RECEIVABLES PURCHASE AGREEMENT
dated as of December 8, 1994
by and between
NATIONAL AUTO FINANCE COMPANY L.P.
as Seller,
and the other Subsidiaries of National Auto
Finance Company, L.P. from time to time parties
hereto, also as Sellers
and
NAFCO FUNDING TRUST
as Purchaser
TABLE OF CONTENTS
Page
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement to Purchase and Sell.................... 1
SECTION 1.2 Timing of Purchases............................... 2
SECTION 1.3 Consideration for Purchases....................... 3
SECTION 1.4 No Recourse....................................... 3
SECTION 1.5 No Assumption of Obligations Relating to
Receivables, Related Assets or Contracts........ 3
SECTION 1.6 True Sales........................................ 3
SECTION 1.7 [Reserved]........................................ 3
SECTION 1.8 Addition of Sellers............................... 3
SECTION 1.9 Termination of Status as a Seller................. 4
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price..................... 5
ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC
SECTION 3.1 Purchase Price Payments........................... 6
SECTION 3.2 The NAFCO Note.................................... 6
SECTION 3.3 Application of Collections and Other
Funds........................................... 7
SECTION 3.4 Servicing of Receivables and Related
Assets.......................................... 7
SECTION 3.5 Repurchase Events................................. 8
SECTION 3.6 Payments and Computations, Etc.................... 9
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase.......... 9
SECTION 4.2 Certification as to Representations and
Warranties...................................... 10
SECTION 4.3 Effect of Payment of Purchase Price............... 10
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Page
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the
Seller.......................................... 11
SECTION 5.2 Representations and Warranties of NAFCO........... 19
ARTICLE VI
GENERAL COVENANTS OF THE SELLER
SECTION 6.1 Affirmative Covenants............................. 19
SECTION 6.2 Reporting Requirements............................ 22
SECTION 6.3 Negative Covenants................................ 24
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE TRANSFERRED ASSETS
SECTION 7.1 Rights of NAFCO................................... 26
SECTION 7.2 Responsibilities of Seller........................ 27
SECTION 7.3 Further Action Evidencing Purchases............... 27
SECTION 7.4 Rights of NAFCO and Its Assignees................. 29
SECTION 7.5 Notice to Trustee................................. 29
SECTION 7.6 Acknowledgement of Transfer....................... 29
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination by the Seller......................... 29
SECTION 8.2 Automatic Termination............................. 29
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Seller......................... 30
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc......................... 30
SECTION 10.2 Notices, Etc..................................... 31
SECTION 10.3 Cumulative Remedies.............................. 31
SECTION 10.4 Binding Effect; Assignability; Survival
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Page
of Provisions................................... 32
SECTION 10.5 Governing Law.................................... 32
SECTION 10.6 Costs, Expenses and Taxes........................ 32
SECTION 10.7 SUBMISSION TO JURISDICTION....................... 33
SECTION 10.8 WAIVER OF JURY TRIAL............................. 33
SECTION 10.9 Integration...................................... 33
SECTION 10.10 Execution in Counterparts........................ 33
SECTION 10.11 No Partnership or Joint Venture.................. 33
SECTION 10.12 No Proceedings................................... 33
SECTION 10.13 Severability of Provisions....................... 34
SECTION 10.14 Recourse to NAFCO................................ 34
SECTION 10.15 Limitation of Liability.......................... 34
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EXHIBITS
EXHIBIT 3.2 Form of Non-Negotiable Promissory Note
EXHIBIT 4.1(a) Form of Seller Assignment Certificate
SCHEDULES
SCHEDULE 5.1(f) Litigation and Other Proceedings
APPENDICES
APPENDIX A Definitions
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THIS RECEIVABLES PURCHASE AGREEMENT (this "Agreement"), dated as of
December 8, 1994, is made by and between National Auto Finance Company L.P., a
Delaware limited partnership, (the "Seller" or "National Auto"), and NAFCO
Funding Trust, a Delaware business trust ("NAFCO"). Except as otherwise
specifically provided herein, capitalized terms used in this Agreement have the
meanings ascribed to such terms in Appendix A hereto, and this Agreement shall
be interpreted in accordance with the conventions set forth in Parts B, C and D
of Appendix A.
WHEREAS, the Seller wishes to sell Receivables that it now owns and from
time to time hereafter will own to NAFCO, and NAFCO is willing, on the terms and
subject to the conditions contained in this Agreement, to purchase such
Receivables from the Seller from time to time; and
WHEREAS, NAFCO intends to transfer its interests in the Receivables sold
pursuant hereto, together with Receivables contributed to NAFCO by the Seller
from time to time, to the NAFCO Auto Receivables Master Trust in order to, among
other things, finance its purchases hereunder;
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I
AGREEMENT TO PURCHASE AND SELL
SECTION 1.1 Agreement to Purchase and Sell. On the terms and subject to
the conditions set forth in this Agreement (including the conditions to
purchases set forth in Article IV), the Seller agrees to sell, transfer, assign,
set over and otherwise convey to NAFCO, and NAFCO agrees to purchase from the
Seller, at the times set forth in Section 1.2, all of the Seller's right, title
and interest in, to and under:
(a) each Receivable (other than Contributed Receivables) that existed and
was owing to the Seller as of the closing of Seller's business on the
Initial Cut-Off Date,
(b) each Receivable created by the Seller (other than Contributed
Receivables) that arises during the period
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from and including the Initial Cut-Off Date to but excluding the
Purchase Termination Date,
(c) all Related Security with respect to all Receivables (other than
Contributed Receivables) of the Seller,
(d) all proceeds of the foregoing, including all Collections described
above (other than Collections in respect of a Contributed Receivable)
or Related Security with respect to any such Receivable, or otherwise
applied to repay or discharge any such Receivable (including net
proceeds of sale or other disposition of repossessed Financed Vehicles
that were the subject of any such Receivable) or other collateral or
property of any Obligor or any other party directly or indirectly
liable for payment of such Receivables), and
(e) all Records relating to any of the foregoing.
As used herein, (i) "Purchased Receivables" means the items listed above
in clauses (a) and (b); (ii) "Related Purchased Assets" means the items listed
above in clauses (c), (d) and (e); (iii) "Related Contributed Assets" means the
items listed above in clauses (c), (d) and (e) as they relate to the Contributed
Receivables, (iv) "Related Assets" means the Related Purchased Assets and the
Related Contributed Assets; (v) "Purchased Assets" means the Purchased
Receivables and the Related Purchased Assets; and (vi) "Transferred Assets"
means the Purchased Receivables, the Contributed Receivables and the Related
Assets. It is understood and agreed that the term "Receivables" includes the
Purchased Receivables and the Contributed Receivables. NAFCO's foregoing
commitment to purchase Purchased Assets is herein called the "Facility."
SECTION 1.2 Timing of Purchases.
(a) Initial Purchase. All of the Purchased Assets of the Seller that exist
at the closing of Seller's business on the Initial Cut-Off Date automatically
shall be deemed to have been sold to NAFCO on the Purchase Commencement Date
without further action by any Person.
(b) Regular Purchases. Except to the extent otherwise provided in Section
8.2, after the closing of Seller's business on the Initial Cut-Off Date until
the closing of Seller's business on the Business Day immediately preceding the
Purchase Termination Date, each Receivable and the Related Assets of
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Seller shall be deemed to have been sold to NAFCO pursuant hereto immediately
(and without further action by any Person) upon the acquisition of such
Receivable by Seller, unless such Receivable and Related Assets have been
contributed to NAFCO at such time.
SECTION 1.3 Consideration for Purchases. On the terms and subject to the
conditions set forth in this Agreement, NAFCO agrees to make Purchase Price
payments to the Seller in accordance with Article III.
SECTION 1.4 No Recourse. Except as specifically provided in this
Agreement, the sale and purchase of Purchased Assets under this Agreement shall
be without recourse to the Seller; it being understood that Seller shall be
liable to NAFCO for all representations, warranties, covenants and indemnities
made by Seller pursuant to the terms of this Agreement, all of which obligations
are limited so as not to constitute recourse to the Seller for the credit risk
of the Obligors.
SECTION 1.5 No Assumption of Obligations Relating to Receivables, Related
Assets or Contracts. Neither NAFCO, the NAFCO Trustee, the Administrator, any
Certificateholder, nor the Trustee shall have any obligation or liability to any
Obligor or other customer or client of Seller (including any obligation to
perform any of the obligations of Seller under any Receivable, related Contracts
or any other related purchase orders or other agreements). No such obligation or
liability is intended to be assumed by NAFCO, the NAFCO Trustee, the
Administrator, any Certificateholder, or the Trustee hereunder, and any such
assumption is expressly disclaimed.
