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EXHIBIT 4.3
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SALE AND SERVICING
AGREEMENT
among
NATIONAL AUTO FINANCE 1997-1 TRUST,
Issuer,
NATIONAL FINANCIAL AUTO FUNDING TRUST,
Seller,
NATIONAL AUTO FINANCE COMPANY, INC.,
Servicer
and
XXXXXX TRUST AND SAVINGS BANK
Trust Collateral Agent and Back-up Servicer
Dated as of June 29, 1997
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TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.1. Definitions......................................................1
SECTION 1.2. Other Definitional Provisions...................................23
SECTION 1.3. Usage of Terms..................................................23
SECTION 1.4. Certain References..............................................23
SECTION 1.5. No Recourse.....................................................23
SECTION 1.6. Action by or Consent of Noteholders.............................24
SECTION 1.7. Material Adverse Effect.........................................24
ARTICLE II
Conveyance of Receivables
SECTION 2.1. Conveyance of Initial Receivables...............................24
SECTION 2.2. Conveyance of Subsequent Receivables............................26
SECTION 2.3. Further Encumbrance of Trust Property...........................29
ARTICLE III
The Receivables
SECTION 3.1. Representations and Warranties of Seller........................30
SECTION 3.2. Repurchase upon Breach..........................................31
SECTION 3.3. Custody of Receivables Files....................................32
ARTICLE IV
Administration and Servicing of Receivables
SECTION 4.1. Duties of the Servicer...........................................32
SECTION 4.2. Sub-Servicing Agreements between Servicer and the Sub-Servicers..35
SECTION 4.3. Obligations of the Servicer......................................35
SECTION 4.4. No Contractual Relationship between a Sub-Servicer and
Trust Collateral Agent or Noteholders............................36
SECTION 4.5. Assumption or Termination of Sub-Servicing Agreement by
Trust Collateral Agent...........................................36
SECTION 4.6. Collection of Receivable Payments................................36
SECTION 4.7. Maintenance of Insurance.........................................38
SECTION 4.8. Realization upon Defaulted Receivables...........................38
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SECTION 4.9. Total Servicing Fee; Payment of Certain Expenses by Servicer....38
SECTION 4.10. [Reserved]......................................................39
SECTION 4.11. Reports.........................................................39
SECTION 4.12. Annual Statement as to Compliance, Notice of Servicer
Termination Event..............................................39
SECTION 4.13. Annual Independent Accountants' Report.........................40
SECTION 4.14. Access to Certain Documentation and Information Regarding
Receivables....................................................41
SECTION 4.15. Monthly Tape...................................................41
SECTION 4.16. Retention and Termination of Servicer..........................41
SECTION 4.17. Custodial Arrangement..........................................41
ARTICLE V
Trust Accounts; Distributions; Statements to Noteholders
SECTION 5.1. Establishment of Trust Accounts.................................42
SECTION 5.2. Pre-Funding Period Reserve Account..............................45
SECTION 5.3. Certain Reimbursements to the Servicer..........................46
SECTION 5.4. Application of Collections......................................46
SECTION 5.5. Withdrawals from Series 1997-1 Spread Account...................47
SECTION 5.6. Additional Deposits.............................................47
SECTION 5.7. Distributions...................................................47
SECTION 5.8. Note Distribution Account.......................................49
SECTION 5.9. Pre-Funding Account.............................................50
SECTION 5.10. Statements to Noteholders......................................51
SECTION 5.11. Optional Deposits by the Insurer...............................51
ARTICLE VI
The Note Policy
SECTION 6.1. Claims Under Note Policy........................................51
SECTION 6.2. Preference Claims...............................................52
SECTION 6.3. Surrender of Policy.............................................53
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ARTICLE VII
RESERVED
ARTICLE VIII
The Seller
SECTION 8.1. Representations, Warranties and Covenants of the Seller.........54
SECTION 8.2. Corporate Existence.............................................56
SECTION 8.3. Liability of Seller; Indemnities................................57
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller..........................................58
SECTION 8.5. Limitation on Liability of Seller and Others....................58
SECTION 8.6. Seller May Own Notes............................................58
ARTICLE IX
The Servicer
SECTION 9.1. Representations, Warranties and Covenants of the Servicer.......58
SECTION 9.2. Liability of Servicer; Indemnities..............................60
SECTION 9.3. Merger or Consolidation of, or Assumption of the Obligations
of the Servicer or the Trust Collateral Agent...................62
SECTION 9.4. Limitation on Liability of Servicer, Trust Collateral
Agent and Others................................................63
SECTION 9.5. Delegation of Duties............................................65
SECTION 9.6. Servicer and Trust Collateral Agent Not to Resign..............65
ARTICLE X
Default
SECTION 10.1. Servicer Termination Event.....................................66
SECTION 10.2. Consequences of a Servicer Termination Event...................68
SECTION 10.3. Appointment of Successor.......................................69
SECTION 10.4. Notification to Noteholders and Rating Agencies................71
SECTION 10.5. Waiver of Past Defaults........................................71
SECTION 10.6. Termination of Trust Collateral Agent..........................71
SECTION 10.7. Successor to Servicer..........................................72
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ARTICLE XI
Termination
SECTION 11.1. Optional Purchase of All Receivables...........................72
ARTICLE XII
Administrative Duties of the Servicer
SECTION 12.1. Administrative Duties..........................................73
SECTION 12.2. Records........................................................75
SECTION 12.3. Additional Information to be Furnished to the Issuer...........75
ARTICLE XIII
Miscellaneous Provisions
SECTION 13.1. Amendment......................................................76
SECTION 13.2. Protection of Title to Trust...................................77
SECTION 13.3. Notices........................................................79
SECTION 13.4. Assignment.....................................................80
SECTION 13.5. Limitations on Rights of Others................................80
SECTION 13.6. Severability...................................................80
SECTION 13.7. Separate Counterparts..........................................80
SECTION 13.8. Headings.......................................................81
SECTION 13.9. Governing Law..................................................81
SECTION 13.10. Assignment to Trustee.........................................81
SECTION 13.11. Nonpetition Covenants.........................................81
SECTION 13.12. Limitation of Liability of Owner Trustee and Trustee..........81
SECTION 13.13. Independence of the Servicer..................................82
SECTION 13.14. No Joint Venture..............................................82
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SALE AND SERVICING AGREEMENT dated as of June 29, 1997, among
NATIONAL AUTO FINANCE 1997-1 TRUST, a Delaware business trust (the "Issuer"),
NATIONAL FINANCIAL AUTO FUNDING TRUST, a Delaware business trust (the "Seller"),
and NATIONAL AUTO FINANCE COMPANY, INC., a Delaware corporation (the
"Servicer"), and XXXXXX TRUST AND SAVINGS BANK, an Illinois banking association,
in its capacity as Trust Collateral Agent and Back-up Servicer.
WHEREAS the Issuer desires to purchase a portfolio of
receivables arising in connection with motor vehicle retail installment sale
contracts acquired by National Auto Finance Company, Inc. directly or indirectly
through motor vehicle dealers;
WHEREAS the Seller has acquired such receivables from National
Financial Auto Funding Trust II and National Auto Finance Company, Inc. and is
willing to sell such receivables to the Issuer;
WHEREAS the Issuer desires to acquire additional receivables
arising in connection with motor vehicle retail installment sale contracts to be
acquired by National Auto Finance Company, Inc. directly or indirectly through
motor vehicle dealers;
WHEREAS the Seller has an agreement to purchase such
additional receivables from National Auto Finance Company, Inc. and is willing
to sell such receivables to the Issuer;
WHEREAS the Servicer is willing to service all such
receivables;
NOW, THEREFORE, in consideration of the promises and the
mutual covenants herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions. Whenever used in this Agreement, the
following words and phrases shall have the following meanings:
"Accountants' Report" means the report of a firm of nationally
recognized independent accountants described in Section 4.14.
"Actuarial Method" means the method of allocating a fixed
level payment on an obligation between principal and interest, pursuant to which
the portion of such payment that is allocated to interest is equal to the
product of (a) 1/12, (b) the fixed rate of interest on such obligation and (c)
the outstanding principal balance of such obligation.
"Addition Notice" means, with respect to any transfer of
Subsequent Receivables to the Trust pursuant to Section 2.2 of this Agreement,
notice of the Seller's election to transfer Subsequent Receivables to the Trust,
such notice to designate the related Subsequent Transfer
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Date and the aggregate Amount Financed of the Subsequent Receivables to be
transferred on such Subsequent Transfer Date.
"Affiliate" means, with respect to any specified Person, any
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Aggregate Principal Balance" means, with respect to any date
of determination, the sum of the Principal Balances for all Receivables (other
than (i) any Receivable that became a Liquidated Receivable during the related
Due Period and (ii) any Receivable that became a Purchased Receivable during the
related Due Period) as of the date of determination.
"Agreement" means this Sale and Servicing Agreement, as the
same may be amended and supplemented from time to time.
"Amount Financed" means, with respect to a Receivable, the
original principal balance of such Receivable reduced by the portion of each
payment received thereon before the applicable Cut-off Date that would represent
principal if such payments were allocated to the principal of and interest on
such Receivable based on the amortization method provided in such Receivable.
"Annual Percentage Rate" or "APR" of a Receivable means the
annual percentage rate of finance charges or service charges, as stated in the
related Contract.
"Assignment Agreement" means the agreement, dated as of June
29, 1997, between Bankers Trust Company, not in its individual capacity but
solely as Trustee of the National Financial Auto Receivables Master Trust, and
National Financial Auto Funding Trust II.
"Available Amount" means, with respect to any Distribution
Date, an amount equal to the sum of (i) the amount on deposit in the
Distribution Account on the preceding Distribution Date after giving effect to
all withdrawals therefrom on such preceding Distribution Date, (ii) the amount,
if any, to be transferred by the Trust Collateral Agent to the Distribution
Account from the Pre-Funding Period Reserve Account and/or the Pre-Funding
Account, if any, as provided herein, (iii) the amount to be transferred by the
Trust Collateral Agent to the Distribution Account from the Collection Account
on such Distribution Date pursuant to Section 5.1(c), and (iv) any amounts paid
by the Insurer to the Trust Collateral Agent pursuant to Section 5.11 hereof for
distribution on such Distribution Date.
"Average Default Rate" means, with respect to any Distribution
Date, the arithmetic average of the Default Rates for each of the three Due
Periods immediately preceding the Due Period in which such Distribution Date
occurs.
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"Average Delinquency Ratio" means, with respect to any
Distribution Date, the arithmetic average of the Delinquency Ratios for each of
the three Due Periods immediately preceding the Due Period in which such
Distribution Date occurs.
"Average Net Loss Rate" means, with respect to any
Distribution Date, the arithmetic average of the Net Loss Rates for each of the
three Due Periods immediately preceding the Due Period in which such
Distribution Date occurs.
"Backup Servicer" means, Xxxxxx Trust and Savings Bank, as the
Back-up Servicer hereunder, including in its capacity as Servicer, in the event
NAFI resigns or is removed as Servicer.
"Bankruptcy Loss" means, with respect to a Receivable, if a
court of appropriate jurisdiction in an insolvency proceeding shall have issued
an order reducing the amount owed on a Receivable or otherwise modifying or
restructuring the scheduled payments to be made on a Receivable, an amount equal
to the excess of the principal balance of such Receivable immediately prior to
such order over the principal balance of such Receivable as so reduced or the
net present value (using as the discount rate the higher of the APR on such
Receivable or the rate of interest, if any, specified by the court in such
order) of the scheduled payments as so modified or restructured. A "Bankruptcy
Loss" shall be deemed to have occurred on the date of issuance of such order.
"Base Servicing Fee" means, with respect to any Due Period,
the fee payable to the Servicer for services rendered during such Due Period,
which shall be equal to one-twelfth of the Servicing Fee Rate multiplied by the
Pool Balance as of the close of business on the last day of the preceding Due
Period.
"Business Day" means a day other than a Saturday, a Sunday or
other day on which commercial banks located in New York, Illinois, Delaware or
Florida are authorized or obligated to be closed.
"Certificateholder" or "Certificateholders" means a person in
whose name a Trust Certificate is registered in the Certificate Register
maintained pursuant to the Trust Agreement.
"Closing Date" means July 23, 1997.
"Collateral Agent" means Xxxxxx Trust and Savings Bank, in its
capacity as Collateral Agent under the Spread Account Agreement.
"Collection Account" means the account designated as such,
established and maintained pursuant to Section 5.1.
"Computer Tape" means the computer tapes or other electronic
media furnished by the Seller to the Issuer and its assigns describing certain
characteristics of the Initial Receivables as of the Initial Cut-off Date and of
the Subsequent Receivables as of the related Subsequent Cut-off Date.
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"Contract" means a motor vehicle retail installment sale
contract.
"Controlling Party" means the Insurer, so long as no Insurer
Default shall have occurred and be continuing, and, in the event the Insurer
Default shall have occurred and be continuing, the Trust Collateral Agent for
the benefit of Section 5.10.
"Conveyance Agreements" means the Purchase Agreement, the Sale
Agreement and the Assignment Agreement.
"Corporate Trust Office" means (i) with respect to the Owner
Trustee, the principal corporate trust office of the Owner Trustee, which at the
time of execution of this agreement is Xxxxxx Square North, 0000 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000- 0001, Attention: Corporate Trust
Administration, and (ii) with respect to the Trustee and the Trust Collateral
Agent, the principal corporate trust office of the Trustee, which at the time of
execution of this agreement is 000 Xxxx Xxxxxx Xxxxxx, 00xx Xxxxx, Xxxxxxx, XX
00000.
"Custodial Agreement" means the Custodial Agreement, dated as
of July 23, 1997, between NAFI and OFSA, as assigned to the Trust Collateral
Agent pursuant to Section 4.17 hereof.
"Custodian" means OFSA and any other Person named from time to
time as custodian in any Custodian Agreement acting as agent for the Trust
Collateral Agent, which Person must be acceptable to the Controlling Party (the
Custodian as of the Closing Date is acceptable to the Insurer as of the Closing
Date).
"Custodian Agreement" means the Custodial Agreement and any
other Custodian Agreement from time to time in effect between the Custodian
named therein and the Trust Collateral Agent, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof, which Custodian Agreement and any amendments, supplements or
modifications thereto shall be acceptable to the Controlling Party (the
Custodian Agreement which is effective on the Closing Date is acceptable to the
Controlling Party).
"Cut-off Date" means the Initial Cut-off Date or Subsequent
Cut-off Date, as applicable.
"Dealer" means a dealer who sold a Financed Vehicle and who
originated and assigned the respective Receivable to NAFI or an Originator under
a Dealer Agreement.
"Dealer Agreement" means any agreement between an Originator
and a Dealer relating to the acquisition of Receivables from a Dealer by an
Originator.
"Dealer Assignment" means, with respect to a Receivable, the
executed assignment executed by a Dealer conveying such Receivable to an
Originator.
"Dealer Underwriting Guide" means either, (i) the underwriting
guidelines used by or on behalf of NAFI in the origination and purchase of
Receivables as amended from time to
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time or (ii) the underwriting guidelines used in the origination of Receivables
as reviewed by NAFI prior to the purchase of Receivables by NAFI.
"Default Rate" means, with respect to any Due Period, the
product of (i) twelve and (ii) the quotient, expressed as a percentage, obtained
by dividing (a) the sum of (x) the aggregate outstanding Principal Balance of
all Defaulted Receivables which became Defaulted Receivables during such Due
Period and (y) the aggregate outstanding Principal Balance of all Receivables
that became Purchased Receivables during such Due Period and were 30 days or
more past due as of the date such Receivables were retransferred hereunder by
(b) the arithmetic average of the Pool Balance as of the end of such Due Period
and the Pool Balance as of the end of the preceding Due Period.
"Defaulted Receivable" means, with respect to any Due Period,
a Receivable with respect to which any of the following has occurred during such
Due Period: (i) all or a part of any Scheduled Payment is 90 days or more
delinquent as of the end of such Due Period, (ii) such Receivable is in default
and the Servicer (or Sub-Servicer) has in good faith determined that payments
thereunder are not likely to be resumed, or (iii) the Financed Vehicle that
secures the Receivable has been repossessed without reinstatement of the
Receivable on or before the last day of such Due Period and any applicable
redemption period has expired.
"Deficiency Claim Amount" shall have the meaning set forth in
Section 5.5.
"Deficiency Claim Date" means, with respect to any
Distribution Date, the fourth Business Day immediately preceding such
Distribution Date.
"Deficiency Notice" shall have the meaning set forth in
Section 5.5.
"Delinquency Rate" means, with respect to any Due Period, the
quotient, expressed as a percentage, obtained by dividing (a) the aggregate
Principal Balance of all Receivables with respect to which a scheduled payment
is 30 or more days past due as of the end of such Due Period, by (b) the Pool
Balance as of the end of such Due Period.
"Delivery" when used with respect to Trust Account Property
means:
(a) with respect to bankers' acceptances, commercial paper,
negotiable certificates of deposit and other obligations that constitute
"instruments" within the meaning of Section 9-105(1)(i) of the UCC and are
susceptible of physical delivery, transfer thereof to the Trust Collateral Agent
or its nominee or custodian by physical delivery to the Trust Collateral Agent
or its nominee or custodian endorsed to, or registered in the name of, the Trust
Collateral Agent or its nominee or custodian or endorsed in blank, and, with
respect to a certificated security (as defined in Section 8-102 of the UCC)
transfer thereof (i) by delivery of such certificated security endorsed to, or
registered in the name of, the Trust Collateral Agent or its nominee or
custodian or endorsed in blank to a financial intermediary (as defined in
Section 8-313 of the UCC) and the making by such financial intermediary of
entries on its books and records identifying such certificated securities as
belonging to the Trust Collateral Agent or its nominee or custodian and the
sending by such financial intermediary of a confirmation of the
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purchase of such certificated security by the Trust Collateral Agent or its
nominee or custodian, or (ii) by delivery thereof to a "clearing corporation"
(as defined in Section 8-102(3) of the UCC) and the making by such clearing
corporation of appropriate entries on its books reducing the appropriate
securities account of the transferor and increasing the appropriate securities
account of a financial intermediary by the amount of such certificated security,
the identification by the clearing corporation of the certificated securities
for the sole and exclusive account of the financial intermediary, the
maintenance of such certificated securities by such clearing corporation or a
"custodian bank" (as defined in Section 8-102(4) of the UCC) or the nominee of
either subject to the clearing corporation's exclusive control, the sending of a
confirmation by the financial intermediary of the purchase by the Trust
Collateral Agent or its nominee or custodian of such securities and the making
by such financial intermediary of entries on its books and records identifying
such certificated securities as belonging to the Trust Collateral Agent or its
nominee or custodian (all of the foregoing, "Physical Property"), and, in any
event, any such Physical Property in registered form shall be in the name of the
Trust Collateral Agent or its nominee or custodian; and such additional or
alternative procedures as may hereafter become appropriate to effect the
complete transfer of ownership of any such Trust Account Property to the Trust
Collateral Agent or its nominee or custodian, consistent with changes in
applicable law or regulations or the interpretation thereof;
(b) with respect to any security issued by the U.S. Treasury,
the Federal Home Loan Mortgage Corporation or by the Federal National Mortgage
Association that is a book-entry security held through the Federal Reserve
System pursuant to Federal book-entry regulations, the following procedures, all
in accordance with applicable law, including applicable Federal regulations and
Articles 8 and 9 of the UCC: book-entry registration of such Trust Account
Property to an appropriate book-entry account maintained with a Federal Reserve
Bank by a financial intermediary which is also a "depository" pursuant to
applicable Federal regulations and issuance by such financial intermediary of a
deposit advice or other written confirmation of such book-entry registration to
the Trust Collateral Agent or its nominee or custodian of the purchase by the
Trust Collateral Agent or its nominee or custodian of such book-entry
securities; the making by such financial intermediary of entries in its books
and records identifying such book-entry security held through the Federal
Reserve System pursuant to Federal book-entry regulations as belonging to the
Trust Collateral Agent or its nominee or custodian and indicating that such
custodian holds such Trust Account Property solely as agent for the Trust
Collateral Agent or its nominee or custodian; and such additional or alternative
procedures as may hereafter become appropriate to effect complete transfer of
ownership of any such Trust Account Property to the Trust Collateral Agent or
its nominee or custodian, consistent with changes in applicable law or
regulations or the interpretation thereof; and
(c) with respect to any item of Trust Account Property that is
an uncertificated security under Article 8 of the UCC and that is not governed
by clause (b) above, registration on the books and records of the issuer thereof
in the name of the financial intermediary, the sending of a confirmation by the
financial intermediary of the purchase by the Trust Collateral Agent or its
nominee or custodian of such uncertificated security, the making by such
financial intermediary of entries on its books and records identifying such
uncertificated certificates as belonging to the Trust Collateral Agent or its
nominee or custodian.
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(d) in each case of delivery contemplated herein, the Trust
Collateral Agent shall make appropriate notations on its records, and shall
cause the same to be made on the records of its nominees, indicating that such
securities are held in trust pursuant to and as provided in this Agreement.
"Depositor" shall mean the Seller in its capacity as Depositor
under the Trust Agreement.
"Determination Date" means, with respect to a Distribution
Date, the last day of the Due Period immediately preceding such Distribution
Date.
"Distribution Account" means the account established pursuant
to Section 5.1(a)(iv) hereof.
"Distribution Date" means, with respect to each Due Period,
the twenty first day of the following calendar month, or if such day is not a
Business Day, the immediately following Business Day, commencing August 21,
1997.
"Draw Date" means, with respect to any Distribution Date, the
fourth Business Day (as defined in the Note Policy) immediately preceding such
Distribution Date.
"Due Date" means, with respect to a Receivable, the date in
each Due Period on which a scheduled payment on such Receivable is due.
"Due Period" means , with respect to any Distribution Date,
the period from and including the first day of the calendar month preceding the
month in which such Distribution Date occurs to and including the last day of
the calendar month preceding the month of such Distribution Date.
"Electronic Ledger" means the electronic master record of the
retail installment sales contracts or installment loans of the Servicer.
"Eligible Bank" means any depository institution (which shall
initially be the Trust Collateral Agent) acceptable to the Insurer (so long as
an Insurer Default shall not have occurred and be continuing), organized under
the laws of the United States of America or any one of the states thereof or the
District of Columbia (or any United States branch or agency of a foreign bank),
which is subject to supervision and examination by federal or state banking
authorities and which at all times (a) has a net worth in excess of $50,000,000
and (b) has either (i) a rating of P-1 from Moody's and A-1 from S&P with
respect to short-term deposit obligations, or (ii) if such institution has
issued long-term unsecured debt obligations, a rating of A2 or higher from
Moody's and AA from S&P with respect to long-term unsecured debt obligations.
Such depository institution (other than the Trust Collateral Agent) shall have
been approved in writing by the Controlling Party, operating in its discretion,
by written notice to the Trust Collateral Agent.
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"Eligible Deposit Account" means (i) a segregated trust
account that is maintained with the corporate trust department of a depository
institution or trust company acceptable to the Insurer (unless a Insurer Default
has occurred and is continuing, in which case such institution shall be one
subject to regulations regarding fiduciary funds on deposit substantially
similar to 12 CFR ss.9.10(b)), or (ii) a segregated direct deposit account
maintained with a depository institution or trust company organized under the
laws of the United States of America, or any of the States thereof, or the
District of Columbia, having a certificate of deposit, short-term deposit or
commercial paper rating of at least "A-1+" from Standard & Poor's and "P-1" from
Moody's and (unless a Insurer Default has occurred and is continuing) acceptable
to the Insurer.
"Eligible Investments" mean book-entry securities, negotiable
instruments or securities represented by instruments in bearer or registered
form which evidence:
(a) direct interest-bearing obligations of, and
interest-bearing obligations fully guaranteed as to timely payment of principal
and interest by, the United States of America;
(b) demand deposits, time deposits or certificates of deposit
of any depository institution or trust company organized under the laws of the
United States of America or any state thereof or the District of Columbia (or
any domestic branch of a foreign bank) and subject to supervision and
examination by Federal or state banking or depository institution authorities
(including depository receipts issued by any such institution or trust company
as custodian with respect to any obligation referred to in clause (a) above or
portion of such obligation for the benefit of the holders of such depository
receipts); provided, however, that at the time of the investment or contractual
commitment to invest therein (which shall be deemed to be made again each time
funds are reinvested following each Distribution Date), the commercial paper or
other short-term senior unsecured debt obligations (other than such obligations
the rating of which is based on the credit of a Person other than such
depository institution or trust company) of such depository institution or trust
company shall have a credit rating from Standard & Poor's of AAA and from
Moody's of Aaa;
(c) commercial paper and demand notes investing solely in
commercial paper that (i) is payable in United States dollars and (ii) has, at
the time of the investment or contractual commitment to invest therein, a rating
from Standard & Poor's of A-1+ and from Moody's of P-1;
(d) investments in money market funds (including funds for
which the Trust Collateral Agent or the Owner Trustee in each of their
individual capacities or any of their respective Affiliates is investment
manager or advisor) having a rating from Standard & Poor's of AAA-m or AAAm-G
and from Moody's of Aaa and (other than funds for which the Trust Collateral
Agent or the Owner Trustee in each of their individual capacities or any of
their respective Affiliates is investment manager or advisor) having been
approved in writing by the Insurer;
(e) bankers' acceptances issued by any depository institution
or trust company referred to in clause (b) above;
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(f) repurchase obligations pursuant to a written agreement (i)
with respect to any obligation described in clause (a) above, where the Trustee
has taken actual or constructive delivery of such obligation, and (ii) entered
into with the corporate trust department of a depository institution or trust
company organized under the laws of the United States or any State thereof, the
deposits of which are insured by the Federal Deposit Insurance Corporation and
the short-term unsecured debt obligations of which are rated "A-1+" by Standard
& Poor's and "P-1" by Moody's (including, if applicable, the Trustee or any
agent of the Trustee acting in its respective commercial capacities);
(g) any other investment which is consistent with the ratings
of the Notes and acceptable to the Rating Agencies and which, so long as no
Insurer Default shall have occurred and be continuing, has been approved by the
Insurer.
Any of the foregoing Eligible Investments may be purchased by
or through the Owner Trustee or the Trust Collateral Agent or any of their
respective Affiliates.
"Eligible Servicer" means the Servicer, the Back-up Servicer
or another Person that, at the time of its appointment as Servicer, (i) is
servicing a portfolio of motor vehicle retail installment sales contracts and/or
motor vehicle installment loans, (ii) is legally qualified and has the capacity
to service the Receivables and (iii) has demonstrated the ability professionally
and competently to service a portfolio of motor vehicle retail installment sales
contracts and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care.
"Eligible Sub-Servicer" means (x) OFSA or (y) any Person which
at the time of its appointment as Sub-Servicer, (i) is servicing a portfolio of
motor vehicle retail installment sales contracts and/or motor vehicle
installment loans, (ii) is legally qualified and has the capacity to service the
Receivables, (iii) has demonstrated the ability professionally and competently
to service a portfolio of motor vehicle retail installment sales contracts
and/or motor vehicle installment loans similar to the Receivables with
reasonable skill and care, and (iv) is qualified and entitled to use, pursuant
to a license or other written agreement, and agrees to maintain the
confidentiality of, the software which the Servicer uses in connection with
performing its duties and responsibilities under this Agreement or otherwise has
available software which is adequate to perform its duties and responsibilities
under this Agreement.
"Final Scheduled Distribution Date" means the Distribution
Date occurring in November, 2003.
"Financed Vehicle" means an automobile or light-duty truck,
van or minivan, together with all accessions thereto, securing an Obligor's
indebtedness under the respective Receivable.
"Funding Trust II" means National Auto Funding Trust II, a
Delaware business trust.
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"Indemnification Agreement" means the Indemnification
Agreement dated as of July 23, 1997 among the Insurer, the Seller and First
Union, as the same may be amended, supplemented or otherwise modified from time
to time in accordance with the terms thereof.
"Indenture" means the Indenture dated as of June 29, 1997,
among the Issuer and Xxxxxx Trust and Savings Bank, as Trust Collateral Agent
and Trustee, as the same may be amended and supplemented from time to time.
"Initial Cut-off Date" means June 29, 1997.
"Initial Receivables" means any Receivable conveyed to the
Trust on the Closing Date.
"Initial Spread Account Deposit" has the meaning set forth in
the Spread Account Agreement.
"Insurance Agreement" means the Insurance and Indemnity
Agreement, dated as of July __, 1997, among the Insurer, the Trust, the Seller
and NAFI, as such agreement may be amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"Insurance Agreement Event of Default" means an "Event of
Default" as defined in the Insurance Agreement.
"Insurance Policy" means, with respect to a Receivable, any
insurance policy (including the insurance policies described in Section 4.4
hereof) benefiting the holder of the Receivable providing loss or physical
damage, credit life, credit disability, theft, mechanical breakdown or similar
coverage with respect to the Financed Vehicle or the Obligor.
"Insurer" means Financial Security Assurance Inc., a monoline
insurance company incorporated under the laws of the State of New York, or any
successor thereto, as issuer of the Note Policy.
"Insurer Default" means the occurrence and continuance of any
of the following events:
(a) the Insurer shall have failed to make a payment required
under the Note Policy in accordance with its terms;
(b) the Insurer shall have (i) filed a petition or commenced
any case or proceeding under any provision or chapter of the United States
Bankruptcy Code or any other similar federal or state law relating to
insolvency, bankruptcy, rehabilitation, liquidation or reorganization, (ii) made
a general assignment for the benefit of its creditors, or (iii) had an order for
relief entered against it under the United States Bankruptcy Code or any other
similar federal or state law relating to insolvency, bankruptcy, rehabilitation,
liquidation or reorganization which is final and nonappealable; or
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(c) a court of competent jurisdiction, the New York Department
of Insurance or other competent regulatory authority shall have entered a final
and nonappealable order, judgment or decree (i) appointing a custodian, trustee,
agent or receiver for the Insurer or for all or any material portion of its
property or (ii) authorizing the taking of possession by a custodian, trustee,
agent or receiver of the Insurer (or the taking of possession of all or any
material portion of the property of the Insurer).
"Insurer Optional Deposit" means, with respect to any
Distribution Date, an amount delivered by the Insurer pursuant to Section 5.11,
at its sole option, other than amounts in respect of a Note Policy Claim Amount
to the Trust Collateral Agent for deposit into the Collection Account for any of
the following purposes: (i) to provide funds in respect of the payment of fees
or expenses of any provider of services to the Trust with respect to such
Distribution Date; or (ii) to include such amount as part of the Distribution
Amount for such Distribution Date to the extent that without such amount a draw
would be required to be made on the Note Policy.
"Interest Rate" means ____% per annum (computed on the basis
of a 360-day year of twelve 30-day months).
"Investment Earnings" means, with respect to any Distribution
Date and Trust Account, the investment earnings on amounts on deposit in such
Trust Account on such Distribution Date.
"Issuer" means National Auto Finance 1997-1 Trust.
"Lien" means a security interest, lien, charge, pledge,
equity, or encumbrance of any kind.
"Lien Certificate" means, with respect to a Financed Vehicle,
an original certificate of title, certificate of lien or other notification
issued by the Registrar of Titles of the applicable state to a secured party
which indicates that the lien of the secured party on the Financed Vehicle is
recorded on the original certificate of title. In any jurisdiction in which the
original certificate of title is required to be given to the Obligor, the term
"Lien Certificate" shall mean only a certificate or notification issued to a
secured party.
"Liquidated Receivable" means, with respect to any Due Period,
a Receivable with respect to which any of the following has occurred during such
Due Period: (i) 90 days have elapsed since Repossession of the related Financed
Vehicle, (ii) the Servicer (or Sub-Servicer) has in good faith determined that
all amounts that it expects to recover under such Receivable have been received,
or (iii) 90% of any Scheduled Payment on such Receivable is 120 days or more
(or, if the related Obligor is a debtor under Chapter 13 of the U.S.
Bankruptcy Code, 180 days or more) delinquent as of the end of such Due Period.
"Liquidation Expenses" means, reasonable out-of-pocket
expenses which are incurred by the Servicer or any Sub-Servicer in connection
with the liquidation of any Defaulted Receivable. Such expenses shall include,
without limitation, legal fees and expenses, any
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unreimbursed amount expended by the Servicer or any Sub-Servicer pursuant to
Section 4.8 (to the extent such amount is reimbursable under the terms of
Section 4.8) respecting the related Receivable, and any related and unreimbursed
expenditures for property restoration or preservation.
"Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all amounts realized with respect to such Receivable (other than
amounts withdrawn from the Series 1997-1 Spread Account and drawings under the
Note Policy), including any proceeds from any Insurance Policies.
"Lockbox Account" means any bank account maintained at a
Lockbox Bank into which collections under the Receivables are deposited in
accordance with Section 4.6.
"Lockbox Agreement" means a letter agreement among a Lockbox
Bank, the Seller, the Trust Collateral Agent, the Servicer and, if applicable,
any Sub-Servicer, relating to one or more Lockbox Accounts, as the same may be
amended, supplemented, amended and restated or otherwise modified from time to
time in accordance with the terms thereof. So long as no Insurer Default shall
have occurred and be continuing, any Lockbox Agreement is also required to be
acceptable to the Insurer.
"Lockbox Bank" means any bank at which a Lockbox Account is
maintained from time to time and whose short-term debt securities are rated A-1+
by S&P and P-1 by Moody's. So long as no Insurer Default shall have occurred and
be continuing, any Lockbox Bank is also required to be acceptable to the
Insurer.
"Mandatory Redemption Date" means the Distribution Date
relating to the Reporting Date next succeeding the last day of the Pre-Funding
Period.
"Monthly Pre-Funding Period Reserve Amount" means, with
respect to any Distribution Date occurring on or prior to the Distribution Date
next succeeding termination of the Pre-Funding Period, am amount equal to the
excess, if any, of (i) the product of (a) 1/12th, (b) the Note Rate and (c) the
average daily balance of funds on deposit in the Pre-Funding Account from and
including the preceding Distribution Date (or, in the case of the first
Distribution Date, the Closing Date) to but not including the current
Distribution Date, over (ii) the amount of interest accrued on Permitted
Investments on deposit in the Pre-Funding Account from and including the
preceding Distribution Date (or, in the case of the first Distribution Date, the
Closing Date) to but not including the current Distribution Date.
"Monthly Records" means all records and data maintained by the
Servicer with respect to the Receivables, including the following with respect
to each Receivable: the account number; the originating Dealer; Obligor name;
Obligor address; Obligor home phone number; Obligor business phone number;
original Principal Balance; original term; Annual Percentage Rate; current
Principal Balance; current remaining term; origination date; first payment date;
final scheduled payment date; next payment due date; date of most recent
payment; new/used classification; collateral description; days currently
delinquent; number of contract extensions
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(months) to date; amount of Scheduled Payment; current Insurance Policy
expiration date; and past due late charges.
"Moody's" means Xxxxx'x Investors Service, Inc., or its
successor.
"NAFI" means National Auto Finance Company, Inc and its
permitted successors and assigns hereunder in accordance with the terms hereof.
"Net Liquidation Proceeds" means, with respect to a Liquidated
Receivable, all Liquidation Proceeds net of (i) reasonable expenses, which
expenses shall not include any deficiency balances or post-disposition
recoveries collected, incurred by the Servicer in connection with the collection
of such Receivable and the repossession and disposition of the Financed Vehicle
and (ii) amounts that are required to be refunded to the Obligor on such
Receivable; provided, however, that the Net Liquidation Proceeds with respect to
any Receivable shall in no event be less than zero.
"Net Loss Rate" means, with respect to any Due Period, the
product, expressed as a percentage, of (i) twelve and (ii) a fraction, the
numerator of which equals the excess of (A) the sum of (1) the aggregate
Principal Balance of all Receivables that became Liquidated Receivables in such
Due Period and (2) accrued and unpaid interest on such Principal Balance through
the end of such Due Period and (3) the amount of any Bankruptcy Losses, over (B)
the Liquidation Proceeds received by the Trust during such Due Period with
respect to all Liquidated Receivables in the Trust (including Liquidated
Receivables that became Liquidated Receivables in a prior Due Period) and the
denominator of which equals the arithmetic average of the Pool Balance as of the
end of such Due Period and the Pool Balance as of the end of the preceding Due
Period.
"Note" or "Notes" has the meaning assigned to such term in the
Indenture.
"Note Balance" means initially, the aggregate principal amount
of Notes issued on the Closing Date and, thereafter, such principal amount
reduced by all amounts distributed to the Noteholders in respect of the
Noteholders' Principal Distributable Amount.
"Note Distribution Account" means the account designated as
such, established and maintained pursuant to Section 5.1.
"Note Majority" means a majority by aggregate outstanding
principal balance of the Noteholders so long as the Notes are outstanding.
"Note Policy" means the financial guaranty insurance policy
issued by the Insurer to the Trust Collateral Agent, as agent for the Trustee,
for the benefit of the Noteholders.
"Note Policy Claim Amount" means, for any Distribution Date,
shall equal the lesser of (i) the sum of the Scheduled Payments (as defined in
the Policy, including any endorsements thereto) for such Distribution Date and
(ii) the excess, if any, of (x) the amount required to be distributed pursuant
to clauses (i) through (iv) of Section 5.7(b) hereof over (y) the
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sum of the Available Amount and Deficiency Claim Amount with respect to such
Distribution Date.
"Note Pool Factor" for the Notes as of the close of business
on a Distribution Date means a seven-digit decimal figure equal to the
outstanding principal amount of such Notes (after giving effect to any
distributions reducing the Note Balance of the Notes on such Distribution Date)
divided by the original outstanding principal amount of such Class of Notes on
the Closing Date.
"Note Prepayment Amount" means, as of the Distribution Date on
or immediately following the last day of the Pre-Funding Period, after giving
effect to any transfer of Subsequent Receivables on such date, an amount equal
to the remaining Pre-Funded Amount on deposit in the Pre-Funding Account.
"Noteholders' Distributable Amount" means, with respect to any
Distribution Date, the sum of the Noteholders' Principal Distributable Amount
and the Noteholders' Interest Distributable Amount.
"Noteholders' Interest Carryover Shortfall" means, with
respect to any Distribution Date, the excess of the Noteholders' Monthly
Interest Distributable Amount for the preceding Distribution Date and any
outstanding Noteholders' Interest Carryover Shortfall on such preceding
Distribution Date, over the amount in respect of interest that was actually
deposited in the Note Distribution Account on such preceding Distribution Date.
"Noteholders' Interest Distributable Amount" means, with
respect to any Distribution Date, the sum of the Noteholders' Monthly Interest
Distributable Amount for such Distribution Date and the Noteholders' Interest
Carryover Shortfall for such Distribution Date.
"Noteholders' Monthly Interest Distributable Amount" means,
with respect to any Distribution Date, the sum of (i) thirty (30) days of
interest (or, in the case of the initial Distribution Date, the number of days
from and including the Closing Date to but not including such initial
Distribution Date) at the Interest Rate on the Note Balance on such Distribution
Date (before reduction of the Note Balance by any distributions made on such
Distribution Date) and (ii)interest on the Noteholders' Interest Carryover
Shortfall at the Interest Rate from the preceding Distribution Date through the
current Distribution Date, to the extent permitted by law.
"Noteholders' Principal Carryover Shortfall" means, as of the
close of any Distribution Date, the excess of the Noteholders' Principal
Distributable Amount and any outstanding Noteholders' Principal Carryover
Shortfall from the preceding Distribution Date over the amount in respect of
principal that was actually deposited in the Note Distribution Account on such
Distribution Date.
"Noteholders' Principal Distributable Amount" means, with
respect to (i) any Distribution Date prior to the Final Scheduled Distribution
Date, the sum of (a) 91% of the Principal Distributable Amount, (b) amounts
transferred from the Pre-Funding Account to the Note Distribution Account on
such Distribution Date, if any, pursuant to Section 5.7(a)(ii), and
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(c) the Noteholders' Principal Carryover Shortfall with respect to such
Distribution Date, and (ii) the Final Scheduled Distribution Date, the Note
Balance (before giving effect to any distribution on the Notes on such Final
Scheduled Distribution Date).
"Notice of Claim" means the notice required to file a claim
under the Policy.
"Obligor" on a Receivable means the purchaser or co-purchasers
of the Financed Vehicle and any other Person who owes payments under the
Receivable.
"Officers' Certificate" means a certificate signed by a
Co-Trustee of the Seller or Funding Trust II, as the case may be, or the
Chairman of the Board, President, Executive Vice President, Senior Vice
President, Vice President, or Assistant Vice President of the Custodian, NAFI,
or by a Servicing Official, as the case may be, and delivered to the Trust
Collateral Agent, as required by this Agreement.
"OFSA" means Omni Financial Services of America, Inc., a
Florida corporation, or any substitute Subservicer performing substantially the
same services on behalf of the Servicer as OFSA performs pursuant to the Amended
Restated Servicing Agreement, dated as of December 8, 1994, between the Servicer
and World Omni Financial Corp. ("WOFCO"), as such agreement may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof and the terms of this Agreement, and the Assignment and Assumption
Agreement dated as of October 23, 1995 between WOFCO and OFSA pursuant to which
WOFCO assigned its subservicing duties to OFSA.
"Opinion of Counsel" means an opinion of counsel reasonably
acceptable to the Insurer, and, if such opinion or a copy thereof is required by
the provisions of this Agreement to be delivered to the Insurer, to the Insurer.
"Original Pool Balance" means the sum, as of any date, of the
Pool Balance as of the Initial Cut-off Date.
"Originator" means consumer finance companies, depository
institutions and other financial institutions engaged in the financing of motor
vehicle retail installment sale contracts from whom NAFI acquired Receivables;
provided, however, that "Originators" shall not include Dealers.
"Originator Agreement" means an agreement pursuant to which
NAFI acquired Receivables from an Originator.
"Other Conveyed Property" means all property conveyed by the
Seller to the Trust pursuant to Section 2.1(b) through (h) and Section
2.2(a)(ii) through (x) of this Agreement.
"Owner Trust Property" has the meaning assigned to such term
in the Trust Agreement.
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"Owner Trustee" means Wilmington Trust Company, not in its
individual capacity but solely as Owner Trustee under the Trust Agreement, its
successors in interest or any successor Owner Trustee under the Trust Agreement.
"Person" means any individual, corporation, estate,
partnership, joint venture, association, joint stock company, trust (including
any beneficiary thereof), unincorporated organization or government or any
agency or political subdivision thereof.
"Physical Property" has the meaning assigned to such term in
the definition of "Delivery" above.
"Pool Balance" means, as of any date of determination, the
Original Pool Balance, plus the aggregate Principal Balance of the Subsequent
Receivables, if any, sold to the Trust, reduced by any principal amounts
previously paid (excluding Purchased Receivables and Liquidated Receivables).
"Preference Claim" has the meaning set forth in Section 6.2
hereof.
"Pre-Funded Amount" means, with respect to any Distribution
Date, the amount on deposit in the Pre-Funding Account, (exclusive of
Pre-Funding Earnings) which initially shall be $6,689,091.18
"Pre-Funding Account" has the meaning specified in
Section 5.1.
"Pre-Funding Earnings" means any Investment Earnings on
amounts on deposit in the Pre-Funding Account.
"Pre-Funding Period" means the period beginning on and
including the Closing Date and ending on the first to occur of (a) the first
date on which the amount on deposit in the Pre-Funding Account (after giving
effect to any transfers therefrom in connection with the transfer of Subsequent
Receivables to the Issuer on such date) is less than $100,000, (b) the date on
which an Event of Default occurs under the Indenture or a Servicer Termination
Event occurs and (c) the close of business on October 30, 1997.
"Pre-Funding Period Reserve Account" means the account
designated as such, established and maintained pursuant to Section 5.2.
"Pre-Funding Period Reserve Account Initial Deposit" means
$86,824.40 deposited on the Closing Date.
"Principal Balance" means, with respect to any Receivable, as
of any date, the Amount Financed minus (i) that portion of all amounts received
on or prior to such date and allocable to principal in accordance with the
Actuarial Method and (ii) any Bankruptcy Loss in respect of such Receivable.
"Principal Distributable Amount" means, with respect to any
Distribution Date (other than the Final Scheduled Distribution Date), the sum of
(i) that portion of all collections
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on the Receivables (other than Liquidated Receivables and Purchased Receivables
and, to the extent included in clause (iv) below, the Principal Balance of all
Retransfer Default Receivables) allocable to principal, including all full and
partial principal prepayments, deposited into the Collection Account during the
related Due Period, (ii) the Principal Balance of all Receivables that became
Liquidated Receivables during the related Due Period (other than Liquidated
Receivables that became Purchased Receivables during such Due Period and, to the
extent included in clause (iv) below, the Principal Balance of all Retransfer
Default Receivables), (iii) the portion of the Purchase Amount allocable to
principal of all Receivables that became Purchased Receivables on or prior to
the related Reporting Date and subsequent to the preceding Reporting Date, (iv)
in the sole discretion of the Insurer, the Principal Balance as of the related
Reporting Date of all the Receivables that were required to be purchased
pursuant to Sections 3.2 and 4.1 but were not purchased, and (v) the aggregate
amount of Bankruptcy Losses that occurred during the related Due Period.
"Purchase Agreement" means the Purchase and Contribution
Agreement between the Seller and NAFI, dated as of July 23, 1997, as such
Agreement may be amended from time to time.
"Purchase Amount" means, with respect to a Receivable, the
Principal Balance and all accrued and unpaid interest on the Receivable, after
giving effect to the receipt of any moneys collected (from whatever source) on
such Receivable, if any, as of the date of purchase.
"Purchased Receivable" means a Receivable purchased as of the
close of business on the last day of a Due Period by the Servicer pursuant to
Section 4.7 or repurchased by the Seller or NAFI pursuant to Section 3.2 or
Section 11.1(a).
"Rating Agency" means Moody's and Standard & Poor's. If no
such organization or successor maintains a rating on the Notes, "Rating Agency"
shall be a nationally recognized statistical rating organization or other
comparable Person designated by the Seller and acceptable to the Insurer (so
long as an Insurer Default shall not have occurred and be continuing), notice of
which designation shall be given to the Seller, the Trust Collateral Agent, the
Owner Trustee and the Servicer.
"Rating Agency Condition" means, with respect to any action,
that each Rating Agency shall have been given 10 days' (or such shorter period
as shall be acceptable to each Rating Agency) prior notice thereof and that each
of the Rating Agencies shall have notified the Seller, the Servicer, the
Insurer, the Owner Trustee and the Trust Collateral Agent in writing that such
action will not result in a reduction or withdrawal of the then current rating
of the Notes.
"Receivable" means each motor vehicle retail installment sale
contract and security agreement (including any and all rights to receive
payments thereunder on and after the applicable Cut-off Date and security
interests in the Financed Vehicle securing such contract or note) assigned and
transferred to the Issuer hereunder as of the Closing Date or a Subsequent
Transfer Date and not reassigned, retransferred or otherwise released in
accordance herewith, each such Receivable being identified in a Receivable
Schedule attached to a Subsequent Transfer Agreement.
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"Receivable Documents" means, with respect to a Receivable,
all papers and documents (including those contained in the Receivable File) and
all other papers and records (including computerized data) of whatever kind or
description, whether developed or originated by NAFI, a Dealer, an Originator,
the Servicer or another Person, required to document the Receivable or to
service the Receivable.
"Receivable Files" means with respect to a Receivable, the
fully executed original of such Receivable; the assignment of such Receivable by
a Dealer or Originator to NAFI, the original Title Document or UCC financing
statement evidencing that the security interest in a Financed Vehicle granted to
NAFI under such Receivable has been perfected under applicable state law public
records office, in which case NAFI will deliver to National Financial, on the
Closing Date or the Subsequent Transfer Date, as the case may be, an Officer's
Certificate of NAFI indicating that the original of such Title Document has been
applied for at, or the original of such UCC financing statement was delivered
to, such public office and shows NAFI as the lienholder or secured party and
that NAFI will deliver the originals thereof when returned from such office; the
original of any assumption agreement or any modification, extension or
refinancing agreement; and the original application of the related Obligor to
obtain the financing extended by such Receivable.
"Receivables Schedule" means the schedule of all retail
installment sales contracts and promissory notes originally held as part of the
Trust which is attached as Schedule A.
"Record Date" with respect to each Distribution Date means
the Business Day immediately preceding such Distribution Date, unless otherwise
specified in the Agreement.
"Registrar of Titles" means, with respect to any state, the
governmental agency or body responsible for the registration of, and the
issuance of certificates of title relating to, motor vehicles and liens thereon.
"Reporting Date" means, with respect to a Distribution Date,
the earlier of (i) the 15th day of the calendar month in which such Distribution
Date occurs, and (ii) the fourth business Day preceding such Distribution Date.
"Repossession" means any action taken or to be taken pursuant
to the UCC or other applicable laws in connection with recovery on a Defaulted
Receivable (including any Liquidated Receivable), including repossession of the
related Financed Vehicle with or without judicial proceedings, sale of such
Financed Vehicle at public or private sale, retention of such Financed Vehicle
in satisfaction of the Obligor's obligations under such Defaulted Receivable, or
a levy on and sheriff's sale of the related Financed Vehicle in enforcement of a
judgment on such Defaulted Receivable or by voluntary surrender or otherwise.
"Required Reserve Amount" means, with respect to any
Distribution Date, an amount equal to the product of (i) a per annum rate equal
to the Interest Rate less 250 basis points (2.5%), (ii) the amount of funds on
deposit in the Pre-Funding Account after giving effect to any withdrawals
therefrom on such Distribution Date and (iii) a fraction, the numerator of which
is the number of days from and including such Distribution Date to (but
excluding) the
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Distribution Date immediately following the end of the Pre-Funding Period, and
the denominator of which is 360.
"Requisite Amount" has the meaning specified in the Spread
Account Agreement.
"Responsible Officer" means, with respect to the Trust
Collateral Agent, any officer within the Corporate Trust Office of the Trust
Collateral Agent, including any Managing Director, Vice President, Assistant
Vice President, Assistant Treasurer, Assistant Secretary or any other officer of
the Trust Collateral Agent, customarily performing functions similar to those
performed by any of the above designated officers, and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject.
"Purchase Amount" means, with respect to any Receivable
required to be retransferred pursuant to Sections 3.2 or 4.1, an amount equal to
the sum of (I) 100% of the Principal Balance thereof on the date of retransfer
and (ii) unpaid accrued interest thereon from the date to which interest was
last paid by the Obligor to the due Date in the Due Period in which such
retransfer occurs. For purposes of determining the Purchase Amount of any
Receivable, the Principal Balance thereof on the date of retransfer shall not be
reduced to zero as a result of its classification as a Liquidated Receivable.
"Retransfer Default Receivable" means any Receivable with
respect to which the Seller or the Servicer is required to deposit in the
Collection Account the related Purchase Amount pursuant to Section 3.2 or
Section 4.1 and has not so deposited such amount on the Reporting Date on which
it is required to repurchase such Receivable following receipt of notice from
the Trust Collateral Agent that such Receivable is required to be retransferred.
"Retransfer Receivable" means any Receivable retransferred to
the Seller or the Servicer pursuant to Sections 3.2 or 4.1 hereof.
"Sale Agreement" means the Sale Agreement, dated of even date
herewith, between Funding Trust II and the Seller, as the same may be amended,
supplemented or otherwise modified from time to time in accordance with the
terms thereof.
"Schedule of Representations" means the Schedule of
Representations and Warranties attached hereto as Schedule B.
"Scheduled Payment" means, with respect to any Due Period for
any Receivable, the amount set forth in such Receivable as required to be paid
by the Obligor in such Due Period. If after the Closing Date, the Obligor's
obligation under a Receivable with respect to a Collection Period has been
modified so as to differ from the amount specified in such Receivable as a
result of (i) the order of a court in an insolvency proceeding involving the
Obligor, (ii) pursuant to the Soldiers' and Sailors' Civil Relief Act of 1940,
as amended, or (iii) modifications or extensions of the Receivable permitted by
Sections 4.2(b) and (c), the Scheduled Payment with respect to such Due Period
shall refer to the Obligor's payment obligation with respect to such Due Period
as so modified.
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"Seller" means National Financial Auto Funding Trust, a
Delaware business trust, and its successors in interest to the extent permitted
hereunder.
"Series 1997-1 Spread Account" means the account designated as
such, established and maintained pursuant to the Spread Account Agreement.
"Servicer" means National Auto Finance Company, Inc., as the
servicer of the Receivables, and each successor Servicer pursuant to Section
10.3.
"Servicer Extension Notice" means the notice specified in
Section 4.16.
"Servicer Termination Event" means an event specified in
Section 10.1.
"Servicing Fee" has the meaning specified in Section 4.9.
"Servicing Fee Rate" means 2.00% per annum.
"Servicing Official" means any employee of the Servicer
involved in, or responsible for, the administration and servicing of the
Receivables whose name appears on a list of servicing employees furnished to the
Trust Collateral Agent and the Insurer by the Servicer, as such list may from
time to time be amended.
"Servicer's Certificate" means an Officers' Certificate of the
Servicer delivered pursuant to Section 4.12, substantially in the form of
Exhibit B.
"Simple Interest Method" means the method of allocating a
fixed level payment on an obligation between principal and interest, pursuant to
which the portion of such payment that is allocated to interest is equal to the
product of the fixed rate of interest on such obligation multiplied by the
period of time (expressed as a fraction of a year, based on the actual number of
days in the calendar month and 365 days in the calendar year) elapsed since the
preceding payment under the obligation was made.
"Simple Interest Receivable" means a Receivable under which
the portion of the payment allocable to interest and the portion allocable to
principal is determined in accordance with the Simple Interest Method.
"Spread Account Agreement" means the Spread Account Agreement
dated as of July __, 1997 among the Insurer, the Seller, the Trust Collateral
Agent and the Collateral Agent, as the same may be modified, supplemented or
otherwise amended from time to time in accordance with the terms thereof.
"Standard & Poor's" means Standard & Poor's Ratings Services,
a division of The McGraw Hill Companies, Inc., or its successor.
"Subsequent Cut-off Date" means, with respect to any
Subsequent Transfer Date, the third Business Day prior thereto.
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"Subsequent Purchase Agreement" means an agreement by and
between the Seller and NAFI pursuant to which the Seller will acquire Subsequent
Receivables.
"Subsequent Receivables" means the Receivables transferred to
the Issuer pursuant to Section 2.2, which shall be listed on Schedule A to the
related Subsequent Transfer Agreement.
"Subsequent Transfer Agreement" means the agreement among the
Issuer, the Seller and the Servicer, substantially in the form of Exhibit A.
"Subsequent Transfer Date" means, with respect to Subsequent
Receivables, any date, occurring not more frequently than once a month, during
the Pre-Funding Period on which Subsequent Receivables are to be transferred to
the Trust pursuant to this Agreement, and a Subsequent Transfer Agreement is
executed and delivered to the Trust and the Insurer.
"Sub-Servicer" means any Eligible Sub-Servicer with whom NAFI
has entered into a Sub-Servicing Agreement. Initially, the Sub-Servicer will be
OFSA.
"Sub-Servicer Account" means the account maintained by OFSA
with Mellon Financial Services to which Obligors have been or will be instructed
to remit payments in respect of the Receivables.
"Sub-Servicing Agreement" means the written contract between
NAFI and any Sub-Servicer relating to servicing and/or administration of the
Receivables as permitted by Section 4.2 hereof.
"Supplemental Servicing Fee" means, with respect to any Due
Period, any payments received from an Obligor or a Dealer in connection with any
application fees, tax processing fees, wire transfer fees, express mail fees,
insurance premiums, late charges, taxes, fees or other charges imposed by any
Governmental Authority (other than any extension fees).
"Title Documents" means, with respect to any Financed Vehicle,
the actual motor vehicle title or certificate of title for such Financed Vehicle
issued by the Registrar of Titles or other government agency in the jurisdiction
in which such Financed Vehicle is registered; alternatively, in those certain
jurisdictions whose law requires that the original of the actual motor vehicle
title or certificate of title be possessed by the Obligor, then, in lieu of the
actual title or certificate of title, Title Documents shall mean such duplicate
titles, certificates or other documents as are permitted, required and/or
contemplated to be possessed by the secured party under the laws of such
jurisdiction.
"Transaction Documents" shall have the meaning assigned
thereto in the Insurance and Indemnity Agreement.
"Trigger Event" has the meaning assigned thereto in the Spread
Account Agreement.
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"Trust" means the Issuer.
"Trust Account Property" means the Trust Accounts, all amounts
and investments held from time to time in any Trust Account (whether in the form
of deposit accounts, Physical Property, book-entry securities, uncertificated
securities or otherwise), and all proceeds of the foregoing.
"Trust Accounts" has the meaning assigned thereto in Section
5.1.
"Trust Agreement" means the Trust Agreement dated as of July
__, 1997, between the Seller and the Owner Trustee, as the same may be amended
and supplemented from time to time.
"Trust Certificates" means the certificates issued pursuant to
the Trust Agreement evidencing beneficial ownership interests in the Trust.
"Trust Collateral Agent" means the Person acting as Trust
Collateral Agent hereunder, its successors in interest and any successor Trust
Collateral Agent hereunder.
"Trust Officer" means, (i) in the case of the Trust Collateral
Agent, any officer within the Corporate Trust Office of the Trust Collateral
Agent, including any Managing Director, Vice President, Assistant Vice
President, Assistant Treasurer, Assistant Secretary or any other officer of the
Trust Collateral Agent, customarily performing functions similar to those
performed by any of the above designated officers, and also, with respect to a
particular matter, any other officer to whom such matter is referred because of
such officer's knowledge of and familiarity with the particular subject., and
(ii) in the case of the Owner Trustee, any officer in the Corporate Trust Office
of the Owner Trustee or any agent of the Owner Trustee under a power of attorney
with direct responsibility for the administration of this Agreement or any of
the Transaction Documents on behalf of the Owner Trustee.
"Trust Property" means the property and proceeds conveyed
pursuant to Section 2.1 and Section 2.2. Although the Seller has pledged the
Series 1997-1 Spread Account to the Trust Collateral Agent and the Insurer
pursuant to the Spread Account Agreement, the Series 1997-1 Spread Account shall
not under any circumstances be deemed to be a part of or otherwise includable in
the Trust or the Trust Property.
"Trustee" means the Person acting as Indenture Trustee under
the Indenture, its successors in interest and any successor trustee under the
Indenture.
"UCC" means the Uniform Commercial Code as in effect in the
relevant jurisdiction on the date of the Agreement.
"Unearned Finance Charge" means, with respect to any Contract
of a Receivable, the amount of the add-on finance charge that, under the term of
such Contract, would be required to be refunded or credited to the related
Obligor in accordance with such Contract if such Contract were then prepaid in
full.
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SECTION 1.2. Other Definitional Provisions.
(a) Capitalized terms used herein and not otherwise defined
herein have the meanings assigned to them in the Indenture, or, if not defined
therein, in the Trust Agreement.
(b) All terms defined in this Agreement shall have the defined
meanings when used in any instrument governed hereby and in any certificate or
other document made or delivered pursuant hereto unless otherwise defined
therein.
(c) As used in this Agreement, in any instrument governed
hereby and in any certificate or other document made or delivered pursuant
hereto or thereto, accounting terms not defined in this Agreement or in any such
instrument, certificate or other document, and accounting terms partly defined
in this Agreement or in any such instrument, certificate or other document to
the extent not defined, shall have the respective meanings given to them under
generally accepted accounting principles as in effect on the date of this
Agreement or any such instrument, certificate or other document, as applicable.
To the extent that the definitions of accounting terms in this Agreement or in
any such instrument, certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles, the
definitions contained in this Agreement or in any such instrument, certificate
or other document shall control.
(d) Any agreement, instrument or statute defined or referred
to herein or in any instrument or certificate delivered in connection herewith
means such agreement, instrument or statute as from time to time amended,
modified or supplemented and includes (in the case of agreements or instruments)
references to all attachments thereto and instruments incorporated therein;
references to a Person are also to its permitted successors and assigns.
SECTION 1.3. Usage of Terms. With respect to all terms used in
this Agreement, the singular includes the plural and the plural includes the
singular; words importing any gender include the other gender; references to
"writing" include printing, typing, lithography, and other means of reproducing
words in a visible form; references to agreements and other contractual
instruments include all subsequent amendments thereto or changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
the terms "include" or "including" mean "include without limitation" or
"including without limitation; "the words "herein", "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and not to any
particular Article, Section or other subdivision, and Article, Section, Schedule
and Exhibit references, unless otherwise specified, refer to Articles and
Sections of Schedules and Exhibits to this Agreement.
SECTION 1.4. Certain References. All references to the
Principal Balance of a Receivable as of any date of determination shall refer to
the close of business on such day.
SECTION 1.5. No Recourse. Without limiting the obligations of
NAFI hereunder, no recourse may be taken, directly or indirectly, under this
Agreement or any
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certificate or other writing delivered in connection herewith or therewith,
against any stockholder, officer or director, as such, of NAFI, or of any
predecessor or successor of NAFI.
SECTION 1.6. Action by or Consent of Noteholders. Whenever any
provision of this Agreement refers to action to be taken, or consented to, by
Noteholders, such provision shall be deemed to refer to the Noteholder of record
as of the Record Date immediately preceding the date on which such action is to
be taken, or consent given, by Noteholders. Solely for the purposes of any
action to be taken, or consented to, by Noteholders, any Note registered in the
name of NAFI or any Affiliate thereof shall be deemed not to be outstanding;
provided, however, that, solely for the purpose of determining whether a Trust
Officer of the Trustee or the Trust Collateral Agent is entitled to rely upon
any such action or consent, only Notes which the Owner Trustee, the Trust
Officer of the Trustee or the Trust Collateral Agent, respectively, actually
knows to be so owned shall be so disregarded.
SECTION 1.7. Material Adverse Effect. Whenever a determination
is to be made under this Agreement as to whether a given event, action, course
of conduct or set of facts or circumstances could or would have a material
adverse effect on the Noteholders (or any similar or analogous determination),
such determination shall be made without taking into account the insurance
provided by the Policy.
SECTION 1.8. For all purposes of this Agreement the allocation
of a payment on a Receivable between principal and interest shall be made based
upon the amortization method provided in such Receivable. For purposes of
allocating a pay-ahead payment on a Receivable between principal and interest,
the pay-ahead shall be deemed to have been received on the date it was actually
due. For all purposes of this Agreement, no amount shall be treated as collected
under a Contract until such amount has been deposited into the Collection
Account.
ARTICLE II
CONVEYANCE OF RECEIVABLES
SECTION 2.1. Conveyance of Initial Receivables. In
consideration of the Issuer's delivery to or upon the order of the Seller on the
Closing Date of the net proceeds from the sale of the Notes and the other
amounts to be distributed from time to time to the Seller in accordance with the
terms of this Agreement, the Seller does hereby sell, transfer, assign, set over
and otherwise convey to the Issuer, without recourse (subject to the obligations
set forth herein), all right, title and interest of the Seller in and to:
(a) the Initial Receivables and all monies received thereon on
or after the Initial Cut-off Date (including amounts due on or before the
Initial Cut-off Date but received by NAFI, the Seller or the Issuer on or after
the Initial Cut-off Date);
(b) any proceeds and the right to receive proceeds with
respect to the Initial Receivables from claims on any physical damage, credit
life or disability insurance policies covering Financed Vehicles or Obligors,
including rebates of insurance premiums relating to the Receivables and any
proceeds from the liquidation of the Initial Receivables;
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(c) all rights against Dealers pursuant to Dealer Agreements
or against Originators pursuant to Originator Agreements;
(d) the related Receivables Files and any and all other
documents that NAFI keeps on file in accordance with its customary procedures
relating to the Receivables, the Obligors or the Financed Vehicles;
(e) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been acquired by or
on behalf of the Trust pursuant to liquidation of such Receivable;
(f) all funds on deposit from time to time in the Trust
Accounts (less all investments and proceeds thereof), and all rights of the
Issuer therein;
(g) the rights and benefits, but none of its obligations or
burdens, under the Conveyance Agreements, including the delivery requirements,
representations and warranties and the cure and repurchase obligations of NAFI
under the Purchase Agreement; and
(h) the proceeds of any and all of the foregoing.
The foregoing transfer and assignment does not constitute and
is not intended to result in an assumption by the Trust Collateral Agent, any
Noteholder or the Insurer of any obligation of the Seller, the Master Trust,
Funding Trust II or NAFI to the Obligors, Dealers, insurers or any other Person
in connection with the Receivables, the Receivable Files, or the insurance
policies or any agreements or instruments relating to any of them. It is the
intention of the Seller that the transfer and assignment contemplated by this
Agreement shall constitute a sale of the Receivables and other Trust Property
from the Seller to the Issuer and the beneficial interest in and title to the
Receivables and the other Trust Property shall not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or against the
Seller under any bankruptcy law. In the event that, notwithstanding the intent
of the Seller, the transfer and assignment contemplated hereby is held not to be
a sale, this Agreement shall constitute a grant of a security interest in the
property referred to in this Section 2.1 for the benefit of the Noteholders and
the Insurer.
The Seller intends that the transfer and assignment of
Receivables by the Seller to the Trust constitute an absolute transfer to the
Trust of all the Seller's right, title, and interest in and to the Receivables
and the remainder of the Trust Property (other than the Policy); provided that,
in the event that, notwithstanding the intent of the Seller, the transfer is not
held to be a sale, then it is intended that the conveyance shall be deemed to be
a grant of a security interest in the Receivables and the remainder of the Trust
Property. By the transfer, assignment and set-over contemplated by this Section
2.1, the Seller further grants and transfers to the Trustee, for the benefit of
all Noteholders, and the Insurer a first priority, perfected security interest,
as their respective interests appear in Section 5.7, in all of the Seller's
right, title and interest in, to and under the Receivables and the remainder of
the Trust Property, whether now existing or hereafter acquired, and agrees that
this Agreement shall also constitute a security agreement under applicable law.
Within two Business Days of the Closing Date, the Seller shall have filed a UCC
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financing statement or statements, appropriate under the applicable UCC, to
reflect the assignment of the Receivables and the remainder of the Trust
Property (other than the Policy) by the Seller to the Trustee and the Insurer
and to protect the Noteholders' and the Insurer's interest in the Receivables,
their proceeds and the Financed Vehicles, against all other Persons and shall
thereafter file any appropriate continuation statements in respect thereof.
During the term of this Agreement, the Seller shall not change its name,
identity or structure or relocate its chief executive office or principal place
of business without first giving at least 30 days' advance written notice to the
Trust Collateral Agent, the Servicer and the Insurer; provided however, that the
Trust Collateral Agent, the Servicer and the Insurer shall, subject to the last
sentence of this paragraph, have no right or power to prohibit a change in the
Seller's name, identity or structure or a relocation of, its chief executive
office or principal place of business. If any change in the Seller's name,
identity or structure or the relocation of its chief executive office or
principal place of business would make any financing or continuation statement
or notice of lien filed in connection with this Agreement misleading within the
meaning of applicable provisions of the UCC or any title statute, the Seller,
promptly but in no event later than thirty days after the effective date of such
change, shall file such amendments or take such other actions as may be required
to preserve and protect the Trust Collateral Agent's interest in the Receivable
and proceeds thereof and the Financed Vehicles and the remainder of the Trust
Property. Promptly after filing such amendments or taking such other action, the
Seller shall deliver to the Trust Collateral Agent and the Insurer an Opinion of
Counsel stating that all financing statements, continuation statements or
amendments thereto necessary to continue the perfection of the interest of the
Trust Collateral Agent in the Trust Property have been filed and reciting the
details thereof.
SECTION 2.2. Conveyance of Subsequent Receivables.
(a) Subject to the conditions set forth in paragraph (b)
below, in consideration of the Issuer's delivery on each related Subsequent
Transfer Date to or upon the order of the Seller of the amount described in
Section 5.9(a) to be delivered to the Seller, the Seller does hereby sell,
transfer, assign, set over and otherwise convey to the Issuer without recourse
(subject to the obligations set forth herein), all right, title and interest of
the Seller in and to:
(i) the Subsequent Receivables listed on Schedule A to the
related Subsequent Transfer Agreement and all monies received thereon
on or after the related Subsequent Transfer Date (including amounts due
on or before the Subsequent Cut-off Date but received by NAFI, the
Seller or the Issuer on or after the Subsequent Cut-off Date);
(ii) any proceeds and the right to receive proceeds with
respect to such Subsequent Receivables from claims on any physical
damage, credit life or disability insurance policies covering the
related Financed Vehicles or Obligors, including rebating of insurance
premiums relating to the Receivables, and any proceeds from the
liquidation of the Subsequent Receivables;
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(iii) all rights of the Seller against the Dealers pursuant to
Dealer Agreements; or against Originators pursuant to Originator
Agreements;
(iv) the related Receivables Files; and any and all other
documents that NAFI or the Seller keeps on file in accordance with its
customary procedures relating to the Receivables, the Obligors or the
Financed Vehicles;
(v) property (including the right to receive future
Liquidation Proceeds) that secures a Receivable and that has been
acquired by or on behalf of the Trust pursuant to liquidation of such
Receivable;
(vi) all funds on deposit from time to time in the Trust
Accounts (less all investments and proceeds thereof), and all rights of
the Issuer therein;
(vii) all of the Seller's right, title and interest in its
rights and benefits, but none of its obligations or burdens, under each
of the Subsequent Purchase Agreements, including the delivery
requirements, representations and warranties and the cure and
repurchase obligations of NAFI under each of the Subsequent Purchase
Agreements, on or after the related Subsequent Cut-off Date; and
(viii) the proceeds of any and all of the foregoing.
(b) The Seller shall transfer to the Issuer the Subsequent
Receivables and the other property and rights related thereto described in
paragraph (a) above during the Pre-Funding Period (but not more often than once
during each calendar month or as more frequently consented to in writing by the
Insurer) only upon the satisfaction of each of the following conditions on or
prior to the related Subsequent Transfer Date:
(i) the Seller shall have provided the Trust Collateral Agent,
the Owner Trustee, each Rating Agency and the Insurer with an Addition
Notice not later than ten days prior to such Subsequent Transfer Date
and shall have provided any information reasonably requested by any of
the foregoing with respect to the Subsequent Receivables;
(ii) the Seller shall have delivered the Receivables Schedule
for the Additional Receivables to be transferred to the Trust on such
Subsequent Transfer Date to each Rating Agency and the Insurer at least
three Business Days prior to such Subsequent Transfer Date, and the
Trust Collateral Agent and the Insurer shall have received, prior to
10:00 a.m., New York City time, on such Subsequent Transfer Date,
written notice from each Rating Agency to the effect that such transfer
will result in the downgrade or withdrawal of the rating then assigned
by such Rating Agency to the Notes;
(iii) the Seller shall have delivered to the Owner Trustee and
the Trust Collateral Agent a duly executed Subsequent Transfer
Agreement which shall include supplements to Schedule A, listing the
Subsequent Receivables and a copy thereof to the Insurer;
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(iv) the Seller shall, to the extent required by Section 4.2,
have deposited or caused to be deposited in the Collection Account all
collections in respect of the Subsequent Receivables;
(v) as of each Subsequent Transfer Date, no Servicer
Termination Event or Insurance Agreement Event of Default shall have
occurred and be continuing;
(vi) after giving effect to any transfer of Subsequent
Receivables on a Subsequent Transfer Date, the Receivables transferred
to the Trust pursuant hereto shall meet the following criteria (based
on the characteristics of the Initial Receivables on the Initial
Cut-off Date and the Subsequent Receivables on the related Subsequent
Cut-off Dates): (i) the weighted average APR of the Receivables
transferred to the Trust shall not be less than 18.0%, unless, with the
prior consent of the Rating Agencies and the Insurer, the Seller
increases the Initial Spread Account Deposit with respect to such
Subsequent Receivables by the amount required by the Insurer; (ii) the
weighted average remaining term of the Receivables transferred to the
Trust shall not be greater than 55 months; (iii) not more than 80% of
the Aggregate Principal Balance shall represent loans to finance the
purchase of used Financed Vehicles; and (iv) the final scheduled
payment date on the Receivable with the latest maturity shall not be
later than October 30, 2002;
(vii) each of the representations and warranties made by the
Seller pursuant to Section 8.1 and pursuant to Section 3.1 with respect
to the Subsequent Receivables to be transferred on such Subsequent
Transfer Date shall be true and correct as of the related Subsequent
Transfer Date, and the Seller shall have performed all obligations to
be performed by it hereunder on or prior to such Subsequent Transfer
Date;
(viii) the Insurer (so long as no Insurer Default shall have
occurred and be continuing), in its absolute and sole discretion, shall
have approved the transfer of such Subsequent Receivables to the Trust,
the Insurer shall have been reimbursed for any fees and expenses
incurred by the Insurer in connection with the granting of such
approval, and shall have received a copy of the executed Subsequent
Transfer Agreement; and
(ix) the Seller shall have delivered to the Insurer and the
Trust Collateral Agent an Officers' Certificate confirming the
satisfaction of each condition precedent specified in this paragraph
(b).
The Seller covenants that in the event any of the foregoing
conditions precedent are not satisfied with respect to any Subsequent Receivable
on the date required as specified above, the Seller will immediately repurchase
such Subsequent Receivable from the Trust, at a price equal to the Purchase
Amount thereof, in the manner specified in Section 4.7.
(c) Within ten Business Days after the last day of the
Pre-Funding Period, the Seller shall, at its cost and expense, cause KPMG Peat
Marwick or such other nationally recognized firm of public accountants as may be
acceptable to the Insurer to deliver to the Insurer a report covering the
Receivables then in the Trust and addressing such procedures as the Seller and
the Insurer may agree upon.
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SECTION 2.3. Further Encumbrance of Trust Property. (a)
Immediately upon the conveyance to the Trust by the Seller of any item of the
Trust Property pursuant to Section 2.1, all right, title and interest of the
Seller in and to such item of Trust Property shall terminate, and all such
right, title and interest shall vest in the Trust, in accordance with the Trust
Agreement and Sections 3802 and 3805 of the Business Trust Statute (as defined
in the Trust Agreement).
(b) Prior to the payment in full on the Notes, the payment of
all amounts due to the Insurer under the Insurance Agreement, the end of the
Term of the Note Policy (as defined therein) and the surrender of the Note
Policy by the Collateral Agent to the Insurer, the Trust Collateral Agent shall
hold the Trust Property for the exclusive benefit of the Trustee on behalf of
the Noteholders and the Insurer.
(c) The Trust Collateral Agent shall, at such time as there
are no Securities outstanding and all sums due to (i) the Trustee or any agent
or counsel thereof pursuant to the Indenture, (ii) the Insurer under the
Insurance Agreement and (iii) the Trust Collateral Agent pursuant to this
Agreement, have been paid, and the term of the Note Policy has expired and the
Trust Collateral Agent has surrendered the Note Policy to the Insurer, release
any remaining portion of the Trust Property to the Seller.
SECTION 2.4. (a) The Servicer shall be responsible for
maintaining, and shall maintain and cause the respective Subservicers, if any,
to maintain, a complete set of books and records (including tapes and disks for
computer use) for each Receivable to the extent that such books and records were
delivered to the Servicer or such Subservicer or were developed by it during the
course of servicing such Receivable. The Servicer shall, and shall cause the
respective Subservicers to, maintain such books of account and other records as
will enable the Trust Collateral Agent to determine the ownership status of each
Receivable; provided however, that neither the Servicer nor any Subservicer
shall be required to physically xxxx or segregate any Receivables or other
Receivable Documents to indicate such ownership status. Promptly after the
Closing Date and each Subsequent Transfer Date, the Seller and the Servicer
shall deliver to the Custodian all Receivable Documents in its possession or
under its control, and shall promptly deliver to the Custodian any Receivable
Documents that subsequently come into its possession or within its control. NAFI
hereby warrants, represents and covenants to and with the Trust Collateral Agent
and the Insurer that recordation of the name of NAFI as lienholder in the Title
Documents respecting any Financed Vehicle as well as such lien itself is
maintained by NAFI as agent for the Trust Collateral Agent for the benefit of
the Trust and NAFI has no equitable ownership in the Receivables, except as it
may have by virtue of ownership of a Certificate or an equity interest in the
Seller or any Noteholder.
(b) On the Closing Date, the Seller shall deliver to the Trust
Collateral Agent for deposit in the Collection Account, or to the extent
received by the Servicer or any Subservicer, cause the Servicer to deliver or
cause to be delivered to the Trust Collateral Agent for deposit in the
Collection Account, all payments received on the Receivables on or after the
Initial Cut-off Date and on or before the second Business Day preceding the
Closing Date. Within two Business Days after a Subsequent Transfer Date, the
Seller shall deliver to the Trust
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Collateral Agent for deposit in the Collection Account, or to the extent
received by the Servicer or any Subservicer, cause the Servicer to deliver or
cause to be delivered to the Trust Collateral Agent for deposit in the
Collection Account, all payments received on the Receivables on or after the
applicable Cut-off Date and on or before such Subsequent Transfer Date.
SECTION 2.5. The Trust Collateral Agent, based solely upon the
representations of the Custodian, acknowledges receipt by the Custodian as of
the Closing Date and each Subsequent Transfer Date, as the case may be, of a
Receivable File relating to each Receivable. It is understood and agreed that
OFSA makes no representation as to the contents of the Receivable File. If the
Servicer or any such Subservicer subsequently finds any document or documents
constituting a part of a Receivable File to be missing or defective in any
material respect, the Servicer or such Subservicer shall promptly so notify the
Trust Collateral Agent, the Insurer and the Seller in writing, and the Servicer
shall add such item to the exceptions list. The Seller shall use best efforts to
cure each such omission or defect on the exceptions list. If the Seller does not
correct or cure any such omission or defect within sixty (60) days from the date
the Trust Collateral Agent was notified of such omission or defect, then the
Seller shall promptly accept a retransfer of the related Receivable from the
Trust Collateral Agent. The Purchase Amount for the retransferred Receivable
shall be delivered by the Seller to the Trust Collateral Agent for deposit in
the Collection Account and upon receipt of the Purchase Amount by the Trust
Collateral Agent and its receipt of written notice thereof, the Trust Collateral
Agent shall cause the Custodian to release to the Seller the related Receivable
File and the Trust Collateral Agent shall execute and deliver such instruments
of transfer or assignment, in each case without recourse, as shall be reasonably
necessary to vest in the Seller or its designee any Receivable released pursuant
hereto. It is understood and agreed that the obligation of the Seller to accept
a retransfer of any Receivable as to which a material defect in or omission of a
constituent document exists shall constitute the sole remedy respecting such
defect or omission available to Noteholders or the Trust Collateral Agent on
behalf of Noteholders.
ARTICLE III
THE RECEIVABLES
SECTION 3.1. Representations and Warranties of Seller. The
Seller makes the following representations and warranties as to the Receivables
and the Other Conveyed Property on which the Issuer is deemed to have relied in
acquiring the Receivables and upon which the Insurer shall be deemed to rely in
issuing the Note Policy. Such representations and warranties speak as of the
execution and delivery of this Agreement and as of the Closing Date in the case
of the Initial Receivables, and as of the related Subsequent Transfer Date in
case of the Subsequent Receivables (unless another date or time period is
otherwise specified or indicated in the particular representation or warranty),
but shall survive the sale, transfer and assignment of the Receivables to the
Issuer and the pledge thereof to the Trustee pursuant to the Indenture.
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(a) Schedule of Representations. The representations and
warranties set forth on the Schedule of Representations attached hereto as
Schedule B are true and correct.
(b) The representations and warranties set forth in this
Section shall survive assignment of the Receivables to the Trust Collateral
Agent and shall survive as long as any Note is outstanding or this Agreement has
not been terminated.
SECTION 3.2. Repurchase upon Breach.
(a) The Seller, the Servicer, any Subservicer, the Insurer,
any Trust Officer of the Trust Collateral Agent or the Owner Trustee, as the
case may be, shall promptly inform each of the other parties and the Insurer, in
writing, upon the discovery of any breach of the Seller's representations and
warranties made pursuant to Section 3.1 which materially and adversely affects
the interests of the Noteholders or the Insurer in the related Receivable (any
Sub-servicer being so obligated under the related Sub-Servicing Agreement);
provided, however, that the failure to give any such notice shall not derogate
from any obligations of the Seller under this Section 3.2. In addition, with
respect to any Receivables in respect of which the Title Documents were being
applied for on the Closing Date or the related Subsequent Transfer Date, as
applicable, if such Title Documents have not been received by the Servicer
within 180 days after the Closing Date or such Subsequent Transfer Date, as
applicable, the Servicer shall give the Trust Collateral Agent, the Insurer and
Seller written notice of such fact. If the Seller does not correct or cure such
breach (including delivery of such Title Documents, if applicable) by the
Reporting Date occurring during the second full calendar month following the
calendar month in which the Trust Collateral Agent was notified or the Seller,
any Subservicer or the Servicer became aware, if earlier, of such breach
(including failure to deliver such Title Documents), then the Seller shall
promptly repurchase such Receivables from the Issuer. Any such repurchase by the
Seller shall be in exchange for the delivery by the Seller to the Issuer of the
Purchase Amount and shall be accomplished in the manner set forth in Section 5.6
and the Trust shall execute such assignments and other documents reasonably
requested by such Person in order to effect such repurchase. It is understood
and agreed that the obligation of the Seller to accept a repurchase of any
Receivable as to which such a breach has occurred and is continuing as described
above shall constitute the sole remedy respecting such breach available to the
Servicer, the Noteholders, the Insurer, the Issuer, the Trust Collateral Agent,
the Trustee and the Owner Trustee.
In addition to the foregoing and notwithstanding whether the related Receivable
shall have been purchased by the Seller or NAFI, the Seller shall indemnify the
Trust, the Trust Collateral Agent, the Insurer, and the Noteholders and any of
their respective officers, directors, employees or agents against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
a breach of the representation.
(b) Pursuant to Section 2.1 and 2.2 of this Agreement, the
Seller conveyed to the Trust all of the Seller's right, title and interest in
its rights and benefits, but none of its obligations or burdens, under the
Purchase Agreement including the Seller's rights under the
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Purchase Agreement and the delivery requirements, representations and warranties
and the cure or repurchase obligations of NAFI thereunder. The Seller hereby
represents and warrants to the Trust that such assignment is valid, enforceable
and effective to permit the Trust to enforce such obligations of NAFI under the
Purchase Agreement.
SECTION 3.3. Custody of Receivables Files. The Custodian shall
maintain custody and possession of the Receivable Files as custodian and bailee
for, in accordance with and pursuant to the Custodial Agreement.
ARTICLE IV
ADMINISTRATION AND SERVICING OF RECEIVABLES
SECTION 4.1. Duties of the Servicer.
(a) The Servicer shall service and administer the Receivables
on behalf of the Trust and shall have full power and authority, acting alone
and/or through Sub-Servicers as provided in Section 4.2, to do any and all
things which it may deem necessary or desirable in connection with such
servicing and administration and which are consistent with this Agreement.
Consistent with the terms of this Agreement, the Servicer may waive, modify or
vary any term of any Receivable or consent to the postponement of strict
compliance with any such term or in any manner, grant indulgence to any Obligor
if, in the Servicer's sole determination, which shall be conclusive and binding,
such waiver, modification, postponement or indulgence is not materially adverse
to the Noteholders or the Insurer; provided however, that the Servicer may not
permit any modification with respect to any Receivable that would change its
Annual Percentage Rate, defer the payment of any principal or interest (except
to the extent permitted by Section 4.6(a)), reduce the outstanding principal
balance (except for actual payments of principal), or extend (except to the
extent permitted by Section 4.6(a)) the final maturity date on such Receivable.
Without limiting the generality of the foregoing, the Servicer in its own name
or in the name of the Seller is hereby authorized and empowered by the Trust
Collateral Agent when the Servicer believes it appropriate in its best judgment
to execute and deliver, on behalf of the Trust, any and all instruments of
satisfaction or cancellation, or of partial or full release or discharge and all
other comparable instruments, with respect to the Receivables and with respect
to the Financed Vehicles; provided however, that notwithstanding the foregoing,
the Servicer shall not, except pursuant to an order from a Court of competent
jurisdiction, release an Obligor from payment of any unpaid amount under any
Receivable or waive the right to collect the unpaid balance of any Receivable
from the Obligor, except that the Servicer may forego collection efforts if the
amount subject to collection is de minimis and if it would forego collection in
accordance with its customary procedures. If any Receivable contains a
"due-on-sale" provision allowing the holder thereof to accelerate the Receivable
upon sale of the Financed Vehicle financed thereunder, the Servicer shall take
reasonable steps under the circumstances to enforce such due on sale provision
if a Financed Vehicle is sold as soon as practicable after determining that such
Financed Vehicle has been sold; provided however, that the Servicer shall not be
obligated to take any legal action to enforce such provision.
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(b) The Servicer shall service and administer the Receivables
by employing procedures (including collection procedures) and a degree of care
consistent with prudent industry standards and as are customarily employed by
servicers in servicing and administering comparable motor vehicle retail
installment sales contracts and, to the extent more exacting, the degree of
skill and attention that the Servicer exercises from time to time with respect
to all comparable motor vehicle receivables that it services for itself or
others. The Servicer shall take all actions (other than those required to be
taken by the Seller pursuant to this Agreement) that are necessary or desirable
to maintain continuous perfection and first priority of security interests
granted by the obligors in the Financed Vehicles to NAFI, as the case may be,
and to maintain continuous perfection of the security interest created by each
Receivable in the related Finance Vehicle on behalf of the Trust Collateral
Agent, including, but not limited to, using reasonable efforts to obtain
execution by the Obligors and the recording, registering, filing, re-recording,
re-registering and refiling of all Title Documents (it being understood that
Title Documents have not been and need not be endorsed or delivered to the Trust
Collateral Agent and do not and need not identify the Trust Collateral Agent as
the secured party or lienholder with respect to the Receivables), security
agreements, financing statements, continuation statements or other instruments
as are necessary to maintain the security interests granted by the Obligors
under the respective Receivables on behalf of the Trust Collateral Agent;
provided however, that the Servicer is not required to expend any of its own
funds to remove any security interest, lien or other encumbrance on any Financed
Vehicle. The Servicer shall not take any action to impair the Trust's rights in
any Receivable, except to the extent allowed pursuant to this Agreement or
required by law. The Financed Vehicle securing each Receivable shall not be
released in whole or in part from the security interest granted by the
Receivable, except upon payment in full of the Receivable or as otherwise
contemplated herein. The Servicer shall not extend or otherwise amend the terms
of any Receivable, except in accordance with Section 4.1(a). Upon discovery by
either the Servicer or any Sub-Servicer or actual knowledge by a Trust Officer
of the Trust Collateral Agent of a default by the Servicer in the performance of
its obligations under this Section 4.1(b) which materially and adversely affects
the interests of the Noteholders or the Insurer in the related Receivable, the
party discovering or having knowledge of such breach shall give prompt written
notice thereof to the other parties and the Insurer. If the Servicer does not
correct or cure such default by the Reporting Date occurring during the second
full calendar month following the calendar month in which the Trust Collateral
Agent was notified, or the Servicer, the Trust Collateral Agent or the
Sub-servicer became aware, if earlier, of such default, then the Servicer shall
promptly purchase such Receivable from the Trust. Any such purchase by the
Servicer shall be in exchange for the delivery by the Servicer to the Trust of
the Purchase Amount. Except as expressly provided in Section 9.2 and subject to
Section 10.1, it is understood and agreed that the obligation of the Servicer to
repurchase any Receivable as to which such a default has occurred and is
continuing as described above shall constitute the sole remedy respecting such
default available to the Seller, the Noteholders, the Insurer or the Indenture
Trustee on behalf of the Noteholders.
(c) Upon the occurrence of an Insurance Agreement Event of
Default pursuant to Section 5.01(b), (c), (d), (e) or (j), the Insurer may (so
long as an Insurer Default shall not have occurred and be continuing) instruct
the Trust Collateral Agent and the Servicer in writing to take or cause to be
taken, or, if an Insurer Default shall have occurred, upon the occurrence of a
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Servicer Termination Event, the Trust Collateral Agent and the Servicer shall
take or cause to be taken such action as may, in the opinion of counsel to the
Controlling Party, be necessary to perfect or re-perfect the security interests
in the Financed Vehicles securing the Receivables in the name of the Trust by
amending the title documents of such Financed Vehicles or by such other
reasonable means as may, in the opinion of counsel to the Controlling Party, be
necessary or prudent. NAFI hereby agrees to pay all expenses related to such
perfection or reperfection and to take all action necessary therefor. In
addition, prior to the occurrence of an Insurance Agreement Event of Default,
the Controlling Party may instruct the Trust Collateral Agent and the Servicer
to take or cause to be taken such action as may, in the opinion of counsel to
the Controlling Party, be necessary to perfect or re-perfect the security
interest in the Financed Vehicles underlying the Receivables in the name of the
Trust, including by amending the title documents of such Financed Vehicles or by
such other reasonable means as may, in the opinion of counsel to the Controlling
Party, be necessary or prudent; provided, however, that if the Controlling Party
requests that the title documents be amended prior to the occurrence of an
Insurance Agreement Event of Default, the out-of-pocket expenses of the Servicer
in connection with such action shall be reimbursed to the Servicer by the
Controlling Party.
(d) The Servicer may perform any of its duties pursuant to
this Agreement, including those delegated to it by the Trust Collateral Agent
pursuant to this Agreement, through Persons appointed by the Servicer. Such
Persons may include affiliates of the Servicer and may include the Seller and
its affiliates. Notwithstanding any such delegation of a duty, the Servicer
shall remain obligated and liable for the performance of such duty as if the
Servicer were performing such duty.
(e) Upon the execution and delivery of this Agreement, the
Servicer shall deliver to the Trust Collateral Agent and the Insurer a list of
officers and employees of the Servicer, upon which the Trust Collateral Agent
may conclusively rely, involved in, or responsible for, the administration and
servicing of the Receivables, which list shall from time to time be updated by
the Servicer as additional officers and employees of the Servicer become
involved, or responsible for, the administration and servicing of the
Receivables or officers or employees of the Servicer previously identified on
any such list become disassociated with the administration and servicing of the
Receivables.
(f) The Servicer may take such actions as are necessary to
discharge its duties as Servicer in accordance with this Agreement, including
the power to execute and deliver on behalf of the Trust such instruments and
documents as may be customary, necessary or desirable in connection with the
performance of the Servicer's duties under this Agreement (including consents,
waivers and discharges relating to the Receivables and the Financed Vehicles and
such instruments or documents as may be necessary to effect foreclosure or other
conversion of the ownership of any Financed Vehicle). In furtherance thereof,
the Trust Collateral Agent hereby irrevocably appoints the Servicer as its
attorney-in-fact, such appointment being coupled with an interest, to execute on
its behalf such documents or instruments as are necessary to effect the
Repossession of Financed Vehicles, to deliver applicable Receivable Files,
Receivable Documents and Title
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Documents to the Seller upon the sale of a Receivable to the Seller under this
Agreement and to deliver applicable Receivable Files, Receivable Documents and
Title Documents upon liquidation or final payment of a Receivable. The Trust
Collateral Agent, upon receipt of a certificate of a Servicing Official
requesting the same be accepted by the Trust Collateral Agent and certifying as
to the reasons such documents are required, shall furnish the Servicer with any
other powers of attorney or other documents reasonably necessary or appropriate
which the Trust Collateral Agent may legally execute to enable the Servicer to
carry out its servicing and administrative duties hereunder. Neither the
Servicer nor any of its directors, officers, employees or agents will be under
any liability to the Trust, the Trust Collateral Agent, the Insurer, any
Noteholder, or the Seller for the consequences of any delay resulting from
having to obtain such documents from the Trust Collateral Agent, provided that
the Servicer furnished such certificate to the Trust Collateral Agent reasonably
promptly after determining the necessity therefor in the particular instance.
(g) The Servicer warrants, represents and covenants to the
Trust Collateral Agent that recordation of the name of the Servicer as
lienholder in Title Documents respecting any Financed Vehicle is maintained by
the Servicer as agent for the Trust and that the Servicer has no equitable
ownership in the Receivables, except as it may have by virtue of ownership of a
Note or an equity interest in the Seller or any Noteholder. The Servicer
acknowledges that it is holding the Receivables coming into its possession and
any other property constituting a part of the Trust held by it, in trust, for
the benefit of the Noteholders and the Insurer.
SECTION 4.2. Sub-Servicing Agreements between Servicer and the
Sub-Servicers. The Servicer may enter into Sub-Servicing Agreements with one or
more Sub-Servicers for the servicing and administration of certain of the
Receivables; provided however, that the Servicer shall not enter into any such
Sub-Servicing Agreement with any Sub-Servicer other than OFSA, without the prior
written consent of the Insurer (so long as a Insurer Default shall not have
occurred and be continuing), which consent shall not be unreasonably withheld;
provided further that the Servicer shall not amend any Sub-Servicing Agreement
without (i) with respect to a material amendment, the consent of the Insurer and
(ii) with respect to all other amendments, upon five (5) days prior written
notice of such amendment. References in this Agreement to actions taken or to be
taken by the Servicer in servicing the Receivables include actions taken or to
be taken by a Sub-Servicer on behalf of the Servicer. Each Servicing Agreement
shall be upon such terms and conditions as are not inconsistent with this
Agreement and as the Servicer and the Sub-Servicer have agreed. Each
Sub-Servicing Agreement shall require that the related Sub-Servicer acknowledge
that it is holding the Receivables and the Receivable Documents for the related
Receivables coming into its possession and any other property constituting a
part of the Trust Property held by it, in trust, for the benefit of the
Noteholders and the Insurer. The Servicer and a Sub-Servicer may enter into
amendments thereto; provided however, that any such amendments or different
forms shall be consistent with and not violate the provisions of this Agreement.
The Servicer shall notify each Rating Agency, the Trust Collateral Agent and the
Insurer upon entering into any Sub-Servicing Agreement.
SECTION 4.3. Obligations of the Servicer. Notwithstanding any
Sub-Servicing Agreement, any of the provisions of this Agreement relating to
agreements or arrangements between the Servicer or a Sub-Servicer or reference
to actions taken through a Sub-Servicer or otherwise, the Servicer shall remain
obligated for the servicing and administering of
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the Receivables in accordance with the provisions of Section 4.1 of this
Agreement without diminution of such obligation or liability by virtue of such
Sub-Servicing Agreements or arrangements or by virtue of indemnification from a
Sub-Servicer and to the same extent and under the same terms and conditions as
if the Servicer alone were servicing and administering the Receivables. The
Servicer shall be entitled to enter into any agreement with a Sub-Servicer for
indemnification of the Servicer, and nothing contained in this Agreement shall
be deemed to limit or modify such indemnification.
SECTION 4.4. No Contractual Relationship between a
Sub-Servicer and Trust Collateral Agent or Noteholders. Any Sub-Servicing
Agreement that may be entered into and any other transactions or services
relating to the Receivables involving a Sub-Servicer in its capacity as such and
not as an originator shall be deemed to be between a Sub-Servicer and the
Servicer alone, and the Trust Collateral Agent, the Trust, the Insurer and
Noteholders shall not be deemed parties thereto and shall have no claims,
rights, obligations, duties or liabilities with respect to a Sub-Servicer except
as expressly set forth in Section 4.5 or in the applicable Sub-Servicing
Agreement; provided that, if the Servicer is deemed terminated, the Sub-Servicer
may be terminated. Servicer shall promptly provide to the Trust Collateral Agent
and the Insurer any notice received from a Sub-Servicer.
SECTION 4.5. Assumption or Termination of Sub-Servicing
Agreement by Trust Collateral Agent. In the event the Servicer shall for any
reason no longer be the servicer of the Receivables (including by reason of a
Servicer Termination Event), the Trust Collateral Agent, its designee or any
successor Servicer will thereupon assume all of the rights and obligations of
the Servicer under one or more Sub-Servicing Agreements that may have been
entered into by giving notice of such assumption to the related Sub-Servicer or
Sub-Servicers within ten (10) Business Days of the termination of the Servicer
as servicer of the Receivables. Upon the giving of such notice, the Trust
Collateral Agent, its designee or the successor Servicer, shall be deemed to
have assumed all of the Servicer's interest therein and to have replaced the
Servicer as a party to the Sub-Servicing Agreement to the same extent as if the
Sub-Servicing Agreement had been assigned to the assuming party except that the
Servicer and the Sub-Servicer, if any, shall not thereby be relieved of any
accrued liability or obligations under the Sub-Servicing Agreement and the
Sub-Servicer, if any, shall not be relieved of any liability or obligation to
the Servicer that survives the assignment or termination of the Sub-Servicing
Agreement. The Trust Collateral Agent shall notify each Rating Agency and the
Insurer if any Sub-Servicing Agreement is assumed by the Trust Collateral Agent,
its designee or the successor Servicer.
The Servicer shall, upon request of the Trust Collateral Agent
but at the expense of the Servicer, deliver to the assuming party all documents
and records relating to the Sub-Servicing Agreement and the Receivables then
being serviced and an accounting of amounts collected and held by it and
otherwise use its reasonable efforts to effect the orderly and efficient
transfer of the Sub-Servicing Agreement to the assuming party.
SECTION 4.6. Collection of Receivable Payments.
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(a) The Servicer shall proceed diligently to collect all
payments called for under the terms and provisions of the Receivables, and shall
service the Receivables in a manner consistent with the servicing standards and
procedures generally accepted in the financial services industry for similar
Receivables, and as otherwise expressly provided by this Agreement. Consistent
with the foregoing, the Servicer may in its discretion (i) waive any late
payment charge and (ii) extend the then current maturity date of a Receivable by
two months, once during each calendar year at the request of the related Obligor
on account of the Obligor's adverse financial circumstances that affect the
Obligor's ability to make payments under such Receivable; provided however, that
the Servicer may not so extend the then current maturity date of Receivable more
than twice during the life of such Receivable; provided further, that the
aggregate number of Receivables that have been so extended during any twelve
month period shall not exceed the product of (i) 3.5% (0.035) and (ii) the
aggregate number of outstanding Receivables as of the beginning of such twelve
month period.
(b) The Servicer shall instruct (or shall cause the
Sub-Servicer to instruct) all Obligors to make all payments due in respect of
the Receivables to the Sub-Servicer Account. The Servicer shall, pursuant to the
Sub-Servicing Agreement, cause the Sub-Servicer to use any amounts other than
collections in respect of motor vehicle financing obligations serviced by the
Sub-Servicer. The Servicer shall cause the Sub-Servicer to use its best efforts
to transfer to the Collection Account all collected funds on deposit in the
Sub-Servicer Account that constitute part of the Trust Property within one
Business Day, and in any event within two Business Days of receipt thereof. If
the Servicer, the Seller, NAFI or any Sub-Servicer receives collections under or
other payments in respect of the Receivables, each such Person shall as soon as
practicable, but no later than two Business Days following receipt of such item
by such Person, cause such payment to be remitted to the Trust Collateral Agent
for deposit to the Collection Account. If the Servicer determines that any
amount that is not a part of the Trust Property has been deposited in any Trust
Account, the Servicer shall promptly instruct the Trust Collateral Agent by
facsimile (with prompt telephone confirmation) to segregate such amount, and
shall therein direct the Trust Collateral Agent to turn over such amounts to the
Person entitled thereto within two Business Days. A copy of any such direction
shall be delivered by the Servicer to the Insurer.
(c) The Servicer shall cause OFSA to maintain the Sub-Servicer
Account or a comparable account, and shall cause any other Sub-Servicer to
maintain an account comparable to the Sub-Servicer Account, to which Obligors
shall have been directed to remit payments in respect of the Receivables. If the
Sub-Servicer Account or any comparable account maintained by a Sub-Servicer is
terminated for any reason prior to the establishment of, and notification to
Obligors to remit payments to, a replacement servicing account comparable to the
Sub-Servicer Account, the Servicer shall promptly, and in any event within 30
days of termination of such Sub-Servicer Account or comparable account,
establish a pursuant to a Lockbox Agreement and notify all Obligors to remit
payments in respect of the Receivables to such Lockbox Account.
(d) Notwithstanding any Lockbox Agreement, or any of the
provisions of this Agreement relating to a Lockbox Agreement, a Lockbox Bank or
a Lockbox Account, the Servicer shall remain obligated and liable to the Trust
Collateral Agent and the Noteholders for
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servicing and administering the Receivables and the rest of the Trust Property
in accordance with the provisions of this Agreement without diminution of such
obligations or liability by virtue thereof.
SECTION 4.7. Maintenance of Insurance. The Servicer shall use
its reasonable efforts to cause each Obligor to maintain on the related Financed
Vehicle a comprehensive and collision policy providing coverage at least equal
to the lesser of (i) the actual cash value of such Financed Vehicle and (ii) the
unpaid balance owing on the related Receivable, less Unearned Finance Charges;
provided however, that the Servicer shall not be obligated to expend its own
funds to pay any insurance premiums or obtain or maintain any such policy.
Pursuant to Section 4.6 any amounts collected by the Servicer under any such
policies (other than amounts to be applied to the restoration or repair of the
related Financed Vehicles or amounts released to the Obligor in accordance with
the Servicer's normal servicing procedures) shall be deposited in the Collection
Account. All policies required by this paragraph shall be endorsed with clauses
providing for loss payable to the Servicer or the related Subservicer and its
successors and assigns. Servicer shall maintain and keep in place a vendor's
single interest insurance policy.
SECTION 4.8. Realization upon Defaulted Receivables. In the
event that a Receivable becomes and continues to be a Defaulted Receivable, the
Servicer shall take all reasonable and lawful steps necessary for Repossession;
provided however, that the Servicer shall not be obligated to institute any
action for Repossession through judicial proceedings unless it determines in its
good faith judgment, which determination will be conclusive and binding, that
Insurance Proceeds or Liquidation Proceeds that would be realized in connection
therewith or amounts payable pursuant to the last sentence of this Section 4.8
would be sufficient for the reimbursement in full of its out-of-pocket expenses
pursuant to this Agreement. In connection with such Repossession, the Servicer
shall follow such practices and procedures required by Section 4.1 and make
advances of its own funds for any out-of-pocket expenses incurred. The Servicer
shall be reimbursed for Liquidation Expenses (including advances) by retention
of the required reimbursement from the first Liquidation Proceeds or Insurance
Proceeds received with respect to such Defaulted Receivable. The Servicer shall
be entitled to receive the following amounts with respect to any Receivable the
Obligor of which has filed bankruptcy or against whom a petition for involuntary
bankruptcy has been filed: a one time fee of $200 in respect of those
Receivables not referred to outside legal counsel, or, in the case of those
Receivables that are so referred, reimbursement of the reasonable fees and
expenses of outside legal counsel, if their retention was necessary in the
reasonable judgment of the Servicer.
SECTION 4.9. Total Servicing Fee; Payment of Certain Expenses
by Servicer. On each Distribution Date, the Servicer shall be entitled to
receive out of the Collection Account the Base Servicing Fee and any
Supplemental Servicing Fee for the related Due Period pursuant to Section 5.7.
The Servicer shall be required to pay all expenses incurred by it in connection
with its activities under this Agreement (including taxes imposed on the
Servicer, expenses incurred in connection with distributions and reports made by
the Servicer to Noteholders or the Insurer and all other fees and expenses of
the Owner Trustee, the Trust Collateral Agent or the Trustee, except taxes
levied or assessed against the Trust, and claims against the Trust in respect of
indemnification, which taxes and claims in respect of indemnification against
the Trust are
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expressly stated to be for the account of NAFI) and shall not be entitled to
reimbursement therefor except as specifically provided herein. The Servicer
shall be liable for the fees, charges and expenses of the Owner Trustee, the
Trust Collateral Agent, the Trustee, the Custodian, the Collateral Agent, the
Lockbox Bank, any Sub-Servicer and their respective agents (and any fees under
the Lockbox Agreement).
SECTION 4.10. [Reserved]
SECTION 4.11. Reports.
(a) Not later than the Reporting Date, the Servicer shall
forward to the Trust Collateral Agent, the Indenture Trustee, each Rating
Agency, the Insurer and the Seller a statement substantially in the form
attached hereto as Exhibit 4.11 (as such form may be modified from time to time
by agreement between the Trust Collateral Agent and the Servicer with the prior
written consent of the Insurer), certified by an officer of the Servicer. In
addition to the information required by Exhibit 4.11, the Servicer shall include
in the copy of such statement delivered to the Insurer (i) the Delinquency
Ratio, Average Delinquency Ratio, Default Rate, Average Default Rate, Net Loss
Rate and Average Net Loss Rate for such Reporting Date, (ii) whether any Trigger
Event has occurred as of such Reporting Date, (iii) whether any Trigger Event
that may have occurred as of a prior Reporting Date is deemed cured as of such
Reporting Date, and (iv) whether to the knowledge of the Servicer an Insurance
Agreement Event of Default has occurred.
(b) On the first Business Day after each Determination Date,
the Trust Collateral Agent shall forward by telecopier to the Servicer, the
Insurer and the Seller a statement (and shall also mail a copy to the Servicer,
the Insurer and the Seller) setting forth the amount, if any, on deposit in the
Collection Account, the Distribution Account, the Pre-Funding Account, the Note
Distribution Account and the Pre-Funding Period Reserve Account as of such
Determination Date. Not later than the close of business on the fourth Business
Day prior to each Distribution Date, the Trust Collateral Agent shall forward by
telecopier to the Collateral Agent and the Insurer a copy of the statement
required to be delivered to Noteholders on such Distribution Date pursuant to
Section 5.10 prepared assuming that the Insurer will not exercise its right
under Section 5.11. Not later than five days after each Determination Date, the
Trust Collateral Agent shall forward to the Servicer, the Insurer and the Seller
a statement showing, for the previous Distribution Date, the aggregate of
withdrawals from the Distribution Account and the withdrawals and deposits to
the Spread Account.
SECTION 4.12. Annual Statement as to Compliance, Notice of
Servicer Termination Event.
(a) The Servicer shall deliver or cause to be delivered to the
Trustee, the Owner Trustee, the Trust Collateral Agent and the Insurer on or
before April 30 (or 120 days after the end of the Servicer's fiscal year, if
other than December 31) of each year, beginning on April 30, 1998, an Officer's
Certificate signed by any responsible officer of the Servicer, or such Eligible
Sub-Servicer who is performing the servicing duties of the Servicer, dated as of
December 31 (or other applicable date) of the immediately preceding year,
stating that (i) a
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review of the activities of the Servicer during the preceding calendar year and
of performance under this Agreement has been made under such officer's
supervision, (ii) to the best of such officer's knowledge, based on such review,
the Servicer has fulfilled all its obligations under this Agreement throughout
such year, or, if there has been a default in the fulfillment of any such
obligation, specifying each such default known to such officer and the nature
and status thereof and (iii) to the best of such officer's knowledge, each
Subservicer has fulfilled its obligations under its Subservicing Agreement in
all material respects, or if there has been a material default in the
fulfillment of such obligations, specifying such default known to such employee
and the nature and status thereof.
(b) The Servicer shall deliver to the Trust Collateral Agent,
the Insurer, the Noteholders and each Rating Agency, promptly after having
obtained knowledge thereof, but in no event later than two Business Days
thereafter, written notice in an Officer's Certificate of any event which with
the giving of notice or lapse of time, or both, would become a Servicer
Termination Event under Section 10.1.
SECTION 4.13. Annual Independent Accountants' Report.
(a) The Servicer shall, at its expense, cause a firm of
nationally recognized independent certified public accountants (the "Independent
Accountants"), who may also render other services to the Servicer or to the
Seller, to deliver to the Trustee, the Owner Trustee, the Trust Collateral
Agent, the Insurer, on or before March 30 (or 90 days after the end of the
Servicer's fiscal year, if other than December 31) of each year, beginning on
March 30, 1998, with respect to the twelve months ended the immediately
preceding December 31 (or other applicable date) (or such other period as shall
have elapsed from the Closing Date to the date of such certificate), a statement
(the "Accountants' Report") addressed to the Board of Directors of the Servicer,
to the Trustee, the Owner Trustee, the Trust Collateral Agent and to the
Insurer, to the effect that such firm has audited the books and records of the
Servicer and that such audit (1) was made in accordance with generally accepted
auditing standards, and accordingly included such tests of the accounting
records and such other auditing procedures as such firm considered necessary in
the circumstances; (2) included an examination of documents and records relating
to the servicing of automobile installment sales contracts under pooling and
servicing agreements substantially similar one to another (such statement to
have attached thereto a schedule setting forth the servicing agreements covered
thereby, including this Agreement); (3) included an examination of the
delinquency and loss statistics relating to the Servicer's portfolio of
automobile installment sales contracts; and (4) except as described in the
statement, disclosed no exceptions or errors in the records relating to
automobile and light truck loans serviced for others that, in the firm's
opinion, generally accepted auditing standards requires such firm to report. The
Accountants' Report shall further state that (1) a review in accordance with
agreed upon procedures was made of three randomly selected Servicer's
Certificates for the Trust; (2) except as disclosed in the Report, no exceptions
or errors in the Servicer's Certificates so examined were found; and (3) the
delinquency and loss information relating to the Receivables contained in the
Servicer Certificates were found to be accurate.
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(b) The Accountants' Report shall also indicate that the firm
is independent of the Seller and the Servicer within the meaning of the Code of
Professional Ethics of the American Institute of Certified Public Accountants.
(c) A copy of the Accountant's Report may be obtained by any
Noteholder by a request in writing to the Trust Collateral Agent addressed to
its Corporate Trust Office.
SECTION 4.14. Access to Certain Documentation and Information
Regarding Receivables. The Servicer shall provide to representatives of the
Trust Collateral Agent and the Insurer Seller and Servicer will permit any
authorized representative or agent designated by the Insurer to visit and
inspect any of the properties of the Seller or Servicer, as the case may be, to
examine the corporate books and financial records of the Seller or Servicer, as
the case may be, its records relating to the Receivables, and make copies
thereof or extracts therefrom and to discuss the affairs, finances, and accounts
of the Seller or Servicer, as the case may be, with its principal officers, as
applicable, and its independent accountants. Any expense incident to the
exercise by the Insurer of any right under this Section 4.14 shall be borne by
NAFI, so long as NAFI is the Servicer. In each case, such access shall be
afforded without charge but only upon reasonable request and during normal
business hours.
SECTION 4.15. Monthly Tape. On or before the fourth Business
Day, but in no event later than the fifth calendar day, of each month, the
Servicer will deliver or cause to be delivered to the Trust Collateral Agent and
the Insurer a computer tape and a diskette (or any other electronic transmission
acceptable to the Trust Collateral Agent and the Insurer in a format acceptable
to the Trust Collateral Agent and the Insurer, containing the information with
respect to the Receivables as of the preceding Determination Date necessary for
preparation of the Servicer's Certificate relating to the immediately succeeding
Determination Date and necessary to determine the application of collections as
provided in Section 5.4.
SECTION 4.16. Retention and Termination of Servicer. The
Servicer hereby covenants and agrees to act as such under the Agreement for an
initial term, commencing on the Closing Date and ending on September 30, 1997,
which term shall be extendible by the Insurer for successive quarterly terms
ending on each successive March 31, June 30, September 30 and December 31 (or,
pursuant to revocable written standing instructions from time to time to the
Servicer and the Trust Collateral Agent, for any specified number of terms
greater than one), until the termination of the Trust. Each such notice
(including each notice pursuant to standing instructions, which shall be deemed
delivered at the end of successive quarterly terms for so long as such
instructions are in effect) (a "Servicer Extension Notice") shall be delivered
by the Insurer to the Trust Collateral Agent and the Servicer. The Servicer
hereby agrees that, as of the date hereof and upon its receipt of any such
Servicer Extension Notice, the Servicer shall become bound, for the initial term
beginning on the date hereof and for the duration of the term covered by such
Notice, to continue as the Servicer subject to and in accordance with the other
provisions of this Agreement. Until such time as an Insurer Default shall have
occurred and be continuing, the Trust Collateral Agent agrees that, as of the
fifteenth day prior to the last day of any term of the Servicer, if in which the
Trust Collateral Agent shall not have received any Servicer Extension Notice
from the Insurer, the Trust Collateral Agent will, within five days thereafter,
give written
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notice of such non-receipt to the Insurer, and the Servicer and the Servicer's
term shall not be extended unless a Servicer Extension Notice is received on or
before the last day of such term.
SECTION 4.17. Custodial Arrangement. The Custodian shall
maintain custody and possession of the Receivable Files as custodian and bailee
in accordance with and pursuant to the Custodial Agreement. The Servicer hereby
assigns all of its right, title and interest in, but none of its obligators
thereunder, and to such Custodial Agreement to the Trust Collateral Agent. To
the extent the Servicer receives any notices with respect to the Custodial
Agreement, the Servicer will forward a copy of such notice to the Trust
Collateral Agent and the Insurer.
ARTICLE V
TRUST ACCOUNTS; DISTRIBUTIONS;
STATEMENTS TO NOTEHOLDERS
SECTION 5.1. Establishment of Trust Accounts.
(a) (i) The Trust Collateral Agent, on behalf of the
Noteholders, the Certificateholders and the Insurer, shall establish and
maintain in its own name an Eligible Deposit Account (the "Collection Account"),
bearing a designation clearly indicating that the funds deposited therein are
held for the benefit of the Trust Collateral Agent on behalf of the Noteholders,
the Certificateholders and the Insurer. The Collection Account shall initially
be established with the Trust Collateral Agent.
(ii) The Trust Collateral Agent, on behalf of the Noteholders,
shall establish and maintain in its own name an Eligible Deposit Account (the
"Note Distribution Account"), bearing a designation clearly indicating that the
funds deposited therein are held for the benefit of the Trust Collateral Agent
on behalf of the Noteholders and the Insurer. The Note Distribution Account
shall initially be established with the Trust Collateral Agent.
(iii) The Trust Collateral Agent, on behalf of the Noteholders
and the Insurer, shall establish and maintain in its own name an Eligible
Deposit Account (the "Pre-Funding Account"), bearing a designation clearly
indicating that the funds deposited therein are held for the benefit of the
Trust Collateral Agent on behalf of the Noteholders and the Insurer. The
Pre-Funding Account shall initially be established with the Trust Collateral
Agent.
(iv) The Trust Collateral Agent, on behalf of the Noteholders,
the Certificateholders and the Insurer, shall establish and maintain in its own
name an Eligible Deposit Account (the "Distribution Account"), bearing a
designation clearly indicating that the funds deposited therein are held for the
benefit of the Trust Collateral Agent on behalf of the Noteholders, the
Certificateholders and Insurer. The Distribution Account shall initially be
established with the Trust Collateral Agent.
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(b) The Trust Collateral Agent shall deposit the following
amounts into the Collection Account upon receipt: (i) all amounts withdrawn by a
Sub-Servicer from the Sub-Servicer Account and all amounts received by the
Servicer, the Seller, NAFI or any subservicer and transferred to the Trustee
pursuant to Section 4.6(b); (ii) the Purchase Amount received in respect of any
Purchased Receivables pursuant to Sections 2.4, 3.2 and 4.1 hereof; (iii) all
income and gain from investments of funds in the Collection Account; and (iv)
all Liquidation Proceeds (net of Liquidation Expenses retained by the Servicer
or Sub-Servicer) and other amounts with respect to the Trust Property, if any,
received from the Seller, the Servicer or any Sub-Servicer.
(c) No later than each Distribution Date, the Trust Collateral
Agent shall, at the written direction of the Servicer, withdraw from the
Collection Account and deposit in the Distribution Account the amount on deposit
in the Collection Account as of the close of business on the related
Determination Date (other than any pay-ahead amounts, as provided in Section
5.4) and any amount deposited to the Collection Account in respect of
Receivables on or prior to the related Reporting Date and subsequent to the
preceding Reporting Date, less the sum of (i) the Supplemental Servicing Fee
collected with respect to the Receivables on deposit in the Collection Account
as of such Determination Date, (ii) any income and gain on investments of
deposits in the Collection Account as of such Determination Date, (iii) any
collection or other amounts deposited to the Collection Account in respect of
Purchased Receivables other than the Purchase Amounts. In addition, on each
Distribution Date, the Trust Collateral Agent shall, in accordance with the
written direction of the Servicer, withdraw from the Collection Account and
shall pay (i) to the Seller any income and gain on investments then on deposit
in the Collection Account and all late payment fees then on deposit in the
Collection Account and (ii) to pay to the Seller with respect to each Receivable
or property acquired in respect thereof that has been retransferred to the
Seller pursuant to Sections 2.4, 3.2, 4.1 or 11.1, all amounts received thereon
and not distributed as of, or received after, the date on which the related
Purchase Amount (or, in the case of a retransfer pursuant to Section 11.1, the
purchase amount required therein) is determined. In the event the Servicer, any
Sub-Servicer or the Trust Collateral Agent shall deposit in the Collection
Account any amount in error and such amount is not required to be deposited
therein, the Trust Collateral Agent may withdraw at any time, on its own behalf
if the erroneous deposit was made by the Trust Collateral Agent and on behalf of
the Servicer or Sub-Servicer if the erroneous deposit was made by the Servicer
or Sub-Servicer promptly after receipt of an Officer's Certificate setting forth
the reason for such withdrawal of such amount from the Collection Account, any
provision herein to the contrary notwithstanding.
(d) Funds on deposit in the Collection Account, the
Pre-Funding Account, the Note Distribution Account and the Pre-Funding Period
Reserve Account (collectively, the "Trust Accounts") shall be invested by the
Trust Collateral Agent (or any custodian with respect to funds on deposit in any
such account) in Eligible Investments selected in writing by the Servicer
(pursuant to standing instructions or otherwise) which, absent any instruction
shall be the investments specified in clause (d) of the definition of Eligible
Investments set forth herein. Other than as permitted by the Rating Agencies and
the Insurer, funds on deposit in any Trust Account other than the Pre-Funding
Period Reserve Account shall be invested in Eligible Investments that will
mature so that such funds will be available at the close of business on the
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Business Day immediately preceding the following Distribution Date. Funds
deposited in the Pre-Funding Account shall be invested by the Trust Collateral
Agent pursuant to written instructions from the Seller in Eligible Investments
that mature no later than the Business Day next preceding the earlier of the
date on which such funds are expected to be needed and the Distribution Date
next succeeding the date of such investment (or on such date or such
Distribution Date, as the case may be, if such Eligible Investment is an
obligation of the institution maintaining the Pre-Funding Account), and no such
investment shall be sold prior to its maturity. Funds deposited in a Trust
Account on the day immediately preceding a Distribution Date upon the maturity
of any Eligible Investments are not required to be invested overnight. All
Eligible Investments will be held to maturity.
(e) All investment earnings of moneys deposited in the Trust
Accounts shall be deposited (or caused to be deposited) by the Trust Collateral
Agent in the Collection Account no later than the close of business on the
Business Day immediately preceding the related Distribution Date, and any loss
resulting from such investments shall be charged to the Collection Account. The
Servicer shall not direct the Trust Collateral Agent to make any investment of
any funds held in any of the Trust Accounts unless the security interest granted
and perfected in such account will continue to be perfected in such investment,
in either case without any further action by any Person, and, in connection with
any direction to the Trust Collateral Agent to make any such investment, if
necessary, the Servicer shall deliver to the Trust Collateral Agent an Opinion
of Counsel to such effect upon which the Trust Collateral Agent may conclusively
rely.
(f) The Trust Collateral Agent shall not in any way be held
liable by reason of any insufficiency in any of the Trust Accounts resulting
from any loss on any Eligible Investment included therein except for losses
attributable to the Trust Collateral Agent's negligence or bad faith or its
failure to make payments on such Eligible Investments issued by the Trust
Collateral Agent, in its commercial capacity as principal obligor and not as
trustee, in accordance with their terms.
(g) If (i) the Servicer shall have failed to give investment
directions for any funds on deposit in the Trust Accounts to the Trust
Collateral Agent by 2:00 p.m. Eastern Time (or such other time as may be agreed
by the Issuer and Trust Collateral Agent) on any Business Day; or (ii) a Default
or Event of Default shall have occurred and be continuing with respect to the
Notes but the Notes shall not have been declared due and payable, or, if such
Notes shall have been declared due and payable following an Event of Default,
amounts collected or receivable from the Trust Property are being applied as if
there had not been such a declaration and a Responsible Officer of the Trust
Collateral Agent shall have actual knowledge; then the Trust Collateral Agent
shall, to the fullest extent practicable, invest and reinvest funds in the Trust
Accounts in one or more Eligible Investments pursuant to paragraph (b) above.
(h) (i) The Trust Collateral Agent shall possess all right,
title and interest in all funds on deposit from time to time in the Trust
Accounts and in all proceeds thereof (excluding all Investment Earnings on the
Collection Account) and all such funds, investments, proceeds and income shall
be part of the Owner Trust Property. Except as
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otherwise provided herein, the Trust Accounts shall be under the sole dominion
and control of the Trust Collateral Agent for the benefit of the Noteholders and
the Insurer. If, at any time, any of the Trust Accounts ceases to be an Eligible
Deposit Account, the Trust Collateral Agent (or the Servicer on its behalf)
shall within five Business Days (or such longer period as to which each Rating
Agency and the Insurer may consent) establish a new Trust Account as an Eligible
Deposit Account and shall transfer any cash and/or any investments to such new
Trust Account. In connection with the foregoing, the Servicer agrees that, in
the event that any of the Trust Accounts are not accounts with the Trust
Collateral Agent, the Servicer shall notify the Trust Collateral Agent in
writing promptly upon any of such Trust Accounts ceasing to be an Eligible
Deposit Account.
(ii) With respect to the Trust Account Property:
(A) any Trust Account Property that is held in deposit
accounts shall be held solely in the Eligible Deposit Accounts; and,
except as otherwise provided herein, each such Eligible Deposit Account
shall be subject to the exclusive custody and control of the Trust
Collateral Agent, and the Trust Collateral Agent shall have sole
signature authority with respect thereto;
(B) any Trust Account Property that constitutes Physical
Property shall be delivered to the Trust Collateral Agent in accordance
with paragraph (a) of the definition of "Delivery" and shall be held,
pending maturity or disposition, solely by the Trust Collateral Agent
or a financial intermediary (as such term is defined in Section
8-313(4) of the UCC) acting solely for the Trust Collateral Agent;
(C) any Trust Account Property that is a book-entry security
held through the Federal Reserve System pursuant to Federal book-entry
regulations shall be delivered in accordance with paragraph (b) of the
definition of "Delivery" and shall be maintained by the Trust
Collateral Agent, pending maturity or disposition, through continued
book-entry registration of such Trust Account Property as described in
such paragraph; and
(D) any Trust Account Property that is an "uncertificated
security" under Article 8 of the UCC and that is not governed by clause
(C) above shall be delivered to the Trust Collateral Agent in
accordance with paragraph (c) of the definition of "Delivery" and shall
be maintained by the Trust Collateral Agent, pending maturity or
disposition, through continued registration of the Trust Collateral
Agent's (or its nominee's) ownership of such security.
SECTION 5.2. Pre-Funding Period Reserve Account.
(a) The Servicer shall cause the Trust Collateral Agent to
establish and maintain an Eligible Deposit Account (the "Pre-Funding Period
Reserve Account") with the Trust Collateral Agent, bearing a designation clearly
indicating that the funds deposited therein are held in trust for the benefit of
the Noteholders and the Insurer.
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On or prior to the Closing Date, the Seller shall deposit an
amount equal to the Pre-Funding Period Reserve Account Initial Deposit into the
Pre-Funding Period Reserve Account.
(b) (i) On the Distribution Dates occurring in August,
September and October of 1997 the Trust Collateral Agent shall, in accordance
with the Servicer's Certificate, withdraw from the Pre-Funding Period Reserve
Account the Monthly Pre-Funding Period Reserve Amount for such Distribution Date
and deposit such amount in the Collection Account as further provided in Section
5.7.
(ii) On the Distribution Dates occurring on or prior to the
Distribution Date next succeeding termination of the Pre-Funding Period,
Servicer shall instruct the Trust Collateral Agent in writing to withdraw from
the Pre-Funding Period Reserve Account and pay to the Seller on such
Distribution Date an amount equal to the amount of funds on deposit in the
Pre-Funding Period Reserve Account (after giving effect to any required transfer
pursuant to the preceding clause (i) on such Distribution Date) in excess of the
Required Reserve Amount for such Distribution Date. Any amounts remaining in the
Pre-Funding Period Reserve Account on the Distribution Date which immediately
follows the end of the Pre-Funding Period after taking into account the transfer
pursuant to Section 5.7(a)(i) shall be remitted by the Trust Collateral Agent to
the Seller. Upon any such distributions to the Seller, the Noteholders and the
Insurer will have no further rights in, or claims to, such amounts.
SECTION 5.3. Certain Reimbursements to the Servicer. The
Servicer will be entitled to be reimbursed from amounts on deposit in the
Collection Account with respect to a Due Period for amounts previously deposited
in the Collection Account but later determined by the Servicer to have resulted
from mistaken or postings or checks returned for insufficient funds. The amount
to be reimbursed hereunder shall be paid to the Servicer on the related
Distribution Date pursuant to Section 5.7(b)(i) upon certification by the
Servicer of such amounts and the provision of such information to the Trust
Collateral Agent and the Insurer as may be necessary in the opinion of the
Insurer to verify the accuracy of such certification. In the event that the
Insurer has not received evidence satisfactory to it of the Servicer's
entitlement to reimbursement pursuant to this Section, the Insurer shall (unless
an Insurer Default shall have occurred and be continuing) give the Trust
Collateral Agent written notice to such effect, following receipt of which the
Trust Collateral Agent shall not make a distribution to the Servicer in respect
of such amount pursuant to Section 5.7, or if the Servicer prior thereto has
been reimbursed pursuant to Section 5.7, the Trust Collateral Agent shall
withhold such amounts from amounts otherwise distributable to the Servicer on
the next succeeding Distribution Date.
SECTION 5.4. Application of Collections. For all purposes of
this Agreement the allocation of a payment on a Receivable between principal and
interest shall be made based upon the amortization method provided in the
related Contract. For purposes of allocating a pay-ahead payment on a Receivable
between principal and interest, the pay-ahead shall be deemed to have been
received on the date it was actually due. For all purposes of this Agreement, no
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amount shall be treated as collected under a Receivable until such amount has
been deposited into the Collection Account.
SECTION 5.5. Withdrawals from Series 1997-1 Spread Account.
(a) In the event that the Servicer's Certificate with respect
to any Determination Date shall state that the Available Amount with respect to
such Distribution Date is less than the sum of the amounts payable on the
related Distribution Date pursuant to clauses (i) through (iv) (other than any
Note Prepayment Amount) of Section 5.7(b) (such deficiency being a "Deficiency
Claim Amount"), which notice shall also state if there are not sufficient
amounts in the Spread Account to cover such deficiency, then on the Business Day
immediately preceding the related Draw Date, the Trust Collateral Agent shall
deliver to the Collateral Agent, the Owner Trustee, the Insurer and the
Servicer, by hand delivery, telex or facsimile transmission, a written notice (a
"Deficiency Notice") specifying the Deficiency Claim Amount for such
Distribution Date and the Note Policy Claim Amount, if any. Such Deficiency
Notice shall direct the Collateral Agent to remit such Deficiency Claim Amount
(to the extent of the funds available to be distributed pursuant to the Spread
Account Agreement) to the Trust Collateral Agent for deposit in the Collection
Account on the related Distribution Date.
(b) Any Deficiency Notice shall be delivered by 10:00 am., New
York City time, on the Business Day immediately preceding the Draw Date
immediately preceding the related Distribution Date. The amounts distributed by
the Collateral Agent to the Trust Collateral Agent pursuant to a Deficiency
Notice shall be deposited by the Trust Collateral Agent into the Collection
Account pursuant to Section 5.6.
SECTION 5.6. Additional Deposits.
(a) NAFI and the Seller, as applicable, shall deposit or cause
to be deposited in the Collection Account on the Reporting Date following the
date on which such obligations are due the aggregate Purchase Amount with
respect to Purchased Receivables. On or before each Draw Date, the Trust
Collateral Agent shall remit to the Collection Account any amounts delivered to
the Trust Collateral Agent by the Collateral Agent.
(b) The proceeds of any purchase or sale of the assets of the
Trust described in Section 11.1 hereof shall be deposited in the Collection
Account.
SECTION 5.7. Distributions.
(a) On each Distribution Date, the Trust Collateral Agent
shall (based solely on the information contained in the Servicer's report
delivered pursuant to Section 4.11 on the related Reporting Date unless the
Insurer shall have notified the Trust Collateral Agent of any errors or
deficiencies with respect thereto) cause to be made the following transfers and
distributions in the amounts set forth in such report for such Distribution
Date:
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(i) During the Pre-Funding Period, from the Pre-Funding Period
Reserve Account to the Note Distribution Account, in immediately
available funds, the Monthly Pre-Funding Period Reserve Amount for such
Distribution Date; and
(ii) If such Distribution Date is the Mandatory Redemption
Date, from the Pre-Funding Account to the Note Distribution Account, in
immediately available funds, the Pre-Funded Amount after giving effect
to the purchase of Subsequent Receivables, if any, on the Mandatory
Redemption Date.
(b) On each Distribution Date, the Trust Collateral Agent
shall, to the extent of the Available Amount together with (i) funds withdrawn
from the Spread Account, if any, (ii) the Policy Claim Amount, if any, and (iii)
any amount deposited to the Distribution Account pursuant to Section 5.11 (such
amounts so deposited to be applied only as directed by the Insurer) make the
following payments (in case of the withdrawals from the Spread Account, for
payments of the Servicing Fee, the Noteholders Distributable Amount and any
amounts owing to the Insurer pursuant to clause (iv) below, and in the case of
the Policy Claim Amount, for Scheduled Payments (as defined in the Policy) only)
from the Distribution Account in the following order of priority:
(i) to the Servicer, the Servicing Fee for the related Due
Period, Period, and any unpaid Servicing Fees from prior Due Periods to
the extent not previously paid;
(ii) to each of the Trust Collateral Agent, the Indenture
Trustee, the Owner Trustee, the Collateral Agent and the Custodian,
their respective accrued and unpaid fees to the extent not paid by the
Servicer;
(iii) to the Note Distribution Account, the Noteholders'
Distributable Amount;
(iv) to the Insurer (or any designee thereof), to the extent
of any amounts owing to the Insurer under the Insurance Agreement, the
Indenture or this Agreement and not paid;
(v) to the Collateral Agent for deposit to the Spread Account,
an amount, if necessary, required to increase the amount therein to the
Requisite Amount (after taking into account all withdrawals from the
Spread Account on such Distribution Date);
(vi) to the Pre-Funding Period Reserve Account, the amount by
which the Required Reserve Amount exceeds the amount of funds on
deposit therein after giving effect to any withdrawals from the
Pre-Funding Period Reserve Account on such Distribution Date;
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(vii) to the Indenture Trustee and the Owner Trustee for any
unreimbursed expenses and to pay any indemnities owed by the Seller to
the Indenture Trustee under the Indenture or to the Owner Trustee under
the Trust Agreement;
(viii) to reimburse the Servicer for any expense of an Opinion
of Counsel incurred in connection with an amendment to the Indenture,
and any expenses incurred by the Servicer in connection with a
realization upon a Defaulted Receivable;
(ix) to reimburse the Backup Servicer for expenses incurred by
the Backup Servicer and to reimburse the Servicer for expenses incurred
by and reimbursable, or any indemnities payable by the Seller, to the
Servicer pursuant to this Agreement;
(x) to reimburse the Seller for expenses incurred by and
reimbursable to the Seller pursuant to the Indenture and this
Agreement; and
(xi) to the holder(s) of the Trust Certificates, the balance
of any funds remaining in the Distribution Account after application
pursuant to the preceding clauses (i) through (x).
provided, however, that, (A) following an acceleration of the Notes or, (B) if
an Insurer Default shall have occurred and be continuing and an Event of Default
pursuant to Section 5.1(i), 5.1(ii), 5.1(iv), 5.1(v) or 5.1(vi) of the Indenture
shall have occurred and be continuing, in each case, to the extent actually
known by a Trust Officer of the Trust Collateral Agent, or (C) the receipt of
Insolvency Proceeds pursuant to Section 11.1(b), amounts deposited in the Note
Distribution Account (including any such Insolvency Proceeds) and the
Distribution Account shall be paid to the Noteholders and the Certificateholders
pursuant to Section 5.6 of the Indenture.
(c) In the event that the Collection Account is maintained
with an institution other than the Trust Collateral Agent, the Servicer shall
instruct and cause such institution to make all deposits and distributions
pursuant to Section 5.7(b) on the related Distribution Date.
SECTION 5.8. Note Distribution Account.
(a) On each Distribution Date, the Trust Collateral Agent
shall distribute all amounts on deposit in the Note Distribution Account, as
such amounts on deposit in the Note Distribution Account are specified on the
Monthly Servicer's Certificate, to Noteholders in respect of the Notes to the
extent of amounts due and unpaid on the Notes for principal and interest in the
following amounts and in the following order of priority:
(i) accrued and unpaid interest on the Notes; provided that if
there are not sufficient funds in the Note Distribution Account to pay
the entire amount of accrued and unpaid interest then due on the Notes,
the amount in the Note Distribution Account shall be applied to the
payment of such interest on the Notes pro rata on the basis of the
amount of accrued and unpaid interest due on the Notes; and
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(ii) to the Holders of the Notes, the Noteholders' Principal
Distributable Amount until the outstanding principal balance of the
Notes is reduced to zero.
(b) On each Distribution Date, the Trust Collateral Agent
shall send to each Noteholder the statement provided to the Trust Collateral
Agent by the Servicer pursuant to Section 5.10 hereof on such Distribution Date.
(c) In the event that any withholding tax is imposed on the
Trust's payment (or allocations of income) to a Noteholder, such tax shall
reduce the amount otherwise distributable to the Noteholder in accordance with
this Section. The parties hereto hereby agree to provide to the Trust Collateral
Agent the information any such party may have, if any, with respect to any such
withholding tax. The Trust Collateral Agent is hereby authorized and directed to
retain from amounts otherwise distributable to the Noteholders sufficient funds
for the payment of any tax that is legally owed by the Trust (but such
authorization shall not prevent the Trust Collateral Agent from contesting any
such tax in appropriate proceedings, and withholding payment of such tax, if
permitted by law, pending the outcome of such proceedings). The amount of any
withholding tax imposed with respect to a Noteholder shall be treated as cash
distributed to such Noteholder at the time it is withheld by the Trust and
remitted to the appropriate taxing authority. If there is a possibility that
withholding tax is payable with respect to a distribution (such as a
distribution to a non-U.S. Noteholder), the Trust Collateral Agent may in its
sole discretion withhold such amounts in accordance with this clause (c). In the
event that a Noteholder wishes to apply for a refund of any such withholding
tax, the Trust Collateral Agent shall reasonably cooperate with such Noteholder
in making such claim so long as such Noteholder agrees to reimburse the Trust
Collateral Agent for any out-of-pocket expenses incurred.
(d) Distributions required to be made to Noteholders on any
Distribution Date shall be made to each Noteholder of record on the preceding
Record Date either by wire transfer, in immediately available funds, to the
account of such Holder at a bank or other entity having appropriate facilities
therefor, if such Noteholder shall have provided to the Note Registrar
appropriate written instructions at least five Business Days prior to such
Distribution Date and such Holder's Notes in the aggregate evidence a
denomination of not less than $1,000,000 or, if not, by check mailed to such
Noteholder at the address of such holder appearing in the Note Register;
provided, however, that, unless Definitive Notes have been issued pursuant to
Section 3.13 of the Trust Agreement, with respect to Notes registered on the
Record Date in the name of the nominee of the Clearing Agency (initially, such
nominee to be Cede & Co.), distributions will be made by wire transfer in
immediately available funds to the account designated by such nominee.
Notwithstanding the foregoing, the final distribution in respect of any Note
(whether on the Final Scheduled Distribution Date or otherwise) will be payable
only upon presentation and surrender of such Note at the office or agency
maintained for that purpose by the Note Registrar pursuant to Section 2.4 of the
Indenture.
SECTION 5.9. Pre-Funding Account.
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(a) On the Closing Date, the Trust Collateral Agent will
deposit, on behalf of the Seller, in the Pre-Funding Account $6,689,091.18 from
the proceeds of the sale of the Notes. On each Subsequent Transfer Date, the
Servicer shall instruct the Trust Collateral Agent to withdraw from the
Pre-Funding Account (i) an amount equal to 91% of the Principal Balance of the
Subsequent Receivables transferred to the Issuer on such Subsequent Transfer
Date and to distribute such amount to or upon the order of the Seller upon
satisfaction of the conditions set forth in this Agreement with respect to such
transfer. The Trust Collateral Agent shall also deposit into the Pre-Funding
Account any income or gain earned from the investment of amounts on deposit in
the Pre-Funding Account as received. On each Distribution Date, any income and
gain earned from the investment of amounts on deposit in the Pre-Funding Account
since the previous Distribution Date (or the Closing Date, in the case of the
first Distribution Date) shall be deposited into the Note Distribution Account.
(b) If the Pre-Funded Amount has not been reduced to zero on
the date on which the Pre-Funding Period ends after giving effect to any
reductions in the Pre-Funded Amount on such date, the Servicer shall instruct
the Trust Collateral Agent to withdraw from the Pre-Funding Account on the
Mandatory Redemption Date the Pre-Funded Amount (exclusive of any Pre-Funding
Earnings) and deposit an amount equal to the Note Prepayment Amount in the Note
Distribution Account in accordance with the priority of payments under Section
5.7(b).
SECTION 5.10. Statements to Noteholders. Concurrently with
each distribution charged to the Note Distribution Account, the Trust Collateral
Agent shall forward by mail to each Noteholder, the Seller, the Servicer, the
Insurer and each Rating Agency, a written statement prepared by the Servicer
substantially in the form attached hereto as Exhibit 5.10.
SECTION 5.11. Optional Deposits by the Insurer. The Insurer
shall at any time, and from time to time, with respect to a Distribution Date,
have the option (but shall not be required, except in accordance with the terms
of a Policy) to deliver amounts to the Trust Collateral Agent for deposit into
the Collection Account for any of the following purposes: (i) to provide funds
in respect of the payment of fees or expenses of any provider of services to the
Trust with respect to such Distribution Date, or (ii) to include such amount to
the extent that without such amount a draw would be required to be made on the
Note Policy.
ARTICLE VI
THE NOTE POLICY
SECTION 6.1. Claims Under Note Policy.
(a) In the event that the Trust Collateral Agent has delivered
a Deficiency Notice with respect to any Reporting Date pursuant to Section 5.5
hereof, the Trust Collateral Agent shall on the related Draw Date determine the
Note Policy Claim Amount for the related Distribution Date. If the Note Policy
Claim Amount specified on the Deficiency Notice for such Distribution Date is
greater than zero, the Trust Collateral Agent shall furnish to the Insurer no
later than 12:00 noon New York City time on the related Draw Date, a completed
Notice of Claim (as defined in (b) below) in the amount of the Note Policy Claim
Amount. Amounts paid
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by the Insurer pursuant to a claim submitted under this Section 6.1. shall be
deposited by the Trust Collateral Agent into the Note Distribution Account for
payment pursuant to paragraph (b) below to Noteholders on the related
Distribution Date.
(b) Any notice delivered by the Trust Collateral Agent to the
Insurer pursuant to subsection 6.1(a) shall specify the Note Policy Claim Amount
claimed under the Note Policy and shall constitute a "Notice of Claim" under the
Note Policy. In accordance with the provisions of the Note Policy, the Insurer
is required to pay to the Trust Collateral Agent the Note Policy Claim Amount
properly claimed thereunder by 12:00 noon, New York City time, on the later of
(i) the third Business Day (as defined in the Policy) following receipt on a
Business Day of the Notice of Claim, and (ii) the applicable Distribution Date.
Any payment made by the Insurer under the Note Policy shall be applied solely to
the payment of the Notes, and for no other purpose.
(c) The Trust Collateral Agent shall (i) receive as
attorney-in-fact of each Noteholder any Note Policy Claim Amount from the
Insurer and (ii) deposit the same in the Note Distribution Account for
distribution to Noteholders. Any and all Note Policy Claim Amounts disbursed by
the Trust Collateral Agent from claims made under the Note Policy shall not be
considered payment by the Trust or from the Spread Account with respect to such
Notes, and shall not discharge the obligations of the Trust with respect
thereto. The Insurer shall, to the extent it makes any payment with respect to
the Notes, become subrogated to the rights of the recipients of such payment, to
the extent of such payments. Subject to and conditioned upon any payment with
respect to the Notes by or on behalf of the Insurer, the Trust Collateral Agent
shall assign to the Insurer all rights to the payment of interest or principal
with respect to the Notes which are then due for payment to the extent of all
payments made by the Insurer and the Insurer may exercise any option, vote,
right, power or the like with respect to the Notes to the extent that it has
made payment pursuant to the Policy. The Trust Collateral Agent agrees that the
Insurer shall be subrogated to all of the rights of payment of the Noteholders
or in relation thereto to the extent that any such payment was made to such
Noteholders with payments made under the Policy. To evidence such subrogation,
the Trust Collateral Agent shall note the Insurer's rights as subrogee upon the
Note Register upon receipt from the Insurer of proof of payment by the Insurer
of any Scheduled Payments (as defined in the Policy).
(d) The Trust Collateral Agent shall keep a complete and
accurate record of all funds deposited by the Insurer into the Note Distribution
Account and the allocation of such funds to payment of interest on and principal
paid in respect of any Note. The Insurer shall have the right to inspect such
records at reasonable times upon one Business Day's prior notice to the Trust
Collateral Agent.
(e) The Trust Collateral Agent shall be entitled to enforce on
behalf of the Noteholders the obligations of the Insurer under the Note Policy.
Notwithstanding any other provision of this Agreement or any Transaction
Document, the Noteholders are not entitled to make any claims under the Note
Policy or institute proceedings directly against the Insurer.
SECTION 6.2. Preference Claims.
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(a) In the event that the Trust Collateral Agent has received
a certified copy of an order of the appropriate court that any Scheduled Payment
(as defined in the Note Policy) has been avoided in whole or in part as a
preference payment under applicable bankruptcy law, the Trust Collateral Agent
shall so notify the Insurer, shall comply with the provisions of the Note Policy
to obtain payment by the Insurer of such avoided payment, and shall, at the time
it provides notice to the Insurer, notify Holders of the Notes by mail that, in
the event that any Noteholder's payment is so recoverable, such Noteholder will
be entitled to payment pursuant to the terms of the Note Policy. The Trust
Collateral Agent shall furnish to the Insurer its records evidencing the
payments of principal of and interest on Notes, if any, which have been made by
the Trust Collateral Agent and subsequently recovered from Noteholders, and the
dates on which such payments were made. Pursuant to the terms of the Note
Policy, the Insurer will make such payment on behalf of the Noteholder to the
receiver, conservator, debtor-in-possession or trustee in bankruptcy named in
the Order (as defined in the Note Policy) and not to the Trust Collateral Agent
or any Noteholder directly (unless a Noteholder has previously paid such payment
to the receiver, conservator, debtor-in-possession or trustee in bankruptcy, in
which case the Insurer will make such payment to the Trust Collateral Agent for
distribution to such Noteholder upon proof of such payment reasonably
satisfactory to the Insurer).
(b) The Trust Collateral Agent shall promptly notify the
Insurer of any proceeding or the institution of any action (of which a
Responsible Officer of the Trust Collateral Agent has actual knowledge) seeking
the avoidance as a preferential transfer under applicable bankruptcy,
insolvency, receivership, rehabilitation or similar law (a "Preference Claim")
of any distribution made with respect to the Notes. Each Holder, by its purchase
of Notes, and the Trust Collateral Agent hereby agree that so long as an Insurer
Default shall not have occurred and be continuing, the Insurer may at any time
during the continuation of any proceeding relating to a Preference Claim direct
all matters relating to such Preference Claim including, without limitation, (i)
the direction of any appeal of any order relating to any Preference Claim and
(ii) the posting of any surety, supersedeas or performance bond pending any such
appeal at the expense of the Insurer, but subject to reimbursement as provided
in the Insurance Agreement. In addition, and without limitation of the
foregoing, as set forth in Section 6.1(c), the Insurer shall be subrogated to,
and each Noteholder and the Trust Collateral Agent hereby delegate and assign,
to the fullest extent permitted by law, the rights of the Trust Collateral Agent
and each Noteholder in the conduct of any proceeding with respect to a
Preference Claim, including, without limitation, all rights of any party to an
adversary proceeding action with respect to any court order issued in connection
with any such Preference Claim.
SECTION 6.3. Surrender of Note Policy. The Trust Collateral
Agent shall surrender the Note Policy to the Insurer for cancellation upon the
expiration of such policy in accordance with the terms thereof.
ARTICLE VII
RESERVED
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ARTICLE VIII
THE SELLER
SECTION 8.1. Representations, Warranties and Covenants of the
Seller. The Seller hereby represents, warrants and covenants to the Trust
Collateral Agent, the Insurer and the Servicer, which representations,
warranties and covenants shall survive as long as any Note shall be outstanding
or this Agreement has not been terminated, that as of the Closing Date and each
Subsequent Transfer Date:
(a) the Seller is a Delaware business trust duly organized,
validly existing, and in good standing under the laws of the State of Delaware
and has all licenses and approvals necessary to carry on its business as now
being conducted and shall appoint and employ agents or attorneys in each
jurisdiction where it shall be necessary to take action under this Agreement and
the other Transaction Documents; the Seller has the full power and authority to
own its property, to carry on its business as presently conducted, and to
execute, deliver and perform this Agreement (including all instruments of
transfer to be delivered pursuant to this Agreement) and the other Transaction
Documents by the Seller and the consummation of the transactions contemplated
hereby and thereby have been duly and validly authorized; this Agreement
evidences the valid, binding and enforceable obligations of the Seller (subject
to applicable bankruptcy and insolvency laws and other similar laws affecting
the enforcement of creditors' rights generally whether enforcement is sought in
a proceeding in equity or at law); and all requisite action has been taken by
the Seller to make this Agreement and the other Transaction Documents valid and
binding upon the Seller (subject as aforesaid in the preceding clause);
(b) the Seller is not required to obtain the consent of any
other party or obtain the consent, license, approval or authorization of, or
make any registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of this Agreement or any other Transaction Documents;
(c) the consummation of the transactions contemplated by this
Agreement and the other Transaction Documents will not result in the breach of
any term or provision of the trust agreement of the Seller or result in the
breach of any term or provision of, or conflict with or constitute a default
(with or without notice, lapse of time or both) under or result in the
acceleration of any obligation under, any agreement, indenture or loan or credit
agreement or other instrument to which the Seller or its property is subject or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such agreement, indenture or loan or credit
agreement or other instruments (aside from the lien created pursuant to this
Agreement), or result in the violation of any law (including, without
limitation, any bulk transfer or similar law), rule, regulation, order, judgment
or decree to which the Seller or its property or the Receivables are subject;
(d) no statement, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the transaction
contemplated hereby contains or will, when furnished, contain any untrue
statement of a material fact or omits or will, when
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furnished, omit to state a material fact necessary to make the statements
contained therein not misleading, in light of the circumstances under which they
were made;
(e) neither the Seller nor any of its subsidiaries or
affiliates is a party to, bound by or in breach or violation of any indenture or
other agreement or instrument, or subject to or in violation of any statute,
order or regulation of any court, regulatory body, administrative agency or
governmental body having jurisdiction over it, which materially and adversely
affects, or may in the future materially and adversely affect, the ability of
the Seller to perform its obligations under this Agreement or any other
Transaction Document;
(f) this Agreement and each Basic Agreement, when duly
executed and delivered, shall effect a valid sale, transfer and assignment of
the Receivables and the remaining Trust Property, enforceable against the Seller
and creditors of and purchasers from the Seller;
(g) there are no proceedings or investigations pending or, to
the Seller's knowledge, threatened against the Seller or NAFI, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (i)
asserting the invalidity of this Agreement or any of the Transaction Documents,
(ii) seeking to prevent the issuance of the Notes or the consummation of any of
the transactions contemplated by this Agreement or any of the Transaction
Documents, (iii) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the Transaction
Documents, (iv) involving the Seller and which might adversely affect the
federal income tax or other federal, state or local tax attributes of the Notes,
or (e) that could have a material adverse effect on the Receivables.
(h) the Seller has obtained or made all necessary consents,
approvals, waivers and notifications of creditors, lessors and other
non-governmental persons, in each case, in connection with the execution and
delivery of this Agreement and the other Transaction Documents, and the
consummation of all the transactions herein and therein contemplated;
(i) the Seller shall not take any action to impair the Trust
Collateral Agent's rights on behalf of the Noteholder and the Insurer in any
Contract;
(j) the Seller has filed all federal, state, county, local and
foreign income, franchise and other tax returns required to be filed by it
through the date hereof, and has paid all taxes reflected as due thereon;
(k) since the date of its organization, the Seller has
maintained its chief executive office in the State of Florida or the State of
Delaware, and there have been no other locations of the Seller's principal
office during the four (4) months preceding the Closing Date;
(l) Seller is solvent and will not become insolvent after
giving effect to the transactions contemplated hereunder; Seller is paying its
debts as they become due; Seller, after giving effect to the contemplated
transactions, will have adequate capital to conduct its business;
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(m) since February 1995, "National Financial Auto Funding
Trust" is the only trade name under which the Seller has operated its business
and, prior to such date, NAFCO Funding Trust was the only trade name under which
the Seller operated its business;
(n) the Seller shall not engage in any business or activity
other than in connection with or relating to the purchase of auto loan
receivables and the issuance of securities secured by, or evidencing beneficial
interests in, such auto loan receivables;
(o) the Seller is not and shall not be involved in the
day-to-day or other management of its parent or any of its affiliates;
(p) the Seller's financial statements shall reflect its
separate legal existence from any of its affiliates;
(q) the Seller shall maintain records and books of account of
the Seller and shall not commingle such records and books of account with the
records and books of account of any Person;
(r) the Seller shall act solely in its own name and through
the duly authorized trustees or agents in the conduct of its business, and shall
conduct its business so as not to mislead others as to the identity of the
entity with which they are concerned;
(s) at all times, except in the case of a temporary vacancy,
which shall promptly be filled, the Seller shall have at least one trust
collateral agent who qualifies as an "Independent Trust Collateral Agent" as
such term is defined in the Trust Agreement as in effect on the date hereof.
The Seller shall indemnify the Trust Collateral Agent, the
Insurer, the Servicer, their respective officers, directors, agents and
employees and each Noteholder, and hold each of them harmless against any and
all damages (including all expenses and legal fees) resulting from a breach of
the representations and warranties set forth in this Section 8.1.
The Insurer shall be deemed to have relied on the foregoing
representations, warranties and covenants in executing and delivering the Note
Policy.
SECTION 8.2. Corporate Existence.
(a) During the term of this Agreement, the Seller will keep in
full force and effect its existence, rights and franchises as a business trust
under the laws of Delaware and will obtain and preserve its qualification to do
business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, any
Subsequent Transfer Agreement, the Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby and thereby and the
performance of its obligations hereunder and thereunder.
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(b) During the term of this Agreement, the Seller shall
observe the applicable legal requirements for the recognition of the Seller as a
legal entity separate and apart from its Affiliates, including as follows:
(i) the Seller shall maintain business records and books of
account separate from those of its Affiliates;
(ii) except as otherwise provided in this Agreement, the
Seller shall not commingle its assets and funds with those of its
Affiliates;
(iii) the Seller shall at all times hold itself out to the
public under the Seller's own name as a legal entity separate and
distinct from its Affiliates; and
(iv) all transactions and dealings between the Seller and its
Affiliates will be conducted on an arm's-length basis.
SECTION 8.3. Liability of Seller; Indemnities. The Seller
shall be liable in accordance herewith only to the extent of the obligations
specifically undertaken under this Agreement by the Seller and the
representations made by the Seller under this Agreement.
(a) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trust, the Insurer, the Trustee, the Trust
Collateral Agent and their respective officers, directors, agents and employees
from and against any taxes that may at any time be asserted against any such
Person with respect to the transactions contemplated in this Agreement and any
of the Transaction Documents (except any income taxes arising out of fees paid
to the Owner Trustee, the Trust Collateral Agent, the Trustee and the Insurer
and except any taxes to which the Owner Trustee, the Trust Collateral Agent or
the Trustee may otherwise be subject to), including any sales, gross receipts,
general corporation, tangible personal property, privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, federal or other income taxes arising out of distributions on the Notes) and
costs and expenses in defending against the same.
(b) The Seller shall indemnify, defend and hold harmless the
Issuer, the Owner Trustee, the Trustee, the Trust Collateral Agent, the Insurer,
their respective officers, directors, agents and employees and the Noteholders
from and against any loss, liability or expense incurred by reason of (i) the
Seller's willful misfeasance, bad faith or negligence in the performance of its
duties under this Agreement, or by reason of reckless disregard of its
obligations and duties under this Agreement and (ii) the Seller's or the
Issuer's violation of Federal or state securities laws in connection with the
offering and sale of the Notes.
(c) The Seller shall indemnify, defend and hold harmless the
Owner Trustee, Trustee and the Trust Collateral Agent and their respective
officers, directors, employees and agents from and against any and all costs,
expenses, losses, claims, damages and liabilities arising out of, or incurred in
connection with the acceptance or performance of the trusts and duties set forth
herein and in the Transaction Documents except to the extent that such cost,
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expense, loss, claim, damage or liability shall be due to the willful
misfeasance, bad faith or negligence (except for errors in judgment) of the
Owner Trustee.
Indemnification under this Section shall survive the
resignation or removal of the Owner Trustee, the Trustee or the Trust Collateral
Agent and the termination of this Agreement or the Indenture or the Trust
Agreement or the Custodian Agreement, as applicable, and shall include
reasonable fees and expenses of counsel and other expenses of litigation. If the
Seller shall have made any indemnity payments pursuant to this Section and the
Person to or on behalf of whom such payments are made thereafter shall collect
any of such amounts from others, such Person shall promptly repay such amounts
to the Seller, without interest.
SECTION 8.4. Merger or Consolidation of, or Assumption of the
Obligations of, Seller. The Seller may not be merged or consolidated with or
into any person or transfer substantially all of its assets to any Person.
SECTION 8.5. Limitation on Liability of Seller and Others. The
Seller and any director or officer or employee or agent of the Seller may rely
in good faith on the written advice of counsel or on any document of any kind,
prima facie properly executed and submitted by any Person respecting any matters
arising under any Transaction Document. The Seller shall not be under any
obligation to appear in, prosecute or defend any legal action that shall not be
incidental to its obligations under this Agreement, and that in its opinion may
involve it in any expense or liability.
SECTION 8.6. Seller May Own Notes. The Seller and any
Affiliate thereof may in its individual or any other capacity become the owner
or pledgee of Notes with the same rights as it would have if it were not the
Seller or an Affiliate thereof, except as expressly provided herein or in any
Transaction Document. Notes so owned by the Seller or such Affiliate shall have
an equal and proportionate benefit under the provisions of the Transaction
Documents, without preference, priority, or distinction as among all of the
Notes; provided, however, that any Notes owned by the Seller or any Affiliate
thereof, during the time such Notes are owned by them, shall be without voting
rights for any purpose set forth in the Documents and will not be entitled to
the benefits of the Note Policy. The Seller shall notify the Owner Trustee, the
Trustee, the Trust Collateral Agent and the Insurer promptly after it or any of
its Affiliates become the owner or pledgee of a Note.
ARTICLE IX
THE SERVICER
SECTION 9.1. Representations, Warranties and Covenants of the
Servicer. The Servicer hereby represents, warrants and covenants to the Trust
Collateral Agent and the Insurer that as of the Closing Date and each Subsequent
Transfer Date:
(a) the Servicer is duly organized, validly existing and in
good standing under the laws of the state of its organization and is qualified
to transact business in and is in good standing under the laws of each state in
which it is necessary for it to be so qualified in order to
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carry on its business as now being conducted and has all licenses necessary to
carry on its business as now being conducted; the Servicer has the full power
and authority to own its property, to carry on its business as presently
conducted, and to execute, deliver and perform each of the Transaction Documents
to which it is a party; the execution, delivery and performance of each of the
Transaction Documents to which it is a party (including all instruments of
transfer to be delivered pursuant to any such Transaction Documents to which it
is a party) by the Servicer and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized; each of
the Transaction Documents to which it is a party evidences the valid, binding
and enforceable obligation of the Servicer (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of creditors'
rights generally and to general principles of equity, regardless of whether
enforcement is sought in a proceeding in equity or at law) and all requisite
partnership action has been taken by the Servicer to make each of the
Transaction Documents to which it is a party valid and binding upon the Servicer
(subject as aforesaid in the preceding clause);
(b) the Servicer is not required to obtain the consent of any
other party or obtain the consent, license, approval or authorization of, or
make any registration or declaration with, any governmental authority, bureau or
agency in connection with the execution, delivery, performance, validity or
enforceability of each of the Transaction Documents to which it is a party;
(c) the consummation of the transactions contemplated by the
Transaction Documents will not result in the breach of any term or provision of
the partnership agreement of the Servicer or result in the breach of any term or
provision of, or conflict with or constitute a default (with or without notice,
lapse of time or both) under or result in the acceleration of any obligation
under, any agreement, indenture or loan or credit agreement or other instrument
to which the Servicer or its property is subject, or result in the creation or
imposition of any Lien upon any of the properties pursuant to the terms of any
such agreement indenture or loan or credit agreement or other instrument (aside
from the lien created pursuant to this Agreement) or result in the violation of
any law, rule, regulation, order, judgment or decree to which the Servicer or
its property or the Receivables are subject;
(d) the Servicer is not a party to, bound by or in breach or
violation of any indenture or other agreement or instrument, or subject to or in
violation of any statute, order or regulation of any court, regulatory body,
administrative agency or governmental body having jurisdiction over it, which
materially and adversely affects, or may in the future materially and adversely
affect, the ability of the Servicer to perform its obligations under this
Agreement or the interest of the Noteholders, the Trust or the Insurer in any
material respect;
(e) there are no actions, suits, proceedings or investigations
pending or, to the Servicer's knowledge, threatened against the Servicer, before
any court, regulatory body, administrative agency or other tribunal or
governmental instrumentality (i) asserting the invalidity of this Agreement or
any of the Transaction Documents, (ii) seeking to prevent the issuance of the
Notes or the consummation of any of the transactions contemplated by the
Transaction Documents, (iii) seeking any determination or ruling that might
materially and
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adversely affect the performance by the Servicer of its obligations under, or
the validity or enforceability of, this Agreement or any of the Transaction
Documents, (iv) involving the Servicer and which might adversely affect the
federal income tax or other federal, state or local tax attributes of the Notes,
or (v) that could have a material adverse effect on the Receivables. To the
Servicer's knowledge, there are no proceedings or investigations pending or
threatened against the Servicer, before any court, regulatory body,
administrative agency or other tribunal or governmental instrumentality having
jurisdiction over the Servicer or its properties relating to the Servicer which
might adversely affect the federal income tax or other federal, state or local
tax attributes of the Notes;
(f) the principal office of the Servicer is located at One
Park Place, 000 XX 00xx Xxxxxx, Xxxxx 000, Xxxx Xxxxx, Xxxxxxx 00000; and
(g) the Subservicing Agreement is enforceable against the
Servicer and has been duly authorized by all necessary corporate action of the
Servicer and has been duly executed and delivered by the Servicer.
(h) It is understood and agreed that the representations and
warranties set forth in this Section 9.1 shall survive delivery of the
respective Receivable Files to the Custodian and the Sub-Servicers, if any, on
behalf of the Trust Collateral Agent and shall survive as long as any Note shall
be outstanding or this Agreement has not been terminated. Upon discovery by the
Seller, the Servicer or a Responsible Officer of the Trust Collateral Agent of a
breach of any of the representations and warranties set forth in this Section
9.1 which materially and adversely affects the interests of the Noteholders or
the Insurer in any Receivable, the party discovering such breach shall give
prompt written notice thereof to the other parties and to the Insurer. In
addition to the foregoing, the Servicer shall indemnify the Seller, the Trust
Collateral Agent, the Insurer, the Trust and the Noteholders against all costs,
expenses, losses, damages, claims and liabilities, including reasonable fees and
expenses of counsel, which may be asserted against or incurred by any of them as
a result of third party claims arising out of the events or facts giving rise to
a breach of the covenants or representations and warranties set forth in Section
9.1.
The Insurer shall be deemed to have relied on the foregoing
representations, warranties and covenants in executing and delivering the Note
Policy.
SECTION 9.2. Liability of Servicer; Indemnities.
(a) The Servicer (in its capacity as such) shall be liable
hereunder only to the extent of the obligations in this Agreement specifically
undertaken by the Servicer and the representations made by the Servicer.
(b) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee, the Insurer,
their respective officers, directors, agents and employees, and the Noteholders
from and against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation arising out of or resulting from the use, ownership or operation by
the Servicer or any Affiliate thereof of any Financed Vehicle.
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(c) The Servicer shall indemnify, defend and hold harmless the
Trustee, the Trust Collateral Agent and the Owner Trustee and their respective
officers, directors, agents and employees from and against any taxes that may at
any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement except to the extent that such
costs, expenses, losses, damages, claims and liabilities arise out of the
negligence or willfully misconduct of such parties.
(d) The Servicer (when the Servicer is NAFI) shall indemnify,
defend and hold harmless the Trust, the Trustee, the Trust Collateral Agent, the
Owner Trustee, the Insurer, their respective officers, directors, agents and
employees and the Noteholders from and against any taxes that may at any time be
asserted against any of such parties with respect to the transactions
contemplated in this Agreement, including, without limitation, any sales, gross
receipts, tangible or intangible personal property, privilege or license taxes
(but not including any federal or other income taxes, including franchise taxes
asserted with respect to, and as of the date of, the sale of the Receivables and
the Other Conveyed Property to the Trust or the issuance and original sale of
the Securities) and costs and expenses in defending against the same.
(e) The Servicer (when the Servicer is not NAFI) shall
indemnify, defend and hold harmless the Trust, the Trustee, the Trust Collateral
Agent, the Owner Trustee, the Insurer, their respective officers, directors,
agents and employees and the Noteholders from and against any taxes with respect
to the sale of Receivables in connection with servicing hereunder that may at
any time be asserted against any of such parties with respect to the
transactions contemplated in this Agreement, including, without limitation, any
sales, gross receipts, tangible or intangible personal property, privilege or
license taxes (but not including any federal or other income taxes, including
franchise taxes asserted with respect to, and as of the date of, the sale of the
Receivables and the Other Conveyed Property to the Trust or the issuance and
original sale of the Securities) and costs and expenses in defending against the
same.
(f) The Servicer shall indemnify, defend and hold harmless the
Trust, the Trustee, the Trust Collateral Agent, the Owner Trustee, the Insurer,
their respective officers, directors, agents and employees and the Noteholders
from and against any and all costs, expenses, losses, claims, damages, and
liabilities to the extent that such cost, expense, loss, claim, damage, or
liability arose out of, or was imposed upon the Trust, the Trustee, the Trust
Collateral Agent, the Insurer or the Noteholders by reason of the breach of this
Agreement by the Servicer, the negligence, misfeasance, or bad faith of the
Servicer in the performance of its duties under this Agreement or by reason of
reckless disregard of its obligations and duties under this Agreement or
otherwise incurred in connection with the transactions contemplated hereby.
(g) NAFI shall indemnify, defend and hold harmless the Trust,
the Trustee, the Trust Collateral Agent, the Owner Trustee, the Insurer, their
respective officers, directors, agents and employees and the Noteholders from
and against any loss, liability or expense incurred by reason of the violation
by Servicer or Seller of federal or state securities laws in connection with the
registration or the sale of the Securities.
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(h) Indemnification under this Article shall survive the
termination of this Agreement and will survive the early resignation or removal
of any of the parties hereto and shall include, without limitation, reasonable
fees and expenses of counsel and expenses of litigation. If the Servicer has
made any indemnity payments pursuant to this Article and the recipient
thereafter collects any of such amounts from others, the recipient shall
promptly repay such amounts collected to the Servicer, without interest.
Notwithstanding any other provision of this Agreement, the obligations of the
Servicer shall not terminate or be deemed released upon the resignation or
termination of NAFI as the Servicer and shall survive any termination of this
Agreement.
SECTION 9.3. Merger or Consolidation of, or Assumption of the
Obligations of the Servicer or the Trust Collateral Agent.
(a) During the term of this Agreement, the Servicer will keep
in full force and effect its existence, rights and franchises as a business
trust under the laws of Delaware and will obtain and preserve its qualification
to do business in each jurisdiction in which such qualification is or shall be
necessary to protect the validity and enforceability of this Agreement, any
Subsequent Transfer Agreement, the Transaction Documents and each other
instrument or agreement necessary or appropriate to the proper administration of
this Agreement and the transactions contemplated hereby and thereby and the
performance of its obligations hereunder and thereunder.
(b) The Servicer may be merged or consolidated with or into
any Person, or transfer substantially all of its assets to any Person, in which
case any Person resulting from any merger or consolidation to which the Servicer
shall be a party, or any Person succeeding to the business of the Servicer,
shall be the successor of the Servicer hereunder, without the execution or
filing of any paper or any further act on the part of any of the parties hereto,
anything herein to the contrary notwithstanding; provided however, that the
successor or surviving person to the Servicer shall be an Eligible Servicer and
each successor to the Servicer by virtue of its acquisition of substantially all
of the Servicer's assets shall be deemed to have made the representations and
warranties set forth in Section 9.01 hereof and shall agree in writing to be
bound by each of the Servicer's obligations hereunder; provided further, that,
(i) no representation or warranty of the Servicer is breached at the time of
merger, (ii) no event has occurred that, after notice or lapse of time or both,
would be an Insurance Agreement Event of Default and (iii) an opinion of counsel
to the effect that all conditions precedent to merger have been satisfied and a
security interest opinion have been provided. The Servicer shall provide notice
of any such merger, consolidation or transfer of substantially all of its assets
to the Insurer, the Trust Collateral Agent and the Rating Agencies.
(c) Any Person (i) into which the Trust Collateral Agent may
be merged or consolidated, (ii) resulting from any merger or consolidation to
which the Trust Collateral Agent shall be a party, (iii) which acquires by
conveyance, transfer or lease substantially all of the assets of the Trust
Collateral Agent, or (iv) succeeding to the business of the Trust Collateral
Agent, in any of the foregoing cases shall execute an agreement of assumption to
perform every obligation of the Trust Collateral Agent under this Agreement and,
whether or not such
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assumption agreement is executed, shall be the successor to the Trust Collateral
Agent under this Agreement without the execution or filing of any paper or any
further act on the part of any of the parties to this Agreement, anything in
this Agreement to the contrary notwithstanding. In the event that the resulting
entity does not meet the eligibility requirements set forth in Section 6.11 of
the Indenture, the Trust Collateral Agent, upon the written request of the
Insurer, shall resign. Nothing contained herein shall be deemed to release the
Trust Collateral Agent from any obligation.
SECTION 9.4. Limitation on Liability of Servicer, Trust
Collateral Agent and Others.
(a) The Servicer will defend and indemnify the Trust
Collateral Agent, the Insurer and their respective officers, directors,
employees and agents and the Noteholders against any and all costs, expenses,
losses, damages, claims and liabilities, including reasonable fees and expenses
of counsel and expenses of litigation, arising out of or resulting from the use
or operation of any Financed Vehicle by the Servicer or any Subservicer. In
addition, the Servicer will defend and indemnify the Trust Collateral Agent, the
Insurer and their respective officers, directors, employees and agents and the
Noteholders against any and all costs, expenses, losses, damages, claims and
liabilities, including reasonable fees and expenses of counsel and expenses of
litigation, arising from a breach of its obligations to service the Contracts in
accordance with this Agreement; provided however, that the Servicer shall not be
liable for any such costs, expenses, losses, damages, claims or liabilities to
the extent that any thereof resulted from the negligence or willful misconduct
of the Trust Collateral Agent, its officers, directors, employees and agents;
and provided further that the Servicer will not be liable for any such amount
that resulted from any act or omission to act by it done in conformity with the
written instruction of the Trust Collateral Agent. If the Servicer or Seller has
made any indemnity payments to the Noteholders or the Trust Collateral Agent,
the Insurer or their respective officers, directors, employees or agents
pursuant to this paragraph, and the Trust Collateral Agent, the Insurer or their
respective officers, directors, employees or agents thereafter collects any of
the amounts which gave rise to such indemnity payments from others or any such
amounts are received by the Trust Collateral Agent or its officers, directors,
employees or agents, the Trust Collateral Agent or its officers, directors,
employees or agents shall repay such amounts collected to the Servicer or Seller
who made such indemnity payment. These indemnities of the Servicer and the
Seller will survive any transfer of the respective rights, duties and
obligations of the Servicer or the Seller hereunder to another Person, the
termination of this Agreement, any Servicer Default, the termination of the
Trust Property or the resignation or replacement of the Trust Collateral Agent
for acts accruing prior to the transfer, termination of the Trust Property or
the resignation or replacement of the Trust Collateral Agent, but will not cover
actions or omissions of any successor Servicer after a Servicer Default. Neither
the Servicer nor any of its directors, officers, employees or agents shall be
under any liability to the Trust Property, the Trust Collateral Agent, any
Noteholder, the Insurer or the Seller for any action taken by the Servicer in
its capacity as such (and not in any other capacity) in good faith or for errors
in judgment except for any action taken or errors committed which caused a
breach of a representation or warranty of the Servicer under Section 9.1. The
Seller, the Servicer and any director, officer, employee or agent of any
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Seller or the Servicer may rely in good faith on any document of any kind prima
facie properly executed and submitted by any Person respecting any matters
arising hereunder.
(b) The Seller, the Servicer and any director, officer,
employee or agent of the Seller or the Servicer shall be indemnified by the
Trust Property and held harmless against any loss, liability or expense incurred
in connection with any legal action relating to this Agreement or the
Certificates, other than any loss, liability or expense for which the Seller or
Servicer provides an indemnity as provided in the preceding paragraph (except as
any such loss, liability or expense shall be otherwise reimbursable pursuant to
this Agreement). Neither the Seller nor the Servicer shall be under any
obligation to appear in, prosecute or defend any legal action which is not in
its reasonable judgment incidental to its respective duties under this Agreement
and which in its reasonable judgment may subject it to any expense or liability;
provided however, that the Servicer may in its discretion undertake any such
action which it may deem necessary or desirable in respect to this Agreement and
the rights and duties of the parties hereto and the interest of the Noteholders
hereunder. In such event, the legal expenses and costs of such action and any
liability resulting therefrom shall be expenses, costs and liabilities of the
Trust Property, and the Servicer shall be entitled to be reimbursed therefor as
provided herein. The rights of the Servicer to indemnity, reimbursement or
limitation on its liability pursuant to this Section 9.4 shall survive the
transfer of the rights, duties and obligations of the Servicer to another Person
or any Servicer Default.
(c) The Servicer shall defend, indemnify and hold harmless the
Trust, the Trust Collateral Agent, the Insurer, their respective officers,
directors, agents and employees, and the Noteholders from and against any taxes
that may at any time be asserted against the Trust, the Trust Collateral Agent
or the Noteholders with respect to the transactions contemplated in this
Agreement, including, without limitation, any sales, gross receipts, general
corporation, tangible personal property, privilege or license taxes (but not
including any taxes asserted with respect to, and as of the date of, the sale of
the Receivables and the other Trust Property to the Trust Collateral Agent or
the issuance and original sale of the Certificates, or asserted with respect to
ownership of the Receivables, or federal or other income taxes arising out of
distributions on the Certificates) and costs and expenses in defending against
the same.
(d) The Servicer shall indemnify, defend and hold harmless the
Trust, the Trust Collateral Agent, the Insurer, their respective officers,
directors, agents and employees and the Noteholders from and against any and all
costs, expenses, losses, claims, damages, and liabilities to the extent that
such cost, expense, loss, claim, damage, or liability arose out of, or was
imposed upon the Trust Collateral Agent, the Trust, the Insurer or the
Noteholders through the breach of this Agreement, the negligence, willful
misfeasance, or bad faith of the Servicer in the performance of its duties under
this Agreement or by reason of reckless disregard of its obligations and duties
under this Agreement.
(e) Notwithstanding anything herein to the contrary, the Trust
Collateral Agent shall not be liable for any obligation of the Servicer
contained in this Agreement, and the Trust Collateral Agent, the Seller, the
Insurer and the Noteholders shall look only to the Servicer to perform such
obligations.
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(f) The parties expressly acknowledge and consent to Xxxxxx
Trust and Savings Bank acting in the possible dual capacity of successor
Servicer and in the capacity as Trust Collateral Agent. Xxxxxx Trust and Savings
Bank may, in such dual or other capacity, discharge its separate functions
fully, without hindrance or regard to conflict of interest principles, duty of
loyalty principles or other breach of fiduciary duties to the extent that any
such conflict or breach arises from the performance by Xxxxxx Trust and Savings
Bank of express duties set forth in the this Agreement in any of such
capacities, all of which defenses, claims or assertions are hereby expressly
waived by the other parties hereto and the Noteholders except in the case of
gross negligence and willful misconduct by Xxxxxx Trust and Savings Bank.
SECTION 9.5. Delegation of Duties. The Servicer may delegate
duties under this Agreement to an Affiliate of NAFI, or, pursuant to Section
4.2, to a Sub-Servicer with the prior written consent of the Insurer (unless an
Insurer Default shall have occurred and be continuing) and the Trust Collateral
Agent; provided, however, that such consent shall not be required for the
initial delegation to OFSA. The Servicer also may at any time perform through
sub-contractors the specific duties of (i) repossession of Financed Vehicles,
(ii) tracking Financed Vehicles' insurance and (iii) pursuing the collection of
deficiency balances on certain Liquidated Receivables, in each case, without the
written consent of the Insurer and may perform other specific duties through
such sub-contractors in accordance with Servicer's customary servicing policies
and procedures, with the prior consent of the Insurer; provided, however, that
no such delegation or sub-contracting duties by the Servicer shall relieve the
Servicer of its responsibility with respect to such duties. So long as no
Insurer Default shall have occurred and be continuing neither NAFI or any party
acting as Servicer hereunder shall appoint any Sub-Servicer hereunder without
the prior written consent of the Insurer and the Trust Collateral Agent.
SECTION 9.6. Servicer and Trust Collateral Agent Not to
Resign.
(a) Subject to the provisions of Section 9.3, the Servicer
shall not resign from the obligations and duties imposed on it by this Agreement
as Servicer except upon a determination that by reason of a change in legal
requirements the performance of its duties under this Agreement would cause it
to be in violation of such legal requirements in a manner which would have a
material adverse effect on the Servicer, and the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or a Note Majority (if an
Insurer Default shall have occurred and be continuing) does not elect to waive
the obligations of the Servicer to perform the duties which render it legally
unable to act or to delegate those duties to another Person. Any such
determination permitting the resignation of the Servicer shall be evidenced by
an Opinion of Counsel to such effect delivered and acceptable to the Trust
Collateral Agent, the Owner Trustee and the Insurer (unless an Insurer Default
shall have occurred and be continuing). No resignation of the Servicer shall
become effective until, so long as no Insurer Default shall have occurred and be
continuing, the Back-up Servicer or an entity acceptable to the Insurer shall
have assumed the responsibilities and obligations of the Servicer or, if an
Insurer Default shall have occurred and be continuing, a successor Servicer that
is an Eligible Servicer shall have assumed the responsibilities and obligations
of the Servicer. Upon
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the resignation of the Servicer, the Servicer shall give prompt written notice
thereof to the Rating Agencies.
(b) Subject to the provisions of Section 9.3, the Trust
Collateral Agent shall not resign from the obligations and duties imposed on it
by this Agreement as Trust Collateral Agent and successor Servicer except (i)
upon a determination that by reason of a change in legal requirements the
performance of its duties under this Agreement would cause it to be in violation
of such legal requirements in a manner which would have a material adverse
effect on the Trust Collateral Agent and the Insurer (so long as an Insurer
Default shall not have occurred and be continuing) or a Note Majority (if an
Insurer Default shall have occurred and be continuing) does not elect to waive
the obligations of the Trust Collateral Agent to perform the duties which render
it legally unable to act or to delegate those duties to another Person or (ii)
the Trust Collateral Agent is no longer in the business of providing servicing
and/or administrative services of the type contemplated herein (any such
determination shall be evidenced by an Officer's Certificate to such effect
delivered to the Insurer and the Trust Collateral Agent) or (iii) subject to
paragraph (c) below, upon 30 days written notice to the Insurer, the Trust
Collateral Agent, the Owner Trustee and the Servicer. Any such determination
permitting the resignation of the Trust Collateral Agent pursuant to clause (i)
above shall be evidenced by an Opinion of Counsel to such effect delivered and
acceptable to the Servicer, the Owner Trustee and the Insurer (unless an Insurer
Default shall have occurred and be continuing). No resignation of the Trust
Collateral Agent shall become effective until, so long as no Insurer Default
shall have occurred and be continuing, an entity acceptable to the Insurer shall
have assumed the responsibilities and obligations of the Trust Collateral Agent
or, if an Insurer Default shall have occurred and be continuing a Person that is
an Eligible Sub-Servicer and an entity that satisfies the eligibility
requirements set forth in Section 6.11 of the Indenture shall have assumed the
responsibilities and obligations of the Trust Collateral Agent; provided,
however, that, subject to paragraph (c) below, in the event a successor servicer
is not appointed within 30 days after the Trust Collateral Agent has given
notice of its resignation and has provided the Opinion of Counsel required by
this Section 9.6, the Trust Collateral Agent may petition a court for the
appointment of a successor Trust Collateral Agent. Upon the resignation of the
Trust Collateral Agent, the Trust Collateral Agent shall give prompt written
notice thereof to the Rating Agencies.
ARTICLE X
DEFAULT
SECTION 10.1. Servicer Termination Event. For purposes of this
Agreement, each of the following shall constitute a "Servicer Termination Event"
(whatever the reason for such Servicer Termination Event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation of any
administrative or governmental body):
(a) Any failure by the Servicer to deliver, or cause to be
delivered by any Sub-Servicer, to the Trust Collateral Agent for distribution to
Noteholders or deposit in the Spread
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Account any proceeds or payment required to be so delivered under the terms of
this Agreement (including deposits of the Purchase Amount) that continues
unremedied for a period of two Business Days (one Business Day with respect to
payment of Purchase Amounts) after written notice is received by the Servicer
from the Trust Collateral Agent or (unless an Insurer Default shall have
occurred and be continuing) the Insurer or after discovery of such failure by a
Responsible Officer of the Servicer (but in no event later than five Business
Days after the Servicer is required to make such delivery or deposit);
(b) Any failure by the Servicer to observe or perform any
other of the covenants or agreements on the part of the Servicer in this
Agreement, which failure (i) materially and adversely affects the rights of
Noteholders (determined without regard to the availability of funds under the
Note Policy) or of the Insurer (unless an Insurer Default shall have occurred
and be continuing), and (ii) continues unremedied for a period of thirty days
after the date on which written notice of such failure, requiring the same to be
remedied, shall have been given to the Servicer by the Trust Collateral Agent,
or to the Servicer and the Trust Collateral Agent by the Insurer (or, if an
Insurer Default has occurred and is continuing, Noteholders evidencing in the
aggregate not less than 25% of the aggregate outstanding Principal Balance of
the Notes); or
(c) The entry of a decree or order for relief by a court or
regulatory authority having jurisdiction in respect of the Servicer in an
involuntary case under the federal bankruptcy laws, as now or hereafter in
effect, or another present or future, federal bankruptcy, insolvency or similar
law, or appointing a receiver, liquidator, assignee, trustee, custodian,
sequestrator or other similar official of the Servicer or of any substantial
part of its property or ordering the winding up or liquidation of the affairs of
the Servicer or the commencement of an involuntary case under the federal
bankruptcy laws, as now or hereinafter in effect, or another present or future
federal or state bankruptcy, insolvency or similar law and such case is not
dismissed within 60 days; or
(d) The commencement by the Servicer of a voluntary case under
the federal bankruptcy laws, as now or hereafter in effect, or any other present
or future, federal or state, bankruptcy, insolvency or similar law, or the
consent by the Servicer to the appointment of or taking possession by a
receiver, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Servicer or of any substantial part of its property or
the making by the Servicer of an assignment for the benefit of creditors or the
failure by the Servicer generally to pay its debts as such debts become due or
the taking of corporate action by the Servicer in furtherance of any of the
foregoing; or
(e) Any representation, warranty or statement of the Servicer
made in this Agreement or any certificate, report or other writing delivered
pursuant hereto shall prove to be incorrect in any material respect as of the
time when the same shall have been made, and the incorrectness of such
representation, warranty or statement has a material adverse effect on the
interests of the Trust, the Insurer or the Noteholders (or of the Seller if NAFI
is the Servicer) in the Receivables (determined without regard to the
availability of funds under the Note Policy) and, within 30 days after written
notice thereof shall have been given to the Servicer by the Trust Collateral
Agent or the Insurer (or, if an Insurer Default shall have occurred and be
continuing, a
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Noteholder), the circumstances or condition in respect of which such
representation, warranty or statement was incorrect shall not have been
eliminated or otherwise cured; or
(f) (x) an Insurance Agreement Event of Default or (y) under
any other Insurance and Indemnity Agreement relating to any Series (as defined
in the Insurance Agreement) an Event of Default thereunder shall have occurred;
(g) The Servicer fails to deliver the report required to be
delivered by the Servicer pursuant to Section 4.12 and such failure remains
unremedied for a period of five days; or
(h) A claim is made under the Note Policy.
SECTION 10.2. Consequences of a Servicer Termination Event. If
a Servicer Termination Event shall occur, then, and in each and every such case,
so long as such Servicer Termination Event shall not have been remedied, the
Trust Collateral Agent may, with the written consent of the Insurer (unless an
Insurer Default has occurred and is continuing), and at the written direction of
the Insurer (or, if an Insurer Default has occurred and is continuing,
Noteholders evidencing in the aggregate not less than 51% of the aggregate
outstanding Principal Balance of the Notes), the Trust Collateral Agent shall,
by notice in writing to the Servicer, the Seller and the Back-up Servicer, (i)
terminate all of the rights and obligations of the Servicer under this Agreement
and in and to any Receivables and the proceeds thereof, subject to compensation,
rights of reimbursement, indemnity and limitation on liability to which the
Servicer is then entitled and the rights of indemnity to which the Trust
Collateral Agent and the Insurer are then entitled pursuant to Section 9.04
hereof, and (ii) subject to 10.03, appoint the Back-up Servicer as the successor
Servicer. Such notice shall specify, to the extent possible, the timing and
method of transition of the servicing of the Receivables from the Servicer to
the Back-up Servicer or another successor Servicer appointed pursuant to Section
10.03. On and after the receipt by the Servicer of such written notice and upon
the effective date of the transfer to the Back-up Servicer or such other
successor Servicer specified in such notice, all authority and power of the
Servicer under this Agreement, whether with respect to the Notes or the
Receivables or otherwise, shall pass to and be vested in the Back-up Servicer or
such other successor Servicer, pursuant to and under this Section; and, without
limitation, such Person is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, an attorney-in-fact or otherwise, any and
all documents and other instruments, and to do or accomplish all other acts or
things necessary or appropriate to effect the purposes of such notice of
termination, whether to complete the transfer and endorsement or assignment of
the Receivables and related documents, or otherwise. The Servicer agrees to
cooperate with such Person in effecting the termination of the Servicer's
responsibilities and rights hereunder, including, without limitation, the
transfer to such party for administration by is of all cash amounts which shall
thereafter be received with respect to the Receivables.
The Trust Collateral Agent shall not be charged with knowledge
of any event referred to in clauses (a) through (f) above unless a Responsible
Officer of the Trust Collateral Agent at the Corporate Trust Office obtains
actual knowledge of such event or receives written
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notice of such event from the Servicer, the Insurer or from a Noteholder. The
Trust Collateral Agent promptly shall send written notice to each Rating Agency
and the Insurer of each Servicer Termination Event of which it is charged with
knowledge in accordance with the preceding sentence.
If the Servicer is terminated pursuant to this Section 10.02,
then the Servicer shall bear all of the costs and expenses of transferring the
duties and obligations of the Servicer to a successor Servicer and except as
otherwise agreed by the Insurer such costs and expenses shall not be
reimbursable from the Trust Property nor payable by the Seller or the Trust
Collateral Agent. To the extent not borne by the Servicer as described above,
such costs and expenses (including attorney's fees and expenses) shall be borne
by the Trust Property in accordance with Section 5.7(b)(ix).
SECTION 10.3. The successor Servicer is authorized and
empowered by this Agreement to execute and deliver, on behalf of the terminated
Servicer, as attorney-in-fact or otherwise, any and all documents and other
instruments and to do or accomplish all other acts or things necessary or
appropriate to effect the purposes of such notice of termination, whether to
complete the transfer and endorsement of the Receivables and the Other Conveyed
Property and related documents to show the Trust as lienholder or secured party
on the related Lien Certificates, or otherwise. The terminated Servicer agrees
to cooperate with the successor Servicer in effecting the termination of the
responsibilities and rights of the terminated Servicer under this Agreement,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
terminated Servicer for deposit, or have been deposited by the terminated
Servicer, in the Collection Account or thereafter received with respect to the
Receivables and the delivery to the successor Servicer of all Receivable Files,
Monthly Records and a computer tape in readable form as of the most recent
Business Day containing all information necessary to enable the successor
Servicer or a successor Servicer to service the Receivables and the Other
Conveyed Property. If requested by the Controlling Party, the successor Servicer
shall terminate the Lockbox Agreement and direct the Obligors to make all
payments under the Receivables directly to the successor Servicer (in which
event the successor Servicer shall process such payments in accordance with
Section 4.2(e)), or to a lockbox established by the successor Servicer at the
direction of the Controlling Party, at the terminated Servicer's expense. The
terminated Servicer shall grant the Trust Collateral Agent, the successor
Servicer and the Controlling Party reasonable access to the terminated
Servicer's premises at the terminated Servicer's expense.
SECTION 10.4. Appointment of Successor.
On and after (i) the time the Servicer receives a notice of
termination pursuant to Section 10.2, (ii) upon non-extension of the servicing
term as referred to in Section 4.14, or (iii) upon the resignation of the
Servicer pursuant to Section 9.5, the Back-up Servicer (unless the Insurer shall
have exercised its option pursuant to Section 10.3(b) to appoint an alternate
successor Servicer) shall be the successor in all respects to the Servicer in
its capacity as servicer under this Agreement and the transactions set forth or
provided for in this Agreement, and shall be subject to all the rights,
responsibilities, restrictions, duties, liabilities and termination
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provisions relating thereto placed on the Servicer by the terms and provisions
of this Agreement except as otherwise stated herein. The Trust Collateral Agent
and such successor shall take such action, consistent with this Agreement, as
shall be necessary to effectuate any such succession. If a successor Servicer is
acting as Servicer hereunder, it shall be subject to term-to-term servicing as
referred to in Section 4.14 and to termination under Section 10.2 upon the
occurrence of any Servicer Termination Event applicable to it as Servicer.
SECTION 10.5. The Insurer, or in the event that an Insurer
Default shall have occurred and be continuing, a Note Majority, may exercise at
any time its right to appoint as successor to the Servicer a Person other than
the Person serving as Trust Collateral Agent at the time, and (without limiting
its obligations under the Note Policy) shall have no liability to the Trust
Collateral Agent, NAFI, the Seller, the Person then serving as successor
servicer, any Noteholders or any other Person if it does so. Notwithstanding the
above, if the Trust Collateral Agent shall be legally unable or unwilling to act
as Servicer, and an Insurer Default shall have occurred and be continuing, a
Note Majority may petition a court of competent jurisdiction to appoint any
Eligible Sub-Servicer as the successor to the Servicer. Pending appointment
pursuant to the preceding sentence, the Trust Collateral Agent shall act as
successor Servicer unless it is legally unable to do so, in which event the
outgoing Servicer shall continue to act as Servicer until a successor has been
appointed and accepted such appointment. Subject to Section 9.6, no provision of
this Agreement shall be construed as relieving the Trust Collateral Agent of its
obligation to succeed as successor Servicer upon the termination of the Servicer
pursuant to Section 10.2, the resignation of the Servicer pursuant to Section
9.6 or the non-extension of the servicing term of the Servicer, as referred to
in Section 4.14. If upon the termination of the Servicer pursuant to Section
10.2 or the resignation of the Servicer pursuant to Section 9.6, the Insurer or
in the event that an Insurer Default shall have occurred and be continuing, a
Note Majority, appoints a third party to serve as Servicer other than the Trust
Collateral Agent, the Trust Collateral Agent shall not be relieved of its duties
as successor Servicer hereunder. If the Back-up Servicer refuses or is unable to
act as successor Servicer hereunder, the Trust Collateral Agent may, if it shall
be unwilling to so act, or shall, if it is unable to so act, appoint, or
petition a court of competent jurisdiction to appoint, any experienced servicer
of motor vehicle installment sales contracts and notes having a net worth of not
less than $10,000,000 as the successor to the Servicer hereunder in the
assumption of all or any part of the responsibilities, duties or liabilities of
the Servicer hereunder. The Trust Collateral Agent shall obtain the prior
written consent of the Insurer (unless an Insurer Default has occurred and is
continuing) before appointing a successor Servicer other than the Back-up
Servicer, and any successor Servicer other than the Back-up Servicer shall be
satisfactory to the Insurer (unless an Insurer Default has occurred and is
continuing). Pending appointment of a successor to the Servicer hereunder, the
Trust Collateral Agent shall act in such capacity as hereinabove provided. In
connection with such appointment and assumption, the Trust Collateral Agent may
make such arrangements for the compensation of such successor out of payments on
Receivables as it and such successor shall agree; provided however, that no such
compensation to such successor Servicer shall be in excess of that permitted the
Servicer hereunder unless (A) the Trust Collateral Agent and the Insurer (or if
an Insurer Default has occurred and is continuing, holders of Notes evidencing a
majority of the aggregate outstanding Principal Amount of the Notes) agree in
writing to a larger Servicing Fee and (B) each Rating Agency delivers a letter
to the Trust Collateral Agent to the effect that
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such larger Servicing Fee will not result in a reduction or the withdrawal of
the rating assigned by such Rating Agency to the Notes; and provided further,
however, that the Servicing Fee to a successor Servicer, including the Trust
Collateral Agent, shall not exceed a monthly fee equal to 1/12th of the product
of (i) the aggregate amount of the Outstanding Principal Balances of all
Receivables outstanding as of the last day of the related Due Period and (ii)
two percent (2%). The Seller, the Trust Collateral Agent, any Subservicer and
such successor shall take such action, consistent with this Agreement, as shall
be necessary to effectuate any such succession.
If the Trust Collateral Agent shall succeed to the Servicer's
duties as Servicer of the Receivables as provided herein, it shall do so in its
individual capacity and not in its capacity as Trust Collateral Agent. In the
event that the Trust Collateral Agent shall not seek to appoint a successor
Servicer within three months of its succession to the Servicer's duties as
servicer, it shall resign as Trust Collateral Agent pursuant to Section 9.6 and
the Seller shall, with the written consent of the Insurer (unless an Insurer
Default shall have occurred and be continuing), appoint, or the Trust Collateral
Agent shall petition a court to appoint, a successor trust collateral agent. To
the extent a successor Servicer is appointed, the Trust Collateral Agent shall
not be liable for the acts or omissions of such successor Servicer.
SECTION 10.6. Notification to Noteholders and Rating Agencies.
Upon any termination of, or appointment of a successor to, the Servicer, the
Trust Collateral Agent shall give prompt written notice thereof to each
Noteholder and Rating Agency.
SECTION 10.7. Waiver of Past Defaults. So long as no Insurer
Default shall have occurred and be continuing, the Insurer (or, if an Insurer
Default shall have occurred and be continuing, the Note Majority) may, on behalf
of all Noteholders, waive any default by the Servicer in the performance of its
obligations hereunder and its consequences. Upon any such waiver of a past
default, such default shall cease to exist, and any Servicer Termination Event
arising therefrom shall be deemed to have been remedied for every purpose of
this Agreement. No such waiver shall extend to any subsequent or other default
or impair any right consequent thereto. Written notice of such waiver shall be
given promptly to each Rating Agency.
SECTION 10.8. Termination of Trust Collateral Agent. If any of
the following events occur and shall be continuing, the Insurer (so long as an
Insurer Default shall not have occurred and be continuing), or, in the event
that an Insurer Default has occurred and is continuing, the Note Majority, upon
notice to the Noteholders, may terminate all of the duties of the Trust
Collateral Agent under this Agreement:
(i) the Trust Collateral Agent shall cease to meet the
eligibility requirements for the Indenture Trustee as set forth in
Section 6.11 of the Indenture and shall fail to resign after written
request therefor by the Insurer, or
(ii) the Trust Collateral Agent shall become incapable of
acting or shall be adjudged a bankrupt or insolvent, or a receiver of
the Trust Collateral Agent or of its property shall be appointed, or
any public officer shall take charge or control of the Trust Collateral
Agent or of its property or affairs for the purpose of rehabilitation,
conservation or liquidation or
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(iii) the Trust Collateral Agent has failed to perform its
duties hereunder.
On or after the receipt by the Trust Collateral Agent of such
written notice, all authority, power, obligations and responsibilities of the
Trust Collateral Agent under this Agreement, whether with respect to the Notes
or the Other Conveyed Property or otherwise, automatically shall pass to, be
vested in and become obligations and responsibilities of such other successor
trust collateral agent appointed by the Controlling Party. Nothing contained
herein shall be deemed to release the Trust Collateral Agent from any
obligation.
The Insurer (or if an Insurer Default shall have occurred and
be continuing, Noteholders holding Notes evidencing in the aggregate a majority
of the outstanding Principal Balance of the Notes) at any time may remove the
Trust Collateral Agent and appoint a successor trust collateral agent by written
instrument or instruments, in triplicate, signed by the Insurer or such Holders,
as the case may be, or their attorneys-in-fact duly authorized, one complete set
of which instruments shall be delivered to the Seller, one complete set to the
Trust Collateral Agent so removed and one complete set to the successor trust
collateral agent so appointed.
SECTION 10.9. Successor to Servicer.
(a) The Trust Collateral Agent, in its capacity as successor
to the Servicer, shall perform such duties and only such duties as are
specifically set forth in this Agreement with respect to the assumption of any
servicing duties, including, without limitation, to supervise, verify, monitor
or administer the performance of the Servicer and no implied covenants or
obligations shall be read into this Agreement against the Trust Collateral
Agent.
(b) In the absence of bad faith or negligence on its part, the
Trust Collateral Agent may conclusively rely as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trust Collateral Agent and conforming to the
requirements of this Agreement; but in the ease of any such certificates or
opinions, which by any provision hereof are specifically required to be
furnished to the Trust Collateral Agent, the Trust Collateral Agent shall be
under a duty to examine the same and to determine whether or not they conform to
the requirements of this servicing agreement.
(c) The Trust Collateral Agent shall have no liability for any
actions taken or omitted by the Servicer.
ARTICLE XI
TERMINATION
SECTION 11.1. Optional Purchase of All Receivables.
(a) On the last day of any Due Period as of which the Pool
Balance shall be less than or equal to 10% of the Original Pool Balance plus the
aggregate principal balance of the Subsequent Receivables, if any, sold to the
Trust, as of their respective Cut-off Dates, the Seller
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each shall have the option to purchase the Owner Trust Property, other than the
Trust Accounts (with the consent of the Insurer if such purchase would result in
a claim on either Policy or would result in any amount owing to the Insurer
under the Insurance Agreement remaining unpaid); provided, however, that the
amount to be paid for such purchase (as set forth in the following sentence)
shall be sufficient to pay the full amount of principal, premium, if any, and
interest then due and payable on the Notes. To exercise such option, the Seller
shall (i) deliver written notice of such purchase to the Trust Collateral Agent
and the Servicer not later than the fifteenth day of the month next preceding
the month in which such purchase will occur, and (ii) deposit pursuant to
Section 5.6 in the Collection Account an amount equal to the aggregate Purchase
Amount for the Receivables (including Liquidated Receivables), plus the
appraised value of any other property held by the Trust, such value to be
determined by an appraiser mutually agreed upon by the Servicer, the Insurer and
the Trust Collateral Agent, and shall succeed to all interests in and to the
Trust. Written notice of the exercise of the option to purchase described in
this Section 11.1(a) shall be given to each Rating Agency by the relevant party
exercising such option
(b) Upon any sale of the assets of the Trust pursuant to
Section 9.1 of the Trust Agreement, the Servicer shall instruct the Trust
Collateral Agent to deposit the proceeds from such sale after all payments and
reserves therefrom (including the expenses of such sale) have been made (the
"Insolvency Proceeds") in the Collection Account.
(c) Notice of any termination of the Trust shall be given by
the Servicer to the Owner Trustee, the Trustee, the Trust Collateral Agent, the
Insurer and the Rating Agencies as soon as practicable after the Servicer has
received notice thereof.
ARTICLE XII
ADMINISTRATIVE DUTIES OF THE SERVICER
SECTION 12.1. Administrative Duties.
(a) Duties with Respect to the Indenture. The Servicer shall
perform all its duties and the duties of the Issuer under the Indenture. In
addition, the Servicer shall consult with the Owner Trustee as the Servicer
deems appropriate regarding the duties of the Issuer under the Indenture. The
Servicer shall monitor the performance of the Issuer and shall advise the Owner
Trustee when action is necessary to comply with the Issuer's duties under the
Indenture. The Servicer shall prepare for execution by the Issuer or shall cause
the preparation by other appropriate Persons of all such documents, reports,
filings, instruments, certificates and opinions as it shall be the duty of the
Issuer to prepare, file or deliver pursuant to the Indenture. In furtherance of
the foregoing, the Servicer shall take all necessary action that is the duty of
the Issuer to take pursuant to the Indenture, including, without limitation,
pursuant to Sections 2.7, 3.5, 3.6, 3.7, 3.9, 3.10, 3.17, 5.1, 5.4, 7.3, 8.3,
9.2, 9.3, 11.1 and 11.15 of the Indenture.
(b) Duties with Respect to the Issuer.
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(i) In addition to the duties of the Servicer set forth in
this Agreement or any of the Transaction Documents, the Servicer shall
perform such calculations and shall prepare for execution by the Issuer
or the Owner Trustee or shall cause the preparation by other
appropriate Persons of all such documents, reports, filings,
instruments, certificates and opinions as it shall be the duty of the
Issuer or the Owner Trustee to prepare, file or deliver pursuant to
this Agreement or any of the Transaction Documents or under state and
federal tax and securities laws, and at the request of the Owner
Trustee shall take all appropriate action that it is the duty of the
Issuer to take pursuant to this Agreement or any of the Transaction
Documents, including, without limitation, pursuant to Sections 2.6 and
2.11 of the Trust Agreement. In accordance with the directions of the
Issuer or the Owner Trustee, the Servicer shall administer, perform or
supervise the performance of such other activities in connection with
the Collateral (including the Transaction Documents) as are not covered
by any of the foregoing provisions and as are expressly requested by
the Issuer or the Owner Trustee and are reasonably within the
capability of the Servicer.
(ii) Notwithstanding anything in this Agreement or any of the
Transaction Documents to the contrary, the Servicer shall be
responsible for promptly notifying the Owner Trustee and the Trust
Collateral Agent in the event that any withholding tax is imposed on
the Issuer's payments (or allocations of income) to an Owner (as
defined in the Trust Agreement) as contemplated by this Agreement. Any
such notice shall be in writing and specify the amount of any
withholding tax required to be withheld by the Owner Trustee or the
Trust Collateral Agent pursuant to such provision.
(iii) Notwithstanding anything in this Agreement or the
Transaction Documents to the contrary, the Servicer shall be
responsible for performance of the duties of the Issuer or the Seller
set forth in Section 5.1(a), (b), (c) and (d) of the Trust Agreement
with respect to, among other things, accounting and reports to Owners
(as defined in the Trust Agreement). (iv) The Servicer shall perform
the duties of the Servicer specified in Section 10.2 of the Trust
Agreement required to be performed in connection with the resignation
or removal of the Owner Trustee, and any other duties expressly
required to be performed by the Servicer under this Agreement or any of
the Transaction Documents.
(v) In carrying out the foregoing duties or any of its other
obligations under this Agreement, the Servicer may enter into
transactions with or otherwise deal with any of its Affiliates;
provided, however, that the terms of any such transactions or dealings
shall be in accordance with any directions received from the Issuer and
shall be, in the Servicer's opinion, no less favorable to the Issuer in
any material respect.
(c) Tax Matters. The Servicer shall prepare and file, on
behalf of the Seller, all tax returns, tax elections, financial statements and
such annual or other reports of the Issuer as are necessary for preparation of
tax reports as provided in Article V of the Trust Agreement, including without
limitation forms 1099 and 1066. All tax returns will be signed by the Seller.
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(d) Non-Ministerial Matters. With respect to matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article XII unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee, Trust Collateral Agent and the Insurer of the proposed action and the
Owner Trustee and, with respect to items (A), (B), (C) and (D) below, the
Insurer shall not have withheld consent or provided an alternative direction.
For the purpose of the preceding sentence, "non-ministerial matters" shall
include:
(A) the amendment of or any supplement to the Indenture;
(B) the initiation of any claim or lawsuit by the Issuer and
the compromise of any action, claim or lawsuit brought by or against
the Issuer (other than in connection with the collection of the
Receivables);
(C) the amendment, change or modification of this Agreement or
any of the Transaction Documents;
(D) the appointment of successor Note Registrars, successor
Paying Agents and successor Trustees pursuant to the Indenture or the
appointment of Successor Servicers or the consent to the assignment by
the Note Registrar, Paying Agent or Trustee of its obligations under
the Indenture; and
(E) the removal of the Trustee or the Trust Collateral Agent.
(e) Exceptions. Notwithstanding anything to the contrary in
this Agreement, except as expressly provided herein or in the other Transaction
Documents, the Servicer, in its capacity hereunder, shall not be obligated to,
and shall not, (1) make any payments to the Noteholders under the Transaction
Documents, (2) sell the Indenture Trust Property pursuant to Section 5.5 of the
Indenture, (3) take any other action that the Issuer directs the Servicer not to
take on its behalf or (4) in connection with its duties hereunder assume any
indemnification obligation of any other Person.
(f) Notwithstanding anything to the contrary in this
Agreement, neither the Trust Collateral Agent nor any successor Servicer shall
be responsible for any obligations or duties of the Servicer under Section 12.1.
SECTION 12.2. Records. The Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for inspection
by the Issuer and the Trust Collateral Agent at any time during normal business
hours.
SECTION 12.3. Additional Information to be Furnished to the
Issuer. The Servicer shall furnish to the Issuer and the Trust Collateral Agent
from time to time such additional information regarding the Collateral as the
Issuer and the Trust Collateral Agent shall reasonably request.
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ARTICLE XIII
MISCELLANEOUS PROVISIONS
SECTION 13.1. Amendment.
(a) This Agreement may be amended from time to time by the
parties hereto, with the consent of the Trustee and the Trust Collateral Agent
(which consent may not be unreasonably withheld), with the prior written consent
of the Insurer (so long as no Insurer Default has occurred and is continuing)
but without the consent of any of the Noteholders, to cure any ambiguity, to
correct or supplement any provisions in this Agreement, to comply with any
changes in the Code, or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with the
provisions of this Agreement or the Insurance Agreement; provided, however, that
such action shall not adversely affect in any material respect the interests of
any Noteholder.
This Agreement may also be amended from time to time by the
parties hereto, with the consent of the Insurer, the consent of the Trustee and
the Trust Collateral Agent and the consent of the Holders of Notes evidencing
not less than a majority of the outstanding principal amount of the Notes (which
consent of such Holders of Notes given pursuant to this Section 13.1 or pursuant
to any other provision of this Agreement shall be conclusive and binding on such
Holder and on all future Holders of such securities and of any Security issued
upon the transfer thereof or in exchange thereof or in lieu thereof whether or
not notation of such consent is made upon the security) for the purpose of
adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement or of modifying in any manner the rights of the
Noteholders; provided, however, that no such amendment shall (a) increase or
reduce in any manner the amount of, or accelerate or delay the timing of,
collections of payments on Receivables or distributions that shall be required
to be made for the benefit of the Noteholders, or (b) reduce the aforesaid
percentage of the outstanding principal amount of the Notes and the Note
Balance, the Holders of which are required to consent to any such amendment,
without the consent of the Holders of all the outstanding Notes.
Promptly after the execution of any such amendment or consent,
the Trust Collateral Agent shall furnish written notification of the substance
of such amendment or consent to each Noteholder and each Rating Agency. In
addition, a copy of the final executed amendment shall be delivered to each
Rating Agency.
It shall not be necessary for the consent of Noteholders
pursuant to this Section to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents (and any other
consents of Noteholders provided for in this Agreement) and of evidencing the
authorization of any action by Noteholders shall be subject to such reasonable
requirements as the Trustee or the Owner Trustee, as applicable, may prescribe,
including the establishment of record dates.
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The Owner Trustee, the Trust Collateral Agent and the Trustee
may, but shall not be obligated to, enter into any amendment which affects the
Issuer's, the Owner Trustee's, the Trust Collateral Agent's or the Trustee's, as
applicable, own rights, duties or immunities under this Agreement or otherwise.
Prior to the execution of any amendment to this Agreement, the
Trustee and the Trust Collateral Agent shall be entitled to receive and rely
conclusively upon an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent to the execution and delivery of such amendment have been satisfied.
(b) Notwithstanding anything to the contrary contained in
subsection 13.1(a) above, the provisions of the Agreement relating to (i) the
Spread Account Agreement, the Series 1997-1 Spread Account, the Requisite
Amount, a Trigger Event or any component definition of a Trigger Event and (ii)
any additional sources of funds which may be added to the Series 1997-1 Spread
Account or uses of funds on deposit in the Series 1997-1 Spread Account may be
amended in any respect by the Seller, the Servicer, the Insurer and the
Collateral Agent (the consent of which shall not be withheld or delayed with
respect to any amendment that does not adversely affect the Collateral Agent)
without the consent of, or notice to, the Noteholders.
SECTION 13.2. Protection of Title to Trust.
(a) The Seller shall execute and file such financing
statements and cause to be executed and filed such continuation statements, all
in such manner and in such places as may be required by law fully to preserve,
maintain and protect the interest of the Issuer and the interests of the Trust
Collateral Agent and the Insurer in the Receivables and the Other Conveyed
Property and in the proceeds thereof. The Seller shall deliver (or cause to be
delivered) to the Insurer, the Owner Trustee and the Trust Collateral Agent
file-stamped copies of, or filing receipts for, any document filed as provided
above, as soon as available following such filing.
(b) Neither the Seller nor the Servicer shall change its name,
identity or corporate structure in any manner that would, could or might make
any financing statement or continuation statement filed in accordance with
paragraph (a) above seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Insurer, the Owner Trustee, the Trust
Collateral Agent and the Trustee at least thirty days' prior written notice
thereof and shall have promptly filed appropriate amendments to all previously
filed financing statements or continuation statements. Promptly upon such
filing, the Seller or the Servicer, as the case may be, shall deliver an Opinion
of Counsel in form and substance reasonably satisfactory to the Insurer, the
Trust Collateral Agent and the Trustee, stating either (A) all financing
statements and continuation statements have been executed and filed that are
necessary fully to preserve and protect the interest of the Issuer and the Trust
Collateral Agent in the Receivables, and reciting the details of such filings or
referring to prior Opinions of Counsel in which such details are given, or (B)
no such action shall be necessary to preserve and protect such interest.
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(c) Each of the Seller and the Servicer shall have an
obligation to give the Insurer, the Owner Trustee, the Trust Collateral Agent
and the Trustee at least 60 days' prior written notice of any relocation of its
principal executive office if, as a result of such relocation, the applicable
provisions of the UCC would require the filing of any amendment of any
previously filed financing or continuation statement or of any new financing
statement and shall promptly file any such amendment. The Servicer shall at all
times maintain each office from which it shall service Receivables, and its
principal executive office, within the United States of America.
(d) The Servicer shall maintain accounts and records as to
each Receivable accurately and in sufficient detail to permit (i) the reader
thereof to know at any time the status of such Receivable, including payments
and recoveries made and payments owing (and the nature of each) and (ii)
reconciliation between payments or recoveries on (or with respect to) each
Receivable and the amounts from time to time deposited in the Collection Account
in respect of such Receivable.
(e) The Servicer shall maintain or cause to be maintained, a
computer systems so that, from and after the time of sale under this Agreement
of the Receivables to the Issuer, such master computer records (including any
backup archives) that refer to a Receivable shall indicate clearly the interest
of the Trust in such Receivable and that such Receivable is owned by the Trust.
Indication of the Trust's interest in a Receivable shall be deleted from or
modified on such computer systems when, and only when, the related Receivable
shall have been paid in full or repurchased by NAFI or the Seller.
(f) If at any time the Seller or NAFI shall propose to sell,
grant a security interest in or otherwise transfer any interest in automotive
receivables to any prospective purchaser, lender or other transferee, the
Servicer shall give to such prospective purchaser, lender or other transferee
computer tapes, records or printouts (including any restored from backup
archives) that, if they shall refer in any manner whatsoever to any Receivable,
shall indicate clearly that such Receivable has been sold and is owned by the
Trust unless such Receivable has been paid in full or repurchased by NAFI or the
Seller.
(g) Upon request, the Servicer shall furnish or cause to be
furnished to the Insurer, the Owner Trustee or to the Trustee, at any time upon
request, a list of all Receivables (by contract number and name of Obligor) then
held as part of the Trust, together with a reconciliation of such list to the
Receivables Schedule and to each of the Servicer's Certificates furnished before
such request indicating removal of Receivables from the Trust. The Trustee shall
hold any such list and Receivables Schedule for examination by interested
parties during normal business hours at the Corporate Trust Office upon
reasonable notice by such Persons of their desire to conduct an examination.
(h) The Servicer shall deliver to the Insurer, the Owner
Trustee, the Trust Collateral Agent and the Trustee:
(1) simultaneously with the execution and delivery of the
Agreement and, if required pursuant to Section 13.1, of each amendment,
an Opinion of
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Counsel stating that, in the opinion of such Counsel, in form and
substance reasonably satisfactory to the Insurer, either (A) all
financing statements and continuation statements have been executed and
filed that are necessary fully to preserve and protect the interest of
the Trust and the Trustee in the Receivables, and reciting the details
of such filings or referring to prior Opinions of Counsel in which such
details are given, or (B) no such action shall be necessary to preserve
and protect such interest or (C) any action which is necessary to
preserve and protect such interest during the following 12-month
period; and
(2) within 90 days after the beginning of each calendar year
beginning with the first calendar year beginning more than three months
after the Cut-off Date, an Opinion of Counsel, dated as of a date
during such 90-day period, stating that, in the opinion of such
counsel, either (A) all financing statements and continuation
statements have been executed and filed that are necessary fully to
preserve and protect the interest of the Trust and the Trustee in the
Receivables, and reciting the details of such filings or referring to
prior Opinions of Counsel in which such details are given, or (B) no
such action shall be necessary to preserve and protect such interest.
Each Opinion of Counsel referred to in clause (1) or (2) above
shall specify any action necessary (as of the date of such opinion) to be taken
in the following year to preserve and protect such interest.
(i) The Servicer shall permit the Trustee, the Trust
Collateral Agent, the Insurer and their respective agents, during regular
business hours and upon reasonable advance notice, to inspect and make copies of
the records regarding any Receivables or any other portion of the Receivables.
SECTION 13.3. Notices. All demands, notices and communications
upon or to the Seller, the Servicer, the Owner Trustee, the Trustee, the Insurer
or the Rating Agencies under this Agreement shall be in writing, personally
delivered, or mailed by certified mail, or sent by confirmed telecopier
transmission and shall be deemed to have been duly given upon receipt (a) in the
case of the Seller to National Financial Auto Funding Trust, One Park Place, 000
X.X. 00xx Xxxxxx, Xxxx Xxxxx, Xxxxxxx 00000, (b) in the case of the Servicer to
National Auto Finance Company, Inc., One Park Place, 000 X.X. 00xx Xxxxxx, Xxxxx
000, Xxxx Xxxxx, Xxxxxxx 00000, (c) in the case of the Issuer or the Owner
Trustee, at 0000 Xxxxx Xxxxxx Xxxxxx, Xxxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxxx
00000; Attention: Corporate Trust Administration, (d) in the case of the Trustee
or the Trust Collateral Agent, at 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx
00000, (e) in the case of the Insurer, to Financial Security Assurance Inc., 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000; Attention: Senior Vice President,
Surveillance (in each case in which notice or other communication to the Insurer
refers to a Servicer Termination Event, a claim on a Policy, a Deficiency Notice
pursuant to Section 5.5 of this Agreement or with respect to which failure on
the part of the Insurer 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
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be marked to indicate "URGENT MATERIAL ENCLOSED") Telecopier # 000-000-0000, (f)
in the case of Moody's, to Xxxxx'x Investors Service, Inc., ABS Monitoring
Department, 00 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopier #
000-000-0000, and (g) in the case of Standard & Poor's, to Standard & Poor's
Ratings Group, 00 Xxxxxxxx - 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Asset Backed Surveillance Department, Telecopier # 212-208-1582. Any notice
required or permitted to be mailed to a Noteholder shall be given by first class
mail, postage prepaid, at the address of such Holder as shown in the Note
Register, as applicable. Any notice so mailed within the time prescribed in the
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder shall receive such notice.
SECTION 13.4. Assignment. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Notwithstanding anything to the contrary
contained herein, except as provided in Sections 8.4 and 9.3 and as provided in
the provisions of this Agreement concerning the resignation of the Servicer,
this Agreement may not be assigned by the Seller or the Servicer without the
prior written consent of the Owner Trustee, the Trust Collateral Agent, the
Trustee and the Insurer (or if an Insurer Default shall have occurred and be
continuing the Holders of Notes evidencing not less than 66% of the principal
amount of the outstanding Notes).
SECTION 13.5. Limitations on Rights of Others. The provisions
of this Agreement are solely for the benefit of the parties hereto and for the
benefit of the Trustee and the Noteholders, as third-party beneficiaries. The
Insurer and its successors and assigns shall be a third-party beneficiary to the
provisions of this Agreement, and shall be entitled to rely upon and directly
enforce such provisions of this Agreement so long as no Insurer Default shall
have occurred and be continuing. Except as expressly stated otherwise herein,
any right of the Insurer to direct, appoint, consent to, approve of, or take any
action under this Agreement, shall be a right exercised by the Insurer in its
sole and absolute discretion. The Insurer may disclaim any of its rights and
powers under this Agreement (but not its duties and obligations under the Note
Policy) upon delivery of a written notice to the Owner Trustee. Nothing in this
Agreement, whether express or implied, shall be construed to give to any other
Person any legal or equitable right, remedy or claim in the Owner Trust Property
or under or in respect of this Agreement or any covenants, conditions or
provisions contained herein.
SECTION 13.6. Severability. Any provision of this Agreement
that is prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and any
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
SECTION 13.7. Separate Counterparts. This Agreement may be
executed by the parties hereto in separate counterparts, each of which when so
executed and delivered shall be an original, but all such counterparts shall
together constitute but one and the same instrument.
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SECTION 13.8. Headings. The headings of the various Articles
and Sections herein are for convenience of reference only and shall not define
or limit any of the terms or provisions hereof.
SECTION 13.9. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
SECTION 13.10. Assignment to Trustee. The Seller hereby
acknowledges and consents to any mortgage, pledge, assignment and grant of a
security interest by the Issuer to the Trustee pursuant to the Indenture for the
benefit of the Noteholders and the Insurer of all right, title and interest of
the Issuer in, to and under the Receivables and/or the assignment of any or all
of the Issuer's rights and obligations hereunder to the Trustee.
SECTION 13.11. Nonpetition Covenants. (a) Notwithstanding any
prior termination of this Agreement, the Servicer and the Seller shall not,
prior to the date which is one year and one day after the termination of this
Agreement with respect to the Issuer, acquiesce, petition or otherwise invoke or
cause the Issuer to invoke the process of any court or government authority for
the purpose of commencing or sustaining a case against the Issuer under any
federal or state bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Issuer or any substantial part of its property, or ordering the winding
up or liquidation of the affairs of the Issuer.
(b) Notwithstanding any prior termination of this Agreement,
the Servicer shall not, prior to the date that is one year and one day after the
termination of this Agreement with respect to the Seller, acquiesce to, petition
or otherwise invoke or cause the Seller to invoke the process of any court or
government authority for the purpose of commencing or sustaining a case against
the Seller under any federal or state bankruptcy, insolvency or similar law,
appointing a receiver, liquidator, assignee, trustee, custodian, sequestrator,
or other similar official of the Seller or any substantial part of its property,
or ordering the winding up or liquidation of the affairs of the Seller.
SECTION 13.12. Limitation of Liability of Owner Trustee and
Trustee.
(a) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Wilmington Trust Company not in its
individual capacity but solely in its capacity as Owner Trustee of the Issuer
and in no event shall Wilmington Trust Company in its individual capacity or,
except as expressly provided in the Trust Agreement, as Owner Trustee have any
liability for the representations, warranties, covenants, agreements or other
obligations of the Issuer hereunder or in any of the certificates, notices or
agreements delivered pursuant hereto, as to all of which recourse shall be had
solely to the assets of the Issuer. For all purposes of this Agreement, in the
performance of its duties or obligations hereunder or in the performance of any
duties or obligations of the Issuer hereunder, the Owner Trustee shall be
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subject to, and entitled to the benefits of, the terms and provisions of
Articles VI, VII and VIII of the Trust Agreement.
(b) Notwithstanding anything contained herein to the contrary,
this Agreement has been countersigned by Chase Manhattan Bank Delaware not in
its individual capacity but solely in its capacity as Trustee of the Seller and
in no event shall Chase Manhattan Bank Delaware in its individual capacity have
any liability for the representations, warranties, covenants, agreements or
other obligations of the Seller hereunder or in any of the certificates, notices
or agreements delivered pursuant hereto, as to all of which recourse shall be
had solely to the assets of the Seller.
(c) Notwithstanding anything contained herein to the contrary,
this Agreement has been executed and delivered by Xxxxxx Trust and Savings Bank
not in its individual capacity but solely as Trust Collateral Agent and in no
event shall Xxxxxx Trust and Savings Bank, have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder or in any of the certificates, notices or agreements delivered
pursuant hereto, as to all of which recourse shall be had solely to the assets
of the Issuer.
(d) In no event shall Wilmington Trust Company, in any of its
capacities hereunder, be deemed to have assumed any duties of the Owner Trustee
under the Delaware Business Trust Statute, common law, or the Trust Agreement.
SECTION 13.13. Independence of the Servicer. For all purposes
of this Agreement, the Servicer shall be an independent contractor and shall not
be subject to the supervision of the Issuer, the Trust Collateral Agent or the
Owner Trustee with respect to the manner in which it accomplishes the
performance of its obligations hereunder. Unless expressly authorized by this
Agreement, the Servicer shall have no authority to act for or represent the
Issuer or the Owner Trustee in any way and shall not otherwise be deemed an
agent of the Issuer or the Owner Trustee.
SECTION 13.14. No Joint Venture. Nothing contained in this
Agreement (i) shall constitute the Servicer and either of the Issuer or the
Owner Trustee as members of any partnership, joint venture, association,
syndicate, unincorporated business or other separate entity, (ii) shall be
construed to impose any liability as such on any of them or (iii) shall be
deemed to confer on any of them any express, implied or apparent authority to
incur any obligation or liability on behalf of the others.
SECTION 13.15. Financial Security as Controlling Party. Each
Noteholder by purchase of the Notes held by it acknowledges that as partial
consideration of the issuance of the Note Policy, the Insurer shall have certain
rights hereunder for so long as no Insurer Default shall have occurred and be
continuing. So long as an Insurer Default has occurred and is continuing, any
provision giving the Insurer the right to direct, appoint or consent to, approve
of, or take any action under this Agreement shall be inoperative during the
period of such Insurer Default and such right shall instead vest in the Trust
Collateral Agent acting at the written direction of the Holders of Notes. The
Insurer may disclaim any of its rights and powers under this Agreement (but not
its duties and obligations under the Note Policy) upon delivery of a written
notice to the
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88
Trust Collateral Agent. The Insurer may give or withhold any consent hereunder
in its sole and absolute discretion.
83
89
IN WITNESS WHEREOF, the parties hereto have caused this Sale
and Servicing Agreement to be duly executed and delivered by their respective
duly authorized officers as of the day and the year first above written.
NATIONAL AUTO FINANCE 1997-1 TRUST,
by the Wilmington Trust Company, not in its
individual capacity but solely as
Owner Trustee on behalf of the Trust,
By:
------------------------------------
Name:
Title:
NATIONAL FINANCIAL AUTO FUNDING TRUST, Seller,
by Chase Manhattan Bank Delaware, not in its
individual capacity but solely as Trustee of
National Financial Auto Funding Trust,
By:
------------------------------------
Name:
Title:
NATIONAL AUTO FINANCE COMPANY, INC.,
in its individual capacity and as Servicer,
By:
------------------------------------
Name:
Title:
XXXXXX TRUST AND SAVINGS BANK,
not in its individual capacity but solely as
Trust Collateral Agent,
By:
------------------------------------
Name:
Title:
84
90
SCHEDULE A
SCHEDULE OF RECEIVABLES
91
SCHEDULE B
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller hereby represents and warrants to the Trust Collateral Agent
on behalf of the Noteholders and the Insurer as of the Closing Date with respect
to the Initial Receivables transferred to the Trust on the Closing Date and as
of each Subsequent Transfer Date with respect to the Subsequent Receivables
transferred to the Trust on such Subsequent Transfer Date (unless another date
or time period is otherwise specified or indicated in the particular
representation or warranty):
1. immediately prior to the Closing Date or the Subsequent Transfer
Date, as the case may be, the Seller had a valid and enforceable security
interest in the related Financed Vehicle, and such security interest had been
duly perfected and was prior to all other present and future liens and security
interests (except future tax liens and liens that, by statute, may be granted
priority over previously perfected security interests) that now exist or may
hereafter arise, and the Seller had the full right to assign such security
interest to the Trust Collateral Agent;
2. on and after the Closing Date or the Subsequent Transfer Date, as
the case may be, there shall exist under the Receivable a valid, subsisting and
enforceable first priority perfected security interest in the Financed Vehicle
securing such Receivable (other than, as to the priority of such security
interest, any statutory lien arising by operation of law after the Closing Date
or the Subsequent Transfer Date, as the case may be, which is prior to such
interest) and at such time as enforcement of such security interest is sought
there shall exist a valid, subsisting and enforceable first priority perfected
security interest in such Financed Vehicle in favor of the Trust Collateral
Agent (other than, as to the priority of such security interest, any statutory
lien arising by operation of law after the Closing Date or the Subsequent
Transfer Date, as the case may be, which is prior to such interest);
3. no Receivable has been sold, assigned or pledged to any other Person
other than an endorsement to the Servicer for purposes of servicing or any such
pledge has been released; immediately prior to the transfer and assignment
herein contemplated, the Seller has good and marketable title thereto free and
clear of any lien, encumbrance, equity, pledge, charge, claim or security
interest and is the sole owner thereof and has full right to transfer such
Receivable to the Trust Collateral Agent. No Dealer has a participation in, or
other right to receive, proceeds of any Receivable. None of NAFI, Funding Trust
II nor the Seller has taken any action to convey any right to any Person that
would result in such Person having a right to payments received under the
related insurance policies or Dealer Agreements or to payments due under such
Receivable;
4. upon the transfers pursuant to Sections 2.1 and 2.2, the Trust
Collateral Agent will have a first priority ownership or security interest in
each such Receivable free and clear of any encumbrance, lien, pledge, charge,
claim, security interest or rights of others; the purchase of each such
Receivable by NAFI from a Dealer was not an extension of financing to such
Dealer;
92
5. no such Receivable is delinquent for more than thirty days in
payment as to any scheduled payment;
6. there is no lien against any related Financed Vehicle for delinquent
taxes;
7. there is no right of rescission, offset, defense or counterclaim to
the obligation of the related Obligor to pay the unpaid principal or interest
due under such Receivable; the operation of the terms of such Receivable or the
exercise of any right thereunder will not render such Receivable unenforceable
in whole or in part or subject to any right of rescission, offset, defense or
counterclaim, and no such right of rescission, offset, defense or counterclaim
has been asserted;
8. no Receivable is assumable by another Person in a manner which would
release the Obligor thereon from such Obligor's obligations to the Seller with
respect to such Receivable;
9. there are no prior liens or claims for work, labor or material
affecting any related Financed Vehicle which are or may become a lien prior to
or equal with the security interest granted by such Receivable;
10. each such Receivable, and the sale of the Financed Vehicle securing
such Receivable, where applicable, complied, at the time it was made and as of
the Closing Date or related Subsequent Transfer Date, as applicable, in all
material respects with applicable state and federal laws (and regulations
thereunder), including, without limitation, usury, disclosure and consumer
protection laws, equal credit opportunity, fair credit reporting,
truth-in-lending or other similar law, the Federal Trade Commission Act, and
applicable state laws regulating retail installment sales contracts and loans in
general and motor vehicle retail installment sales contracts and loans in
particular, and the transfer of such Receivable to the Trust will not violate
any such laws;
11. each such Receivable is a legal, valid and binding obligation of
the Obligor thereunder and is enforceable in accordance with its terms, except
only as such enforcement may be limited by laws affecting the enforcement of
creditors' rights generally whether enforcement is sought in a proceeding in
equity or at law, and all parties to such Receivable had full legal capacity to
execute such Receivable and all documents related thereto and to grant the
security interest purported to be granted thereby at the time of execution and
grant;
12. as of the Closing Date or such Subsequent Transfer Date, as the
case may be, the terms of each such Receivable have not been impaired, waived,
altered or modified in any respect, except by written instruments that are part
of the Receivable Documents, and no such Receivable has been satisfied,
subordinated or rescinded;
13. at the time of origination of each such Receivable, the proceeds of
such Receivable were fully disbursed, there is no requirement for future
advances thereunder, and all fees and expenses in connection with the
origination of such Receivable have been paid;
93
14. there is no default, breach, violation or event of acceleration
existing under any such Receivable (except payment delinquencies permitted by
paragraph 5 above) and no event which, with the passage of time or with notice
or with both, would constitute a default, breach, violation or event of
acceleration under any such Receivable or would otherwise affect the value or
marketability of such contract; NAFI and the Seller have not waived any such
default, breach, violation or event of acceleration; and as of the applicable
Cut-off Date, the related Financed Vehicle has not been repossessed;
15. at the origination date of each such Receivable, the related
Financed Vehicle was covered by a comprehensive and collision insurance policy
(a) in an amount at least equal to the lesser of (i) the actual cash value of
the related Financed Vehicle or (ii) the unpaid balance owing of such
Receivable, less the related Unearned Finance Charge, (b) naming NAFI as a loss
payee and (c) insuring against loss and damage due to fire, theft,
transportation, collision and other risks generally covered by comprehensive and
collision coverage; each Receivable requires the Obligor to maintain physical
loss and damage insurance, naming NAFI as an additional insured party;
16. each such Receivable was acquired by NAFI from a Dealer with which
it ordinarily does business; such Dealer had full right to assign to NAFI such
Receivable and the security interest in the related Financed Vehicle and the
Dealer's assignment thereof to NAFI is legal, valid and binding and NAFI had
full right to assign to the Seller such Receivable and the respective security
interest in the related Financed Vehicle and NAFI's respective assignment
thereof to the Seller is legal, valid and binding;
17. each such Receivable contains customary and enforceable provisions
such as to render the rights and remedies of the holder thereof adequate for the
realization against the related Financed Vehicle of the benefits of the
security;
18. scheduled payments under each such Receivable are due monthly (or,
in the case of the first payment, no later than the forty-fifth day after the
date of the Receivable) in substantially equal amounts to maturity (other than
with respect to those Receivables designated as balloon contracts on the related
Receivable Schedule), and will be sufficient to fully amortize such Receivable
at maturity, assuming that each scheduled payment is made on its Due Date; such
scheduled payments are applicable only to payment of principal and interest on
such Receivable and not to the payment of any insurance premiums (although the
proceeds of the extension of credit on such Receivable may have been used to pay
insurance premiums); and the original term to maturity of each such Receivable
was not more than 60 months;
19. the collection practices used with respect to each such Receivable
have been in all material respects legal, proper, prudent and customary in the
automobile installment sales contract or installment loan servicing business;
20. there is only one original of each such Receivable, the Servicer or
a Sub-Servicer is currently in possession of the Receivable Documents for such
Receivable and there are no custodial agreements in effect adversely affecting
the rights of the Seller to make the deliveries required hereunder on the
Closing Date or the Subsequent Transfer Date, as the case may be;
94
21. as of the Cut-off Date or Subsequent Cut-off Date, as applicable,
no Obligor was the subject of a current bankruptcy proceeding;
22. with respect to each Due Period, the aggregate of the interest due
on all the Receivables in such Due Period from scheduled payments is in excess
of the sum of (i) the Servicing Fee due and any fees due to the Trust Collateral
Agent and the Insurer, each with respect to such Due Period and (ii) the amount
of interest payable on the Notes with respect to such Due Period, in each case
assuming that each scheduled payment is made on its Due Date;
23. the Receivables constitute "chattel paper" within the meaning of
the UCC as in effect in the applicable jurisdiction and all filings (including
without limitation, UCC filings) required to be made and all actions required to
be taken or performed by any Person in any jurisdiction to give the Trust
Collateral Agent a first priority perfected lien on, or ownership interest in,
the Receivables and the proceeds thereof and the remaining Trust Property have
been made, taken or performed;
24. the information regarding such Receivables set forth in the
applicable Receivable Schedule is true and correct in all material respects at
the applicable Cut-off Date and the Closing Date or Subsequent Closing Date, as
applicable; each Receivable was originated in the United States of America and
at the time of origination, materially conformed to all requirements of the NAFI
underwriting policies and guidelines then in effect; and no Obligor is the
United States of America or any state or any agency, department, subdivision or
instrumentality thereof;
25. by the Closing Date and prior to each Subsequent Transfer Date, as
applicable, NAFI will have caused the portions of NAFI's servicing records
relating to the Receivables to be clearly and unambiguously marked to show that
the Receivables constitute part of the Trust Property and are owned by the Trust
in accordance with the terms of this Agreement;
26. the computer tape or listing made available by NAFI to the Trust
Collateral Agent on the Closing Date and on each Subsequent Transfer Date was
complete and accurate as of the applicable Cut-off Date, and includes a
description of the same Receivables that are described in the applicable
Receivable Schedule;
27. no Receivable was originated in, or is subject to the laws of, any
jurisdiction, the laws of which would make unlawful, void or voidable the sale,
transfer and assignment of such Receivable under this Agreement or the
Subsequent Transfer Agreement, as applicable, or pursuant to transfers of the
Notes. The Seller has not entered into any agreement with any account debtor
that prohibits, restricts or conditions the assignment of any portion of the
Receivables;
28. no selection procedures adverse to the Noteholders or to the
Insurer have been utilized in selecting such Receivable from all other similar
Receivables originated by NAFI;
29. as of the Initial Cut-off Date, the APR of the Initial Receivables
was approximately 19.38% and the weighted average remaining scheduled maturity
on the Initial
95
Receivables was approximately 50.31 months and the percentage of the aggregate
outstanding balance of the Initial Receivables relating to the financing of used
Financed Vehicles was 80.45%. The final scheduled payment date on the Initial
Receivable with the latest maturity is June 29, 2002. Each Receivable amortizes
based on a Simple Interest Method or Actuarial Method; and
30. no Receivable provides for a prepayment penalty.
96
EXHIBIT 5.10
FORM OF STATEMENT TO NOTEHOLDERS
97
EXHIBIT A
SUBSEQUENT TRANSFER AGREEMENT
TRANSFER No. ___ OF SUBSEQUENT Receivables pursuant to a Sale and
Servicing Agreement dated as of July __, 1997 (the "Sale and Servicing
Agreement"), among NATIONAL AUTO FINANCE 1997-1 TRUST, a Delaware business trust
(the "Issuer"), NATIONAL FINANCIAL AUTO FUNDING TRUST, a Delaware business trust
(the "Seller"), NATIONAL AUTO FINANCE COMPANY, INC., a Delaware corporation (the
"Servicer"), and XXXXXX TRUST AND SAVINGS BANK, an Illinois banking corporation,
not in its individual capacity, but solely as Trust Collateral Agent (the "Trust
Collateral Agent").
W I T N E S S E T H:
WHEREAS pursuant to the Sale and Servicing Agreement, the Seller wishes
to convey the Subsequent Receivables to the Issuer; and
WHEREAS, the Issuer is willing to accept such conveyance subject to the
terms and conditions hereof.
NOW, THEREFORE, the Issuer, the Seller, the Servicer and the Trust
Collateral Agent hereby agree as follows:
1. Defined Terms. Capitalized terms used herein shall have the meanings
ascribed to them in the Sale and Servicing Agreement unless otherwise defined
herein.
"Subsequent Cut-off Date" shall mean, with respect to the Subsequent
Receivables conveyed hereby, _______________, 1997.
"Subsequent Transfer Date" shall mean. with respect to the Subsequent
Receivables conveyed hereby, _____________, 1997.
2. Receivables Schedule. Annexed hereto is a supplement to Schedule A
to the Sale and Servicing Agreement listing the Receivables that constitute the
Subsequent Receivables to be conveyed pursuant to this Agreement on the
Subsequent Transfer Date and is hereby incorporated in and made a part of this
Transfer Agreement and the Sale and Servicing Agreement.
3. Conveyance of Subsequent Receivables. In consideration of the
Issuer's delivery to or upon the order of the Seller of $____________, the
Seller does hereby sell, transfer, assign, set over and otherwise convey to the
Issuer, without recourse (except as expressly provided in the Sale and Servicing
Agreement) and does hereby grant to the Trustee, in trust for exclusive use and
benefit of all present and future Noteholders and the Insurer, all right, title
and interest of the Seller in and to the following, whether now owned or
hereafter acquired:
98
(a) the Subsequent Receivables and all moneys received thereon, on and
after the related Subsequent Cut-off Date (including amounts due on or before
the Subsequent Cut-off Date but received by NAFI, the Seller or the Issuer on or
after the Subsequent Cut-off Date);
(b) any proceeds and the right to receive proceeds with respect to the
Subsequent Receivables from claim and the right to receive proceeds on any
physical damage, credit life or disability insurance policies or other policies
covering Financed Vehicles or Obligors, including rebating of insurance premiums
relating to the Receivables, and any proceeds from the liquidation of the
Subsequent Receivables;
(c) all rights of the Seller against the Dealers pursuant to Dealer
Agreements or against Originators pursuant to Originator Agreements;
(d) the related Receivables Files; and any and all other documents that
NAFI keeps on file in accordance with its customary procedures relating to the
Receivables, the Obligors or the Financed Vehicles;
(e) its rights and benefits, but none of its obligations or burdens,
under the Subsequent Transfer Agreement, including the delivery requirements,
representations and warranties and the cure and repurchase obligations of NAFI
under the Subsequent Purchase Agreement, on or after the Subsequent Cut-off
Date; and
(f) the proceeds of any and all of the foregoing.
4. Representations and Warranties of the Seller. The Seller hereby
represents and warrants to the Issuer as of the date of this Agreement and as of
the Subsequent Transfer Date that:
(a) Schedule of Representations. The representations and warranties set
forth on the Schedule of Representations attached hereto as Schedule B are true
and correct.
(b) Organization and Good Standing. The Seller is a Delaware business
trust duly organized, validly existing, and in good standing under the laws of
the State of Delaware, with power and authority to own its properties and to
conduct its business as such properties are currently owned and such business is
currently conducted, and had at all relevant times, and now has, power,
authority and legal right to acquire, own and sell the Receivables and the Other
Conveyed Property transferred to the Trust.
(c) Due Qualification. The Seller has obtained all necessary licenses
and approvals in all jurisdictions where the failure to do so would materially
and adversely affect Seller's ability to transfer the Receivables and the Other
Conveyed Property to the Trust pursuant to this Agreement, or the validity or
enforceability of the Receivables and the Other Conveyed Property or to perform
Seller's obligations hereunder and under the Seller's Transaction Documents.
99
(d) Power and Authority. The Seller has the power and authority to
execute and deliver this Agreement and its Transaction Documents and to carry
out its terms and their terms, respectively; the Seller has full power and
authority to sell and assign the Receivables and the Other Conveyed Property to
be sold and assigned to and deposited with the Trust by it and has duly
authorized such sale and assignment to the Trust; and the execution, delivery
and performance of this Agreement and the Seller's Transaction Documents have
been duly authorized by the Seller.
(e) Valid Sale, Binding Obligations. This Agreement effects a valid
sale, transfer and assignment of the Receivables and the Other Conveyed
Property, enforceable against the Seller and creditors of and purchasers from
the Seller; and this Agreement and the Seller's Transaction Documents, when duly
executed and delivered, shall constitute legal, valid and binding obligations of
the Seller enforceable in accordance with their respective terms, except as
enforceability may be limited by bankruptcy, insolvency, reorganization or other
similar laws affecting the enforcement of creditors' rights generally and by
equitable limitations on the availability of specific remedies, regardless of
whether such enforceability is considered in a proceeding in equity or at law.
(f) No Violation. The consummation of the transactions contemplated by
this Agreement and the Transaction Documents and the fulfillment of the terms of
this Agreement and the Transaction Documents shall not conflict with, result in
any breach of any of the terms and provisions of or constitute (with or without
notice, lapse of time or both) a default under the certificate of incorporation
or by-laws of the Seller, or any indenture, agreement, mortgage, deed of trust
or other instrument to which the Seller is a party or by which it is bound, or
result in the creation or imposition of any Lien upon any of its properties
pursuant to the terms of any such indenture, agreement, mortgage, deed of trust
or other instrument, other than this Agreement, or violate any law, order, rule
or regulation applicable to the Seller of any court or of any federal or state
regulatory body, administrative agency or other governmental instrumentality
having jurisdiction over the Seller or any of its properties.
(g) No Proceedings. There are no proceedings or investigations pending
or, to the Seller's knowledge, threatened against the Seller, before any court,
regulatory body, administrative agency or other tribunal or governmental
instrumentality having jurisdiction over the Seller or its properties (A)
asserting the invalidity of this Agreement or any of the Transaction Documents,
(B) seeking to prevent the issuance of the Securities or the consummation of any
of the transactions contemplated by this Agreement or any of the Transaction
Documents, (C) seeking any determination or ruling that might materially and
adversely affect the performance by the Seller of its obligations under, or the
validity or enforceability of, this Agreement or any of the Transaction
Documents, or (D) seeking to adversely affect the federal income tax or other
federal, state or local tax attributes of the Securities.
(h) Approvals. All approvals, authorizations, consents, order or other
actions of any person, corporation or other organization, or of any court,
governmental agency or body or official, required in connection with the
execution and delivery by the Seller of this
100
Agreement and the consummation of the transactions contemplated hereby have been
or will be taken or obtained on or prior to the Closing Date.
(i) No Consents. The Seller is not required to obtain the consent of
any other party or any consent, license, approval or authorization, or
registration or declaration with, any governmental authority, bureau or agency
in connection with the execution, delivery, performance, validity or
enforceability of this Agreement which has not already been obtained.
(j) Chief Executive Office. The chief executive office of the Seller is
at One Park Place, 000 X.X. 00xx Xxxxxx, Xxxx Xxxxx, Xxxxxxx, 00000.
(k) Principal Balance. The aggregate Principal Balance of the
Receivables listed on the supplement to Schedule A annexed hereto and conveyed
to the Issuer pursuant to this Agreement as of the Subsequent Cut-off Date is
$____________.
(l) Contract Files. The Seller does hereby deliver to the Custodian the
original motor vehicle retail installment sale contracts and Receivables Files
for each Receivable identified in the Receivable Schedule.
5. Conditions Precedent. The obligation of the Issuer to acquire the
Receivables hereunder is subject to the satisfaction, on or prior to the
Subsequent Transfer Date, of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by the Seller in Section 4 of this Agreement and in Section 6.1
of the Sale and Servicing Agreement shall be true and correct as of the date of
this Agreement and as of the Subsequent Transfer Date.
(b) Sale and Servicing Agreement Conditions. Each of the conditions set
forth in Section 2.2(b) to the Sale and Servicing Agreement shall have been
satisfied.
(c) Additional Information. The Seller shall have delivered to the
Issuer such information as was reasonably requested by the Issuer to satisfy
itself as to (i) the accuracy of the representations and warranties set forth in
Section 4 of this Agreement and in Section 6.1 of the Sale and Servicing
Agreement and (ii) the satisfaction of the conditions set forth in this Section
5.
6. Ratification of Agreement. As supplemented by this Agreement, the
Sale and Servicing Agreement is in all respects ratified and confirmed and the
Sale and Servicing Agreement as so supplemented by this Agreement shall be read,
taken and construed as one and the same instrument.
7. Counterparts. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
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8. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS CONFLICT OF LAW
PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER
SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
9. Third-Party Beneficiaries. This Agreement shall incur to the
benefit of and be binding upon the parties hereto and their respective successor
and permitted assigns. Except as otherwise provided in this Section 9, no other
person shall have any right or obligation hereunder. The Insurer and its
successors and assigns shall be a third-party beneficiary to the provisions of
this Agreement, and shall be entitled to rely upon and directly enforce such
provisions of this Agreement so long as no Insurer Default shall have occurred
and be continuing. Except as expressly stated otherwise herein or in the
Transaction Documents, any right of the Insurer to direct, appoint, consent to,
approve of, or take any action under this Agreement, shall be a right exercised
by the Insurer to direct, appoint, consent to, approve of, or take any action
under this Agreement, shall be a right exercised by the Insurer in its sole and
absolute discretion. The Insurer may disclaim any of its rights and powers under
this Agreement (but not its duties and obligations under the Policy) upon
delivery of a written notice to the Trustee.
IN WITNESS WHEREOF, the Issuer, the Seller and the Servicer have caused
this Agreement to be duly executed and delivered by their respective duly
authorized officers as of day and the year first above written.
NATIONAL AUTO FINANCE 1997-1 TRUST
by Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust,
by
------------------------------------
Title:
NATIONAL FINANCIAL AUTO FUNDING TRUST, Seller,
by Chase Manhattan Bank Delaware, not in
its individual capacity, but solely as
Trustee of National Financial Auto Funding
Trust,
by
------------------------------------
Title:
102
NATIONAL AUTO FINANCE COMPANY, INC., Servicer,
by
------------------------------------
Title:
Acknowledged and Accepted:
XXXXXX TRUST AND SAVINGS BANK, not in its
individual capacity but solely as Trust
Collateral Agent and Backup Servicer
by
------------------------------------
Title:
103
EXHIBIT B
FORM OF SERVICER'S CERTIFICATE
104
EXHIBIT C
FORM OF DEFICIENCY CLAIM NOTICE
[Date]
Xxxxxx Trust and Savings Bank, as Collateral Agent
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Wilmington Trust Company, as Owner Trustee
Xxxxxx Square North
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
National Auto Finance Company, Inc., as Servicer
One Park Place
000 X.X. 00xx Xxxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Fiscal Agent [if any]
[Address]
Re: Sale and Servicing Agreement, dated as of June 29,
1997 (the "Agreement") among National Auto Finance
1997-1 Trust, (the "Issuer"), National Financial Auto
Funding Trust, (the "Seller"), and National Auto
Finance Company, Inc. (the "Servicer"), and Xxxxxx
Trust and Savings Bank, in its capacity as Trust
Collateral Agent.
Ladies and Gentlemen:
Reference is hereby made to Section 5.5(a) of the Agreement.
Capitalized terms not defined herein shall have the meanings ascribed thereto in
the Agreement.
Pursuant to Section 5.5(a) of the Agreement, please note the following
information with respect to the Distribution Date which is to occur on
_______________:
105
Deficiency Claim Amount: $
-------------------
Note Policy Claim Amount: $
-------------------
The Collateral Agent shall remit Deficiency Claim Amount specified
above to the Trust Collateral Agent for deposit by the Trust Collateral Agent
into the Collection Account pursuant to Section 5.6 of the Agreement on the next
Draw Date which is to occur on _________________.
Sincerely,
XXXXXX TRUST AND SAVINGS BANK,
as Trust Collateral Agent
By:
-----------------------------------
Name:
Title:
