Execution Copy
MASTER SPREAD ACCOUNT AGREEMENT,
dated as of November 21, 1995,
among
NATIONAL FINANCIAL AUTO FUNDING TRUST
FINANCIAL SECURITY ASSURANCE INC.
and
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Trustee and as Collateral Agent
TABLE OF CONTENTS
Page
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions...................................................................... 2
Section 1.02. Rules of Interpretation.......................................................... 8
ARTICLE II.
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. Credit Enhancement Fee........................................................... 9
Section 2.02. Series Supplements............................................................... 9
Section 2.03. Grant of Security Interest by the Transferor..................................... 10
Section 2.04. Priority......................................................................... 10
Section 2.05. Transferor Remains Liable........................................................ 11
Section 2.06. Maintenance of Collateral........................................................ 11
Section 2.07. Termination and Release of Rights................................................ 12
Section 2.08. Non-Recourse Obligations of Transferor........................................... 13
ARTICLE III.
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits into
Spread Accounts............................................................... 13
Section 3.02. Investments...................................................................... 14
Section 3.03. Distributions; Priority of Payments.............................................. 15
Section 3.04. General Provisions Regarding Spread Accounts..................................... 17
Section 3.05. Reports by the Collateral Agent.................................................. 18
ARTICLE IV.
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers........................................................... 19
Section 4.02. Performance of Duties............................................................ 19
Section 4.03. Limitation on Liability.......................................................... 19
Section 4.04. Reliance upon Documents.......................................................... 20
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Section 4.05. Successor Collateral Agent....................................................... 20
Section 4.06. Indemnification.................................................................. 22
Section 4.07. Compensation and Reimbursement................................................... 23
Section 4.08. Representations and Warranties of the Collateral Agent........................... 23
Section 4.09. Waiver of Setoffs................................................................ 23
Section 4.10. Control by the Controlling Party................................................. 24
ARTICLE V.
COVENANTS OF THE TRANSFEROR
Section 5.01. Preservation of Collateral....................................................... 24
Section 5.02. Opinions as to Collateral........................................................ 24
Section 5.03. Notices.......................................................................... 25
Section 5.04. Waiver of Stay or Extension Laws; Marshalling of Assets.......................... 25
Section 5.05. Noninterference, etc............................................................. 25
Section 5.06. Transferor Changes............................................................... 26
ARTICLE VI.
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party................................................. 26
Section 6.02. Controlling Party's Authority.................................................... 27
Section 6.03. Rights of Secured Parties........................................................ 27
Section 6.04. Degree of Care................................................................... 28
ARTICLE VII.
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default.......................................................... 28
Section 7.02. Waiver of Default................................................................ 28
Section 7.03. Restoration of Rights and Remedies............................................... 29
Section 7.04. No Remedy Exclusive.............................................................. 29
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Further Assurances............................................................... 29
Section 8.02. Waiver........................................................................... 29
Section 8.03. Amendments, Waivers.............................................................. 30
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Section 8.04. Severability..................................................................... 30
Section 8.05. Nonpetition Covenant............................................................. 30
Section 8.06. Notices.......................................................................... 31
Section 8.07. Term of this Agreement........................................................... 32
Section 8.08. Assignments, Third-Party Rights; Reinsurance..................................... 33
Section 8.09. Consent of Controlling Party..................................................... 33
Section 8.10. Trial by Jury Waived............................................................. 33
Section 8.11. Governing Law.................................................................... 34
Section 8.12. Consents to Jurisdiction......................................................... 34
Section 8.13. Limitation of Liability.......................................................... 34
Section 8.14. Determination of Adverse Effect.................................................. 35
Section 8.15. Counterparts..................................................................... 35
Section 8.16. Headings......................................................................... 35
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MASTER SPREAD ACCOUNT AGREEMENT
MASTER SPREAD ACCOUNT AGREEMENT, dated as of November 21,
1995 (the "Agreement"), by and among NATIONAL FINANCIAL AUTO FUNDING
TRUST, a Delaware business trust (the "Transferor"), FINANCIAL
SECURITY ASSURANCE INC., a New York stock insurance company
("Financial Security") and ▇▇▇▇▇▇ TRUST AND SAVINGS BANK, an Illinois
banking corporation in its capacities as Trustee under each Pooling
and Servicing Agreement referred to below, in such capacity as agent
for the Certificateholders with respect to the related Series (the
"Trustee") and as Collateral Agent (as defined below).
RECITALS
1. National Auto Finance 1995-1 Trust (the "Series 1995-1
Trust") was formed pursuant to a Pooling and Servicing Agreement,
dated as of October 1, 1995 (the "Series 1995-1 Pooling and Servicing
Agreement"), among the Transferor, National Auto Finance Company, L.P.
("NAFCO"), as Master Servicer (the "Master Servicer") and the Trustee.
2. Pursuant to the Series 1995-1 Pooling and Servicing
Agreement, the Transferor sold to the Series 1995-1 Trust all of its
right, title and interest in and to the Contracts and certain other
property of the Trust Estate.
3. The Transferor requested that Financial Security issue the
Series 1995-1 Policy to the Trustee to guarantee payment of the
Guaranteed Distributions (as defined in such Policy) on each
Distribution Date in respect of the Series 1995-1 Certificates.
4. In partial consideration of the issuance of the Series
1995-1 Policy, the Transferor has agreed that Financial Security shall
have certain rights as Controlling Party, to the extent set forth
herein with respect to the Series 1995-1 Trust.
5. The Transferor is a special purpose Delaware business
trust, the beneficial ownership interests of which are held by NAFCO
and its affiliates. The Series 1995-1 Trust has agreed to pay a Series
1995-1 Credit Enhancement Fee to the Transferor in consideration of
the obligations of the Transferor pursuant hereto in respect of the
Series 1995-1 Certificates and in consideration of the obligations of
the Transferor pursuant to the Series 1995-1 Insurance Agreement (such
obligations forming part of the 1995-1 Insurer Secured Obligations
referred to herein). The 1995-1 Insurer Secured Obligations form part
of the consideration to Financial Security for its issuance of the
Series 1995-1 Policy.
6. To secure the performance of the Series 1995-1 Secured
Obligations, to further effect and enforce the subordination
provisions to which the Credit Enhancement Fee is subject to, and in
consideration of the receipt of the Credit Enhancement Fee, the
Transferor has agreed to pledge the Series 1995-1 Collateral as
Collateral to the Collateral Agent for the
benefit of Financial Security and for the benefit of the Trustee on behalf of
the Trust, upon the terms and conditions set forth herein.
7. It is contemplated that the Transferor and NAFCO may enter
into one or more additional Pooling and Servicing Agreements with the
Trustee pursuant to which the Transferor will sell all of its right,
title and interest in pools of Contracts, and that Financial Security
in its discretion may issue additional Policies with respect to
certain guaranteed distributions on the corresponding additional
Series of Certificates. In connection with any such issuance of
additional Policies, it is contemplated that Financial Security will
obtain certain Controlling Party rights with respect to the related
Series, and that, in connection with each such additional Series, the
parties hereto will enter into a Series Supplement hereto pursuant to
which the Transferor will pledge additional Collateral pursuant to the
terms hereof.
AGREEMENTS
In consideration of the premises, and for other good and
valuable consideration, the adequacy, receipt and sufficiency of which
are hereby acknowledged the parties hereto agree as follows:
ARTICLE I.
DEFINITIONS
Section 1.01. Definitions. Unless defined in this Agreement,
capitalized terms used in this Agreement shall have the meaning given
such terms in the applicable Series Pooling and Servicing Agreement or
Series Supplement, as identifiable from the context in which such term
is used. The following terms shall have the following respective
meanings:
"Authorized Officer" means, (i) with respect to Financial
Security, the Chairman of the Board, the President, the Executive Vice
President or any Managing Director of Financial Security, (ii) with
respect to the Trustees or the Collateral Agent, any Vice President or
Trust Officer thereof, and (iii) with respect to the Transferor, any
Co-Trustee thereof.
"Certificates" means, with respect to a Series, the
Certificates issued pursuant to the Pooling and Servicing Agreement
for such Series.
"Collateral" means the Series 1995-1 Collateral, and with
respect to any other Series, all collateral delivered hereunder with
respect to each of such Series, as specified in the related Series
Supplement.
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"Collateral Agent" means, initially, ▇▇▇▇▇▇ Trust and Savings
Bank, in its capacity as collateral agent on behalf of the Secured
Parties, including its successors in interest, until a successor
Person shall have become the Collateral Agent pursuant to Section 4.05
hereof, and thereafter "Collateral Agent" shall mean such successor
Person.
"Collateral Agent Fee" means, with respect to the Series
1995-1 Certificates, the annual fee payable to the Collateral Agent
for services rendered as the Collateral Agent, which Collateral Agent
Fee is included in the fees paid to ▇▇▇▇▇▇ Trust pursuant to the
Series 1995-1 Pooling and Servicing Agreement.
"Collection Account" means the Collection Account applicable
to any Series, as specified in the related Pooling and Servicing
Agreement.
"Controlling Party" means with respect to a Series, at any
time, the Person designated as the Controlling Party at such time
pursuant to Section 6.01 hereof.
"Credit Enhancement Fee" means the Credit Enhancement Fee
applicable to any Series as specified in this Agreement or any Series
Supplement.
"Deemed Cured" means, as of a Reporting Date, with respect to
a Trigger Event that has occurred with respect to a Series, that no
Trigger Event with respect to such Series shall have occurred as of
such Reporting Date or as of any of the three consecutively preceding
Reporting Dates.
"Default" means with respect to any Series, at any time, (i)
if Financial Security is then the Controlling Party with respect to
such Series, any Insurance Agreement Event of Default with respect to
such Series, and (ii) if the Trustee is then the Controlling Party
with respect to such Series, any Servicer Default with respect to such
Series.
"Delinquency Claim Date" means, with respect to any
Distribution Date, the fourth Business Day preceding such Distribution
Date.
"Delivery" shall have the meaning set forth in the Series
1995-1 Pooling and Servicing Agreement.
"Final Termination Date" means, with respect to a Series, the
date that is the later of (i) the Insurer Termination Date with
respect to such Series and (ii) the Trustee Termination Date with
respect to such Series.
"Financial Security Default" means, with respect to any
Series, any one of the following events shall have occurred and be
continuing:
(a) Financial Security shall have failed to make
a payment required under the related Policy;
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(b) Financial Security 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
(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 Financial Security 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
Financial Security (or the taking of possession of all or any
material portion of the property of Financial Security).
"Guaranteed Distributions" shall have the meaning set forth in the
related Policy.