SECTION 1.6 True Sales. The Seller and NAFCO intend the transfers of the
Purchased Assets hereunder to be true sales by the Seller to NAFCO that are
absolute and irrevocable and that provide NAFCO with the full benefits of
ownership of the Purchased Assets, and neither the Seller nor NAFCO intends the
transactions contemplated hereunder to be, or for any purpose to be
characterized as, loans from NAFCO to the Seller.
SECTION 1.7 [Reserved].
SECTION 1.8 Addition of Sellers. Any Subsidiary of National Auto may
become a seller hereunder and sell its receivables and property of the types
that constitute Related Assets hereunder to NAFCO if (i) NAFCO consents and (ii)
the Rating Agency Condition is satisfied with respect to such addition. National
Auto and its Subsidiary that is proposed to be added as a seller shall give to
NAFCO, the Trustee and the
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Applicable Rating Agencies not less than thirty days' prior written notice of
the effective date of the addition of such Subsidiary as a seller. Once such
notice has been given, any addition of a Subsidiary of National Auto as a seller
pursuant to this Section 1.8 shall become effective on the first Business Day
following the expiration of such thirty-day period (or such later date as may be
specified in such notice) on which the Rating Agency Condition has been
satisfied and such Subsidiary and the parties hereto shall have executed and
delivered such agreements, instruments and other documents and such amendments
or other modifications to the Transaction Documents, in form and substance
reasonably satisfactory to NAFCO and the Trustee, that NAFCO or the Trustee
reasonably determines are necessary or appropriate to effect such addition.
SECTION 1.9 Termination of Status as a Seller. (a) At any time when more
than one Person is a Seller, a Seller (other than National Auto) may terminate
its obligation to sell its Receivables and Related Assets to NAFCO if:
(i) such Seller (a "Terminating Seller") shall have given NAFCO
not less than thirty days' prior written notice of such
Seller's intention to terminate such obligations, which notice
shall be given by NAFCO to the Trustee and the Applicable
Rating Agencies;
(ii) an Authorized Officer of National Auto shall have certified
that the termination of the Terminating Seller as a Seller
will not have a Material Adverse Effect;
(iii) both immediately before and after giving effect to such
termination by the Terminating Seller, no Amortization Event
or Unmatured Amortization Event shall have occurred and be
continuing or shall reasonably be expected to occur; and
(iv) the Rating Agency Condition has been satisfied with respect to
such termination and the Trustee has consented to such
termination.
Any termination by a Seller pursuant to this Section 1.9(a) shall become
effective on the first Business Day that follows the day on which the
requirements of foregoing clauses (a)(i) through (iv) shall have been satisfied
(or such later date specified in the notice or certificate referred to in such
clauses). Any
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termination by a Seller pursuant to this Section 1.9(a) shall terminate such
Seller's right and obligation to sell Receivables and Related Assets hereunder
to NAFCO and NAFCO's agreement, with respect to such Seller, to purchase such
Receivables and Related Assets; provided, however, that such termination shall
not relieve such Seller of any of its other Obligations, to the extent such
Obligations related to Receivables (and Related Assets with respect thereto)
originated by such Seller prior to the effective date of such termination.
(b) A Seller's right and obligation to sell its Receivables and Related
Assets to NAFCO shall terminate immediately if such Seller ceases to be a
Subsidiary of National Auto; provided, however, that such termination shall not
relieve such Seller of any of its other Obligations, to the extent such
Obligations relate to Receivables (and Related Assets with respect thereto)
originated by such Seller prior to the effective date of such termination.
ARTICLE II
CALCULATION OF PURCHASE PRICE
SECTION 2.1 Calculation of Purchase Price. (a) On each Business Day
(including the Purchase Commencement Date), the Administrator shall deliver to
NAFCO, the Trustee and the Seller a Daily Report with respect to NAFCO's
purchases of Receivables from the Seller
(i) that are to be made on such Business Day (in the case of the
Daily Report to be delivered on the Purchase Commencement Date) or
(ii) that were made on the immediately preceding Business Day (in
the case of each subsequent Daily Report).
(b) On each day when Receivables are purchased by NAFCO from the Seller
pursuant to Article I hereof, the "Purchase Price" to be paid to the Seller on
such day (in the case of the Purchase Commencement Date) or on the next Business
Day for the Receivables and Related Assets that are to be sold by the Seller on
such day shall be an amount equal to the sum of (i) the Amount Financed minus
the Dealer Discount and (ii) the lesser of (a) the amount of any up-front
insurance premium paid by the Seller for physical damage insurance on the
related Financed Vehicle, and (b) $165.00.
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ARTICLE III
PAYMENT OF PURCHASE PRICE; SERVICING, ETC.
SECTION 3.1 Purchase Price Payments.
On the Purchase Commencement Date and on the Business Day following
each day on which any Receivables are purchased from the Seller by NAFCO
pursuant to Article I hereof, on the terms and subject to the conditions of this
Agreement, NAFCO shall pay to the Seller the Purchase Price for the Receivables
and Related Assets purchased on such day by NAFCO from the Seller by (i) making
a cash payment (pro rata on the basis of the Purchase Price owing to each seller
if there is more than one seller) to the Seller to the extent that NAFCO has
cash available to make such payment pursuant to Section 3.3 and (ii)
automatically increasing the principal amount outstanding under the Seller's
NAFCO Note by the amount of the excess of the Purchase Price to be paid to the
Seller for such Receivables and Related Assets over the amount of any cash
payment made on such day to the Seller.
SECTION 3.2 The NAFCO Note.
(a) On the Purchase Commencement Date, NAFCO shall deliver to the Seller a
promissory note, substantially in the form of Exhibit 3.2, payable to the order
of Seller (each such promissory note, as the same may be amended, supplemented,
endorsed or otherwise modified from time to time, together with any promissory
note issued from time to time in substitution therefor or renewal thereof in
accordance with the Transaction Documents, being herein called a "NAFCO Note"),
which NAFCO Note is subordinated to all Certificates now or hereafter arising
under or in connection with the Pooling and Administration Agreement. The NAFCO
Note is payable in full on the date that is sixty (60) months after the
Amortization Commencement Date. The NAFCO Note bears interest at a rate per
annum equal to the rate publicly announced by the Trustee from time to time as
its "reference" rate, determined as of each Determination Date. NAFCO may prepay
all or part of the outstanding balance of the NAFCO Note from time to time
without any premium or penalty, unless such prepayment would result in a default
in NAFCO's payment of any other amount required to be paid by it under any
Transaction Document.
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(b) The Administrator shall hold the NAFCO Note for the benefit of the
Seller to whom such NAFCO Note was issued, and shall make all appropriate
recordkeeping entries with respect to the NAFCO Note or otherwise to reflect the
payments on and adjustments of the NAFCO Note. The Administrator's books and
records shall constitute rebuttable presumptive evidence of the principal amount
of and accrued interest on the NAFCO Note at any time. The Seller hereby
irrevocably authorizes the Administrator to ▇▇▇▇ the NAFCO Note issued to Seller
"CANCELLED" and to return the NAFCO Note to NAFCO upon the final payment
thereof.
SECTION 3.3 Application of Collections and Other Funds. If, on any day,
NAFCO receives (a) remittance to NAFCO in respect of the Class C Certificates
that it is not required to hold in trust for, or remit to, the Administrator or
the Trustee pursuant to the Pooling and Administration Agreement or (b) proceeds
of transfers pursuant to the Pooling and Administration Agreement, NAFCO shall
apply such funds as follows:
(i) first, to pay its existing expenses and to set aside funds for
the payment of expenses that are then accrued;
(ii) second, to pay the Purchase Price pursuant to Section 3.1 for
Receivables and Related Assets purchased by NAFCO from the Seller on such
day (in the case of the Purchase Commencement Date) or the next preceding
Business Day; and
(iii) third, in such order as NAFCO may elect, (A) to repay amounts
owed by NAFCO to the Seller under the NAFCO Note or (B) to make
distributions to National Auto to the extent permitted by law and the
NAFCO Trust Agreement.
SECTION 3.4 Servicing of Receivables and Related Assets. Consistent with
NAFCO's ownership, as between the parties to this Agreement, of the Receivables
and the Related Assets, NAFCO shall have the sole right to service, administer
and collect the Receivables, to assign such right and to delegate such right to
others (subject, in any event, to the terms and conditions of the Transaction
Documents). Without limiting the generality of Section 10.4, the Seller hereby
acknowledges and agrees that NAFCO shall assign to the Trustee for the benefit
of the Certificateholders the rights and interests granted by the Seller to
NAFCO hereunder and agrees to cooperate fully with the Administrator and the
Trustee in the exercise of such rights. As more fully described in Section 7.4
and in the Pooling and Administration Agreement, the Trustee may only exercise
the
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rights granted NAFCO pursuant to this Section 3.4 in the place of NAFCO (as
assignee or otherwise) following the designation of an Administrator other than
National Auto pursuant to Section 10.02 of the Pooling and Administration
Agreement.
SECTION 3.5 Repurchase Events.
(a) The Seller hereby covenants and agrees with NAFCO, for the
benefit of NAFCO, the Trustee and the Certificateholders, that the occurrence of
a breach of any of the Seller's representations and warranties contained in
Section 5.1 hereof shall constitute events obligating the Seller to repurchase
Receivables hereunder ("Repurchase Events"), at the Repurchase Price from NAFCO
or from the Trust. The repurchase obligation of the Seller shall constitute the
sole remedy to the Certificateholders, the Trustee, or NAFCO against the Seller
with respect to any Repurchase Event.
(b) With respect to all Receivables repurchased by the Seller
pursuant to this Agreement, NAFCO shall assign, without recourse, representation
or warranty, to the Seller all NAFCO's right, title and interest in and to such
Receivables, and all security and documents relating thereto.
8
SECTION 3.6 Payments and Computations, Etc. All amounts to be paid by the
Seller to NAFCO or by NAFCO to the Seller hereunder shall be paid in accordance
with the terms hereof no later than 1:00 p.m. (New York time) on the day when
due in Dollars in immediately available funds to an account that NAFCO or the
Seller shall from time to time specify in writing. Payments received after such
time shall be deemed to have been received on the next Business Day. In the
event that any payment becomes due on a day which is not a Business Day, then
such payment shall be made on the next succeeding Business Day. Seller shall, to
the extent permitted by law, pay to NAFCO, on demand, interest on all amounts
not paid when due hereunder at 1% per annum above the interest rate on the NAFCO
Note in effect on the date such payment was due; provided, however, that such
interest rate shall not at any time exceed the maximum rate permitted by
applicable law. All computations of interest payable hereunder shall be made on
the basis of a year of 360 days for the actual number of days (including the
first but excluding the last day) elapsed.
ARTICLE IV
CONDITIONS TO PURCHASES
SECTION 4.1 Conditions Precedent to Initial Purchase. The initial purchase
hereunder is subject to the conditions precedent that (i) each of the conditions
precedent to the execution, delivery and effectiveness of each other Transaction
Document (other than a condition precedent in any such other Transaction
Document relating to the effectiveness of this Agreement) shall have been
fulfilled to the satisfaction of NAFCO, and (ii) NAFCO shall have received each
of the following, on or before the Closing Date, each (unless otherwise
indicated) dated the date hereof or the Closing Date and each in form and
substance satisfactory to NAFCO:
(a) Seller Assignment Certificates. The Seller Assignment
Certificate in the form of Exhibit 4.1(a) from the Seller, duly completed,
executed and delivered by the Seller;
(b) Good Standing Certificate of the Seller. A good standing
certificate for National Auto, issued by the Secretary of State of
Delaware;
(c) Incumbency Certificate. A certificate of the Secretary or
Assistant Secretary of the Seller certifying,
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as of a recent date reasonably acceptable to NAFCO, the names and true
signatures of the officers authorized on Seller's behalf to sign this
Agreement and the other Transaction Documents to be delivered by Seller
hereunder (on which certificate NAFCO, the Trustee and the Administrator
may conclusively rely until such time as NAFCO shall receive from the
Seller (with a copy to the Trustee and the Administrator) a revised
certificate meeting the requirements of this subsection (c);
(d) Other Transaction Documents. Original copies, executed by each
of the parties thereto in such reasonable number as shall be specified by
NAFCO, of each of the other Transaction Documents to be executed and
delivered in connection herewith; and
(e) Opinions of Counsel. The following opinions of counsel, each in
form and substance satisfactory to NAFCO: (i) opinions of Weil, Gotshal &
▇▇▇▇▇▇, special counsel to the Seller as to general corporate, UCC, true
sale, non-consolidation and tax matters and (ii) an opinion of the General
Counsel of the Seller as to certain corporate matters.
Each seller which is added subsequent to the Closing Date pursuant to
Section 1.8 hereof shall furnish to NAFCO, prior to the sale of its Receivables,
the items set forth in clauses (a), (b) and an opinion of counsel as to UCC
matters and corporate matters above.
SECTION 4.2 Certification as to Representations and Warranties. Seller, by
accepting the Purchase Price paid for each purchase of Receivables generated by
Seller and the Related Assets of Seller, shall be deemed to have certified, with
respect to the Receivables and Related Assets to be sold by it on such day, that
its representations and warranties contained in Article V are true and correct
on and as of such day, with the same effect as though made on and as of such day
and that no Amortization Commencement Date has occurred.
SECTION 4.3 Effect of Payment of Purchase Price. Upon the payment of the
Purchase Price (whether in cash or by an increase in the Seller's NAFCO Note
pursuant to Section 3.1) for any Purchase, title to the Receivables and the
Related Assets included in such Purchase shall rest in NAFCO, whether or not the
conditions precedent to such Purchase were in fact satisfied; provided, however,
that NAFCO shall not be deemed to have waived
10
any claim it may have under this Agreement for the failure by the Seller in fact
to satisfy any such condition precedent.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
SECTION 5.1 Representations and Warranties of the Seller. In order to
induce NAFCO to enter into this Agreement and to make purchases hereunder,
Seller hereby makes the representations and warranties set forth in this Section
5.1 at the times and to the extent set forth in Section 4.2.
(a) Organization and Good Standing. Seller is a limited partnership
duly organized and validly existing in good standing under the laws of the
State of Delaware and has full power and authority to own its properties
and to conduct its business as such properties are presently owned and
such business is presently conducted. Seller had at all relevant times,
and now has, all necessary power, authority, and legal right to own and
sell the Receivables and the Related Assets.
(b) Due Qualification. Seller is duly qualified to do business and
is in good standing (or is exempt from such requirement), and has obtained
all necessary licenses and approvals, in all jurisdictions in which the
ownership or lease of property or the conduct of its business requires
such qualification, licenses or approvals and where the failure so to
qualify, to obtain such licenses and approvals or to preserve and maintain
such qualification, licenses or approvals would have a reasonable
likelihood of having a Material Adverse Effect.
(c) Power and Authority; Due Authorization. Seller has (i) all
necessary power and authority to (A) execute and deliver this Agreement
and the other Transaction Documents to which it is a party, (B) perform
its obligations under this Agreement and the other Transaction Documents
to which it is a party, and (C) sell and assign Receivables and the
Related Assets on the terms and subject to the conditions herein and
therein provided and (ii) duly authorized by all necessary action such
sale and assignment and the execution, delivery, and performance of this
Agreement and the other Transaction Documents to which it is a party and
the consummation of the transactions provided for in this
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Agreement and the other Transaction Documents to which it is a party.
(d) Valid Sale; Binding Obligations. Each sale made by Seller
pursuant to this Agreement, and each contribution made to NAFCO pursuant
to the NAFCO Trust Agreement, shall constitute a valid sale (except in the
case of Contributed Receivables), transfer, and assignment of all of
Seller's right, title and interest in, to and under the Receivables and
the Related Assets of Seller to NAFCO which is perfected and of first
priority under the UCC and otherwise, enforceable against creditors of,
and purchasers from, Seller and free and clear of any Adverse Claim (other
than any Adverse Claim arising solely as a result of any action taken by
NAFCO hereunder or by the Trustee under the Pooling and Administration
Agreement); and this Agreement constitutes, and each other Transaction
Document to which Seller is a party when duly executed and delivered will
constitute, a legal, valid and binding obligation of Seller, enforceable
against Seller in accordance with its terms, except as such enforceability
may be limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and by
general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law.
(e) No Conflict or Violation. The execution, delivery and
performance of, and the consummation of the transactions contemplated by,
this Agreement and the other Transaction Documents to be signed by Seller
and the fulfillment of the terms hereof and thereof will not (i) conflict
with, violate, result in any breach of any of the terms and provisions of,
or constitute (with or without notice or lapse of time or both) a default
under, (A) the Limited Partnership Agreement or (B) any indenture, loan
agreement, mortgage, deed of trust, or other material agreement or
instrument to which Seller is a party or by which it or any of its
properties is bound, (ii) result in the creation or imposition of any
Adverse Claim upon any of the Receivables or Related Assets other than
pursuant to this Agreement and the other Transaction Documents, or (iii)
conflict with or violate any federal, state, local or foreign law or any
decision, decree, order, rule, or regulation applicable to Seller or any
of its properties of any court or of any federal, state, local or foreign
regulatory body, administrative agency, or other governmental
instrumentality having jurisdiction over Seller or any of its properties,
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which conflict, violation, breach or default, individually or in the
aggregate, would have a reasonable likelihood of having a Material Adverse
Effect.
(f) Litigation and Other Proceedings. Except as described in
Schedule 5.1(f), (i) there is no action, suit, proceeding or investigation
pending or, to the best knowledge of Seller, threatened against Seller
before any court, regulatory body, arbitrator, administrative agency, or
other tribunal or governmental instrumentality and (ii) Seller is not
subject to any order, judgment, decree, injunction, stipulation or consent
order of or with any court or other government authority, that, in the
case of each of the foregoing clauses (i) and (ii), (A) asserts the
invalidity of this Agreement or any other Transaction Document, (B) seeks
to prevent the sale of any Receivables or Related Assets by Seller to
NAFCO, the issuance of the Seller Assignment Certificate or the
consummation of any of the transactions contemplated by this Agreement or
any other Transaction Document, (C) seeks any determination or ruling that
has a reasonable likelihood of materially and adversely affecting the
performance by Seller of its obligations under this Agreement or any other
Transaction Document or the validity or enforceability of this Agreement
or any other Transaction Document, (D) seeks to affect adversely the
income tax attributes of the purchases hereunder or the Seller Assignment
Certificate, in the case of each of the foregoing whether under the United
States federal income tax system or any state income tax system, or (E)
individually or in the aggregate for all such actions, suits, proceedings
and investigations, would have a reasonable likelihood of having a
Material Adverse Effect.
(g) Government Approvals. All authorizations, consents, orders and
approvals of, or other action by, any Governmental Authority that are
required to be obtained by the Seller, and all notices to and filings with
any Governmental Authority that are required to be made by the Seller, in
the case of each of the foregoing in connection with the conveyance of
Receivables and Related Assets or the due execution, delivery and
performance by the Seller of this Agreement, the Seller Assignment
Certificate or any other Transaction Document to which it is a party and
the consummation of the transactions contemplated by this Agreement, have
been obtained or made and are in full force and effect, except where the
failure to obtain or to make any such authorization, consent, order,
approval, notice or filing, individually or in the aggregate for all such
13
failures, would not have a reasonable likelihood of having a Material
Adverse Effect.
(h) Margin Regulations. No use of any funds obtained by Seller under
this Agreement will conflict with or contravene any of Regulations G, T, U
and X promulgated by the Federal Reserve Board from time to time.
(i) Quality of Title.
(i) Immediately before each purchase to be made by NAFCO
hereunder and each contribution to be made under the NAFCO Trust
Agreement to NAFCO, each Receivable and Related Asset of Seller
which is then to be transferred to NAFCO hereunder or thereunder,
and the related Contracts, shall be owned by Seller free and clear
of any Adverse Claim (other than any Adverse Claim arising solely as
the result of any action taken by NAFCO hereunder or by the Trustee
under the Pooling and Administration Agreement); and Seller shall
have made all filings and shall have taken all other action under
applicable law in each relevant jurisdiction in order to protect and
perfect the ownership interest of NAFCO and its successors in such
Receivables and Related Assets against all creditors of, and
purchasers from, Seller.
(ii) Whenever NAFCO makes a Purchase or accepts a contribution
under the NAFCO Trust Agreement, it shall have acquired a valid and
perfected first priority ownership interest in each Transferred
Asset, free and clear of any Adverse Claim (other than any Adverse
Claim arising solely as the result of any action taken by NAFCO
hereunder or by the Trustee under the Pooling and Administration
Agreement).
(iii) No effective financing statement or other instrument
similar in effect that covers all or part of any Receivable, any
interest therein or any Related Asset with respect thereto is on
file in any recording office except (x) such as may be filed (A) in
favor of Seller in accordance with the Contracts, (B) in favor of
NAFCO pursuant to this Agreement or the NAFCO Trust Agreement and
(C) in favor of the Trustee, for the benefit of the
Certificateholders, in accordance with the Pooling and
Administration Agreement and (y) such as may have been identified to
NAFCO prior to the Closing Date and termination statements relating
to
14
which have been placed with LEXIS Document Services for filing on
the Closing Date or the first Business Day thereafter.
(iv) No purchase of an interest in any Receivable or Related
Asset of Seller by NAFCO from Seller constitutes a fraudulent
transfer or fraudulent conveyance under the United States Bankruptcy
Code or applicable state bankruptcy or insolvency laws or is
otherwise void or voidable or subject to subordination under similar
laws or principles or for any other reason.
(v) The purchase of Receivables and Related Assets by NAFCO
from Seller constitutes a true and valid sale of such Receivables
and Related Assets under applicable state law and true and valid
assignments and transfers for consideration (and not merely a pledge
of such Receivables and Related Assets for security purposes),
enforceable against the creditors of Seller, and no Receivables or
Related Assets transferred to NAFCO hereunder or under the NAFCO
Trust Agreement shall constitute property of Seller.
(j) Eligible Receivables. (i) On the date of each Purchase of
Receivables hereunder and upon transfer of such Receivables to the Trust
in accordance with the Pooling and Administration Agreement, each such
Receivable, unless otherwise identified to NAFCO and the Trustee by the
Administrator in the Daily Report for such date, is an Eligible
Receivable, and (ii) on the date of each Daily Report or Distribution Date
Statement which identifies a Receivable as an Eligible Receivable, such
Receivable is an Eligible Receivable.
(k) Accuracy of Information. All written information furnished on
and after the Closing Date by Seller or any other NAFCO Person to NAFCO,
the Administrator or the Trustee pursuant to or in connection with any
Transaction Document or any transaction contemplated herein or therein
shall not contain any untrue statement of a material fact or omit to state
material facts necessary to make the statements made not misleading, in
each case on the date such statement was made and in light of the
circumstances under which such statements were made or such information
was furnished.
15
(l) Compliance with Applicable Laws. Seller is in compliance with
the requirements of all applicable laws, rules, regulations, and orders of
all Governmental Authorities (federal, state, local or foreign, and
including environmental laws), a violation of any of which, individually
or in the aggregate for all such violations, would have a reasonable
likelihood of having a Material Adverse Effect.
(m) Investment Company Act. The Seller is not, and is not controlled
by, an "investment company" registered or required to be registered under
the Investment Company Act of 1940, as amended.
(n) Representations and Warranties. At the time that any Receivable
is sold or transferred by the Seller to NAFCO, the Seller hereby
represents and warrants that:
(i) Characteristics of Receivables. Each Receivable (a) shall
have been originated in the United States of America by a Dealer for
the retail sale of a Financed Vehicle in the ordinary course of such
Dealer's business, shall have been fully and properly executed by
the parties thereto, shall have been purchased by National Auto from
such Dealer under an existing dealer agreement, and shall have been
validly assigned by such Dealer to National Auto, which in turn is
being validly assigned pursuant to this Purchase Agreement by
National Auto to NAFCO in accordance with the terms of this
Agreement, (b) shall have created or shall create a valid,
subsisting, and enforceable first priority security interest in
favor of National Auto in the Financed Vehicle, which security
interest is being assigned pursuant to this Purchase Agreement by
National Auto to NAFCO, (c) shall contain customary and enforceable
provisions such that the rights and remedies of the holder thereof
shall be adequate for realization against the collateral of the
benefits of the security, (d) shall provide for level monthly
payments (provided that the payment in the first or last month in
the life of the Receivable may be minimally different from the level
payment) that fully amortize the Amount Financed over an original
term of no greater than 60 months and the related Contract and (e)
has not been modified since its issuance date.
(ii) Compliance with Law. Each Receivable and the sale of the
Financed Vehicle shall have complied in
16
all material respects at the time it was originated or made and at
the execution of this Agreement shall comply in all material
respects with all requirements of applicable federal, state, and
local laws, and regulations thereunder, including, without
limitation, usury laws, the Federal Truth-in-Lending Act, the Equal
Credit Opportunity Act, the Fair Credit Reporting Act, the Fair Debt
Collection Practices Act, the Federal Trade Commission Act, the
▇▇▇▇▇▇▇▇-▇▇▇▇ Warranty Act, the Federal Reserve Board's Regulations
B and Z, and state adaptations of the National Consumer Act and of
the Uniform Consumer Credit Code, and other consumer credit laws and
equal credit opportunity and disclosure laws.
(iii) Binding Obligation. Each Receivable shall represent the
genuine, legal, valid, and binding payment obligation in writing of
the Obligor, enforceable by the holder thereof in accordance with
its terms subject to the effect of bankruptcy, insolvency,
reorganization, or other similar laws affecting the enforcement of
creditors' rights generally. No Obligor on a Contract is the United
States of America, any state or local governmental agency or
instrumentality, or any of the foregoing.
(iv) Security Interest in Financed Vehicle. Immediately prior
to the sale, assignment, and transfer thereof, each Receivable shall
be secured by a validly perfected first priority security interest
in the Financed Vehicle in favor of National Auto as secured party
or all necessary and appropriate actions shall have been commenced
that would result in the valid perfection of a first priority
security interest in the Financed Vehicle in favor of National Auto
as secured party.
(v) Receivables in Force. No Receivable shall have been
satisfied, subordinated, or rescinded, nor shall any Financed
Vehicle have been released from the lien granted by the related
Receivable in whole or in part.
(vi) No Defenses. No Contract is subject to any asserted
reduction (including any reduction on account of any offsetting
account payable by the Seller to an Obligor or funds of an Obligor
held by the Seller), cancellation, rebate (including any advertising
rebate)
17
or refund or any dispute, offset, counterclaim, lien or defense
whatsoever;
(vii) No Liens. To the best of the Seller's knowledge, no
liens or claims shall have been filed for work, labor, or materials
relating to a Financed Vehicle that shall be liens prior to, or of
equal priority with, the security interest in the Financed Vehicle
granted by the Contract.
(viii) No Default. Except for payment defaults continuing for
a period of not more than 45 days, no default, breach, violation, or
event permitting acceleration under the terms of any Receivable
shall have occurred; and no continuing condition that with notice or
the lapse of time would constitute a default, breach, violation, or
event permitting acceleration under the terms of any Receivable
shall have arisen; and the Seller shall not waive any of the
foregoing except as otherwise permitted hereunder.
(ix) Insurance. National Auto, in accordance with its
customary procedures, shall have determined that the Obligor has
obtained or agreed to obtain physical damage insurance covering the
Financed Vehicle or the vehicle is protected by force-placed
insurance.
(x) Title. It is the intention of the Seller that the transfer
and assignment herein contemplated constitute a sale of the
Receivables from the Seller to NAFCO and that the beneficial
interest in and title to the Receivables not be part of the Seller's
estate in the event of the filing of a bankruptcy petition by or
against the Seller under any bankruptcy law. No Receivable has been
sold, transferred, assigned, or pledged by the Seller to any Person
other than NAFCO. Immediately prior to the transfer and assignment
herein contemplated, the Seller had good and marketable title to
each Receivable free and clear of all Liens, security interests, and
rights of others; and, immediately upon the transfer thereof, NAFCO
shall have good and marketable title to each Receivable, free and
clear of all Liens, security interests, and rights of others and no
offsets, defenses or counterclaims against it have been asserted or
threatened; and the transfer has been perfected under the UCC.
18
(xi) Possession; One Contract. With respect to each
Receivable, there is only one Contract, which Contract shall be held
by the Servicer on behalf of NAFCO, pursuant to the Servicing
Agreement.
(xii) All Filings Made. All filings (including, without
limitation, UCC filings) necessary in any jurisdiction to give NAFCO
a first priority perfected ownership interest in the Receivables
shall have been made and shall remain in full force and effect.
(xiii) Chattel Paper. Each Receivable constitutes "chattel
paper" as defined in the UCC.
(xiv) Delinquency. No Receivable is more than 45 days past
due.
SECTION 5.2 Representations and Warranties of NAFCO. From the date hereof
until the Purchase Termination Date, NAFCO hereby represents and warrants that
(a) (i) this Agreement has been duly executed and delivered by NAFCO and (ii)
constitutes NAFCO's valid, binding and legally enforceable obligation, except as
enforceability may be limited by bankruptcy, insolvency, reorganization, or
other similar laws affecting the enforcement of creditors' rights generally and
by general principles of equity, regardless of whether such enforceability is
considered in a proceeding in equity or at law, and (b) the execution, delivery
and performance of this Agreement does not violate any applicable law or any
agreement to which NAFCO is a party or by which its properties are bound.
ARTICLE VI
GENERAL COVENANTS OF THE SELLER
SECTION 6.1 Affirmative Covenants. From the Closing Date until the first
day following the Purchase Termination Date on which all Obligations of the
Seller shall have been finally and fully paid and performed and the Pool Balance
shall have been reduced to zero, unless NAFCO shall otherwise give its prior
written consent, the Seller hereby agrees that it will perform the covenants and
agreements set forth in this Section 6.1.
(a) Compliance with Laws, Etc. Seller will comply in all material
respects with all applicable laws, rules, regulations, judgments, decrees
and orders (including those relating to the Receivables, the Related
Assets, the related
19
Contracts of the Seller and any other agreements related thereto), where
the failure so to comply, individually or in the aggregate for all such
failures, would have a reasonable likelihood of having a Material Adverse
Effect.
(b) Preservation of Existence. Seller will preserve and maintain its
existence, rights, franchises and privileges in the jurisdiction of its
organization, and qualify and remain qualified in good standing in each
jurisdiction where the failure to preserve and maintain such existence,
rights, franchises, privileges and qualifications would have a reasonable
likelihood of having a Material Adverse Effect.
(c) Receivables Reviews. Seller shall, during regular business hours
upon reasonable advance notice permit NAFCO and its agents or
representatives, at the expense of Seller, (i) to examine and make copies
of and abstracts from, and to conduct accounting reviews of, all Records
in the possession or under the control of Seller relating to the
Receivables or Related Assets generated by Seller, and (ii) to visit the
offices and properties of Seller for the purpose of examining such
materials described in clause (i) above, and to discuss matters relating
to any Receivables or any Related Assets of Seller or the Seller's
performance hereunder with any of the Authorized Officers of Seller or,
with the prior consent of an Authorized Officer of Seller, with employees
of Seller having knowledge of such matters (the examinations set forth in
the foregoing clauses (i) and (ii) being herein called a "Seller
Receivables Review"). NAFCO and its agents or representatives shall be
entitled to conduct Seller Receivables Reviews whenever NAFCO, in its
reasonable judgment, deems a Seller Receivables Review appropriate.
(d) Keeping of Records and Books of Account. Seller shall maintain
and implement or cause to be maintained and implemented, administrative
and operating procedures (including, an ability to recreate records
evidencing its Receivables and Related Assets in the event of the
destruction of the originals thereof), and shall keep and maintain, or
cause to be kept or maintained, all documents, books, records and other
information which, in the reasonable determination of NAFCO and the
Trustee, are necessary or advisable in accordance with prudent industry
practice and custom for transactions of this type for the collection of
all Receivables and the Related Assets. At any time after the occurrence
and continuance of an
20
Administrator Default, Seller will, upon NAFCO's request, deliver copies
of all books and records maintained pursuant to this Section 6.1(d) to the
Trustee. Seller shall maintain or cause to be maintained at all times
accurate and complete books, records and accounts relating to the
Receivables, Related Assets and Contracts and all Collections thereon in
which timely entries shall be made. Such books and records shall be marked
to indicate the sales of all Receivables and Related Assets hereunder.
(e) Performance and Compliance with Receivables and Contracts.
Seller will, at its expense, timely and fully perform and comply with all
provisions, covenants and other promises required to be observed by it
under the Contracts of the Seller related to the Receivables and Related
Assets, the breach of which provisions, covenants or promises would have a
reasonable likelihood of having a Material Adverse Effect.
(f) Location of Records and Offices. Seller will keep its principal
place of business and chief executive office, and the offices where it
keeps all Records maintained by it at the addresses referred to in
Schedule 5.1(f) or, upon not less than 30 days' prior written notice given
by Seller to NAFCO, the Trustee and the Applicable Rating Agencies, at
such other locations in jurisdictions where all action required by Section
7.3 shall have been taken and completed.
(g) Separate Existence of NAFCO. Seller hereby acknowledges that the
Trustee, on behalf of the Trust, is entering into the transactions
contemplated by the Transaction Documents in reliance upon NAFCO's
identity as a legal entity separate from Seller and the other NAFCO
Persons. Therefore, from and after the date hereof until the first day
following the Purchase Termination Date on which all Obligations of the
Seller shall have been fully paid and performed and the Pool Balance shall
have been reduced to zero, Seller will, and will cause each other NAFCO
Person to, take all reasonable steps to continue their respective
identities as separate legal entities and to make it apparent to third
Persons that each is an entity with assets and liabilities distinct from
those of NAFCO and that NAFCO is not a division of the Administrator,
Seller or any other Person.
(h) Payment Instructions to Obligors. Seller will instruct all
Obligors to submit all payments on Receivables and Related Assets directly
to the Servicer Account.
21
(i) Taxes. Seller will file all tax returns and reports required by
law to be filed by it, will accrue in accordance with GAAP for all taxes
payable by it and will pay all taxes and governmental charges shown on
such tax returns and reports to be owing by it, prior to the date on which
penalties attach thereto except any such taxes or charges which (i) are
being diligently contested in good faith by appropriate proceedings, (ii)
for which adequate reserves in accordance with GAAP have been set aside on
their respective books and (iii) with respect to which no Lien has been
imposed upon any Receivables or Related Assets.
(j) Segregation of Collections. Seller shall use its best efforts to
ensure that there will be no deposit of any funds other than Collections
into the Servicer Account and, to the extent that any such funds
nevertheless are deposited into the Servicer Account, shall promptly
identify any such funds, or shall cause such funds to be so identified, to
NAFCO, the Administrator and the Trustee (following which notice, NAFCO
shall cause the Administrator to return all such funds to the Seller).
(m) Accuracy of Information. All written information furnished on
and after the Closing Date by Seller or any other NAFCO Person to NAFCO,
the Administrator or the Trustee pursuant to or in connection with any
Transaction Document or any transaction contemplated herein or therein
shall not contain any untrue statement of a material fact or omit to state
material facts necessary to make the statements made not misleading, in
each case on the date such statement was made and in light of the
circumstances under which such statements were made or such information
was furnished.
(n) Credit and Collection Policies. Seller shall comply in all
material respects with its Credit and Collection Policy in regard to each
Receivable of the Seller and the Related Assets and the Contracts related
to each such Receivable, where the failure so to comply, individually or
in the aggregate for all such failures, would reasonably be expected to
have a Material Adverse Effect.
SECTION 6.2 Reporting Requirements. From the Closing Date until the first
day following the Purchase Termination Date on which all Obligations of the
Seller shall have been finally and fully paid and performed and the Pool Balance
shall have been
22
reduced to zero, Seller agrees that it will, unless NAFCO and the Trustee and
(with respect to the notices described below in clauses (c) and (d)) the
Applicable Rating Agencies shall otherwise give prior written consent, furnish
to NAFCO and the Trustee and, in the case of the notices described below in
clauses (c) and (d), to the Applicable Rating Agencies:
(a) Annual Financial Statements. As soon as possible and in any
event within 120 days after the end of each fiscal year of Seller, a copy
of the consolidated balance sheet of Seller and its Consolidated
Subsidiaries as at the end of such fiscal year and the related statements
of earnings, stockholders' equity and cash flows of Seller and its
Consolidated Subsidiaries for such fiscal year, setting forth in each case
in comparative form the corresponding figures for the preceding fiscal
year and prepared in accordance with GAAP consistently applied throughout
the periods reflected therein, certified, without Impermissible
Qualification, by KPMG Peat Marwick (or such other independent certified
public accountants of a nationally recognized standing in the United
States of America as shall be selected by Seller);
(b) Amortization Events. As soon as possible, and in any event
within two (2) Business Days after an Authorized Officer of the Seller has
obtained knowledge of the occurrence of any Amortization Event or any
Unmatured Amortization Event, a written statement of an Authorized Officer
of Seller describing such event and the action that Seller proposes to
take with respect thereto, in each case in reasonable detail;
(c) Material Adverse Effect. As soon as possible and in any event
within two (2) Business Days after an Authorized Officer of Seller has
knowledge thereof, written notice that describes in reasonable detail any
event or occurrence which, individually or in the aggregate for all such
events or occurrences, has had, or that would have a substantial
likelihood of having, a Material Adverse Effect;
(d) Proceedings. As soon as possible and in any event within five
Business Days after an Authorized Officer of Seller has knowledge thereof,
written notice of (i) any litigation, investigation or proceeding of the
type described in Section 5.1(f) not previously disclosed to NAFCO and
(ii) any judgment, settlement or other final disposition with respect to
any such previously disclosed litigation, investigation or proceeding;
23
(e) Other. Promptly, from time to time, (i) such other information,
documents, records or reports respecting the Receivables or the Related
Assets or (ii) such other publicly available information respecting the
condition or operations, financial or otherwise, of Seller, in each case
as NAFCO may from time to time reasonably request in order to protect the
interests of NAFCO, the Trustee or the Certificateholders under or as
contemplated by this Agreement.
SECTION 6.3 Negative Covenants. From the Closing Date until the first day
following the Purchase Termination Date on which all Obligations of the Seller
shall have been finally and fully paid and performed and the Pool Balance shall
have been reduced to zero, unless NAFCO shall otherwise give its prior written
consent, the Seller hereby agrees that it will perform the covenants and
agreements set forth in this Section 6.3.
(a) Sales, Liens, Etc. Except as otherwise provided herein or in the
Pooling and Administration Agreement, Seller will not (i) (A) sell, assign
(by operation of law or otherwise) or otherwise transfer to any Person,
(B) pledge any interest in, (C) grant, create, incur, assume or permit to
exist any Adverse Claim to or in favor of any Person upon or with respect
to, or (D) cause to be filed any financing statement or equivalent
document relating to perfection that covers, any Transferred Asset or any
Contract related to any Receivable, or upon or with respect to the
Servicer Account or any lockbox or other account to which any Collections
of any such Receivable or any Related Assets are sent or any interest
therein, or (ii) assign to any Person any right to receive income from or
in respect of any of the foregoing.
In the event that Seller fails to keep any Transferred Assets free
and clear of any Adverse Claim (other than Adverse Claims arising
hereunder, and other Adverse Claims permitted by any other Transaction
Document), NAFCO may (without limiting its other rights with respect to
Seller's breach of its obligations hereunder) make reasonable expenditures
necessary to release such Adverse Claim. NAFCO shall be entitled to
indemnification for any such expenditures pursuant to the indemnification
provisions of Article IX. Alternatively, NAFCO may deduct such
expenditures as an offset to the Purchase Price owed to Seller hereunder.
(b) Extension or Amendment of Receivables. Seller will not extend,
amend or otherwise modify the terms of any
24
Receivable or Contract in a manner that could reasonably be expected to
have a Material Adverse Effect other than (i) in accordance with the
Credit and Collection Policy or (ii) with the consent of NAFCO.
(c) Mergers, Acquisitions, Sales, etc. Except for (i) mergers or
consolidations in which Seller is the surviving Person or (ii) mergers or
consolidations of a Subsidiary of the Seller into the Seller, Seller will
not be a party to any merger or consolidation. Seller will give NAFCO, the
Applicable Rating Agencies and the Trustee notice of any such permitted
merger or consolidation promptly following completion thereof. Seller will
not, directly or indirectly, transfer, assign, convey or lease, whether in
one transaction or in a series of transactions, all or substantially all
of its assets or sell or assign, with or without recourse, any Receivables
or Related Assets, in each case other than pursuant to this Agreement or
the NAFCO Trust Agreement.
(d) Change in Name. Seller will not (i) change its name or (ii)
change the name under or by which it does business in any manner which
would or may make any financing statement filed by Seller in accordance
herewith seriously misleading within the meaning of Section 9-402(7) of an
applicable enactment of the UCC, in each case unless Seller shall have
given NAFCO, the Administrator, the Trustee and the Applicable Rating
Agencies 30 days' prior written notice thereof and unless, prior to any
such change in name, Seller shall have taken and completed all action
required by Section 7.3.
(e) Trust Agreement. Seller will not cause NAFCO to amend the NAFCO
Trust Agreement without the Trustee's prior written consent.
(f) Amendments to Transaction Documents. Seller will not amend or
otherwise modify or supplement any Transaction Document to which it is a
party unless NAFCO shall have given its prior written consent to each such
amendment, modification or supplement, which consent shall not be
unreasonably withheld or delayed.
(g) Accounting for Purchases. Seller shall prepare its financial
statements in accordance with GAAP and, to the extent the transactions
contemplated in this Agreement constitute sales of the Purchased Assets
under GAAP. Seller shall not prepare any financial statements which
account for
25
the transactions contemplated in this Agreement in any manner other than
as a sale of the Purchased Assets by Seller to NAFCO, or in any other
respect account for or treat the transactions contemplated in this
Agreement (including but not limited to accounting and, where taxes are
not consolidated, for tax reporting purposes) in any manner other than as
a sale of the Purchased Assets by Seller to NAFCO.
(h) Change in Credit and Collection Policy. Seller will not change
the terms and provisions of the Credit and Collection Policy in any
material respect unless the Rating Agency Condition is satisfied with
respect thereto.
(i) Change in Payment Instructions to Obligors. Seller will not make
any change in its instructions to Obligors regarding payments to be made
to the Servicer Account other than changes in such instructions which
direct Obligors to make payments to another Servicer Account duly
designated in accordance with the Servicing Agreement or to the
Certificate Account.
ARTICLE VII
ADDITIONAL RIGHTS AND OBLIGATIONS IN
RESPECT OF THE TRANSFERRED ASSETS
SECTION 7.1 Rights of NAFCO.
(a) Subject to Section 7.4, Seller hereby authorizes NAFCO, the
Administrator and/or their respective designees or assignees to take any and all
steps in Seller's name and on behalf of Seller that NAFCO, the Administrator
and/or their respective designees or assignees determine are reasonably
necessary or appropriate to collect all amounts due under any and all
Transferred Assets and enforcing or protecting their rights under this
Agreement, including endorsing the name of Seller on checks and other
instruments representing Collections and enforcing such Receivables and Related
Assets.
(b) Except as set forth in Section 3.5 with respect certain Repurchase
Events, NAFCO shall have no obligation to account for, to replace, to substitute
or to return any Purchased Asset to Seller. NAFCO shall have no obligation to
account for, or to return Collections, or any interest or other finance charge
collected pursuant thereto, to Seller, irrespective of whether
26
such Collections and charges are in excess of the Purchase Price for such
Purchased Assets.
(c) NAFCO shall have the unrestricted right to further assign, transfer,
deliver, hypothecate, subdivide or otherwise deal with the Transferred Assets,
and all of NAFCO's right, title and interest in, to and under this Agreement and
the NAFCO Trust Agreement, on whatever terms NAFCO shall determine, pursuant to
the Pooling and Administration Agreement or otherwise.
(d) NAFCO shall have the sole right to retain any gains or profits created
by buying, selling or holding the Transferred Assets and shall have the sole
risk of and responsibility for losses or damages created by such buying, selling
or holding.
SECTION 7.2 Responsibilities of Seller. Anything herein to the contrary
notwithstanding:
(a) Seller agrees to deliver directly to the Administrator (for
NAFCO's account), within one Business Day after receipt thereof, any
Collections that it receives, in the form so received, and agrees that all
such Collections shall be deemed to be received in trust for NAFCO and
shall be maintained and segregated separate and apart from all other funds
and moneys of Seller until delivery of such Collections to the
Administrator.
(b) Seller shall perform all of its obligations hereunder and under
the Contracts related to the Receivables and Related Assets to the same
extent as if such Receivables had not been sold hereunder, and the
exercise by NAFCO or its designee or assignee of NAFCO's rights hereunder
or in connection herewith shall not relieve Seller from any of its
obligations under the Contracts or Related Assets related to the
Receivables.
(c) Seller hereby grants to NAFCO an irrevocable power of attorney,
with full power of substitution, coupled with an interest, to take in the
name of Seller all steps necessary or advisable to endorse, negotiate or
otherwise realize on any writing or other right of any kind held or
transmitted by Seller or transmitted or received by NAFCO (whether or not
from Seller) in connection with any Purchased Asset.
SECTION 7.3 Further Action Evidencing Purchases. Seller agrees that from
time to time, at its expense, it will promptly, upon reasonable request, execute
and deliver all further
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instruments and documents, and take all further action, in order to perfect,
protect or more fully evidence the purchase by NAFCO or contribution to NAFCO of
the Receivables and the Related Assets under this Agreement or the NAFCO Trust
Agreement (as applicable), or to enable NAFCO to exercise or enforce any of its
rights hereunder or under any other Transaction Document. Seller further agrees
that from time to time, at its expense, it will promptly, upon request, take all
action that NAFCO, the Administrator or the Trustee may reasonably request in
order to perfect, protect or more fully evidence such purchase or contribution
of the Receivables and the Related Assets or to enable NAFCO or the Trustee (as
the assignee of NAFCO) to exercise or enforce any of its rights hereunder or
under any other Transaction Document. Without limiting the generality of the
foregoing, upon the request of NAFCO, Seller will:
(a) execute and file such financing or continuation statements, or
amendments thereto or assignments thereof, and such other instruments or
notices, as NAFCO or the Trustee may reasonably determine to be necessary
or appropriate; and
(b) ▇▇▇▇ the master data processing records evidencing the
Receivables with the following legend:
"THE RECEIVABLES DESCRIBED HEREIN HAVE BEEN SOLD
TO NAFCO FUNDING TRUST AND SUCH RECEIVABLES HAVE
BEEN TRANSFERRED BY NAFCO FUNDING TRUST TO THE
NAFCO AUTO RECEIVABLES MASTER TRUST."
Seller hereby authorizes NAFCO or its designee or assignee to file one or
more financing or continuation statements, and amendments thereto and
assignments thereof, relative to all or any of the Receivables and Related
Assets of Seller, in each case whether now existing or hereafter generated by
Seller. Except for material performance obligations of the Seller to any Obligor
hereunder or under any of the Contracts, if (i) Seller fails to perform any of
its agreements or obligations under this Agreement and does not remedy such
failure within the applicable cure period, if any, and (ii) NAFCO in good faith
reasonably believes that the performance of such agreements and obligations is
necessary or appropriate to protect the interests of NAFCO under this Agreement,
then NAFCO or its designee or assignee may (but shall not be required to)
perform, or cause performance of, such agreement or obligation and the
reasonable expenses of NAFCO or its designee or assignee incurred in connection
with such performance shall be payable by the Seller as provided in Section 9.1.
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SECTION 7.4 Rights of NAFCO and Its Assignees.
At any time when an Administrator other than National Auto has been
designated pursuant to Section 10.02 of the Pooling and Administration
Agreement, the Seller shall, at NAFCO's request, assemble all of the Records
which evidence the Receivables and Related Assets originated by the Seller and
the Contracts related to such Receivables, or which are otherwise necessary or
desirable to collect such Receivables or Related Assets, and make the same
available to NAFCO or the Trustee at a place selected by the Trustee or its
designee.
SECTION 7.5 Notice to Trustee. Seller (including any seller added after
Closing Date) agrees that, concurrently with its delivery to NAFCO, copies of
all notices, reports, documents and other information shall be delivered by the
Seller to the Trustee.
SECTION 7.6 Acknowledgement of Transfer. Seller hereby acknowledges that
NAFCO will transfer all of its interests and rights hereunder (including all
rights of consent) to the Trustee under the Pooling and Administration
Agreement.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination by the Seller. The Seller may terminate its
agreement to sell Receivables hereunder to NAFCO by giving NAFCO and the Trustee
not less than five Business Days' prior written notice of the Seller's election
not to continue to sell Receivables to NAFCO. The Trustee shall notify the
Certificateholders within five Business Days of receiving any such notice. Upon
receipt of a termination notice from the Seller, NAFCO shall cause each Series
of Revolving Certificates to be repaid as early as is practicable.
SECTION 8.2 Automatic Termination. The agreement of the Seller to sell
Receivables hereunder, and the agreement of NAFCO to purchase Receivables from
the Seller hereunder, shall terminate automatically on the earlier to occur of
(i) the Scheduled Amortization Commencement Date, (ii) an Amortization Event
(which Amortization Event has not been waived in accordance with the Pooling and
Administration Agreement), and (iii) a bankruptcy proceeding being filed by or
against the Seller or NAFCO.
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ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Indemnities by the Seller. Seller shall indemnify and hold
harmless NAFCO, each of its successors, permitted transferees and assigns, and
all officers, directors, shareholders or trust certificateholders, employees and
agents of any of the foregoing (each of the foregoing persons being individually
called a "RPA Indemnified Party"), from and against any loss, liability,
expense, claim, damage or injury suffered or sustained by reason of any acts,
omissions or alleged acts or omissions arising out of activities of the Seller
pursuant to this Agreement arising out of or based on the arrangement created by
this Agreement and the activities of the Seller taken pursuant thereto,
including any judgment, award, settlement, reasonable attorneys' fees and other
costs or expenses incurred in connection with the defense of any actual or
threatened action, proceeding or claim; provided, however, that the Seller shall
not indemnify NAFCO if such acts, omissions or alleged acts or omissions
constitute fraud, gross negligence or wilful misconduct by NAFCO; and provided
further, that the Seller shall not indemnify NAFCO for any liabilities, cost or
expense of NAFCO with respect to any Federal, state or local income or franchise
taxes (or any interest or penalties with respect thereto) required to be paid by
NAFCO in connection herewith to any taxing authority. Any indemnification under
this Article IX shall survive the termination of the Agreement.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 Amendments; Waivers, Etc.
(a) The provisions of this Agreement may from time to time be amended,
modified or waived, if such amendment, modification or waiver is in writing and
signed by NAFCO and the Seller (with respect to an amendment) or by NAFCO (with
respect to a waiver or consent by it) and, as provided in Section 7.02(i) of the
Pooling and Administration Agreement, by the Trustee, and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given. This Agreement shall not be amended unless NAFCO shall
have delivered the proposed amendment to the Applicable Rating Agencies at least
ten Business Days (or such shorter period as shall be acceptable to each of
them) prior to the execution and delivery thereof.
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(b) No failure or delay on the part of NAFCO, any RPA Indemnified Party,
or the Trustee or any other third party beneficiary referred to in Section
10.12(a) in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. No notice to or demand on the Seller in any case shall entitle
it to any notice or demand in similar or other circumstances. No waiver or
approval by NAFCO or the Trustee under this Agreement shall, except as may
otherwise be stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval under this Agreement shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2 Notices, Etc. All notices and other communications provided
for hereunder shall, unless otherwise stated herein, be in writing (including
facsimile communication) and shall be personally delivered or sent by certified
mail, postage prepaid, by facsimile or by overnight courier, to the intended
party at the address or facsimile number of such party set forth under its name
on the signature pages hereof or at such other address or facsimile number as
shall be designated by such party in a written notice to the other parties
hereto given in accordance with this Section 10.2. Copies of all notices and
other communications provided for hereunder shall be delivered to the Trustee
and the Applicable Rating Agencies at their respective addresses for notices set
forth in the Pooling and Administration Agreement. All notices and
communications provided for hereunder shall be effective, (a) if personally
delivered, when received, (b) if sent by certified mail, four Business Days
after having been deposited in the mail, postage prepaid and properly addressed,
(c) if transmitted by facsimile, when sent, receipt confirmed by telephone or
electronic means and (d) if sent by overnight courier, two Business Days after
having been given to such courier unless sooner received by the addressee.
SECTION 10.3 Cumulative Remedies. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law. Without limiting
the foregoing, Seller hereby authorizes NAFCO, at any time and from time to
time, to the fullest extent permitted by law, to set-off, against any
Obligations of Seller to NAFCO that are then due and payable or that are not
then due and payable from the Seller to NAFCO but have then accrued, any and all
indebtedness or other obligations at any time owing to Seller by NAFCO to or for
the credit or the
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account of Seller or that are not then due and payable from NAFCO to Seller but
have then accrued.
SECTION 10.4 Binding Effect; Assignability; Survival of Provisions. This
Agreement shall be binding upon and inure to the benefit of NAFCO and the Seller
and its respective successors and permitted assigns. The Seller may not assign
any of its rights hereunder or any interest herein without the prior written
consent of NAFCO, the Trustee and the Applicable Rating Agencies. This Agreement
shall create and constitute the continuing obligations of the parties hereto in
accordance with its terms, and shall remain in full force and effect until the
first date following the Purchase Termination Date, but not later than the date
on which the Trust is terminated pursuant to Section 12.01 of the Pooling and
Administration Agreement, on which all Obligations of the Seller shall have been
finally and fully paid and performed or such other time as the parties hereto
shall agree and as to which the Trustee (at the direction of the Majority
Certificateholders) shall have given its prior written consent, which consent
shall not be unreasonably withheld or delayed. The rights and remedies with
respect to any breach of any representation and warranty made by Seller pursuant
to Article V and the indemnification and payment provisions of Article IX and
Section 10.6 shall be continuing and shall survive any termination of this
Agreement.
SECTION 10.5 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES, EXCEPT TO THE EXTENT THAT THE
PERFECTION OF THE INTERESTS OF NAFCO IN THE RECEIVABLES AND THE RELATED ASSETS
ARE GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF NEW YORK.
SECTION 10.6 Costs, Expenses and Taxes. In addition to the obligations of
the Seller under Article IX, Seller, severally with respect to itself, agrees to
pay on demand:
(a) all reasonable out-of-pocket and other costs and expenses in
connection with the enforcement of, and any modifications, amendments or
waivers of, this Agreement, the Seller Assignment Certificate or the other
Transaction Documents by NAFCO or any successor in interest to NAFCO; and
(b) all stamp and other taxes and fees payable or determined to be
payable in connection with the execution and delivery by the Seller, and
the filing and recording, of
32
this Agreement or the other Transaction Documents, and agrees to indemnify
each RPA Indemnified Party against any liabilities with respect to or
resulting from any delay in paying or omission to pay such taxes and fees.
SECTION 10.7 SUBMISSION TO JURISDICTION. EACH PARTY HERETO HEREBY
IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY NEW YORK STATE OR
FEDERAL COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK, NEW
YORK OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR ANY OTHER TRANSACTION DOCUMENT, AND HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN SUCH NEW
YORK STATE OR FEDERAL COURT.
SECTION 10.8 WAIVER OF JURY TRIAL. EACH PARTY HERETO WAIVES ANY RIGHT TO A
TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER
OR RELATING TO THIS AGREEMENT, ANY OTHER TRANSACTION DOCUMENT, OR ANY AMENDMENT,
INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE
DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY COURSE OF
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), ACTIONS OF
EITHER OF THE PARTIES HERETO OR ANY OTHER RELATIONSHIP EXISTING IN CONNECTION
WITH THIS AGREEMENT OR ANY OTHER TRANSACTION DOCUMENT, AND AGREES THAT ANY SUCH
ACTION OR PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.
SECTION 10.9 Integration. This Agreement and the other Transaction
Documents contain a final and complete integration of all prior expressions by
the parties hereto with respect to the subject matter hereof and thereof and
shall together constitute the entire agreement between the parties hereto with
respect to the subject matter hereof and thereof, superseding all prior oral or
written understandings.
SECTION 10.10 Execution in Counterparts. This Agreement may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which when taken together shall constitute one and the same
agreement.
SECTION 10.11 No Partnership or Joint Venture. Nothing contained in this
Agreement shall be deemed or construed by the parties hereto or by any third
person to create the relationship of principal and agent or of partnership or of
joint venture.
SECTION 10.12 No Proceedings. The Seller hereby agrees that it will not
institute against NAFCO or the Trust, or join
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any other Person in instituting against NAFCO or the Trust, any insolvency
proceeding (namely, any proceeding of the type referred to in the definition of
"Event of Bankruptcy") so long as any Certificates issued by the Trust shall be
outstanding or there shall not have elapsed one year plus one day since the last
day on which any such Certificates shall have been outstanding. The foregoing
shall not limit the right of Seller to file any claim in or otherwise take any
action with respect to any insolvency proceeding that was instituted against
NAFCO or the Trust by any Person other than Seller, or any other NAFCO Person.
SECTION 10.13 Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any of the other
Transaction Documents shall for any reason whatsoever be held invalid, then such
covenants, agreements, provisions or terms shall be deemed severable from the
remaining covenants, agreements, provisions or terms of this Agreement or such
other Transaction Document (as applicable) and shall in no way affect the
validity or enforceability of the other provisions of this Agreement or any of
the other Transaction Documents.
SECTION 10.14 Recourse to NAFCO. Except to the extent expressly provided
otherwise in the Transaction Documents, the obligations of NAFCO under the
Transaction Documents to which it is a party are solely the obligations of
NAFCO, and no recourse shall be had for payment of any fee payable by or other
obligation of or claim against NAFCO that arises out of any Transaction Document
to which NAFCO is a party against any trustee, officer or employee of NAFCO. The
provisions of this Section 10.14 shall survive the termination of this
Agreement.
SECTION 10.15 Limitation of Liability. It is expressly understood and
agreed by the parties hereto that (a) this Agreement is executed and delivered
by The Chase Manhattan Bank (USA), not individually or personally but solely as
trustee of NAFCO, in the exercise of the powers and authority conferred and
vested in it, (b) each of the representations, undertakings and agreements
herein made on the part of NAFCO is made and intended not as personal
representations, undertakings and agreements by The Chase Manhattan Bank (USA)
but is made and intended for the purpose for binding only NAFCO and (c) under no
circumstances shall The Chase Manhattan Bank (USA) be personally liable for the
payment of any indebtedness or expenses of NAFCO or be liable for the breach or
failure of any obligation, representation, warranty or covenant made or
undertaken by NAFCO under this Agreement or the other Transaction Documents.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective officers thereunto duly authorized, as of the date first
above written.
NATIONAL AUTO FINANCE COMPANY L.P.
By: NATIONAL AUTO FINANCE CORPORATION,
as General Partner
By: _________________________
Name
Title:
Address: One Park Place
▇▇▇ ▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
NAFCO FUNDING TRUST
By: THE CHASE MANHATTAN BANK (USA),
not in its individual capacity
but solely as Owner Trustee of the
NAFCO Funding Trust
By: _________________________
Name:
Title:
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
Telephone:
Facsimile:
35