
right of set off, recoupment, banker's lien, statutory lien or any similar right
under any applicable law or in equity against such Issuer. If any action is
taken in violation of this provision or if the preceding sentence should be
inapplicable or unenforceable in any respect, Junior Lien Holder agrees that the
exercise of any such right shall be for the benefit of Senior Lien Holder, FSA
and the Certificateholders and Noteholders and agrees to immediately turns over
the proceeds of any such set off, recoupment or lien to Senior Lien Holder for
application to the Senior Secured Obligations.
I.9 NO RIGHTS OF SUBROGATION/NO ASSIGNMENT. Junior Lien Holder agrees
that no payment or distribution to Senior Lien Holder pursuant to the provisions
of this Agreement shall entitle Junior Lien Holder to exercise rights of
subrogation, if any, until the Final Insurance Termination Date. Nothing
contained in this Agreement shall constitute an assignment by any party to
another. Nothing contained in this Agreement is intended to or shall excuse or
alter, as between Borrower and Junior Lien Holder, any of
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the obligations of Borrower to Junior Lien Holder, or to affect the relative
rights against Borrower of Junior Lien Holder and creditors of Borrower other
than the rights of Senior Lien Holder and FSA and the Noteholders and
Certificateholders and Junior Lien Holder as between them. Junior Lien Holder,
each Issuer and Borrower each agrees to and hereby does expressly waive to the
fullest extent permitted under applicable law any and all rights, whether at law
or in equity, (a) to request or compel Senior Lien Holder, FSA or the
Noteholders or Certificateholders to give notice to Junior Lien Holder of any
action taken (or not taken) by Senior Lien Holder, FSA or the Noteholders or
Certificateholders with respect to the Collateral (other than the Interest
Reserve Account and the Swap Agreement), the Senior Secured Obligations or
otherwise under the Underlying Transaction Documents; (b) to request or compel
marshalling with respect to the Collateral held for the Senior Secured
Obligations; or (c) to challenge the validity, enforceability or first priority
of Senior Xxxx Xxxxxx'x and FSA's claims and liens or the exercise of any rights
or remedies by Senior Lien Holder, FSA or the Noteholders or Certificateholders
pursuant to the Underlying Transaction Documents.
I.10 FURTHER ASSURANCES. Junior Lien Holder, each Issuer and Borrower
will, at its expense and at any time and from time to time, promptly execute and
deliver all further instruments and documents, and take all further action
(other than any action to commence or maintain a Proceeding), that may be
necessary or desirable, or that either Senior Lien Holder, FSA or the
Certificateholders or Noteholders may reasonably request, in order to protect
any right or interest granted or purported to be granted hereby or to enable
Senior Lien Holder, FSA or the Certificateholders or Noteholders to exercise and
enforce its rights and remedies under this Agreement or the Underlying
Transaction Documents.
Junior Lien Holder, each Issuer and Borrower each agrees that Senior
Lien Holder, FSA and the Certificateholders and Noteholders shall have all of
the rights, remedies and discretion provided in connection with the Underlying
Transaction Documents, including, without limitation, the right to extend,
renew, modify, increase, waive or amend any of the terms thereof, to sell,
exchange, release or otherwise deal with any of the Collateral, release
Borrower, any Issuer or any other person liable in any manner for any
obligations owed to Senior Lien Holder, FSA or the Certificateholders or
Noteholders, or exercise or refrain from exercising any rights thereunder or at
law. The foregoing reservation of rights and remedies under the Underlying
Transaction Documents shall further include, without limitation, the right to
charge a default rate of interest on any amounts owed thereunder, to foreclose
upon the Collateral as provided therein, and to purchase in lieu of redemption
any Certificates and any Notes (as the terms "Certificates" and "Notes" are
defined in the Underlying Transaction Documents).
Any and all such rights, remedies, actions or omissions in Senior Xxxx
Xxxxxx'x or FSA's discretion may be taken without incurring any responsibility
or liability to Junior Lien Holder, without impairing or releasing the
obligations of Borrower, any Issuer or Junior Lien Holder under this Agreement,
without otherwise affecting the rights of Senior Lien Holder or FSA under this
Agreement or any Underlying Transaction Document and without any notice to or
consent of Junior Lien Holder.
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The rights of Senior Lien Holder, FSA and the Noteholders and
Certificateholders under this Agreement shall not be prejudiced or impaired by
any action or omission of Senior Lien Holder, Borrower, any Issuer, any
Underlying Trustee, Junior Lien Holder or any person in custody of the
Collateral or the assets, property or operations of Borrower or any Issuer or by
the failure of Borrower, any Issuer, or Junior Lien Holder to comply with any of
the terms of this Agreement, the Transaction Documents or the Underlying
Transaction Documents.
Junior Lien Holder agrees not to directly or indirectly challenge,
contest, or participate in any effort to challenge, contest, set aside, alter,
amend or modify the rights and priorities set forth in the Underlying
Transaction Documents or this Agreement.
I.11 AGREEMENT BY JUNIOR LIEN HOLDER, BORROWER AND ISSUERS. Junior
Lien Holder, each Issuer and Borrower each agrees that it will not (a) take any
other action, in contravention of the provisions of this Agreement, (b)
challenge, directly or indirectly, the enforceability or validity of this
Agreement, any of the Underlying Transaction Documents or any of the provisions
hereof or thereof, or (c) challenge, directly or indirectly, the true sale
nature and absolute assignment of all of any Issuer's, Senior Xxxx Xxxxxx'x or
FSA's interest in the Trust Estate (as defined in the Underlying Transaction
Documents).
I.12 OBLIGATIONS HEREUNDER NOT AFFECTED. All rights and interests of
Senior Lien Holder, FSA and the Noteholders and Certificateholders under this
Agreement, and all agreements and obligations of Junior Lien Holder, Borrower
and Issuers under this Agreement, shall remain in full force and effect
irrespective of:
(a) any lack of validity or enforceability of any Transaction
Document or Underlying Transaction Document or any other agreement or instrument
relating thereto;
(b) any change in any term of any Transaction Document or Underlying
Transaction Document, or any other amendment or waiver of or any consent to
departure from any Transaction Document or Underlying Transaction Document;
(c) any exchange, release or non-perfection of the Collateral, or any
release or amendment or waiver of or consent to departure from any of the terms
of the Senior Secured Obligations; or
(d) any other circumstance which might otherwise constitute a defense
available to, or a discharge of, Borrower, any Issuer, or any guarantor or
subordinated creditor.
Notwithstanding anything contained in this Agreement or any Transaction
Document, this Agreement shall continue to be effective or be reinstated, as the
case may be, if at any time any payment to any of Senior Lien Holder, FSA or any
Noteholder or Certificateholder from Borrower, any Issuer or any other person or
by way of enforcement of any remedies or otherwise from the Collateral is
rescinded, avoided or must otherwise be returned or paid by Senior Lien Holder,
FSA or any Noteholder or
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Certificateholder for any reason, whether following the institution of a
Proceeding or otherwise, under any bankruptcy law, state or federal law, common
law or equitable cause, all as though such payment had not been made and, in
that event, the obligations of the parties hereunder shall be revived with
respect to such amounts ("REVIVED CLAIMS"), all of which shall constitute Senior
Secured Obligations.
I.13 PAYMENTS AND DISTRIBUTIONS HELD IN TRUST. All payments, dividends
or other distributions from or by way of the Collateral, other than First
Priority Collateral, which are received by Junior Lien Holder contrary to the
provisions of this Agreement shall be received in trust for the benefit of
Senior Lien Holder, FSA and the Noteholders and Certificateholders, shall be
held in the same form received, and shall be segregated from other funds and
property held by Junior Lien Holder and shall immediately be paid over to Senior
Lien Holder in the same form as received (with any necessary endorsement) to be
applied (in the case of cash) to or held as collateral (in the case of noncash
property or securities) for the Senior Secured Obligations in accordance with
the terms of the Underlying Transaction Documents until the Senior Secured
Obligations are fully and indefeasibly paid in full in cash.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
II.1 REPRESENTATIONS AND WARRANTIES OF FIRST UNION. First Union
represents and warrants that it is the only Lender and Agent under the Credit
Agreement and that, as Lender, it holds one hundred percent (100%) of the
Lender's legal and beneficial interests, obligations and liens under the Credit
Agreement and other Transaction Documents. First Union covenants that it will
not sell, transfer, syndicate, participate, pledge, encumber or otherwise
assign, in whole or in part, all or any portion of its interests, obligations or
liens in or under any of the Transaction Documents.
ARTICLE III
MISCELLANEOUS
III.1 AMENDMENTS. (a) No amendment or waiver of any provision of this
Agreement nor consent to any departure therefrom by Junior Lien Holder, Borrower
or any Issuer shall in any event be effective unless the same shall be in
writing and signed by Senior Lien Holder and FSA, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. No failure on the part of Senior Lien Holder or FSA to
exercise, and no delay in exercising, any right hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any right hereunder
preclude any other or further exercise thereof or the exercise of any other
right. No notice to or demand on Borrower, any Issuer or Junior Lien Holder in
any case shall entitle Borrower, any Issuer or Junior Lien Holder to any other
or further notice or demand in similar or other circumstances. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
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(b) Junior Lien Holder hereby acknowledges and agrees that FSA may
direct each of the Owner Trustee (as defined in the Underlying Transaction
Documents) or the Underlying Trustees to enter into amendments in accordance
with the terms of the relevant Underlying Transaction Documents, but without
Junior Xxxx Xxxxxx'x consent, to make changes to the Underlying Transaction
Documents that FSA believes in good faith are necessary, appropriate, or
incidental to engaging and retaining a satisfactory successor servicer in the
event of a servicer succession under the terms of the Underlying Transaction
Documents, including, without limitation, any amendment entered into in
accordance with the terms of the relevant Underlying Transaction Documents that
make changes to (a) the duties or standard of care of the servicer or (b) the
compensation paid to the servicer even if the change in compensation paid to the
servicer reduces or eliminates the amount of Free Cash Flow.
III.2 INDEMNIFICATION OF FSA AND SENIOR LIEN HOLDER. (a) NAFI hereby
acknowledges and agrees that it shall upon demand, indemnify, protect, save,
defend and hold harmless FSA and Senior Lien Holder, as the case may be, from
and against any and all obligations, fees, liabilities, losses, damages,
penalties, claims, demands, actions, suits, judgments, costs and expenses,
including reasonable legal expenses and attorneys fees, of every kind and nature
whatsoever (collectively, "INDEMNIFIABLE EXPENSES"), imposed on, incurred by, or
asserted against FSA or Senior Lien Holder by any Person in connection with any
(i) Revived Claim and (ii) payments made by FSA in connection with preference
payments made to Noteholders and Certificateholders, pursuant to certain
provisions of the relevant Underlying Transaction Documents, including, but not
limited to Section 4.05 of the 1995-1 and 1996-1 Pooling and Servicing
Agreements, Section 5.19 of the 1997-1 and 1998-1 Indentures and Section 6.2 of
the 1997-1 and 1998-1 Sale and Servicing Agreements.
(b) NAFI hereby acknowledges and agrees that it shall upon demand,
indemnify, protect, save, defend and hold harmless FSA and Senior Lien Holder,
as the case may be, from Indemnifiable Expenses resulting in an out-of-pocket
expenditure or payment by FSA or Senior Lien Holder to the extent such
Indemnifiable Expenses resulted from the existence of the Transaction Documents
or any of the accommodations, consents or waivers made by FSA and Senior Lien
Holder with respect to First Union's rights or remedies thereunder.
(c) First Union hereby acknowledges and agrees that it shall upon
demand, indemnify, protect, save, defend and hold harmless FSA and Senior Lien
Holder, as the case may be, from any Indemnifiable Expenses pursuant to
subsections (a) and (b) above to the extent that NAFI has failed to fully
indemnify FSA and Senior Lien Holder in accordance therewith.
III.3 ADDITIONAL WAIVERS. (a) Junior Lien Holder, each Issuer and
Borrower each hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Senior Secured Obligations and this
Agreement and any requirement that Senior Lien Holder protect, secure, perfect
or insure any security interest or lien or any property subject thereto or
exhaust any right or take any action against Borrower, any Issuer or any other
person or entity or the Subordinated Collateral.
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(b) Junior Lien Holder hereby acknowledges and agrees that,
notwithstanding anything contained in the Credit Agreement or any other
Transaction Document to the contrary, no obligation or liability shall become
due and payable under the Credit Agreement at any time before the Final
Insurance Termination Date if the effect of such obligation or liability
becoming due would be to cause the Borrower to not be Solvent. Subject to the
terms hereof, any amount that is prevented by operation of this restriction from
becoming due and payable may, at the option of the Junior Lien Holder, become an
arrearage that becomes due and payable no earlier than the first to occur of
the date upon which Borrower can satisfy such obligation or liability in full in
cash and remain Solvent and the day following the Final Insurance Termination
Date.
III.4 SURVIVAL. All covenants, agreements, representations and
warranties made herein shall survive the execution and delivery of the
Transaction Documents and the making of the Loan.
III.5 NO WAIVER BY SENIOR LIEN HOLDER OR FSA. No failure or delay on
the part of Senior Lien Holder, FSA or the Underlying Trustees in the exercise
of any power, right or privilege under this Agreement or any of the other
Underlying Transaction Documents shall impair such power, right or privilege or
be construed to be a waiver of any default or acquiescence therein, nor shall
any single or partial exercise of any such power, right or privilege preclude
other or further exercise thereof or of any other right, power or privilege.
III.6 SEVERABILITY. Whenever possible, each provision of this
Agreement, the Transaction Documents and the Underlying Transaction Documents
shall be interpreted in such manner as to be valid, legal and enforceable under
the applicable law of any jurisdiction. Without limiting the generality of the
foregoing sentence, in case any provision of this Agreement, the Transaction
Documents or the Underlying Transaction Documents shall be invalid, illegal or
unenforceable under the applicable law of any jurisdiction, the validity,
legality and enforceability of the remaining provisions, or of such provision in
any other jurisdiction, shall not in any way be affected or impaired thereby.
III.7 IN FURTHERANCE OF SUBORDINATION. Notwithstanding the prohibition
against the initiation, commencement or maintenance of any Proceeding with
respect to Borrower or any Issuer, if any such Proceeding with respect to
Borrower or any Issuer is nevertheless pending and not dismissed,
(a) Senior Lien Holder and FSA are hereby irrevocably authorized and
empowered (in their own names or in the name of Junior Lien Holder or
otherwise), but shall have no obligation, to demand, xxx for, collect and
receive every payment or distribution referred to in Sections 1.2(a) through
1.2(d), inclusive, and give acquittance therefor and, in the event Junior Lien
Holder has failed to file a claim or proof of claim prior to the 30th day
preceding any bar date or other date fixed as the last day for the filing of
such claims or proofs of claim, to file claims and proofs of claim and take such
other action. Junior Lien Holder hereby irrevocably appoints Senior Lien Holder
and FSA, as such Junior Xxxx Xxxxxx'x attorney-in-fact, with full power in the
place and stead of such Junior Lien Holder and in the name of such Junior Lien
Holder, Senior Lien Holder or FSA, or otherwise, from time to time, in Senior
Xxxx Xxxxxx'x or FSA's
LA/INTERCREDITOR AGREEMENT(FINAL) 10
11
discretion to take any action, execute any instrument or other document in
connection with any Proceeding or enforce any security interest or other lien on
the Subordinated Collateral securing payment to Junior Lien Holder;
(b) Junior Lien Holder shall duly and promptly take such action
(other than any action to commence or maintain a Proceeding) as any Senior Lien
Holder or FSA may reasonably request to collect and receive any and all payments
or distributions which may be payable or deliverable upon or with respect to the
Subordinated Collateral; and
(c) Notwithstanding any other provision hereof, Junior Lien Holder
hereby agrees that any credit extended by Senior Lien Holder or FSA to Borrower
or any Issuer or any refinancing arrangement of the Original Underlying
Transactions consented to by FSA and the Senior Lien Holder (whether or not in
connection with such Proceeding) shall be entitled to all the priorities,
preferences and benefits of this Agreement.
III.8 ENTIRE AGREEMENT; CONSTRUCTION; AMENDMENTS AND WAIVERS.
(a) This Agreement, the Transaction Documents and the Underlying
Transaction Documents constitute and contain the entire agreement among the
parties and supersede any and all prior agreements, negotiations,
correspondence, understandings and communications between the parties, whether
written or oral, respecting the subject matter hereof.
(b) This Agreement is the result of negotiations between and has been
reviewed by each of the parties and their respective counsel; accordingly, this
Agreement shall be deemed to be the product of the parties hereto, and no
ambiguity shall be construed in favor of or against any party. The parties agree
that they intend the literal words of this Agreement and that no parol evidence
shall be necessary or appropriate to establish any party's actual intentions.
(c) The right of Junior Lien Holder to exercise any remedies under
the Credit Agreement or any other Transaction Document is subject to the terms
of this Agreement. Notwithstanding anything in the Credit Agreement or in any
other Transaction Document, until the Final Insurance Termination Date, all
rights and remedies of Junior Lien Holder under the Credit Agreement, any other
Transaction Document or otherwise, whether at law or in equity, is subject to
and limited by this Agreement. In the event of any contradiction or ambiguity
between any Transaction Document and this Agreement, the terms of this Agreement
shall govern. All disputes with respect to the matters addressed in this
Agreement shall be determined by reference to this Agreement exclusively and no
provision of the Credit Agreement or any other Transaction Document should be
interpreted as altering, amending, explaining or clarifying any provision of
this Agreement.
(d) Notwithstanding anything in the Credit Agreement or any other
Transaction Document to the contrary, no obligation or liability shall become
due and payable hereunder at any time before the Final Insurance Termination
Date if the effect of such obligation or liability becoming due would be to
cause the Borrower to not be
LA/INTERCREDITOR AGREEMENT(FINAL) 11
12
Solvent. Subject to the terms of this Agreement, any amount that is prevented by
operation of this restriction from becoming due and payable may, at the option
of Junior Lien Holder, become an arrearage that becomes due and payable no
earlier than the first to occur of the date upon which Borrower can satisfy such
obligation or liability in full in cash and remain Solvent and the day which is
a year and a day following the Final Insurance Termination Date.
III.9 NOTICES. Any notice or other communication required or permitted
to be given hereunder shall be in writing addressed to the respective party as
set forth below and may be personally served, telecopied or sent by overnight
courier or U.S. Mail and shall be deemed given: (a) if served in person, when
served; (b) if telecopied, on the date of transmission if before 3:00 p.m.
(Eastern time) on a business day; provided that a hard copy of such notice is
also sent pursuant to (c) or (d) below; (c) if by overnight courier, on the
first business day after delivery to the courier; or (d) if by U.S. Mail,
certified or registered mail, return receipt requested on the fourth (4th) day
after deposit in the mail postage prepaid.
Notices to Junior
Lien Holder: First Union National Bank
One First Union Center
Attn: Xxxxxx Xxxxxxx
000 Xxxxx Xxxxxxx Xxxxxx, XX-00
Xxxxxxxxx, XX 00000-0000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Xxxxxxx Xxxxxx, Esq.
Thacher, Xxxxxxx & Xxxx
Xxx Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Notices to Issuers: National Auto Finance 1995-1 Trust
Xxxxxx Trust and Savings Bank, as Trustee
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Indenture Trust Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
National Auto Finance 1996-1 Trust
Xxxxxx Trust and Savings Bank, as Trustee
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Indenture Trust Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
LA/INTERCREDITOR AGREEMENT(FINAL) 12
13
National Auto Finance 1997-1 Trust
c/o Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Corporate Trust Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
National Auto Finance 1998-1 Trust
c/o Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attn: Corporate Trust Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Notices to NAFI: National Auto Finance Company, Inc.
Attn: Xxxxx X. Xxxxx
00000 Xxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Xxxxxxxx & Xxxxxxxx LLP
Attn: Xxxxxx Xxxxxxx
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Notices to Borrower: National Auto Financial Auto Funding Trust
Attn: Xxxxx X. Xxxxx
00000 Xxxxxxxx Xxxx Xxxx., Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
With copies to: Chase Manhattan Bank Delaware
Attn: Xxxxx Xxxxx
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and
Xxxxxxxx Xxxxxx & Finger
Attn: Xxxx Xxxxxxx
000 Xxxx Xxxxxx
LA/INTERCREDITOR AGREEMENT(FINAL) 13
00
Xxx Xxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Notices to Senior
Lien Holder: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, XX 00000
Attention: Indenture Trust Administration
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Wtih a copy to: Xxxxxx & Xxxxxx Attn: Xxxxx Xxxxxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
Notices to FSA: Financial Security Assurance, Inc.
Attn: Xxxxxx Xxx
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
With a copy to: Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attn: Xxxxx X. Xxxxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
III.10 CONTINUING AGREEMENT; TRANSFER OF NOTES. This Agreement is a
continuing agreement and shall (a) remain in full force and effect until the
Senior Secured Obligations shall have fully satisfied or paid, (b) be binding
upon Junior Lien Holder, each Issuer and Borrower and each of their respective
successors and assigns, and (c) inure to the benefit of and be enforceable by
Senior Lien Holder and FSA and each of their respective successors, transferees
and assigns. Without limiting the generality of the foregoing clause (c), to the
extent Senior Lien Holder or FSA assigns or otherwise transfers its rights or
obligations under any Underlying Transaction Document to any other person or
entity, such other person or entity shall thereupon become vested with all the
rights in respect thereof granted to Senior Lien Holder or FSA, as applicable,
under this Agreement or any Transaction Document. This Agreement shall terminate
upon the Final Insurance Termination Date except with respect to Revived Claims
and Sections 1.5, 3.2 and 3.11.
LA/INTERCREDITOR AGREEMENT(FINAL) 14
15
III.11 CONSENT TO JURISDICTION. EACH OF THE PARTIES HERETO HEREBY
CONSENTS AND AGREES THAT THE STATE OR FEDERAL COURTS LOCATED IN THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK SHALL HAVE EXCLUSIVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN SUCH PARTIES PERTAINING TO THIS
AGREEMENT OR TO ANY DISPUTE BETWEEN FSA, SENIOR LIEN HOLDER OR THE NOTEHOLDERS
OR CERTIFICATEHOLDERS, ON THE ONE HAND, AND FIRST UNION ON THE OTHER, UNDER ANY
OF THE TRANSACTION DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT PROVIDED, THAT SUCH PARTY ACKNOWLEDGES THAT ANY APPEALS FROM THOSE
COURTS MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE OF THE BOROUGH OF
MANHATTAN, CITY OF NEW YORK AND, PROVIDED, FURTHER NOTHING IN THIS AGREEMENT
SHALL BE DEEMED OR OPERATE TO PRECLUDE FSA OR SENIOR LIEN HOLDER FROM BRINGING
SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE ON ITS
COLLATERAL, OR TO ENFORCE A JUDGMENT OR OTHER COURT ORDER IN FAVOR OF FSA OR
SENIOR LIEN HOLDER. EACH OF THE PARTIES HERETO EXPRESSLY SUBMITS AND CONSENTS IN
ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT COMMENCED IN ANY SUCH COURT,
AND SUCH PARTY HEREBY WAIVES ANY OBJECTION WHICH IT MAY HAVE BASED UPON LACK OF
PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY
CONSENTS TO THE GRANTING OF SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED
APPROPRIATE BY SUCH COURT. BORROWER, EACH ISSUER AND JUNIOR LIEN HOLDER EACH
WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL
SERVICE OF PROCESS BE MADE IN THE MANNER SET FORTH FOR NOTICE IN SECTION 3.9 OF
THIS AGREEMENT. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO A TRIAL BY JURY
IN ANY ACTION TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS
AGREEMENT.
III.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the internal laws of the State of New York without
reference to the conflict of laws provisions thereof.
III.13 PAYMENT OF COUNSEL FEES AND EXPENSES. The Borrower agrees to
pay upon demand, the reasonable fees and expenses of Paul, Hastings, Xxxxxxxx &
Xxxxxx, LLP, special counsel to FSA, in connection with the negotiation,
preparation, approval, execution and delivery of this Agreement and the other
related Transaction Documents.
III.14 NO DUTIES IMPOSED ON SENIOR LIEN HOLDER. The rights granted to
Senior Lien Holder and FSA hereunder are solely for their protection and nothing
herein contained shall impose on Senior Lien Holder or FSA any duties with
respect to the Collateral or any property of Borrower, any Issuer or Junior Lien
Holder received
LA/INTERCREDITOR AGREEMENT(FINAL) 15
16
hereunder. Neither Senior Lien Holder nor FSA shall have any duty to preserve
rights against prior parties in any instrument or chattel paper received
hereunder.
III.15 SPECIFIC PERFORMANCE. Senior Lien Holder and FSA are hereby
authorized to demand specific performance of this Agreement, whether or not
Borrower, any Issuer or Junior Lien Holder shall have complied with any of the
provisions hereof applicable to it, at any time when Borrower, any Issuer or
Junior Lien Holder shall have failed to comply with any of the provisions of
this Agreement applicable to it. Borrower, each Issuer and Junior Lien Holder
each hereby irrevocably waives any defense based on the adequacy of a remedy at
law, which might be asserted as a bar to such remedy of specific performance.
III.16 AUTHORITY OF TRUSTEES. NAFI and FSA by their execution of this
Agreement, hereby direct Chase Manhattan Bank Delaware, not in its individual
capacity but solely as Owner Trustee of National Financial Auto Funding Trust
and Wilmington Trust Company, not in its individual capacity but solely as Owner
Trustee of National Auto Finance 1997-1 Trust and National Auto Finance 1998-1
Trust to acknowledge, agree to, execute and deliver this Agreement on behalf of
National Financial Auto Funding Trust and National Auto Finance 1997-1 Trust and
National Auto Finance 1998-1 Trust, respectively. In connection herewith,
Wilmington Trust Company and Chase Manhattan Bank Delaware shall be afforded all
of the rights, protections, immunities and indemnities provided in the
Underlying Agreements as if the same were specifically set forth herein.
III.17 LIMITATION OF LIABILITY. It is expressly understood and agreed
by the parties hereto that (a) this Agreement is executed and delivered by each
of Wilmington Trust Company and Chase Manhattan Bank Delaware, not individually
or personally, but solely as Owner Trustee of the respective Trusts, in the
exercise of the powers and authority conferred and vested in each under each
respective Trust Agreement, (b) each of the representations, undertakings and
agreements herein made on the part of the Borrower and the Issuers is made and
intended not as personal representations, undertakings and agreements by
Wilmington Trust Company or Chase Manhattan Bank Delaware but is made and
intended for the purpose of binding only the Borrower and the Issuers,
respectively, (c) nothing herein contained shall be construed as creating any
liability on Wilmington Trust Company or Chase Manhattan Bank Delaware,
individually or personally, to perform any covenant either expressed or implied
contained herein, all such liability, if any, being expressly waived by the
parties hereto and by any Person claiming by, through or under the parties
hereto, (d) under no circumstances shall Wilmington Trust Company or Chase
Manhattan Bank Delaware be personally liable for the payment of any indebtedness
or expenses of Borrower or the Issuers or be liable for the breach or failure of
any obligation, representation, warranty or covenant made or undertaken by the
Borrower or Issuers under this Agreement or any other related documents, and (e)
each of the representations, undertakings and agreements herein made on the part
of the Borrower or Issuers is made and intended not as representations,
undertakings and agreements by Wilmington Trust Company or Chase Manhattan Bank
Delaware, in their respective capacity as Owner Trustee or individually, but
rather is made and intended for the purpose for binding only the Borrower or
Issuers respectively.
LA/INTERCREDITOR AGREEMENT(FINAL) 16
17
III.18 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which shall together constitute but one agreement.
[SIGNATURES CONTINUE ON THE FOLLOWING PAGE.]
LA/INTERCREDITOR AGREEMENT(FINAL) 17
18
IN WITNESS WHEREOF, each of Junior Lien Holder, Borrower, each Issuer,
each Senior Lien Holder and FSA has caused this Agreement to be duly executed
and delivered by its officer thereunto duly authorized as of the date first
above written.
JUNIOR LIEN HOLDER
FIRST UNION NATIONAL BANK
By: /s/ C. BRAND XXXXXXX
-------------------------------------
Title: C. BRAND XXXXXXX
---------------------------------
VICE PRESIDENT
19
BORROWER
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By: Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Owner Trustee
By: /s/ XXXXX XXXXX
-------------------------------------
Title: XXXXX XXXXX
----------------------------------
TRUST OFFICER
19
20
ISSUERS
NATIONAL AUTO FINANCE 1995-1 TRUST
By: Xxxxxx Trust and Savings Bank, not in its
individual capacity but solely as Trustee
By: /s/ E. XXX XXXXXXXXX
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
NATIONAL AUTO FINANCE 1996-1 TRUST
By: Xxxxxx Trust and Savings Bank, not in its
individual capacity but solely as Trustee
By: /s/ E. XXX XXXXXXXXX
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
NATIONAL AUTO FINANCE 1997-1 TRUST
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: /s/ EXECUTED BY AUTHORIZED OFFICER
----------------------------------
Title: Senior Financial Services Officer
----------------------------------
NATIONAL AUTO FINANCE 1998-1 TRUST
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee
By: /s/ EXECUTED BY AUTHORIZED OFFICER
----------------------------------
Title: Senior Financial Services Officer
----------------------------------
20
21
NAFI
NATIONAL AUTO FINANCE, COMPANY, INC.
By: /s/ XXXXX X. XXXXX
---------------------------------------------
Title: Chief Executive Officer and Vice Chairman
------------------------------------------
21
22
FSA
Financial Security Assurance, Inc.
By: /s/ XXXXXXX X. XXXXXXXXX
----------------------------------
Title: MD
----------------------------------
22
23
SENIOR LIEN HOLDER
XXXXXX TRUST AND SAVINGS BANK,
as Trustee, Trust Collateral Agent and Collateral
Agent for the 1995-1 Trust, 1996-1 Trust, 1997-1
Trust and 1998-1 Trust
By: /s/ E. XXX XXXXXXXXX
-------------------------------------
Title: VICE PRESIDENT
----------------------------------
22