"Initial Spread Account Deposit" means, with respect to the
Series 1995-1 Certificates, an amount equal to 1% of the Series 1995-1
Initial Balance or $420,000.
"Insurance Agreement" means, with respect to any Series, the
Insurance and Indemnity Agreement among Financial Security, NAFCO and
the Transferor and such other parties as may be named therein,
pursuant to which Financial Security issued a Policy to the Trustee.
"Insurer Secured Obligations" means, with respect to a
Series, all amounts and obligations which may at any time be owed to
or on behalf of Financial Security (or any agents, accountants or
attorneys for Financial Security) under the Insurance Agreement
related to such Series or under any Transaction Document in respect of
such Series, regardless of whether such amounts are owed now or in the
future, whether liquidated or unliquidated, contingent or
noncontingent.
"Insurer Termination Date" means, with respect to any Series,
the date which is the latest of (i) the date of the expiration of all
Policies issued in respect of such Series, (ii) the date on which
Financial Security shall have received payment and performance in full
of all Insurer Secured Obligations with respect to such Series and
(iii) the latest date any payment referred to above could be avoided
as a preference or otherwise under the United States Bankruptcy Code
or any other similar federal or state law relating to insolvency,
bankruptcy, rehabilitation, liquidation or reorganization, as specified
in an Opinion of Counsel delivered to the Collateral Agent and the Trustee.
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"Lien" means any security interest, lien, change, pledge,
preference, equity or encumbrance of any kind, including tax liens,
mechanics' liens and any liens that attach by operation of the law.
"Monthly Period" means, with respect to a Reporting Date or a
Distribution Date, the calendar month immediately preceding the month
in which such Reporting Date or Distribution Date occurs (such
calendar month being referred to as the "related" Monthly Period with
respect to such Reporting Date or Distribution Date).
"NAFCO" means National Auto Finance Company L.P.
"Non-Controlling Party" means with respect to a Series at any
time, the Secured Party that is not the Controlling Party at such
time.
"Opinion of Counsel" means a written opinion of counsel
acceptable, as to form, substance and issuing counsel, to the
Controlling Party.
"Policy" means the Series 1995-1 Policy and any insurance
policy subsequently issued by Financial Security with respect to a
Series.
"Pooling and Servicing Agreement" means, with respect to the
Series 1995-1 Certificates, the Series 1995-1 Pooling and Servicing
Agreement and, for each other Series created pursuant to a Pooling and
Servicing Agreement, the Pooling and Servicing Agreement related to
such Series.
"Requisite Amount" means, with respect to the 1995-1 Series,
as of any Reporting Date after giving effect to any distributions of
Certificate Distributable Amount to be made on the related
Distribution Date, the greater of (a) the lesser of (i) 2% of the
Series 1995-1 Initial Balance and (ii) the greater of (A) the
Certificate Balance, and (B) $100,000 and (b) (i) if a Trigger Event
shall have occurred as of such Reporting Date (and until such Trigger
Event is Deemed Cured) and no Insurance Agreement Event of Default
shall have occurred as of such Reporting Date, 7% of the Series ▇▇▇▇-▇
▇▇▇▇▇▇▇; or (iii) if an Insurance Agreement Event of Default shall
have occurred as of such Reporting Date, an unlimited amount.
"Secured Obligations" means, with respect to each Series the
Insurer Secured Obligations with respect to such Series and the
Trustee Secured Obligations with respect to such Series.
"Secured Parties" means Financial Security and the Trustee.
"Security Interests" means, with respect to the Series 1995-1
Certificates, the security interests and Liens in the Series 1995-1
Collateral granted pursuant to Section 2.03 hereof,
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and, with respect to any other Series, the security interests and Liens
in the related Collateral granted pursuant to the related Series Supplement.
"Series ▇▇▇▇-▇ ▇▇▇▇▇▇▇" means with respect to any
Determination Date, the sum of the Pool Outstanding Principal Balance
as of the related Distribution Date, the amount on deposit in the
Pre-Funding Account, if any, on such date and the amount on deposit
the Revolving Account, if any, on such date.
"Series 1995-1 Certificates" means the Series of Certificates
issued pursuant to the Series 1995-1 Pooling and Servicing Agreement.
"Series 1995-1 Collateral" has the meaning specified in
Section 2.03(a) hereof.
"Series 1995-1 Credit Enhancement Fee" means the amount
distributable on each Distribution Date pursuant to Section 4.01(b)(v)
of the Series 1995-1 Pooling and Servicing Agreement.
"Series 1995-1 Initial Balance" means $42,000,000.
"Series 1995-1 Insurance Agreement" means the Insurance
Agreement related to the Series 1995-1 Certificates.
"1995-1 Insurer Secured Obligations" means the Insurer
Secured Obligations with respect to the Series 1995-1 Certificates.
"Series 1995-1 Policy" means the Policy issued with respect
to the Series 1995-1 Certificates.
"Series 1995-1 Pooling and Servicing Agreement" means the
Pooling and Servicing Agreement, dated as of October 1, among the
Transferor, NAFCO, as the Master Servicer, and ▇▇▇▇▇▇ Trust and
Savings Bank, as Trustee, as such agreement may be supplemented,
amended or modified from time to time.
"Series 1995-1 Secured Obligations" means the Secured
Obligations related to the Series 1995-1 Certificates.
"Series 1995-1 Spread Account" has the meaning specified in
Section 3.01(a) hereof.
"Series of Certificates" or "Series" means the Series 1995-1
Certificates or, as the context may require, any other series of
Certificates issued as described in Section 2.02 hereof, or
collectively, all such series.
"Series Supplement" means a supplement hereto executed by the
parties hereto in accordance with Section 2.02 hereof.
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"Spread Account" has the meaning specified in Section 3.01(a) hereof.
"Spread Account Permitted Investments" means Permitted
Investments held by the Collateral Agent in a Spread Account and with
respect to which the Collateral Agent has taken Delivery.
"Spread Account Shortfall" means, with respect to any Series
and any Reporting Date with respect to which the Requisite Amount for
such Series is 7% of the Series 1995-1 Balance or unlimited, the
excess, if any, of (a) the greater of 7% of the Series 1995-1 Balance
and the amount determined by reference to clause (a) of the definition
of Requisite Amount with respect to such Distribution Date over (b)
the amount on deposit in the related Spread Account after making any
withdrawals therefrom required by priority THIRD of Section 3.03(b)
hereof.
"Transaction Documents" means, with respect to a Series, this
Agreement, each of the Pooling and Servicing Agreement, the Insurance
Agreement, the Indemnification Agreement, the Purchase Agreement, the
Registration Rights Agreement, if any, the Assignment Agreement, if
any, the Custodial Agreement, any Conveyance related to such Series
and any Transfer Agreement related to such Series.
"Trigger Event" means, with respect to Series 1995-1, as of
any Reporting Date with respect to Series 1995-1 that any one of the
following events shall have occurred and shall not have terminated:
(a) the Average Delinquency Ratio as of such Reporting Date is equal
to or greater than 7.5%; or (b) the Average Default Rate as of any
Reporting Date (i) occurring on or prior to November 14, 1996, is
equal to or greater than 12%, (ii) occurring subsequent to November
14, 1996 and on or prior to November 14, 1997, is equal to or greater
than 16% and (iii) occurring subsequent to November 14, 1997, is equal
to or greater than 12%; or (c) the Average Net Loss Rate as of any
Reporting Date (i) occurring on or prior to November 14, 1996, is
equal to or greater than 6%, (ii) occurring subsequent to November 14,
1996 and on or prior to November 14, 1997, is equal to or greater than
8%, (iii) occurring subsequent to November 14, 1997, is equal to or
greater than 6%. A Trigger Event will be deemed to have terminated as
of a Reporting Date if as of each of the two most recent Reporting
Dates and the current Reporting Date no event constituting a Trigger
Event shall exist.
"Trust" means a trust formed pursuant to a Pooling and Servicing
Agreement.
"Trust Estate" with respect to any Series means the property
held in the estate of the Trust formed pursuant to the related Pooling
and Servicing Agreement.
"Trustee" means with respect to any Series, the Trustee named
in the related Pooling and Servicing Agreement.
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"Trustee Secured Obligations" means, with respect to a
Series, all amounts and obligations which NAFCO or the Transferor may
at any time owe to or on behalf of the Trustee, the Trust or the
Certificateholders under the Pooling and Servicing Agreement with
respect to such Series.
"Trustee Termination Date" means, with respect to any Series,
the date which is the latest of (i) the date on which the Trustee
shall have received, as Trustee for the holders of the Certificates of
such Series, payment and performance in full of all Trustee Secured
Obligations arising out of or relating to such Series and (ii) the
date on which all payments in respect of the Certificates shall have
been made and the related Trust shall have been terminated pursuant to
the terms of the related Pooling and Servicing Agreement and (iii) the
latest date any payment referred to above could be avoided as a
preference or otherwise under the United States Bankruptcy Code or any
other similar federal or state law relating to insolvency, bankruptcy,
rehabilitation, liquidation or reorganization, as specified in an
Opinion of Counsel delivered to the Collateral Agent and the Trustee.
"Uniform Commercial Code" or "UCC" means the Uniform
Commercial Code in effect in the relevant jurisdiction, as the same
may be amended from time to time.
"Unreimbursed Amounts" has the meaning specified in Section
3.03(b) hereof.
Section 1.02. Rules of Interpretation. The terms "hereof,"
"herein" or "hereunder," unless otherwise modified by more specific
reference, shall refer to this Agreement in its entirety. Unless
otherwise indicated in context, the terms "Article," "Section,"
"Appendix," "Exhibit" or "Annex" shall refer to an Article or Section
of, or Appendix, Exhibit or Annex to, this Agreement. The definition
of a term shall include the singular, the plural, the past, the
present, the future, the active and the passive forms of such term. A
term defined herein and used herein preceded by a Series designation,
shall mean such term as it relates to the Series designated.
ARTICLE II.
CREDIT ENHANCEMENT FEE; SERIES SUPPLEMENTS; THE COLLATERAL
Section 2.01. Credit Enhancement Fee. To the extent that a
Pooling and Servicing Agreement relating to a particular Series
provides for the payment to the Transferor of a Credit Enhancement
Fee, such Credit Enhancement Fee is to be paid to the Transferor by
distribution of such amounts to the Collateral Agent for deposit and
distribution pursuant to this Agreement. The Transferor hereby agrees
that payment of the Credit Enhancement Fee in the manner and subject
to the conditions set forth herein and in the related Pooling and
Servicing Agreement is adequate consideration and the exclusive
consideration to be received by the Transferor for the obligations
of the Transferor pursuant hereto (including, without limitation, the
transfer by the Transferor to the Collateral Agent of the Initial
Spread Account
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Deposit related to such Series). The Transferor hereby agrees with
the Trustee and with Financial Security that payment of the Credit
Enhancement Fee to the Transferor is expressly conditioned on
subordination of the Credit Enhancement Fee to payments on the senior
Certificates of any Series, payments of amounts due to Financial
Security and the other obligations in respect of each Trust, in each
case to the extent provided in the applicable Pooling and Servicing
Agreement and Section 3.03 hereof; and the Security Interests of the
Secured Parties in the Collateral is intended to effect and enforce
such subordination and to provide security for the Secured Obligations
related to such Series and, except as otherwise provided in the
related Series Supplement, for Secured Obligations with respect to
other Series.
Section 2.02. Series Supplements. The parties hereto agree
that NAFCO and the Transferor will have the option to enter into a
Series Supplement hereto with respect to each Series of Certificates,
the Secured Obligations with respect to which are to be secured by
Collateral held pursuant to the provisions of this Agreement. The
parties will enter into a Series Supplement only if the following
conditions shall have been satisfied:
(i) The Transferor shall have sold Contracts to a
Trust pursuant to a Pooling and Servicing Agreement;
(ii) Financial Security shall have issued a Policy
in respect of the Guaranteed Distributions on the Series of
Certificates issued pursuant to such Pooling and Servicing
Agreement; and
(iii) Pursuant to the related Series Supplement any
and all right, title and interest of the Transferor in the
Collateral specified herein shall be pledged to the Secured
Parties substantially on the terms set forth in Section 2.03
hereof.
Section 2.03. Grant of Security Interest by the Transferor.
(a) To secure the performance of the 1995-1 Secured
Obligations and the Secured Obligations with respect to each other
Series, to the extent provided herein, the Transferor hereby pledges,
assigns, grants, transfers and conveys to the Collateral Agent, on
behalf of and for the benefit of the Secured Parties, a lien on and
security interest in (which lien and security interest is intended to
be prior to all other Liens), all of its right, title and interest in
and to the following (all being collectively referred to herein as the
"Series 1995-1 Collateral" and constituting Collateral hereunder):
(i) the Series 1995-1 Credit Enhancement Fee and all
rights and remedies that the Transferor may have to enforce
payment of the Series 1995-1 Credit Enhancement Fee whether
under the Series 1995-1 Pooling and Servicing Agreement or
otherwise;
(ii) the Series 1995-1 Spread Account established
pursuant to Section 3.01 hereof, and each other account owned
by the Transferor and maintained by the
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Collateral Agent (including, without limitation, the Initial
Spread Account Deposit related thereto and all additional
monies, checks, securities, investments and other documents
from time to time held in or evidencing any such accounts);
(iii) all of the Transferor's right, title and
interest in and to investments made with proceeds of the
property described in clauses (i) and (ii) above, or made
with amounts on deposit in the Series 1995-1 Spread Account;
and
(iv) all distributions, revenues, products,
substitutions, benefits, profits and proceeds, in whatever
form, of any of the foregoing.
(b) To effectuate the provisions and purposes of this
Agreement, including for the purpose of perfecting the security
interests granted hereunder, the Transferor represents and warrants
that it has, prior to the execution of this Agreement, executed and
filed an appropriate Uniform Commercial Code financing statement in
Illinois sufficient to assure that the Collateral Agent, as agent for
the Secured Parties, has a first priority perfected security interest
in all Series 1995-1 Collateral which can be perfected by the filing
of a financing statement.
Section 2.04. Priority. The Transferor intends the security
interests in favor of the Collateral Agent, for the benefit of the
Secured Parties, to be prior to all other Liens in respect of the
Collateral, and the Transferor shall take all actions necessary to
obtain and maintain, in favor of the Collateral Agent, for the benefit
of the Secured Parties, a first lien on and a first priority,
perfected security interest in the Collateral. Subject to the
provisions hereof specifying the rights and powers of the Controlling
Party from time to time to control certain specified matters relating
to the Collateral, each Secured Party shall have all of the rights,
remedies and recourse with respect to the Collateral afforded a
secured party under the Uniform Commercial Code, and all other
applicable law in addition to, and not in limitation of, the other
rights, remedies and recourse granted to such Secured Parties by this
Agreement or any other law relating to the creation and perfection of
liens on, and security interests in, the Collateral.
Section 2.05. Transferor Remains Liable. The Security
Interests are granted as security only and shall not (i) transfer or
in any way affect or modify, or relieve the Transferor from, any
obligation to perform or satisfy, any term, covenant, condition or
agreement to be performed or satisfied by the Transferor under or in
connection with this Agreement, the Insurance Agreement or any other
Transaction Document to which it is a party or (ii) impose any
obligation on any of the Secured Parties or the Collateral Agent to
perform or observe any such term, covenant, condition or agreement
or impose any liability on any of the Secured Parties or the Collateral
Agent for any act or omission on its part relative thereto or for any
breach of any representation or warranty on its part contained therein
or made in connection therewith, except, in each case, to the extent
provided herein and in the other Transaction Documents.
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Section 2.06. Maintenance of Collateral.
(a) Safekeeping. The Collateral Agent agrees to (i) maintain
the Collateral (other than Spread Account Permitted Investments)
received by it and all records and documents relating thereto at the
office of the Collateral Agent specified in Section 8.06 hereof or
such other address within the State of Illinois (unless all filings
have been made to continue the perfection of the security interest in
the Collateral to the extent such security interest can be perfected
by filing a financing statement, as evidenced by an Opinion of Counsel
delivered to the Controlling Party, as may be approved by the
Controlling Party and (ii) take Delivery of and maintain the Spread
Account Permitted Investments and all records and documents relating
thereto at its offices within the State of New York. The Collateral
Agent shall keep all Collateral and related documentation in its
possession separate and apart from all other property that it is
holding in its possession and from its own general assets and shall
maintain accurate records pertaining to the Spread Account Permitted
Investments and Spread Accounts included in the Collateral in such a
manner as shall enable the Collateral Agent and the Secured Parties to
verify the accuracy of such record-keeping. The Collateral Agent's
books and records shall at all times show that the Collateral is held
by the Collateral Agent as agent of the Secured Parties and is not the
property of the Collateral Agent. The Collateral Agent will promptly
report to each Secured Party and the Transferor any failure on its
part to hold the Collateral as provided in this Section 2.06(a) and
will promptly take appropriate action to remedy any such failure.
(b) Access. The Collateral Agent shall permit each of the
Secured Parties, or their respective duly authorized representatives,
attorneys, auditors or designees, to inspect the Collateral in the
possession of or otherwise under the control of the Collateral Agent
pursuant hereto at such reasonable times during normal business hours
as any such Secured Party may reasonably request upon not less than
two Business Days' prior written notice. The costs and expenses
associated with any such inspection will be paid by the party making
such inspection.
Section 2.07. Termination and Release of Rights.
(a) On the Insurer Termination Date relating to a Series, the
rights, remedies, powers, duties, authority and obligations conferred
upon Financial Security pursuant to this Agreement in respect of the
Collateral related to such Series (and, to the extent provided herein,
in respect of Collateral related to other Series) shall terminate and
be of no further force and effect and all rights, remedies, powers,
duties, authority and obligations of Financial Security with respect
to such Collateral shall be automatically released; provided that any
indemnity provided to or by Financial Security herein shall survive
such Insurer Termination Date. If Financial Security is acting as
Controlling Party with respect to a Series on the related Insurer
Termination Date, Financial Security agrees, at the expense of the
Transferor, to execute and deliver such instruments as the successor
Controlling Party may reasonably request to effect such release, and
any such instruments so executed and
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delivered shall be fully binding on Financial Security and any Person
claiming by, through or under Financial Security.
(b) On the Trustee Termination Date related to a Series, the
rights, remedies, powers, duties, authority and obligations, if any,
conferred upon the Trustee pursuant to this Agreement in respect of
the Collateral related to such Series (and, to the extent provided
herein, in respect of Collateral related to other Series) shall
terminate and be of no further force and effect and all such rights,
remedies, powers, duties, authority and obligations of the Trustee
with respect to such Collateral shall be automatically released;
provided that any indemnity provided to the Trustee herein shall
survive such Trustee Termination Date. If the Trustee is acting as
Controlling Party with respect to a Series on the related Trustee
Termination Date, the Trustee agrees, at the expense of the
Transferor, to execute and deliver such instruments as the Transferor
may reasonably request to effectuate such release, and any such
instruments so executed and delivered shall be fully binding on the
Trustee.
(c) On the Final Termination Date with respect to a Series,
the rights, remedies, powers, duties, authority and obligations
conferred upon the Collateral Agent and each Secured Party pursuant to
this Agreement shall terminate and be of no further force and effect
and all rights, remedies, powers, duties, authority and obligations of
the Collateral Agent and each Secured Party with respect to the
Collateral related to such Series (and, to the extent provided herein,
in respect of Collateral related to other Series) shall be
automatically released. On the Final Termination Date with respect to
a Series, the Collateral Agent agrees, and each Secured Party agrees,
at the expense of the Transferor, to execute such instruments of
release, in recordable form if necessary, in favor of the Transferor
as the Transferor may reasonably request, to deliver any Collateral
related to such Series in its possession to the Transferor, and to
otherwise release the lien of this Agreement and release and deliver
to the Transferor the Collateral related to such Series.
Section 2.08. Non-Recourse Obligations of Transferor.
Notwithstanding anything herein or in the other Transaction Documents
to the contrary, the parties hereto agree that the obligations of the
Transferor hereunder (without limiting the obligation to apply
distributions of the respective Credit Enhancement Fees in accordance
with Section 3.03(b) hereof) shall be recourse only to the extent of
amounts released to the Transferor pursuant to priority SEVENTH of
Section 3.03(b) hereof and retained by the Transferor in accordance
with the next sentence. The Transferor agrees that it shall not
declare or make payment of (i) any dividend or other distribution on
or in respect of any beneficial interests in the Transferor or (ii)
any payment on account of the purchase, redemption, retirement or
acquisition of (x) any beneficial interest in the Transferor, (y)
any option, warrant or other right to acquire any beneficial interest
in the Transferor or (z) any payment of any loan made by NAFCO to
the Transferor, unless (in each case) at the time of such
declaration or payment (and after giving effect thereto) no
amount payable by Transferor under any Transaction Document is then
due and owing but unpaid. Nothing contained herein shall be deemed to
limit the rights of the Certificateholders under any other Transaction
Document.
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ARTICLE III.
SPREAD ACCOUNTS
Section 3.01. Establishment of Spread Accounts; Initial Deposits
into Spread Accounts.
(a) On or prior to the Closing Date relating to Series
1995-1, the Collateral Agent shall establish with respect to such
Series, at its office or at another depository institution or trust
company an Eligible Account, designated, "Spread Account - National
Auto Finance Series 1995-1 Trust - ▇▇▇▇▇▇ Trust and Savings Bank, as
Collateral Agent for Financial Security Assurance Inc. and another
Secured Party" (the "Spread Account", and, with respect to the Series
1995-1 Certificates, the "Series 1995-1 Spread Account"). All Spread
Accounts established under this Agreement from time to time shall be
maintained at the same depository institution (which depository
institution may be changed from time to time in accordance with this
Agreement). If any Spread Account or established with respect to a
Series ceases to be an Eligible Account, the Collateral Agent shall,
within five Business Days, establish a new Eligible Account for such
Series.
(b) No withdrawals may be made of funds in any Spread Account
except as provided in Section 3.03 of this Agreement. Except as
specifically provided in this Agreement, funds in a Spread Account
established with respect to a Series shall not be commingled with
funds in a Spread Account established with respect to another Series
or with any other moneys. All moneys deposited from time to time in
such Spread Account and all investments made with such moneys shall be
held by the Collateral Agent as part of the Collateral with respect to
such Series.
(c) On the Closing Date with respect to a Series, the
Collateral Agent shall deposit the Initial Spread Account Deposit with
respect to such Series, if any, received from the Transferor into the
related Spread Account.
(d) Each Spread Account shall be separate from each Trust and
amounts on deposit therein will not constitute a part of the Trust
Estate of any Trust. Each Spread Account shall be maintained by the
Collateral Agent at all times separate and apart from any other
account of the Transferor, the Master Servicer or the Trust. All income
or loss on investments of funds in any Spread Account shall be reported
by the Transferor as taxable income or loss of the Transferor.
Section 3.02. Investments.
(a) Funds which may at any time be held in the Spread Account
established with respect to a Series shall be invested and reinvested
by the Collateral Agent, at the written direction (including, subject
to the provisions hereof, general standing instructions) of the
Transferor (unless a Default actually known to a Responsible Officer
of the Collateral Agent
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shall have occurred and be continuing, in which case at the written
direction of the Controlling Party) or its designee received by the
Collateral Agent by 1:00 P.M. New York City time on the Business Day
prior to the date on which such investment shall be made, in one or
more Spread Account Permitted Investments in the manner specified in
Section 3.02(c) hereof. If no written direction with respect to any
portion of such Spread Account is received by the Collateral Agent,
the Collateral Agent shall invest such funds overnight in such
Permitted Investments as the Collateral Agent may select, provided
that the Collateral Agent shall not be liable for any loss or absence
of income resulting from such investments or for investments made
pursuant to written instructions received in accordance with this
Section 3.02(a).
(b) Each investment made pursuant to this Section 3.02 on any
date shall mature not later than the Business Day immediately
preceding the Distribution Date next succeeding the day such
investment is made, except that any investment made on the day
preceding a Distribution Date shall mature on such Distribution Date;
provided that any investment of funds in any Spread Account maintained
with the Collateral Agent (which shall be qualified as a Spread
Account Permitted Investment) in any investment as to which the
Collateral Agent is the obligor, if otherwise qualified as an
Permitted Investment (including any repurchase agreement on which the
Collateral Agent in its commercial capacity is liable as principal)
may mature on the Distribution Date next succeeding the date of such
investment.
(c) Subject to the other provisions hereof, the Collateral
Agent shall have sole control over each such investment and the income
thereon, and any certificate or other instrument evidencing any such
investment, if any, shall be delivered directly to the Collateral
Agent or its agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Collateral Agent
in a manner complying with Section 2.06 hereof and the requirements of
the definition of "Spread Account Permitted Investments."
(d) If amounts on deposit in any Spread Account are at any
time invested in a Spread Account Permitted Investment payable on
demand, the Collateral Agent shall (i) consistent with any notice
required to be given thereunder, demand that payment thereon be made
on the last day such Spread Account Permitted Investment is permitted
to mature under the provisions hereof and (ii) demand payment of all
amounts due thereunder promptly upon receipt of written notice from
the Controlling Party to the effect that such investment does not
constitute a Spread Account Eligible investment.
(e) All moneys on deposit in a Spread Account together with
any deposits or securities in which such moneys may be invested or
reinvested, and any gains from such investments, shall constitute
Collateral hereunder with respect to the related Series subject to the
Security Interests of the Secured Parties.
(f) Subject to Section 4.03 hereof, the Collateral Agent
shall not be liable by reason of any insufficiency in any Spread
Account resulting from any loss on any Permitted Investment included
therein except for losses attributable to the Collateral Agent's
failure to
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make payments on Permitted Investments as to which the Collateral Agent,
in its commercial capacity, is obligated to make.
Section 3.03. Distributions; Priority of Payments.
(a) On or before each Delinquency Claim Date with respect to
any Series, the Collateral Agent will make the following calculations
on the basis of information (including, without limitation, the amount
of any Deficiency Claim Amount with respect to any Series) received
pursuant to Section 3.17 of the Pooling and Servicing Agreement, with
respect to each such Series from the Master Servicer thereunder;
provided, however, that if the Collateral Agent receives written
notice from Financial Security of the occurrence of an Insurance
Agreement Event of Default with respect to any Series, such notice
shall be determinative for the purposes of determining the Requisite
Amount for such Series:
FIRST, determine the amounts to be on deposit in the
respective Spread Accounts (taking into account amounts in
respect of the respective Credit Enhancement Fees to be
deposited into the related Spread Accounts) on the next
succeeding Distribution Date which will be available to
satisfy any Deficiency Claim Amount.
SECOND, determine (i) the amounts, if any, to be
distributed from each Spread Account related to each Series
with respect to which there exists a Deficiency Claim Amount
and (ii) whether, following distribution from the related
Spread Accounts to the respective Trustees for deposit into
the respective Certificate Account with respect to which
there exists a Deficiency Claim Amount, a Deficiency Claim
Amount will continue to exist with respect to one or more
Series.
THIRD, if a Deficiency Claim Amount will continue to
exist with respect to one or more Series following the
distributions from the related Spread Accounts contemplated
by paragraph SECOND above, determine the amount, if any, to
be distributed to the Trustee with respect to each Series
from unrelated Spread Accounts
in respect of such Deficiency Claim Amount(s). This
determination shall be made in accordance with the
distribution priority scheme set forth in Section 3.03(b)
below.
On such Delinquency Claim Date related to a Series, the
Collateral Agent shall deliver a certificate to each Trustee in
respect of which the Collateral Agent has received a Deficiency Notice
stating the amount, if any, to be distributed to such Trustee on the
next Distribution Date in respect of such Deficiency Claim Amount.
(b) On each Distribution Date, following delivery by the
Trustee of the respective Credit Enhancement Fees for deposit into the
respective Spread Accounts pursuant to the respective Pooling and
Servicing Agreements and if the Trustee has received a Deficiency
Notice with respect to one or more such Series, or with respect to
priority SIXTH below to
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the extent the amount referred to therein is due and owing, the
Collateral Agent shall make the following distributions in the following
order of priority:
FIRST, if with respect to any Series there exists a
Deficiency Claim Amount, from the Spread Account related to
such Series, to the Trustee for deposit in the related
Certificate Account the amount of such Deficiency Claim
Amount.
SECOND, if with respect to any Series there
continues to exist a Deficiency Claim Amount after deposit
into the Certificate Account of amounts distributed pursuant
to priority FIRST of this Section 3.03(b), from amounts, if
any, on deposit in each unrelated Spread Account in excess of
the related Requisite Amount, an amount in the aggregate up
to the aggregate of the Deficiency Claim Amounts for all
Series, for deposit in the respective Certificate Accounts
pro rata in accordance with the respective Deficiency Claim
Amounts.
THIRD, if with respect to any Series there continues
to exist a Deficiency Claim Amount after deposit into the
Certificate Account of amounts distributed pursuant to
priority FIRST and SECOND of this Section 3.03(b), from each
unrelated Spread Account pro rata in accordance with amounts
on deposit therein, an amount up to the aggregate of the
remaining Deficiency Claim Amounts for all Series, to the
respective Trustees for deposit in the respective Certificate
Accounts pro rata in accordance with the respective
Deficiency Claim Amounts.
FOURTH, if with respect to one or more Series there
exists a Spread Account Shortfall, from amounts, if any, (1)
on deposit in each Spread Account in excess of the related
Requisite Amount; or (2) on deposit in any Spread Account
with respect to which the Final Termination Date shall have
occurred on such Distribution Date or a prior Distribution
Date, an amount in the aggregate up to the aggregate of the
Spread Account Shortfalls for all Series for deposit into
each Spread Account pro rata in accordance with the
respective Spread Account Shortfalls.
FIFTH, if with respect to one or more Series,
amounts have been withdrawn from the related Spread Account
pursuant to priority THIRD of this Section 3.03(b) on such
Distribution Date and/or prior Distribution Dates and such
amounts have not been redeposited in full into such Spread
Account pursuant to this priority FIFTH (such amounts in the
aggregate for a Series "Unreimbursed Amounts"), from amounts,
if any, (1) on deposit in each Spread Account in excess of
the related Requisite Amount; or (2) on deposit in any Spread
Account with respect to which the Final Termination Date
shall have occurred on such Distribution Date or a prior
Distribution Date, an amount up to the aggregate of the
Unreimbursed Amounts for all such Series for deposit into
each Spread Account with respect to which there exist
Unreimbursed Amounts pro rata in accordance with the
respective Unreimbursed Amounts.
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SIXTH, if any amounts are owed to the Trustee,
Collateral Agent or Standby Servicer for reasonable
out-of-pocket expenses in connection with the administration
of the Trust, including the expenses incurred in the
transition to a successor Master Servicer and such amounts
have not been paid, then from amounts (if any) on deposit in
the related Spread Account, an amount up to the amount so
owed, to be paid to the Trustee, the Collateral Agent and the
Standby Servicer.
SEVENTH, any funds in a Spread Account in excess of
the applicable Requisite Amount and any funds in a Spread
Account with respect to a Series for which the Final
Termination Date shall have occurred after distribution
pursuant to priorities FIRST through SIXTH will be released
to the Transferor (or as otherwise provided in priority
ELEVENTH of Section 4.01(b) of the Pooling and Servicing
Agreement) free and clear of the Lien established hereunder.
Section 3.04. General Provisions Regarding Spread Accounts.
(a) Promptly upon the establishment (initially or upon any
relocation) of a Spread Account hereunder, the Collateral Agent shall
advise the Transferor and each Secured Party in writing of the name
and address of the depository institution or trust company where such
Spread Account has been established (if not ▇▇▇▇▇▇ Trust and Savings
Bank or any successor Collateral Agent in its commercial banking
capacity), the name of the officer of the depository institution
responsible for overseeing such Spread Account, the account number and
the individuals whose names appear on the signature cards for such
Spread Account. The Transferor shall cause each such depository
institution or trust company to execute a written agreement, in form
and substance satisfactory to the Controlling Party, waiving, and the
Collateral Agent by its execution of this Agreement hereby waives
(except to the extent expressly provided herein), in each case to the
extent permitted under applicable law, (i) any banker's or other
statutory or similar Lien, and (ii) any right of set-off or other
similar right under applicable law with respect to such Spread Account
and any other Spread Account and agreeing, and the Collateral Agent by
its execution of this Agreement hereby agrees, to notify the
Transferor, the Collateral Agent, and each Secured Party of any charge
or claim against or with respect to such Spread Account. The Collateral
Agent shall give the Transferor and each Secured Party at least ten
(10) Business Days' prior written notice of any change in the location
of such Spread Account or in any related account information. If the
Collateral Agent changes the location of any Spread Account, it shall
change the location of the other Spread Accounts, so that all Spread
Accounts shall at all times be located at the same depository
institution. Anything herein to the contrary notwithstanding, unless
otherwise consented to by the Controlling
Party in writing, the Collateral Agent shall have no right to change
the location of any Spread Account.
(b) Upon the written request of the Controlling Party or the
Transferor, the Collateral Agent shall cause, at the expense of the
Transferor, the depository institution at which any Spread Account is
located to forward to the requesting party copies of all monthly
account statements for such Spread Account.
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(c) If at any time any Spread Account ceases to be an
Eligible Account, the Collateral Agent shall notify the Controlling
Party of such fact and shall establish within five (5) Business Days
of such determination in accordance with paragraph (a) of this
Section, a successor Spread Account thereto, which shall be an
Eligible Account, at another depository institution or trust company
acceptable to the Controlling Party and shall establish successor
Spread Accounts with respect to all other Spread Accounts, each of
which shall be an Eligible Account at the same depository institution.
The Transferor shall cause such depository institution to execute a
written agreement under terms provided for in paragraph (a) of this
Section.
(d) No passbook, certificate of deposit or other similar
instrument evidencing a Spread Account shall be issued, and all
contracts, receipts and other papers, if any, governing or evidencing
a Spread Account shall be held by the Collateral Agent.
Section 3.05. Reports by the Collateral Agent. The Collateral
Agent shall report to the Transferor, Financial Security, the Trustee
and the Master Servicer on a monthly basis no later than each
Distribution Date with respect to the amount on deposit in each Spread
Account and the identity of the investments included therein as of the
last day of the related Monthly Period, and shall provide accountings
of deposits into and withdrawals from the Spread Accounts, and of the
investments made therein, upon the request of the Transferor,
Financial Security or the Master Servicer.
ARTICLE IV.
THE COLLATERAL AGENT
Section 4.01. Appointment and Powers. Subject to the terms
and conditions hereof, each of the Secured Parties hereby appoints
▇▇▇▇▇▇ Trust and Savings Bank as the Collateral Agent with respect to
the Series 1995-1 Collateral and the related Collateral subsequently
specified in a Series Supplement, and ▇▇▇▇▇▇ Trust and Savings Bank
hereby accepts such appointment and agrees to act as Collateral Agent
with respect to the Series 1995-1 Collateral, and upon execution of
any Series Supplement, shall be deemed to accept such appointment, and
agree to act as Collateral Agent with respect to such Collateral, in
each case, for the Secured Parties, to maintain custody and possession
of such Collateral (except as otherwise provided hereunder) and to
perform the other duties of the Collateral Agent in accordance with
the provisions of this Agreement. Each Secured Party hereby authorizes
the Collateral Agent to take such action on its behalf, and to
exercise such rights, remedies, powers and privileges hereunder, as
the Controlling Party may direct and as are specifically authorized to
be exercised by the Collateral Agent by the terms hereof, together
with such actions, rights, remedies, powers and privileges as are
reasonably incidental thereto. The Collateral Agent shall act upon and
in compliance with the written instructions of the Controlling Party
delivered pursuant to this Agreement promptly following receipt of
such written instructions; provided, however, that the Collateral
Agent shall not act in accordance
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with any instructions (i) which are not authorized by, or in
violation of the provisions of, this Agreement, (ii) which are in
violation of any applicable law, rule or regulation or (iii) for
which the Collateral Agent has not received reasonable indemnity.
Receipt of such instructions shall not be a condition to the
exercise by the Collateral Agent of its express duties hereunder,
except where this Agreement provides that the Collateral Agent is
permitted to act only following and in accordance with such instructions.
Section 4.02. Performance of Duties. The Collateral Agent
shall have no duties or responsibilities except those expressly set
forth in this Agreement and the other Transaction Documents to which
the Collateral Agent is a party as Collateral Agent or as directed by
the Controlling Party in accordance with this Agreement. The
Collateral Agent shall not be required to take any discretionary
actions hereunder except at the written direction and with the
indemnification of the Controlling Party.
Section 4.03. Limitation on Liability. Neither the Collateral
Agent nor any of its directors, officers or employees, shall be liable
for any action taken or omitted to be taken by it or them hereunder,
or in connection herewith, except that the Collateral Agent shall be
liable for its gross negligence, bad faith or willful misconduct; nor
shall the Collateral Agent be responsible for the validity,
effectiveness, value, sufficiency or enforceability against the
Transferor of this Agreement or any of the Collateral (or any part
thereof). Notwithstanding any term or provision of this Agreement, the
Collateral Agent shall incur no liability to the Transferor or the
Secured Parties for any action taken or omitted by the Collateral
Agent in connection with the Collateral, except for the negligence,
bad faith or willful misconduct on the part of the Collateral Agent,
and, further, shall incur no liability to the Secured Parties except
for negligence, bad faith or willful misconduct in carrying out its
duties to the Secured Parties. Subject to Section 4.04 hereof, the
Collateral Agent shall be protected and shall incur no liability to
any such party in relying upon the accuracy, acting in reliance upon
the contents, and assuming the genuineness of any notice, demand,
certificate, signature, instrument or other document reasonably
believed by the Collateral Agent to be genuine and to have been duly
executed by the appropriate signatory, and (absent actual knowledge to
the contrary) the Collateral Agent shall not be required to make any
independent investigation with respect thereto. The Collateral Agent
shall at all times be free independently to establish to its
reasonable satisfaction, but shall have no duty to independently
verify, the existence or nonexistence of facts that are a condition to
the exercise or enforcement of any right or remedy hereunder or under
any of the Transaction Documents. The Collateral Agent may consult
with counsel, and shall not be liable for any action taken or omitted
to be taken by it hereunder in good faith and in accordance with the
written advice of such counsel. The Collateral Agent shall not be
under any obligation to exercise any of the remedial rights or powers
vested in it by this Agreement or to follow any direction from the
Controlling Party unless it shall have received reasonable security or
indemnity satisfactory to the Collateral Agent against the costs,
expenses and liabilities which might be incurred by it in the exercise
thereof.
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Section 4.04. Reliance upon Documents. In the absence of
negligence, bad faith or willful misconduct on its part, the
Collateral Agent shall be entitled to conclusively rely on any
communication, instrument, paper or other document reasonably believed
by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons and shall have no liability in acting, or
omitting to act, where such action or omission to act is in reliance
upon any statement or opinion contained in any such document or
instrument.
Section 4.05. Successor Collateral Agent.
(a) Merger. Any Person into which the Collateral Agent may be
converted or merged, or with which it may be consolidated, or to which
it may sell or transfer its trust business and assets as a whole or
substantially as a whole, or any Person resulting from any such
conversion, merger, consolidation, sale or transfer to which the
Collateral Agent is a party, shall (provided it is otherwise qualified
to serve as the Collateral Agent hereunder) be and become a successor
Collateral Agent hereunder and be vested with all of the title to and
interest in the Collateral and all of the trusts, powers, discretions,
immunities, privileges and other matters as was its predecessor
without the execution or filing of any instrument or any further act,
deed or conveyance on the part of any of the parties hereto, anything
herein to the contrary notwithstanding, except to the extent, if any,
that any such action is necessary to perfect, or continue the
perfection of, the security interest of the Secured Parties in the
Collateral.
(b) Resignation. The Collateral Agent and any successor
Collateral Agent may resign only (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 result in a material
adverse effect on the Collateral Agent, and the Controlling Party does
not elect to waive the Collateral Agent's obligation to perform those
duties which render it legally unable to act or elect to delegate
those duties to another Person, or (ii) with the prior written consent
of the Controlling Party. The Collateral Agent shall give not less
than 60 days' prior written notice of any such permitted resignation
by registered or certified mail to the other Secured Party and the
Transferor; provided, that such resignation shall take effect only
upon the date which is the latest of (i) the effective date of the
appointment of a successor Collateral Agent and the acceptance in
writing by such successor Collateral Agent of such appointment and of
its obligation to perform its duties hereunder in accordance with the
provisions hereof, (ii) delivery of the Collateral to such successor
to be held in accordance with the procedures specified in Article II
hereof, and (iii) receipt by the Controlling Party of an Opinion of
Counsel to the effect described in Section 5.02 hereof.
Notwithstanding the preceding sentence, if, by the contemplated date
of resignation specified in the written notice of resignation
delivered as described above, no successor Collateral Agent or
temporary successor Collateral Agent has been appointed Collateral
Agent or becomes the Collateral Agent pursuant to subsection (d)
hereof, the resigning Collateral Agent may petition a court of
competent jurisdiction in New York, New York for the appointment of a
successor.
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(c) Removal. The Collateral Agent may be removed by the
Controlling Party at any time, with or without cause, by an instrument
or concurrent instruments in writing delivered to the Collateral
Agent, the other Secured Party and the Transferor. A temporary
successor may be removed at any time to allow a successor Collateral
Agent to be appointed pursuant to subsection (d) below. Any removal
pursuant to the provisions of this subsection (c) shall take effect
only upon the date which is the latest of (i) the effective date of
the appointment of a successor Collateral Agent and the acceptance in
writing by such successor Collateral Agent of such appointment and of
its obligation to perform its duties hereunder in accordance with the
provisions hereof, (ii) delivery of the Collateral to such successor
to be held in accordance with the procedures specified in Article II
hereof and (iii) receipt by the Controlling Party of an Opinion of
Counsel to the effect described in Section 5.02 hereof.
(d) Acceptance by Successor. The Controlling Party shall have
the sole right to appoint each successor Collateral Agent. Every
temporary or permanent successor Collateral Agent appointed hereunder
shall execute, acknowledge and deliver to its predecessor and to each
Secured Party and the Transferor an instrument in writing accepting
such appointment hereunder and the relevant predecessor shall execute,
acknowledge and deliver such other documents and instruments as will
effectuate the delivery of all Collateral to the successor Collateral
Agent to be held in accordance with the procedures specified in
Article II hereof, whereupon such successor, without any further act,
deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, duties and obligations of its
predecessor. Such predecessor shall, nevertheless, on the written
request of either Secured Party or the Transferor, execute and deliver
an instrument transferring to such successor all the estates,
properties, rights and powers of such predecessor hereunder. In the
event that any instrument in writing from the Transferor or a Secured
Party is reasonably required by a successor Collateral Agent to more
fully and certainly vest in such successor the estates, properties,
rights, powers, duties and obligations vested or intended to be vested
hereunder in the Collateral Agent, any and all such written
instruments shall, at the request of the temporary or permanent
successor Collateral Agent, be forthwith executed, acknowledged and
delivered by the Transferor. The designation of any successor
Collateral Agent and the instrument or instruments removing any
Collateral Agent and appointing a successor hereunder, together with
all other instruments provided for herein, shall be maintained with
the records relating to the Collateral and, to the extent required by
applicable law, filed or recorded by the successor Collateral Agent in
each place where such filing or recording is necessary to effect the
transfer of the Collateral to the successor Collateral Agent or to
protect or continue the perfection of the security interests granted
hereunder.
(e) Any resignation or removal of a Collateral Agent and
appointment of a successor Collateral Agent shall be effected with
respect to this Agreement and all Series Supplements simultaneously,
so that at no time is there more than one Collateral Agent acting
hereunder and under all Series Supplements.
Section 4.06. Indemnification. The Transferor shall indemnify
the Collateral Agent, its directors,
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officers, employees and agents for, and hold the Collateral Agent, its
directors, officers, employees and agents harmless against, any loss,
liability or expense (including the costs and expenses of defending against
any claim of liability) arising out of or in connection with the Collateral
Agent's acting as Collateral Agent hereunder, except such loss, liability
or expense as shall result from the negligence, bad faith or willful
misconduct of the Collateral Agent or its officers or agents. The
obligation of the Transferor under this Section shall survive the
termination of this Agreement and the resignation or removal of the
Collateral Agent. The Collateral Agent covenants and agrees that the
obligations of the Transferor hereunder and under Section 4.07 hereof
shall be limited to the extent provided in Section 2.08 hereof, and
further covenants not to take any action to enforce its rights to
indemnification hereunder with respect to the Transferor and to payment
under Section 4.07 hereof except in accordance with the provisions of
Section 8.05 hereof, or otherwise to assert any Lien or take any other
action in respect of the Collateral or the Trust Estate of a Series
until the applicable Final Termination Date.
Section 4.07. Compensation and Reimbursement. The Transferor
agrees for the benefit of the Secured Parties and as part of the
Secured Obligations (a) to pay to the Collateral Agent, on each
Distribution Date, the Collateral Agent Fee for all services rendered
by it hereunder (which compensation shall not be limited by any
provision of law in regard to the compensation of a collateral
trustee); and (b) to reimburse the Collateral Agent upon its request
for all reasonable expenses, disbursements and advances incurred or
made by the Collateral Agent in accordance with any provision of,
or carrying out its duties and obligations under, this Agreement
(including the reasonable compensation and fees and the expenses and
disbursements of its agents, any independent certified public
accountants and independent counsel), except any expense, disbursement
or advances as may be attributable to negligence, bad faith or willful
misconduct on the part of the Collateral Agent.
Section 4.08. Representations and Warranties of the Collateral
Agent. The Collateral Agent represents and warrants to the Transferor and to
each Secured Party as follows:
(a) Due Organization. The Collateral Agent is an Illinois
banking corporation, duly organized, validly existing and in good
standing under the laws of Illinois and is duly authorized and
licensed under applicable law to conduct its business as presently
conducted.
(b) Corporate Power. The Collateral Agent has all requisite right,
power andauthority to execute and deliver this Agreement and to perform all of
its duties as Collateral Agent hereunder.
(c) Due Authorization. The execution and delivery by the
Collateral Agent of this Agreement and the other Transaction Documents
to which it is a party, and the performance by the Collateral Agent of
its duties hereunder and thereunder, have been duly authorized by all
necessary corporate proceedings and no further approvals or filings,
including any governmental approvals, are required for the valid
execution and delivery by the Collateral Agent, or the performance by
the Collateral Agent, of this Agreement and such other Transaction
Documents.
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(d) Valid and Binding Agreement. The Collateral Agent has
duly executed and delivered this Agreement and each other Transaction
Document to which it is a party, and each of this Agreement and each
such other Transaction Document constitutes the legal, valid and
binding obligation of the Collateral Agent, enforceable against the
Collateral Agent in accordance with its terms, except as (i) such
enforceability may be limited by bankruptcy, insolvency,
reorganization and similar laws relating to or affecting the
enforcement of creditors, rights generally and (ii) the availability
of equitable remedies may be limited by equitable principles of
general applicability.
Section 4.09. Waiver of Setoffs. The Collateral Agent hereby
expressly waives any and all rights of setoff that the Collateral
Agent may otherwise at any time have under applicable law with respect
to any Spread Account and agrees that amounts in the Spread Accounts
shall at all times be held and applied solely in accordance with the
provisions hereof.
Section 4.10. Control by the Controlling Party. The
Collateral Agent shall comply with notices and instructions given by
the Transferor only if accompanied by the written consent of the
Controlling Party, except that if any Default shall have occurred and
be continuing, the Collateral Agent shall act upon and comply with
notices and instructions given by the Controlling Party alone in the
place and stead of the Transferor.
ARTICLE V.
COVENANTS OF THE TRANSFEROR
Section 5.01. Preservation of Collateral. Subject to the
rights, powers and authorities granted to the Collateral Agent and the
Controlling Party in this Agreement, the Transferor shall take such
action as is necessary and proper with respect to the Collateral in
order to preserve and maintain such Collateral and to cause (subject
to the rights of the Secured Parties) the Collateral Agent to perform
its obligations with respect to such Collateral as provided herein.
The Transferor will do, execute, acknowledge and deliver, or cause to
be done, executed, acknowledged and delivered, such instruments of
transfer or take such other steps or actions as may be necessary, or
required by the Controlling Party, to perfect the Security Interests
granted hereunder in the Collateral, to ensure that such Security
Interests rank prior to all other Liens and to preserve the priority
of such Security Interests and the validity and enforceability
thereof. Upon any delivery or substitution of Collateral, the
Transferor shall be obligated to execute such documents and perform
such actions as are necessary to create in the Collateral Agent for
the benefit of the Secured Parties a valid first Lien on, and valid
and perfected, first priority security interest in, the Collateral so
delivered and to deliver such Collateral to the Collateral Agent, free
and clear of any other Lien, together with satisfactory assurances
thereof, and to pay any reasonable costs incurred by any of the
Secured Parties or the Collateral Agent (including its agents) or
otherwise in connection with such delivery.
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Section 5.02. Opinions as to Collateral. Not more than 90
days nor less than 30 days prior to (i) each anniversary of the date
hereof during the term of this Agreement and (ii) each date on which
the Transferor proposes to take any action contemplated by Section
5.06 hereof, the Transferor shall, at its own cost and expense,
furnish to each Secured Party and the Collateral Agent an Opinion of
Counsel with respect to each Series either (a) stating that, in the
opinion of such counsel, such action has been taken with respect to
the execution and filing of any financing statements and continuation
statements and other actions as are necessary to perfect, maintain and
protect the lien and security interest of the Collateral Agent (and
the priority thereof), on behalf of the Secured Parties, with respect
to such Collateral against all creditors of, and purchasers from, the
Transferor and reciting the details of such action, or (b) stating
that, in the opinion of such counsel, no such action is necessary to
maintain such perfected lien and security interest. Such Opinion of
Counsel shall further describe each execution and filing of any
financing statements and continuation statements and such other
actions as will, in the opinion of such counsel, be required to
perfect, maintain and protect the lien and security interest of the
Collateral Agent, on behalf of the Secured Parties, with respect to
such Collateral against all creditors of, and purchasers from, the
Transferor for a period, specified in such Opinion, continuing until
a date not earlier than eighteen months from the date of such Opinion.
Section 5.03. Notices. In the event that the Transferor
acquires knowledge of the occurrence and continuance of any Insurance
Agreement Event of Default or Servicer Default or of any event of
default or like event, howsoever described or called, under any of the
Transaction Documents, the Transferor shall immediately give notice
thereof to the Collateral Agent and each Secured Party.
Section 5.04. Waiver of Stay or Extension Laws; Marshalling
of Assets. The Transferor covenants, to the fullest extent permitted
by applicable law, that it will not at any time insist upon, plead, or
in any manner whatsoever claim or take the benefit or advantage of,
any appraisement, valuation, stay, extension or redemption law
wherever enacted, now or at any time hereafter in force, in order to
prevent or hinder the enforcement of this Agreement or any absolute
sale of the Collateral or any part thereof, or the possession thereof
by any purchaser at any sale under Article VII of this Agreement; and
the Transferor, to the fullest extent permitted by applicable law, for
itself and all who may claim under it, hereby waives the benefit of
all such laws, and covenants that it will not hinder, delay or impede
the execution of any power herein granted to the Collateral Agent, but
will suffer and permit the execution of every such power as though no
such law had been enacted. The Transferor, for itself and all who may
claim under it, waives, to the fullest extent permitted by applicable
law, all right to have the Collateral marshalled upon any foreclosure
or other disposition thereof.
Section 5.05. Noninterference, etc. The Transferor shall not
(i) waive or alter any of its rights under the Collateral (or any
agreement or instrument relating thereto) without the prior written
consent of the Controlling Party; or (ii) fail to pay any tax, assessment,
charge or fee levied or assessed against the Collateral, or to defend any
action, if such failure to pay
-24-
or defend may adversely affect the priority or enforceability of the
Transferor's right, title or interest in and to the Collateral or the Collateral
Agent's lien on, and security interest in, the Collateral for the benefit of the
Secured Parties; or (iii) take any action, or fail to take any action, if such
action or failure to take action would interfere with the enforcement of any
rights under the Transaction Documents.
Section 5.06. Transferor Changes.
(a) Change in Name, Structure, etc. The Transferor shall not
change its name, identity or corporate structure unless it shall have
given each Secured Party and the Collateral Agent at least 60 days'
prior written notice thereof, shall have effected any necessary or
appropriate assignments or amendments thereto and filings of financing
statements or amendments thereto, and shall have delivered to the
Collateral Agent and each Secured Party an Opinion of Counsel of the
type described in Section 5.02 hereof.
(b) Relocation of the Transferor. Neither NAFCO nor the
Transferor shall change its principal executive office unless it gives
each Secured Party and the Collateral Agent at least 90 days, prior
written notice of any relocation of its principal executive office. If
the Transferor relocates its principal executive office or principal
place of business from Florida, the Transferor shall give prior notice
thereof to the Controlling Party and the Collateral Agent and shall
effect whatever appropriate recordations and filings are necessary and
shall provide an Opinion of Counsel to the Controlling Party and the
Collateral Agent, to the effect that, upon the recording of any
necessary assignments or amendments to previously-recorded assignments and
filing of any necessary amendments to the previously filed financing or
continuation statements or upon the filing of one or more specified new
financing statements, and the taking of such other actions as may be
specified in such opinion, the security interests in the Collateral shall
remain, after such relocation, valid and perfected.
ARTICLE VI.
CONTROLLING PARTY; INTERCREDITOR PROVISIONS
Section 6.01. Appointment of Controlling Party. From and
after the Closing Date of a Series until the Insurer Termination Date
related to such Series, Financial Security shall be the Controlling
Party with respect to such Series and shall be entitled to exercise
all the rights given the Controlling Party hereunder with respect to
such Series. From and after the Insurer Termination Date related to
such Series until the Trustee Termination Date related to such Series,
the Trustee shall be the Controlling Party with respect to such
Series. Notwithstanding the foregoing, in the event that a Financial
Security Default shall have occurred and be continuing, the Trustee
shall be the Controlling Party with respect to such Series until the
applicable Trustee Termination Date. If prior to an Insurer
Termination Date, the Trustee shall have become the Controlling Party
with respect to a Series as a result
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of the occurrence of a Financial Security Default and either such
Financial Security Default is cured or for any other reason ceases
to exist or the Trustee Termination Date with respect to a Series occurs,
then upon such cure or other cessation or on such Trustee Termination
Date, as the case may be, Financial Security shall, upon notice thereof
being duly given to the Collateral Agent, again be the Controlling Party
with respect to such Series.
Section 6.02. Controlling Party's Authority.
(a) The Transferor hereby irrevocably appoints the
Controlling Party, and any successor to the Controlling Party
appointed pursuant to Section 6.01 hereof, its true and lawful
attorney, with full power of substitution, in the name of the
Transferor, the Secured Parties or otherwise, at the expense of the
Transferor, to the extent permitted by law to exercise, at any time
and from time to time while any Insurance Agreement Event of Default
has occurred and is continuing, any or all of the following powers
with respect to all or any of the Collateral related to the
relevant Series: (i) to demand, ▇▇▇ for, collect, receive and
give acquittance for any and all monies due or to become due upon
or by virtue thereof, (ii) to settle, compromise, compound, prosecute
or defend any action or proceeding with respect thereto, (iii) to
sell, transfer, assign or otherwise deal with the same or the proceeds
thereof as fully and effectively as if the Collateral Agent were
the absolute owner thereof, and (iv) to extend the time of payment
of any or all thereof and to make any allowance or other adjustments
with respect thereto.
(b) With respect to each Series of Certificates and the
related Collateral, each Secured Party hereby irrevocably and
unconditionally constitutes and appoints the Controlling Party with
respect to such Series, and any successor to such Controlling Party
appointed pursuant to Section 6.01 hereof from time to time, as the
true and lawful attorney-in-fact of such Secured Party for so long as
such Secured Party is the Non-Controlling Party, with full power of
substitution, to execute, acknowledge and deliver any notice,
document, certificate, paper, pleading or instrument and to do in the
name of the Controlling Party as well as in the name, place and stead
of such Secured Party such acts, things and deeds for and on behalf of
and in the name of such Secured Party under this Agreement with
respect to such Series which such Secured Party could or might do or
which may be necessary, desirable or convenient in such Controlling
Party's sole discretion to effect the purposes contemplated hereunder
and, without limitation, exercise full right, power and authority to
take, or defer from taking, any and all acts with respect to the
administration of the Collateral related to such Series, and the
enforcement of the rights of the Secured Parties hereunder with
respect to such Series, on behalf of and for the benefit of such
Controlling Party and such Non- Controlling Party, as their interests
may appear.
Section 6.03. Rights of Secured Parties. With respect to each
Series of Certificates and the related Collateral, the Non-Controlling
Party at any time expressly agrees that it shall not assert any rights
that it may otherwise have, as a Secured Party with respect to the
Collateral, to direct the maintenance, sale or other disposition of
the Collateral or any portion thereof, notwithstanding the occurrence
and continuance of any Insurance Agreement Event
-26-
of Default or Servicer Default with respect to such Series or any
non-performance by the Transferor of any obligation owed to such
Secured Party hereunder or under any other Transaction Document, and
each party hereto agrees that the Controlling Party shall be the only
Person entitled to assert and exercise such rights.
Section 6.04. Degree of Care.
(a) Controlling Party. Notwithstanding any term or provision
of this Agreement, the Controlling Party shall incur no liability to
the Transferor for any action taken or omitted by the Controlling
Party in connection with the Collateral, except for any gross
negligence, bad faith or willful misconduct on the part of the
Controlling Party and, further, shall incur no liability to the
Non-Controlling Party except for a breach of the terms of this
Agreement or for gross negligence, bad faith or willful misconduct in
carrying out its duties, if any, to the Non-Controlling Party. The
Controlling Party shall be protected and shall incur no liability
to any such party in relying upon the accuracy, acting in reliance
upon the contents and assuming the genuineness of any notice, demand,
certificate, signature, instrument or other document believed by the
Controlling Party to be genuine and to have been duly executed by the
appropriate signatory, and (absent manifest error or actual knowledge
to the contrary) the Controlling Party shall not be required to make
any independent investigation with respect thereto. The Controlling
Party shall, at all times, be free independently to establish to its
reasonable satisfaction the existence or nonexistence, as the case
may be, of any fact the existence or nonexistence of which shall be
a condition to the exercise or enforcement of any right or remedy
under this Agreement or any of the Transaction Documents.
(b) The Non-Controlling Party. The Non-Controlling Party shall
not be liable to the Transferor for any action or failure to act by the
Controlling Party or the Collateral Agent in exercising, or failing to
exercise, any rights or remedies hereunder.
ARTICLE VII.
REMEDIES UPON DEFAULT
Section 7.01. Remedies upon a Default. If a Default with
respect to a Series has occurred and is continuing, the Collateral
Agent shall, at the written direction of the Controlling Party, take
whatever action at law or in equity as may appear necessary or
desirable in the judgment of the Controlling Party to collect and
satisfy all Secured Obligations, including, but not limited to,
foreclosure upon the Collateral and all other rights available to
secured parties under applicable law or to enforce performance and
observance of any obligation, agreement or covenant under any of the
Transaction Documents related to such Series.
Section 7.02. Waiver of Default. The Controlling Party shall
have the sole right, to be exercised in its complete discretion, to
waive any Default by a writing setting forth the
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terms, conditions and extent of such waiver signed by the Controlling
Party and delivered to the Collateral Agent, the other Secured Party
and the Transferor. Any such waiver shall be binding upon the
Non-Controlling Party and the Collateral Agent. Unless such writing
expressly provides to the contrary, any waiver so granted shall
extend only to the specific event or occurrence which gave rise to
the Default so waived and not to any other similar event or
occurrence occurring subsequent to the date of such waiver.
Section 7.03. Restoration of Rights and Remedies. If the
Collateral Agent has instituted any proceeding to enforce any right or
remedy under this Agreement, and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to such
Collateral Agent, then and in every such case the Transferor, the
Collateral Agent and each of the Secured Parties shall, subject to any
determination in such proceeding, be restored severally and respectively
to their former positions hereunder, and thereafter all rights and
remedies of the Secured Parties shall continue as though no such
proceeding had been instituted.
Section 7.04. No Remedy Exclusive. No right or remedy herein
conferred upon or reserved to the Collateral Agent, the Controlling
Party or either of the Secured Parties is intended to be exclusive of
any other right or remedy, and every right or remedy shall, to the
extent permitted by law, be cumulative and in addition to every other
right and remedy given hereunder or now or hereafter existing at law,
in equity or otherwise (but, in each case, shall be subject to the
provisions of this Agreement limiting such remedies), and each and
every right, power and remedy whether specifically herein given or
otherwise existing may be exercised from time to time and as often and
in such order as may be deemed expedient by the Controlling Party, and
the exercise of or the beginning of the exercise of any right or power
or remedy shall not be construed to be a waiver of the right to
exercise at the same time or thereafter any other right, power or
remedy.
ARTICLE VIII.
MISCELLANEOUS
Section 8.01. Further Assurances. Each party hereto shall
take such action and deliver such instruments to any other party
hereto, in addition to the actions and instruments specifically
provided for herein, as may be reasonably requested or required to
effectuate the purpose or provisions of this Agreement or to confirm
or perfect any transaction described or contemplated herein.
Section 8.02. Waiver. Any waiver by any party of any
provision of this Agreement or any right, remedy or option hereunder
shall only prevent and estop such party from thereafter enforcing such
provision, right, remedy or option if such waiver is given in writing
and only as to the specific instance and for the specific purpose for
which such waiver was given. The failure or refusal of any party
hereto to insist in any one or more
-28-
instances, or in a course of dealing, upon the strict performance of
any of the terms or provisions of this Agreement by any party hereto
or the partial exercise of any right, remedy or option hereunder shall
not be construed as a waiver or relinquishment of any such term or
provision, but the same shall continue in full force and effect.
Section 8.03. Amendments, Waivers. No amendment,
modification, waiver or supplement to this Agreement or any provision
of this Agreement shall in any event be effective unless the same
shall have been made or consented to in writing by each of the parties
hereto and each Rating Agency shall have confirmed in writing that
such amendment will not cause a reduction or withdrawal of a rating on
any Series; provided, however, that, for so long as Financial Security
shall be the Controlling Party with respect to a Series, amendments,
modifications, waivers or supplements hereto relating to such Series,
the related Collateral or Spread Account or any requirement hereunder
to deposit or retain any amounts in such Spread Account or to
distribute any amounts therein as provided in Section 3.03 hereof
shall be effective if made or consented to in writing by Financial
Security, the Transferor, NAFCO 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) but
shall in no circumstances require the consent of the Trustee or the
Certificateholders related to such Series or any other Series.
Section 8.04. Severability. In the event that any provision
of this Agreement or the application thereof to any party hereto or to
any circumstance or in any jurisdiction governing this Agreement
shall, to any extent, be invalid or unenforceable under any applicable
statute, regulation or rule of law, then such provision shall be
deemed inoperative to the extent that it is invalid or unenforceable,
and the remainder of this Agreement, and the application of any such
invalid or unenforceable provision to the parties, jurisdictions or
circumstances other than to whom or to which it is held invalid or
unenforceable, shall not be affected thereby nor shall the same affect
the validity or enforceability of any other provision of this
Agreement. The parties hereto further agree that the holding by any
court of competent jurisdiction that any remedy pursued by the
Collateral Agent, or any of the Secured Parties, hereunder is
unavailable or unenforceable shall not affect in any way the ability
of the Collateral Agent or any of the Secured Parties to pursue any
other remedy available to it or them (subject, however, to the
provisions of this Agreement limiting such remedies).
Section 8.05. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the parties hereto agrees that
it shall not, prior to one year and one day after the Final Scheduled
Distribution Date with respect to each Series, acquiesce, petition or
otherwise invoke or cause the Transferor or the Trust to invoke the
process of the United States of America, any State or other political
subdivision thereof or any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government for the purpose of commencing or sustaining a case by or
against the Transferor or the Trust under a Federal or state
bankruptcy, insolvency or similar law or appointing a receiver,
liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the
-29-
Transferor or the Trust or all or any part of its property or assets
or ordering the winding up or liquidation of the affairs of the
Transferor or the Trust. The parties agree that damages will be an
inadequate remedy for breach of this covenant and that this covenant
may be specifically enforced.
Section 8.06. Notices. All notices, demands, certificates,
requests and communications hereunder ("notices") shall be in writing
and shall be effective (a) upon receipt when sent through the U.S.
mails, registered or certified mail, return receipt requested, postage
prepaid, with such receipt to be effective the date of delivery
indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally
delivered to an Authorized Officer of the party to which sent, or
(d) on the date transmitted by legible telecopier transmission with
a confirmation of receipt, in all cases addressed to the recipient as follows:
(i) If to the Transferor:
National Financial Auto Funding Trust
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇ (▇▇▇)
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
The Chase Manhattan Bank (USA)
▇/▇ ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Bank, N.A.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to Financial Security:
Financial Security Assurance Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Surveillance Department
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(▇▇▇) ▇▇▇-▇▇▇▇
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(in each case in which notice or other communication
to Financial Security refers to a Default or a claim
on the Policy or in which failure on the part of
Financial Security to respond shall be deemed to
constitute consent or acceptance, then with a copy to
the attention of the Senior Vice President
Surveillance)
(iii) If to the Trustee:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust Division
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(iv) If to the Collateral Agent:
▇▇▇▇▇▇ Trust and Savings Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Indenture Trust Division
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(v) If to Moody's:
▇▇▇▇▇'▇ Investors Service, Inc.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
(vi) If to Standard & Poor's:
Standard & Poor's Ratings Group
▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
A copy of each notice given hereunder to any party hereto shall also
be given to (without duplication) Financial Security, the Transferor,
the Trustee and the Collateral Agent. Each
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party hereto may, by notice given in accordance herewith to each of
the other parties hereto, designate any further or different address
to which subsequent notices shall be sent.
Section 8.07. Term of this Agreement. This Agreement shall
take effect on the Closing Date of the Series 1995-1 Certificates and
shall continue in effect until the last Final Termination Date to
occur with respect to each Series. On such Final Termination Date,
this Agreement shall terminate, all obligations of the parties
hereunder shall cease and terminate and the Collateral, if any, held
hereunder and not to be used or applied in discharge of any
obligations of the Transferor or NAFCO in respect of the Secured
Obligations or otherwise under this Agreement, shall be released
to and in favor of the Transferor, provided that the provisions
of Sections 4.06, 4.07 and 8.05 hereof shall survive any termination
of this Agreement and the release of any Collateral upon such
termination.
Section 8.08. Assignments, Third-Party Rights; Reinsurance.
(a) This Agreement shall be a continuing obligation of the
parties hereto and shall (i) be binding upon the parties and their
respective successors and assigns, and (ii) inure to the benefit of
and be enforceable by each Secured Party and the Collateral Agent, and
by their respective successors, transferees and assigns. Neither the
seller nor NAFCO may assign this Agreement, or delegate any of its
duties hereunder, without the prior written consent of the Controlling
Party.
(b) Financial Security shall have the right (unless a
Financial Security Default shall have occurred and be continuing) to
give participations in its rights under this Agreement and to enter
into contracts of reinsurance with respect to any Policy issued in
connection with a Series of Certificates and each such participant or
reinsurer shall be entitled to the benefit of any representation,
warranty, covenant and obligation of each party (other than Financial
Security) hereunder as if such participant or reinsurer was a party
hereto and, subject only to such agreement regarding such reinsurance
or participation, shall have the right to enforce the obligations of
each such other party directly hereunder; provided, however, that no
such reinsurance or participation agreement or arrangement shall
relieve Financial Security of its obligations hereunder, under the
Transaction Documents to which it is a party or under any such Policy.
In addition, nothing contained herein shall restrict Financial
Security from assigning to any Person pursuant to any liquidity
facility or credit facility any rights of Financial Security under
this Agreement or with respect to any real or personal property or
other interests pledged to Financial Security, or in which Federal
Security has a security interest, in connection with the transactions
contemplated hereby. The terms of any such assignment or participation
shall contain an express acknowledgment by such Person of the
condition of this Section and the limitations of the rights of
Financial Security hereunder.
Section 8.09. Consent of Controlling Party. In the event that
the Controlling Party's consent is required under the terms hereof or
under the terms of any Transaction Document, it is understood and
agreed that, except as otherwise provided expressly herein, the
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determination whether to grant or withhold such consent shall be made
solely by the Controlling Party in its sole discretion.
Section 8.10. Trial by Jury Waived. Each of the parties
hereto waives, to the fullest extent permitted by law, any right it
may have to a trial by jury in respect of any litigation arising
directly or indirectly out of, under or in connection with this
Agreement, any of the other Transaction Documents or any of the
transactions contemplated hereunder or thereunder. Each of the
parties hereto (a) certifies that no representative, agent or
attorney of any other party has represented, expressly or otherwise,
that such other party would not, in the event of litigation, seek
to enforce the foregoing waiver and (b) acknowledges that it has
been induced to enter into this Agreement and the other Transaction
Documents to which it is a party, by among other things, this waiver.
Section 8.11. Governing Law. This Agreement shall be governed
by and construed, and the obligations, rights and remedies of the
parties hereunder shall be determined, in accordance with the laws of
the State of New York.
Section 8.12. Consents to Jurisdiction. Each of the parties
hereto irrevocably submits to the jurisdiction of the United States
District Court for the Southern District of New York, any court in the
state of New York located in the city and county of New York, and any
appellate court from any thereof, in any action, suit or proceeding
brought against it and related to or in connection with this
Agreement, the other Transaction Documents or the transactions
contemplated hereunder or thereunder or for recognition or enforcement
of any judgment and each of the parties hereto irrevocably and
unconditionally agrees that all claims in respect of any such suit or
action or proceeding may be heard or determined in such New York State
court or, to the extent permitted by law, in such federal court. Each
of the parties hereto agrees that a final judgment in any such action,
suit or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided
by law. To the extent permitted by applicable law, each of the parties
hereby waives and agrees not to assert by way of motion, as a defense
or otherwise in any such suit, action or proceeding, any claim that it
is not personally subject to the jurisdiction of such courts, that the
suit, action or proceeding is brought in an inconvenient forum, that
the venue of the suit, action or proceeding is improper or that this
Agreement or any of the other Transaction Documents or the subject
matter hereof or thereof may not be litigated in or by such courts.
The Transferor hereby irrevocably appoints and designates ▇▇▇▇▇▇ Trust
and Savings Bank, as its true and lawful attorney and duly authorized
agent for acceptance of service of legal process. The Transferor
agrees that service of such process upon such Person shall constitute
personal service of such process upon it. Subject to Section 8.05
hereof, nothing contained in this Agreement shall limit or affect the
rights of any party hereto to serve process in any other manner
permitted by law or to start legal proceedings relating to any of the
Transaction Documents against NAFCO or the Transferor or their
respective property in the courts of any jurisdiction.
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Section 8.13. Limitation of Liability. It is expressly
understood and agreed by the parties hereto that (a) ▇▇▇▇▇▇ Trust and
Savings Bank is executing this Agreement not in its individual
capacity but solely in its capacities as collateral agent and trustee
of the Trusts pursuant to the Pooling and Servicing Agreements and (b)
in no case whatsoever shall ▇▇▇▇▇▇ Trust and Savings Bank be
personally liable on, or for any loss in respect of, any of the
statements, representations, warranties, covenants, agreements or
obligations of the Trust hereunder, all such liability, if any, being
expressly waived by the parties hereto.
Section 8.14. Determination of Adverse Effect. Any
determination of an adverse effect on the interest of the Secured
Parties or the Certificateholders shall be made without consideration
of the availability of funds under the Policies.
Section 8.15. Counterparts. This Agreement may be executed
in two or more counterparts by the parties hereto, and each such
counterpart shall be considered an original and all such counterparts
shall constitute one and the same instrument.
Section 8.16. Headings. The headings of sections and
paragraphs and the Table of Contents contained in this Agreement are
provided for convenience only. They form no part of this Agreement
and shall not affect its construction or interpretation.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date set forth on the first page hereof.
NATIONAL FINANCIAL AUTO FUNDING
TRUST
By____________________________________
Name:
Title: __________________ of the
Chase Manhattan Bank (USA), as trustee for
National Financial Auto Funding Trust
FINANCIAL SECURITY ASSURANCE INC.
By____________________________________
Name:
Title:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Trustee
By___________________________________
Name:
Title:
▇▇▇▇▇▇ TRUST AND SAVINGS BANK,
as Collateral Agent
By___________________________________
Name:
Title: