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EXHIBIT 10.1
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PURCHASE AND CONTRIBUTION AGREEMENT
BETWEEN
NATIONAL AUTO FINANCE COMPANY, INC.
AND
NATIONAL FINANCIAL AUTO FUNDING TRUST
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DATED AS OF JUNE 29, 1997
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PURCHASE AND CONTRIBUTION AGREEMENT
PURCHASE AND CONTRIBUTION AGREEMENT, dated as of June 29, 1997, by and
between National Auto Finance Company Inc., a Delaware corporation ("NAFI"), and
National Financial Auto Funding Trust, a Delaware business trust ("National
Financial").
W I T N E S S E T H :
In consideration of the mutual covenants herein contained, NAFI and
National Financial agree as follows:
ARTICLE I
DEFINITIONS
1.1. Incorporation of Definitions. Capitalized terms used but not
defined herein have the meanings ascribed to them in the Sale and Servicing
Agreement (as amended, supplemented or otherwise modified from time to time in
accordance with the terms thereof, the "Sale and Servicing Agreement"), dated as
of June 29, 1997, by and among National Financial, as Seller, NAFI, as Servicer,
Wilmington Trust Company, in its capacity as owner trustee of the National Auto
Finance 1997-1 Trust (the "1997-1 Trust"), and Xxxxxx Trust and Savings Bank,
not in its individual capacity, but solely as Trust Collateral Agent and Backup
Servicer (the "Trust Collateral Agent").
Other Definitions. When used in this Agreement, the following words and
phrases shall have the following meanings:
Bankruptcy Event: The occurrence of either of the following with
respect to either NAFI or National Financial:
(a) a case or other proceeding shall be commenced, without the
application or consent of NAFI or National Financial, as applicable,, in any
court, seeking the liquidation, reorganization, debt arrangement, dissolution,
winding up, or composition or readjustment of debts of NAFI or National
Financial, as applicable,, the appointment of a trustee, receiver, custodian,
liquidator, assignee, sequestrator or the like for NAFI or National Financial,
as applicable, or for any substantial part of its assets, or any similar action
with respect to NAFI or National Financial, as applicable, under any law
(foreign or domestic) relating to bankruptcy, insolvency, receivership,
reorganization, winding up or composition or adjustment of debts, and such case
or proceeding shall continue undismissed, or unstayed and in effect, for a
period of 60 (sixty) days or an order for relief in respect of NAFI or National
Financial, as applicable, shall be entered in an involuntary case under the
federal bankruptcy laws or other similar laws (foreign or domestic) now or
hereafter in effect; or
(b) NAFI or National Financial, as applicable, shall commence a
voluntary case or other proceeding under any applicable bankruptcy, insolvency,
receivership,
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reorganization, debt arrangement, dissolution or other similar law now or
hereafter in effect, or shall consent to the appointment of or taking possession
by a trustee, receiver, custodian, liquidator, assignee, sequestrator or the
like for NAFI or National Financial, as applicable, or for any substantial part
of its assets, or shall make any general assignment for the benefit of
creditors, or shall fail to, or admit in writing its inability to, pay its debts
generally as they become due.
Collection Date: With respect to a Receivable, the date in each Due
Period on which a scheduled payment on such Receivable is due.
Conveyance: As defined in Section 2.3(b).
Cut-off Date: With respect to an Initial Receivable, the Initial
Cut-off Date, and with respect to any Subsequent Receivable, the related
Subsequent Cut-off Date.
Individual Sold Balance: With respect to any 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 the Contract.
Insurance Proceeds: Proceeds paid by any insurer pursuant to any
insurance policy covering a Financed Vehicle or the related Obligor.
Liquidation Proceeds: With respect to a Liquidated Receivable, all
amounts (including without limitation, Insurance Proceeds) realized with respect
to such Receivable net of amounts that are required to be refunded to the
Obligor on such Receivable; provided however, that the Liquidation Proceeds with
respect to any Receivable shall in no event be less than zero.
Master Trust: National Financial Auto Receivables Master Trust.
Purchase Price: As defined in Section 2.1.
Receivable: 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 National
Financial 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 the Receivable Schedule attached hereto as
Schedule 1 or a Receivable Schedule attached to a Transfer Agreement, as
applicable.
Receivable Assets: The assets sold, transferred, conveyed and assigned
by NAFI to National Financial pursuant to this Agreement, which consist of (i)
all Receivables identified in the Receivable Schedules attached to the
Conveyances delivered hereunder on each Subsequent Transfer Date and all monies
received thereon on or after the related Cut-off Date (including amounts due on
or before the Cut-off Date but received by NAFI on or after such Cut-off Date);
(ii) any proceeds and the right to receive proceeds with respect to the the
Receivables from claims on any physical damage, credit life or disability
insurance policies covering Financed Vehicles or
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Obligors, including rebates of insurance premiums relating to the Receivables
and any proceeds from the liquidation of the Receivables; (iii) all rights
against 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 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; and (vii) the proceeds of any and all of the foregoing.
Receivable Documents: With respect to a Receivable, all Receivable
papers and documents (including those contained in the Receivable File) and all
other papers and records (including computerized data) of whatever size or
description, whether developed or originated by NAFI, a Dealer, Originator or
another Person, required to document the Receivable or to service the
Receivable.
Receivable File: 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 public state law
(except for any Title Documents or UCC financing statements not returned from
the applicable 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.
Receivable Schedule: The schedule of Receivables attached hereto as
Schedule 1 or attached as Schedule 1 to any Conveyance delivered hereunder, such
schedule identifying each Receivable by name of the Obligor and setting forth as
to each Receivable its Individual Sold Balance as of the Cut-off-Date, loan
number, Receivable Rate, scheduled monthly payment of principal and interest,
final maturity date and original principal amount.
Unearned Financing Charge: With respect to any Receivable, the amount
of the add-on finance charge that, under the term of the Receivable, would be
required to be refunded or credited to the related Obligor in accordance with
such Receivable if such Receivable were then prepaid in full.
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ARTICLE II
PURCHASE SALE AND CONTRIBUTION
2.1. Purchase and Contribution. (a) Subject to and on the terms and
conditions set forth herein, NAFI hereby transfers, conveys and assigns, without
recourse except as expressly set forth herein, as a contribution of capital to
National Financial, all of its right, title and interest in and to (i) the
Receivables identified on the Receivables Schedule attached hereto as Schedule 1
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 on or
after the Initial Cut-off Date) and (ii) the other Receivable Assets related
thereto.
(b) Pursuant to and in connection with the transfer of certain retail
installment sale contracts or promissory notes or other financing documents for
a new or used motor vehicles and certain other property related thereto by
Bankers Trust Company ("Bankers Trust"), as trustee of the National Financial
Auto Receivables Master Trust (the "Master Trust") to National Financial Auto
Funding Trust II, a Delaware business trust ("Funding Trust II"), under the
Assignment Agreement dated as of June 29, 1997 (the "Assignment Agreement"),
between Bankers Trust and Funding Trust II, and by Funding Trust II to National
Financial under the Sale Agreement dated as of June 29, 1997 (the "Sale
Agreement"), between Funding Trust II and National Financial, NAFI hereby
transfers, conveys and assigns, without recourse except as expressly set forth
herein, all of NAFI's rights against Dealers under the Dealer Agreements and
Originators under the Originator Agreements with respect to such retail
installment sales contracts, promissory notes or other financing documents, to
the extent such rights have not been previously conveyed by NAFI to Funding
Trust II and by Funding Trust II to the Master Trust.
(c) Subject to and on the terms and conditions set forth herein, NAFI
hereby agrees to sell, transfer, convey and assign, without recourse except as
expressly provided herein, all of its right, title and interest in and to the
Receivable Assets to National Financial on each Subsequent Transfer Date.
National Financial agrees to pay to NAFI on each Subsequent Transfer Date as the
purchase price (the "Purchase Price") for the Receivable Assets sold hereunder
on such date an amount equal to 100% of the Aggregate Principal Balance of the
Receivables included in such Receivable Assets as of the related Cut-off Date.
(d) NAFI may from time to time during the term of this Agreement and in
its sole discretion, elect to contribute capital to National Financial in the
form of Receivables and Receivable Assets conveyed hereunder, in an amount equal
to the excess of (i) the Principal Balance of Receivables included in Receivable
Assets conveyed on any Subsequent Transfer Date over (ii) the amount of the cash
Purchase Price paid by National Financial to NAFI on such Subsequent Transfer
Date.
2.2. Filings. On or prior to the Closing Date, NAFI shall have filed in
the office of the Secretary of State of Florida a UCC financing statement,
appropriate under the applicable UCC, to reflect the transfer of the Receivables
identified on the Receivable Schedule attached hereto as Schedule 1 and the
other Related Assets related thereto by NAFI to National Financial on the
Closing Date and the Receivable Assets to be transferred from NAFI to National
Financial on any
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Subsequent Transfer Date and to protect National Financial's interest in the
Receivable Assets against all other Persons. NAFI shall thereafter file any
appropriate continuation statements in respect thereof.
Sales. (a) During the Pre-Funding Period, National Financial shall, to
the extent permitted by the Sale and Servicing Agreement, use funds on deposit
in the Pre-Funding Account established under the Sale and Servicing Agreement to
purchase Subsequent Receivables and other Receivable Assets from NAFI. On or
prior to each Subsequent Transfer Date, NAFI shall notify National Financial in
writing of the outstanding principal amount of eligible Receivables included in
Receivable Assets available to be sold and conveyed by NAFI to National
Financial on such Subsequent Transfer Date pursuant to this Agreement, and
subject to the terms and conditions of this Agreement, NAFI shall, on the
applicable Subsequent Transfer Date, sell and convey to National Financial
eligible Receivables and other Receivable Assets having an aggregate outstanding
principal amount equal to the amount specified in such written notice. Each
Subsequent Transfer Date shall be on the date and at the time and place mutually
agreed upon by National Financial and NAFI with the prior written consent of the
Insurer. Payment of the Purchase Price for the Subsequent Receivables and other
Receivable Assets sold and conveyed on a Subsequent Transfer Date shall be made
by National Financial to NAFI. National Financial's obligation to purchase
Subsequent Receivables and other Receivable Assets shall be limited by the
amount of funds available for such purchase in the Pre-Funding Account pursuant
to the Sale and Servicing Agreement and shall be subject to the satisfaction of
the conditions in the Sale and Servicing Agreement.
(b) On or prior to the Closing Date, NAFI shall (i) deliver to National
Financial or such other Person as National shall direct the original motor
vehicle retail installment sale contracts, duly endorsed by NAFI and the
Receivable Files with respect to each Initial Receivable included in the
Receivable Assets then being sold to National Financial, (ii) deliver to
National Financial or such other Person as National Financial shall direct cash
equal to all payments received by NAFI on such Initial Receivables on or after
the Initial Cut-off Date and on or before two Business Days prior to such
Initial Transfer Date. Within two Business Days after such Initial Transfer
Date, NAFI shall deliver to National Financial or such other Person as National
Financial shall direct all other payments received by NAFI on such Initial
Receivables on or after the applicable Cut-off Date and on or before the Closing
Date. National Financial hereby directs NAFI to deliver the materials referenced
in the preceding clause (i) of the second preceding sentence to OFSA, as
Custodian, and hereby directs NAFI to remit any payments received by NAFI and
referenced in the preceding sentence or in clause (ii) of the second preceding
sentence to the Collection Account.
(c) On or prior to any Subsequent Transfer Date, NAFI shall (i) deliver
to National Financial a conveyance instrument substantially in the form attached
hereto as Exhibit A (a "Conveyance") with respect to the Receivable Assets sold
and conveyed hereunder on such Subsequent Transfer Date, (ii) deliver to
National Financial or such other Person as National Financial shall direct the
original motor vehicle retail installment sale contracts, duly endorsed by NAFI
and the Receivable Files with respect to each Subsequent Receivable included in
the Receivable Assets then being sold to National Financial, (iii) deliver to
National Financial or such other Person as National Financial shall direct cash
equal to all payments received by NAFI on
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such Subsequent Receivables on or after the applicable Cut-off Date and on or
before two Business Days prior to such Subsequent Transfer Date. Within two
Business Days after such Subsequent Transfer Date, NAFI shall deliver to
National Financial or such other Person as National Financial shall direct all
other payments received by NAFI on such Subsequent Receivables on or after the
applicable Cut-off Date and on or before such Subsequent Transfer Date. National
Financial hereby directs NAFI to deliver the materials referenced in the
preceding clause (ii) of the second preceding sentence to OFSA, as Custodian,
and hereby directs NAFI to remit any payments received by NAFI and referenced in
the preceding sentence or in clause (iii) of the second preceding sentence to
the Collection Account.
2.3. No Recourse. Except as specifically provided in this Agreement,
the sale and purchase of Receivables and other Receivable Assets under this
Agreement shall be without recourse to NAFI; provided that NAFI shall be liable
to National Financial for all representations, warranties and covenants made by
NAFI pursuant to the terms of this Agreement, it being understood that such
obligations of NAFI do not constitute recourse for the credit risk of the
Obligors.
2.4. True Sales. NAFI and National Financial intend that the
transactions contemplated hereby be true sales of Receivables and other
Receivable Assets by NAFI to National Financial providing National Financial
with the full benefits of ownership of the Receivables and other Receivable
Assets free and clear of any Liens, and neither NAFI nor National Financial
intends the transactions contemplated hereby to be, or for a purpose to be
characterized as, a loan from National Financial to NAFI. NAFI shall reflect
sales of the Receivable Assets hereunder on its balance sheet and other
financial statements as sales of assets, and shall treat such sales as sales for
all purposes. NAFI will respond to third party inquiries by indicating that the
Receivables have been sold.
2.5. Receipt of Payments after Closing Date and Subsequent Transfer
Dates. National Financial shall be entitled to all payments received or
receivable with respect to any Receivable or Subsequent Receivable sold and
conveyed by NAFI to National Financial hereunder that are received on and after
the applicable Cut-off Date. If NAFI receives any payment on a Receivable
belonging to the Trust, NAFI promptly shall turn such payment over to the Trust
Collateral Agent not later than two Business Days after receipt for deposit in
the Collection Account.
2.6. Servicing of Receivables. Consistent with National Financial's
ownership of the Receivable Assets, National Financial shall have the sole right
to service, administer and collect the Receivables, to assign such right and to
delegate such right to others. In consideration of National Financial's purchase
of the Receivable Assets, NAFI agrees to cooperate fully with National Financial
to facilitate the full and proper performance of such duties and obligations for
the benefit of National Financial.
2.7. Other Sales. Prior to the end of the Pre-Funding Period, NAFI
shall not sell, transfer, convey or assign any motor vehicle retail installment
sale contract originated or purchased by it, except as follows: (i) NAFI may
sell, transfer, convey and assign any such motor vehicle retail installment sale
contract to National Financial pursuant to this Agreement; (ii) NAFI may sell,
transfer, convey and assign to any Person, without limitation, any such motor
vehicle retail installment sale contract that does not comply with the
representations and warranties set
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forth in Section 4.1(b) or, if included in the Trust, would result in a
violation of clause (v) of Article III; and (iii) NAFI may sell, transfer,
assign and convey such motor vehicle retail installment sale contract to any
Person, without limitation, pursuant to a warehouse lending, repurchase or other
similar arrangement for the financing of the Receivable Assets pending transfer
to NAFI hereunder on the next Subsequent Transfer Date.
2.8. Protection of Title to Interest.
(a) NAFI shall execute and file such financing statements and cause to
be executed and filed such continuation and other statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of National Financial, the 1997-1 Trust, the Trust
Collateral Agent and the Insurer under this Agreement in the Trust Property and
in the proceeds thereof. NAFI shall deliver (or cause to be delivered) to
National Financial and the Insurer file-stamped copies of, or filing receipts
for, any document filed as provided above, as soon as available following such
filing.
(b) NAFI shall not change its name, identity or corporate structure in
any manner that would, could or might make any financing statement or
continuation statement filed by National Financial 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 Trust Collateral Agent and the Insurer (so
long as an Insurer Default shall not have occurred and be continuing) at least
60 days prior written notice thereof, and shall promptly file appropriate
amendments to all previously filed financing statements and continuation
statements as may be required to preserve and protect National Financial's
interest in the Receivable Assets, which filings shall be made no later than 30
days after the effective date of any such change.
(c) NAFI shall give National Financial, the Trust Collateral Agent and
the Insurer 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 appropriate amendments to all previously
filed financing statements and continuation statements as may be required to
preserve and protect National Financial's interest in the Receivable Assets,
which filings shall be made no later than 30 days after the effective date of
any such change. NAFI shall at all times maintain each office from which it
services Receivables and its principal executive office within the United States
of America.
(d) If at any time NAFI proposes to sell, grant a security interest in,
or otherwise transfer any interest in automotive receivables to any prospective
purchaser, lender or other transferee, NAFI shall give to such prospective
purchaser, lender or other transferee computer tapes, records or printouts
(including any restored from backup archives) that, if they refer in any manner
whatsoever to any Receivable, indicate clearly that such contract has been sold
and is owned by the 1997-1 Trust unless such Receivable has been paid in full or
repurchased by NAFI, National Financial or the Servicer.
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(e) NAFI shall permit National Financial, the Trust Collateral Agent,
the Insurer and their respective agents, at any time to inspect, audit and make
copies of and abstracts from NAFI's records regarding any Receivables or any
other portion of the Trust Property.
(f) NAFI shall furnish to National Financial, the Trust Collateral
Agent and the Insurer at any time upon request a list of all Receivables then
held as part of the Trust, together with a reconciliation of such list to the
Receivable Schedules and to each of the Servicer's statements furnished before
such request indicating removal of Receivables from the Trust. The Trust
Collateral Agent shall hold any such list and Receivable Schedules for
examination by interested parties during normal business hours at the Corporate
Trust Office upon reasonable notice by such Persons of their desire to conduct
an examination.
ARTICLE III
CONDITIONS PRECEDENT
National Financial's obligation to purchase Receivable Assets
hereunder on each Subsequent Transfer Date shall be subject to the execution,
delivery and effectiveness of the Sale and Servicing Agreement and the Indenture
and the delivery of the purchase price for the Notes to National Financial by
the initial purchasers thereof. In addition, the obligation of National
Financial to purchase Receivable Assets hereunder on each Subsequent Transfer
Date shall be further subject to the satisfaction of the following conditions on
or before the Closing Date or such Subsequent Transfer Date, as the case may be:
(i) all representations and warranties of NAFI contained in
Section 4.1(a) shall be true and correct and all representations and
warranties of NAFI in Section 4.1(b) shall be true and correct with
respect to the Receivables sold, transferred, conveyed and assigned to
National Financial on the Subsequent Transfer Date, in each case, on
and as of such Subsequent Transfer Date, as the case may be;
(ii) on such Subsequent Transfer Date, NAFI shall have duly
completed and executed to National Financial a Conveyance conforming to
the requirements of Section 2.03(b) or 2.4(b), as applicable;
(iii) on or before such Subsequent Transfer Date, (a) NAFI
shall have delivered to National Financial or such other Person as
National Financial shall direct the original motor vehicle retail
installment sale contract, duly endorsed by NAFI to National Financial,
and the Receivable Files that relate to each Receivable included in the
Receivable Assets then being sold by NAFI to National Financial and (b)
NAFI shall have performed all other obligations then required to be
performed by it pursuant to this Agreement, including, without
limitation, Sections 2.2 and 2.3 (b) or 2.4(b), as applicable;
(iv) no Bankruptcy Event or Servicer Termination Event shall
have occurred and be continuing on and as of such Subsequent Transfer
Date;
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(v) as of such Subsequent Transfer Date, the Receivables then
in the Trust, together with the Subsequent Receivables to be
transferred to National Financial on such Subsequent Transfer Date,
shall meet the following criteria (computed based on the
characteristics of the Subsequent Receivables as of the applicable
Subsequent Cut-off Date): (A) the weighted average Interest Rate of the
Receivables shall not be less than 18.0%, (B) the weighted average
remaining term of the Receivables shall not be greater than 55 months,
and (C) not more than 80% of the Aggregate Principal Balance
Receivables shall represent loans to finance the purchase of used
Financed Vehicles and (D) the final scheduled payment date on the
Receivable with the latest maturity shall not be later than October 30,
2002; and
(vi) all conditions precedent in Section 2.2 of the Sale and
Servicing Agreement to the transfer and assignment of such Subsequent
Receivables to the Trust pursuant to the Sale and Servicing Agreement
shall have been satisfied.
ARTICLE IV
REPRESENTATIONS, WARRANTIES AND COVENANTS
4.1 (a) NAFI hereby represents, warrants and covenants to National
Financial on and as of the Closing Date and each Subsequent Transfer Date that:
(i) NAFI is a Delaware corporation duly organized, validly
existing, and in good standing under the laws of the state of its
incorporation and has all licenses 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; NAFI 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) by NAFI and the
consummation of the transaction contemplated hereby have been duly and
validly authorized; this Agreement evidences the valid, binding and
enforceable obligation of NAFI (subject to applicable bankruptcy and
insolvency laws and other similar laws affecting the enforcement of
creditors' rights generally); and all requisite corporate action has
been taken by NAFI to make this Agreement valid and binding upon NAFI;
(ii) NAFI 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 except for
those which have been obtained;
(iii) the consummation of the transactions contemplated by
this Agreement will not result in the breach of any term or provision
of the bylaws of NAFI 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
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obligation under, any material agreement, indenture or loan or credit
agreement or other instrument to which NAFI or its property is subject,
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 NAFI or its property or the Receivables are subject;
(iv) no statement, report or other document furnished or to be
furnished pursuant to this Agreement or in connection with the
transaction contemplated hereby contains or will, when furnished,
contain any untrue statement of a material fact or omits or will, when
furnished, omit to state a material fact necessary to make the
statements contained therein not misleading, in light of the
circumstances under which they were made;
(v) neither NAFI 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 is 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 NAFI to perform its obligations
under this Agreement;
(vi) there are no actions, suits or proceedings pending or, to
the knowledge of NAFI, threatened against NAFI, before or by any court,
regulatory body, administrative agency, arbitrator or governmental body
with respect to any of the transactions contemplated by this Agreement,
which will, if determined adversely to NAFI, affect the validity or
enforceability hereof or materially and adversely affect NAFI's ability
to perform its obligations under this Agreement;
(vii) NAFI 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 consummation of all
the transactions herein contemplated;
(viii) NAFI shall not take any action to impair National
Financial's rights in any Receivable; and
(ix) NAFI is solvent and will not become insolvent after
giving effect to the transactions contemplated hereunder and under the
Basic Documents; NAFI is paying its debts as they become due; NAFI,
after giving effect to the contemplated transactions, will have
adequate capital to conduct its business.
NAFI shall indemnify National Financial and the Insurer and hold
National Financial and the Insurer harmless against any loss and damages
resulting from a breach of the representations and warranties set forth in
Section 4.1(a).
(b) NAFI hereby represents and warrants to National Financial as of the
Closing Date with respect to the Initial Receivables contributed and conveyed to
National Financial on the Closing Date by NAFI pursuant to this Agreement and
the Initial Receivables sold and conveyed to National Financial on the Closing
Date by National Financial Auto Funding
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Trust II ("Funding Trust II") and as of each Subsequent Transfer Date with
respect to the Subsequent Receivables sold and conveyed to National Financial on
such Subsequent Transfer Date by NAFI (unless another date or time period is
otherwise specified or indicated in the particular representation or warranty):
(i) the information regarding such Receivables set forth in
the applicable Receivable Schedule or Receivables Schedule is true and
correct in all material respects at the applicable Cut-off Date; 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;
(ii) immediately prior to the Closing Date or such Subsequent
Transfer Date, as the case may be, Funding Trust II or NAFI, as the
case may be, 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 exist or may hereafter arise, and Funding Trust II or NAFI, as
applicable, had the full right to assign such security interest to
National Financial;
(iii) on and after the Closing Date or such 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 security under 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 National Financial or its assigns (other than, as
to the priority of such security interest, any statutory lien arising
by operation of law after the Closing Date or such Subsequent Transfer
Date which is prior to such interest);
(iv) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, each such Receivable has not 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, and
immediately prior to the transfer and assignment contemplated by this
Agreement or the Sale Agreement, NAFI or National Financial Auto
Funding Trust II, as applicable, has good and marketable title to each
such Receivable free and clear of any encumbrance, equity, pledge,
charge, claim or security interest and is the sole owner thereof and
has full right to transfer each such Receivable to National Financial
and, upon the transfers pursuant to Article II or the Sale Agreement,
as applicable, National Financial will have good and marketable title
to each such 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 or Originator was not an extension of
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financing to such Dealer or Originator. No Dealer or Originator has a
participation in, or other right to receive, proceeds of any
Receivable. NAFI, Funding Trust II, the Master Trust, National
Financial and the Originators have not 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, Dealer
Agreement or Originator Agreement or to payments due under such
Receivable;
(v) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, no such Receivable is delinquent for more than
thirty days in payment as to any scheduled payment;
(vi) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, there is no lien against any related Financed
Vehicle for delinquent taxes;
(vii) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, 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;
(viii) as of the Closing Date or such Subsequent Transfer
Date, as the case may be, each such Receivable is not assumable by
another Person in a manner which would release the Obligor thereon from
such Obligor's obligations to National Financial with respect to such
Receivable;
(ix) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, 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;
(x) 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 laws, 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 receipt of interest on, and the ownership of, such
Receivable by National Financial will not violate any such laws;
(xi) 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 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
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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;
(xii) 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;
(xiii) 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;
(xiv) as of the Closing Date or such Subsequent Transfer Date,
as the case may be, there is no default, breach, violation or event of
acceleration existing under any such Receivable (except payment
delinquencies permitted by subparagraph (v) above) and no event which,
with the passage of time or with notice or with both, would constitute
a default, breach, violation or event of acceleration under any such
Receivable or would otherwise affect the value or marketability of such
contract; and NAFI, Funding Trust II or the Master Trust have not
waived any such default, breach, violation or event of acceleration and
as of the applicable Cut-off Date, the related Finance Vehicle has not
been repossessed;
(xv) at the origination date of each such Receivable, the
related Financed Vehicle was covered by a comprehensive and collision
insurance policy (i) in an amount at least equal to the lesser of (a)
and actual cash value of the related Financed Vehicle or (b) the unpaid
balance owing on such Receivable, less the related Unearned Financing
Charge, (ii) naming NAFI as a loss payee and (iii) insuring against
loss and damage due to fire, theft, transportation, collision and other
risks generally covered by comprehensive and collision coverage; each
Receivable requires the Obligor to maintain physical loss and damage
insurance, naming NAFI as an additional insured party;
(xvi) each such Receivable was acquired by NAFI from a Dealer
or Originator with which it ordinarily does business; such Dealer or
Originator had full right to assign to NAFI such Receivable and the
security interest in the related Financed Vehicle (and the Dealer that
assigned any such Receivable to any such Originator had full right to
assign to such Originator such Receivable and the security interest in
the related Financed Vehicle) and the Dealer's or Originator's
assignment thereof to NAFI is legal, valid and binding (and any such
assignment by any Dealer to any Originator is legal, valid and binding)
and the Master Trust had full right to assign to NAFI or Funding Trust
II, as the case may be, such Receivable and the security interest in
the related Financed Vehicle and NAFI or Funding Trust II, as the case
may be, had full right to assign to National Financial such Receivable
and the security interest in the related Financed Vehicle and NAFI's or
Funding Trust II's assignment thereof to National Financial is legal,
valid and binding;
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(xvii) 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;
(xviii) 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); the original
term to maturity of such Receivable was not more than 60 months;
(xix) 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;
(xx) there is only one original of each such Receivable, the
Servicer is currently in possession of the Receivable Documents for
such Receivable and there are no custodial agreements in effect
adversely affecting the right of NAFI to make the deliveries required
hereunder on the Closing Date or such Subsequent Transfer Date;
(xxi) as of the Cut-off Date or Subsequent Cut-off Date, as
applicable, no Obligor was the subject of a current bankruptcy
proceeding;
(xxii) with respect to each Due Period, the aggregate of the
interest due on all the Receivables in such Due Period from scheduled
payments is in excess of the sum of (i) Servicing Fee due and any fees
due to the Trust Collateral Agent and the Insurer, each in 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;
(xxiii) 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 National Financial a first priority perfected lien
on, or an ownership interest in the Receivables and the proceeds
thereof and the remaining Trust Property have been made, taken or
performed;
(xxiv) 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 constitute part
of the Trust Property and to be owned by the Trust in accordance with
the terms of this Agreement;
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(xxv) 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;
(xxvi) 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 contract under
this Agreement or the Transfer Agreement, as applicable, or pursuant to
transfers of the Notes. National Financial has not entered into any
agreement with any account debtor that prohibits, restricts or
conditions the assignment of any portion of the Receivables;
(xxvii) 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; and
(xxviii) as of the Initial Cut-off Date, the weighted average
annual percentage rate, as such term is used with respect to the
Federal Truth-in Lending Act ("APR") of the Initial Receivables was
approximately 19.38% and the weighted average remaining scheduled
maturity on the Initial 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 is a Simple
Interest or Actuarial Receivable.
In the event NAFI has breached any of the foregoing representations and
warranties and National Financial has accepted a retransfer or is required to
accept a retransfer of the affected Receivable pursuant to the Sale and
Servicing Agreement, NAFI shall, upon demand, repurchase such Receivable from
National Financial. In addition, with respect to any Receivable in respect of
which the Title Document was being applied for on the Closing Date or the
applicable Subsequent Transfer Date, as the case may be, if such Title Document
has not been received by National Financial or its transferee within 180 days
after the Closing Date or such Subsequent Transfer Date, as the case may be, and
National Financial is required to accept a retransfer of such Receivable
pursuant to the Sale and Servicing Agreement, NAFI shall, upon demand by
National Financial, repurchase such Receivable. Any such repurchases by NAFI
shall be at a repurchase price equal to the Purchase Amount determined in the
manner provided in the Sale and Servicing Agreement. Such repurchase price shall
be paid by NAFI at the direction of National Financial and upon receipt of such
repurchase price, National Financial shall release, or cause to be released, to
NAFI the related Receivable File and National Financial or its transferee shall
execute and deliver such instruments of transfer or assignment, in each case
without recourse, as shall be necessary to vest in NAFI or its designee any
Receivable released pursuant thereof. Except as expressly provided in the next
sentence, it is understood and agreed that the obligation of NAFI to purchase
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 National Financial. NAFI shall indemnify, defend and hold National
Financial harmless from and
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against any and all losses, damages, claims, expenses and liabilities arising
out of or relating to a breach by NAFI of its representations and warranties in
clauses (vii) and (x) of this Section 4.1(b).
Notwithstanding Section 5.1, it is understood and agreed that the
representations, warranties and covenants set forth in this Section 4.1 shall
survive until the date upon which the Trust terminates pursuant to Section 11.1
of the Sale and Servicing Agreement.
ARTICLE V
DEFINITIONS
5.1. Term. This Agreement shall commence as of the Closing Date and
shall continue in full force and effect until the close of business on October
30, 1997.
5.2. Notices. All notices, demands and requests that may be given or
that are required to be given hereunder shall be sent by United States certified
mail, postage prepaid, return receipt requested, to the parties at their
respective addresses as follows:
IF TO NAFI: National Auto Finance Company, Inc.
Xxx Xxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention: President
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
IF TO NATIONAL FINANCIAL National Financial Auto
Funding Trust
Xxx Xxxx Xxxxx
Xxxxx 000
Xxxx Xxxxx, Xxxxxxx 00000
Attention:
Telecopy No.:
Confirmation: (000) 000-0000
WITH A COPY TO Chase Manhattan Bank Delaware
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attn: Corporate Trust
Administration Department
IF TO THE TRUST COLLATERAL AGENT: Xxxxxx Trust and Savings Bank
000 Xxxx Xxxxxx Xxxxxx, 12th Floor
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Xxxxxxx, Xxxxxxxx 00000
Attention: Indenture Trust Division
Telecopy No.: (000) 000-0000
Confirmation: (000) 000-0000
IF TO THE INSURER: Financial Security Assurance Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Surveillance Department
Re: NAFI Auto Finance 1997-1 Trust,
6.35% Automobile Receivables-
Backed Notes
Telecopier No.: (000) 000-0000
(000) 000-0000
Confirmation: (000) 000-0000
5.3. CHOICE OF LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK AND THE OBLIGATIONS, RIGHTS AND REMEDIES
OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.
5.4. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed shall be deemed to be an original, but
all of such counterparts shall together constitute but one and the same
instrument.
5.5. Amendment. This Agreement may be amended from time to time by NAFI
and National Financial to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions herein or
therein, or to make any other provisions with respect to matters or questions
arising under this Agreement which shall not be materially inconsistent with the
provisions of this Agreement, provided that such action shall not, as evidenced
by an Opinion of Counsel delivered to the Trust Collateral Agent, adversely
affect in any material respect the interests of the Noteholders and provided
further that such action shall be consented to in writing by the Insurer (unless
an Insurer default shall have occurred and be continuing).
5.6. Severability of Provisions. If any one or more of the covenants,
agreements, provisions or terms of this Agreement shall be for any reason
whatsoever held invalid, then such covenants, agreements, provisions or terms
shall be deemed severable from the remaining covenants, agreements, provisions
or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement.
5.7. Assignment. This Agreement may not be assigned by NAFI or National
Financial except as contemplated by this Section and the Sale and Servicing
Agreement; provided however,
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that simultaneously with the execution and delivery of this Agreement, National
Financial shall assign all of its right, title and interest under Section 4.1 to
the 1997-1 Trust to which NAFI hereby expressly consents. NAFI agrees to perform
its obligations hereunder for the benefit of the Trust and further agrees that
the Trust Collateral Agent or the Insurer may (but shall have no obligation to)
enforce the provisions of Section 4.1 and exercise the rights of National
Financial to enforce the obligations of NAFI under Section 4.1 on behalf of the
Trust Collateral Agent and the Noteholders without the consent of National
Financial.
5.8. Third-Party Beneficiaries. This Agreement will inure to the
benefit of and be binding upon the parties hereto, and shall also be for the
benefit of the Trust Collateral Agent (for the benefit of the Noteholders) and
the Insurer, each of which shall be considered to be third-party beneficiaries
and shall be entitled to rely on and directly enforce the provisions of this
Agreement. Except as otherwise provided in this Agreement, no other Person will
have any right or obligation hereunder. The Insurer may disclaim any of its
rights and powers under this Agreement upon delivery of a written notice to the
Trust Collateral Agent and NAFI.
5.9. No Petition: NAFI hereby agrees that it will not institute against
National Financial, or join any other Person instituting against National
Financial, any bankruptcy or insolvency proceeding under any applicable state or
federal law so long as any Note issued pursuant to the Indenture remains
outstanding or there shall have not elapsed one year plus one day since the date
of the final payment on the Notes issued pursuant to the Indenture. The
foregoing shall not limit the right of NAFI to file any claim in or otherwise
take any action with respect to any bankruptcy or insolvency proceeding that was
instituted against National Financial by any Person other than NAFI.
5.10. Limitation of Liability of National Financial Trustee:
Notwithstanding anything contained herein to the contrary, this Agreement has
been executed and delivered by Chase Manhattan Bank Delaware not in its
individual capacity but solely as Trustee and in no event shall Chase Manhattan
Bank Delaware, have any liability for the representations, warranties,
covenants, agreements or other obligations of National Financial 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 National Financial.
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IN WITNESS WHEREOF, the parties hereto have executed this Purchase and
Contribution Agreement as of the day and year first written above.
NATIONAL FINANCIAL AUTO FUNDING TRUST
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.
By: ____________________________________
Name:
Title:
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EXHIBIT A
FORM OF CONVEYANCE
CONVEYANCE No. ___, dated as of _______________, 19__, by National Auto
Finance Company, Inc., a Delaware corporation ("Originator"), to National
Financial Auto Funding Trust, a Delaware business trust ("National Financial"),
pursuant to the Purchase and Contribution Agreement referred to below.
WITNESSETH:
WHEREAS, Originator and National Financial are parties to the Purchase
and Contribution Agreement, dated as of July __, 1997 (as such agreement may
have been, or may from time to time be, amended, supplemented or otherwise
modified, the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, Originator wishes to sell,
transfer, convey and assign Receivable Assets (as defined in the Purchase
Agreement) to National Financial;
NOW THEREFORE, Originator and National Financial hereby agree as
follows:
1. Defined Terms. All capitalized terms used but not defined herein
shall have meanings ascribed to them in the Purchase Agreement.
"Subsequent Transfer Date" shall mean, with respect to the Receivable
Assets sold hereby, ____________________, 199[ ].
2. Transfer of Receivables. For value received, Originator hereby
sells, transfers, assigns, sets-over and conveys to National Financial, without
recourse except as set forth in the Purchase Agreement, and with the
representations, warranties and covenants set forth in the Purchase Agreement,
on and after the Subsequent Transfer Date, all right, title and interest of
National Financial in, to and under all Subsequent Receivables listed in
Schedule 1 hereto and the Receivable Assets related thereto.
3. Delivery of Receivable Schedule. Originator does hereby deliver
National Financial herewith a Receivable Schedule containing a true and complete
list of each Subsequent Receivable being sold hereby as of the Subsequent
Transfer Date. Such Receivable Schedule is marked as Schedule 1 to this
Conveyance and is hereby incorporated in and made a part of this Conveyance and
the Purchase Agreement.
4. Receivable Files. Originator does hereby deliver to National
Financial or such other Person designated by National Financial the original
motor vehicle retail installment sale contracts and Receivable Files for each
Receivable identified in the Receivable Schedule.
5. Acceptance and Acknowledgment. National Financial hereby
acknowledges its acceptance of all right, title and interest of Originator in,
to and under the Receivables and the other Receivable Assets sold hereby.
Originator further acknowledges that, prior to or
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simultaneously with the execution and delivery of this Conveyance the conditions
precedent to such sale set forth in Article III of the Purchase Agreement have
been satisfied.
6. Certification; Representations and Warranties. Originator hereby
certifies to National Financial that all applicable requirements of Article III
of the Purchase Agreement have been fully satisfied and that all representations
and warranties of Originator set forth in Section 4.1(a) of the Purchase
Agreement are true and correct on and as of the date hereof and all
representations and warranties of Originator set forth in Section 4.1(b) of the
Purchase Agreement are true and correct on and as of the date hereof with
respect to the Subsequent Receivables sold hereby. The aggregate outstanding
principal balance of the Subsequent Receivables sold hereby as of the applicable
Cut-off Date is $__________________.
7. The Purchase Agreement. The Purchase Agreement shall continue to be,
and shall remain, in full force and effect in accordance with its terms, and
hereby is ratified and confirmed in all respects.
8. Counterparts. This Conveyance may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
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SCHEDULE 1
SCHEDULE OF RECEIVABLES
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