EXHIBIT 10.19
CONTIFINANCIAL SERVICES CORPORATION
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INVESTMENT BANKING
SERVICES AGREEMENT
dated as of May 17, 1996
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NATIONAL AUTO FUNDING CORPORATION
TABLE OF CONTENTS
Page
SECTION 1. DEFINITIONS.................................................... 1
1.1 Defined Terms.................................................... 1
SECTION 2. INVESTMENT BANKING............................................. 2
2.1 Appointment of Lead Manager...................................... 2
2.2 Fees............................................................. 2
2.3 The Securities................................................... 3
2.4 Information to be Made Available................................. 4
2.5 Payment of Expenses.............................................. 4
2.6 Indemnification.................................................. 5
2.7 Further Assurances............................................... 5
SECTION 3. MISCELLANEOUS.................................................. 5
3.1 Amendments and Waivers........................................... 5
3.2 Notices.......................................................... 5
3.3 Successors and Assigns........................................... 6
3.4 Termination...................................................... 6
3.5 Counterparts..................................................... 6
3.6 Severability..................................................... 6
3.7 Integration; Construction........................................ 6
3.8 Limited Liability................................................ 7
3.9 GOVERNING LAW.................................................... 7
3.10 SUBMISSION TO JURISDICTION; WAIVERS.............................. 7
3.11 Acknowledgements................................................. 8
3.12 WAIVER OF JURY TRIAL............................................. 8
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INVESTMENT BANKING
SERVICES AGREEMENT
INVESTMENT BANKING SERVICES AGREEMENT, dated as of May 17, 1996
(this "IBSA"), by and among CONTIFINANCIAL SERVICES CORPORATION
("ContiFinancial") and NATIONAL AUTO FUNDING CORPORATION, a Delaware corporation
("NAF Corp.").
W I T N E S S E T H:
WHEREAS, the NAF Auto Loan Trust (the "Borrower") has entered
into a Credit Agreement dated as of May 17, 1996 (as may from time to time, be
amended, supplemented, or modified, the "Credit Agreement") with NAF Corp. and
ContiTrade Services L.L.C. (the "Lender"), pursuant to which the Borrower will
receive the proceeds of Advances from time to time made thereunder;
WHEREAS, it is a condition to the obligations of the Lender to
make the Advances under the Credit Agreement that NAF Corp. shall have executed
and delivered this Agreement to ContiFinancial.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. (a) As used in this IBSA, the capitalized
terms used herein and therein shall, unless otherwise defined herein or therein,
have the meanings assigned to them in the Definitions List which is attached as
Exhibit A to the Credit Agreement (the "Definitions List").
(b) The words "hereof," "herein" and "hereunder" and words of
similar import when used in this IBSA shall refer to this IBSA as a whole and
not to any particular provision of this IBSA and Section, subsection, schedule
and exhibit references are to this IBSA unless otherwise specified.
(c) Capitalized terms used herein shall be equally applicable to
both the singular and plural forms of such terms.
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SECTION 2. INVESTMENT BANKING
2.1 Appointment of Lead Manager.
(a) NAF Corp. hereby appoints ContiFinancial as the lead manager
of the NAF Entities with respect to any issuance of Securities. For
purposes of this IBSA, "Securities" shall mean the NAF Entities' first
$600,000,000 of automobile receivables-backed notes or certificates issued
to finance the NAF Entities' automobile loan origination and acquisition
program (the "Program"), together with any such automobile-backed notes or
certificates in excess of such $600,000,000, so long as the Lender
financed the Contracts underlying such notes or certificates pursuant to
the Credit Agreement. ContiFinancial in its capacities as lead manager for
the Securities is referred to herein as the "Lead Manager".
ContiFinancial's mandate as the Lead Manager shall not be conditioned upon
ContiTrade Service L.L.C.'s continued provision of warehouse financing
after the initial term to the Borrower pursuant to the Credit Agreement.
(b) Upon accumulation of a pool of Contracts suitable for
securitization in a structure acceptable to the Lead Manager and rating
agencies and the related Credit Enhancer, the Lead Manager agrees to
utilize its best efforts in its ordinary course of business to obtain one
or more purchasers (the "Purchasers") of the Securities, in compliance
with applicable law and any terms provided in the offering memorandum or
other offering materials, if any, prepared by the NAF Entities for the
issuance of Securities.
(c) ContiFinancial's mandate as Lead Manager is expressly
conditioned upon ContiFinancial's continued ability to effect the
placement of the Securities in a commercially reasonable manner. Any
disagreement as to whether a Securities execution was in a "commercially
reasonable manner" shall be settled by binding arbitration, with each of
ContiFinancial and NAF Corp. naming one arbitrator and the two arbitrators
so named naming a third.
2.2 Fees.
(a) The Lead Manager shall be the exclusive Lead Manager for any
investment grade Securities, at the fees set forth below. The NAF Entities
may retain the Lead Manager to act as placement agent for non-investment
grade securities at fees to be determined at the time of the offering.
(b) The NAF Entities shall pay to the Lead Manager, on the
applicable closing date of each issuance of Securities a management fee
equal to (i) 1.00% of the gross proceeds from the sale of the first
$200,000,000 of Securities issued, (ii) .90% of the gross proceeds from
the next $200,000,000 of Securities issued and (ii) .60% of the gross
proceeds from the sale of any Securities issued thereafter (collectively,
the "Management Fee").
(c) In addition to the provisions of paragraph (b) above, the
Management Fee shall also be due and owing:
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(i) immediately, upon the occurrence of an Event of Default
under the Credit Agreement; provided that the Lender shall
have accelerated the Obligations; in such circumstance the
Management Fee shall be applied to the Adjusted Eligible
Contract Balance as of the date of acceleration;
(ii) (a) six months following the refinancing of the Loan under
the Credit Agreement with another lender un-affiliated
with the Lender, provided that a securitization of such
Contracts through the Lead Manager does not take place
prior to the end of such six- month period and (b)
immediately upon the sale of the Contracts on a whole-loan
basis; in either such circumstance the Management Fee
shall be applied to the Adjusted Eligible Contract Balance
as of the date of such refinancing or sale; provided, that
if the NAF Entities thereafter effects a securitization
with the Lead Manager relating to such Contracts, the
Management Fee previously paid in connection with such
refinancing or sale shall be offset against the Management
Fees due to the Lead Manager in connection with the
subsequent securitization; and
(iii) six months following the termination of the Credit
Agreement at its stated termination date (if not renewed
or extended), if $600,000,000 in Securities have not
previously been issued; in such circumstance the
Management Fee shall be applied to the Aggregate Eligible
Contract Balance as of the date of such termination;
provided, that if the NAF Entities thereafter effects a
securitization with the Lead Manager relating to such
Contracts, the Management Fee previously paid in
connection with such refinancing or sale shall be offset
against the Management Fees due to the Lead Manager in
connection with the subsequent securitization.
In no event shall the above provisions result in the payment of
duplicative Management Fees.
2.3 The Securities.
(a) It is expected that the Securities will consist of either (i)
senior notes ("Notes") of a special purpose corporation created for such
purpose (ii) certificates evidencing undivided interests in a trust
("Grantor Trust Certificates") or (iii) certificates, which for tax
purposes will be indebtedness ("Debt Certificates"). The holders of the
Notes, the Grantor Trust Certificates or the Debt Certificates will have a
first perfected security interest in the contracts and credit enhancement
described below.
(b) It is intended that the Securities will be issued in one or
more series of Rule 144A private placements or public offerings, and the
senior class
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thereof will be rated at least "A" by at least one nationally recognized
rating agency. The credit enhancement used to obtain this rating may
consist of a cash reserve account funded by the NAF Entities or FirstCity,
a subordinated class of securities retained by the NAF Entities,
overcollateralization provided by the NAF Entities, a financial guaranty
insurance policy provided by a nationally recognized monoline financial
guaranty insurer acceptable to the rating agencies, other form of
third-party credit enhancement reasonably acceptable to the Lead Manager,
or a combination of the above. No issuance of the Securities shall be
consummated unless NAF Corp. and the Lead Manager mutually agree on the
tax and credit enhancement structure to be used to issue the Securities
and the interest rate to be paid to investors in respect of the
Securities; provided, however, that NAF Corp. may not unreasonably
withhold consent to any proposed structure (including, without limitation,
the interest rate to be paid to investors in respect of the Securities).
2.4 Information to be Made Available.
(a) The NAF Entities will provide information about the Contracts
to the Lead Manager on a magnetic medium. The Contracts will be selected
by NAF Corp. from the Borrower's portfolio, subject to eligibility
standards established by the Lead Manager, the Rating Agencies and the
Credit Enhancer. If the Securities are Notes, on the closing date the
Contracts will be contributed to the SPC in exchange for the ownership
interests in the SPC and the proceeds received upon sale of the Notes.
(b) The NAF Entities agree to make available to the Lead Manager,
the Rating Agencies, the Credit Enhancer and any prospective Purchaser for
their review all documents, records and other information relating to the
Contracts and/or the servicing thereof. NAF Entities also will make
available the appropriate personnel to meet with prospective Purchasers,
the Rating Agencies and the Credit Enhancer, as identified by the Lead
Manager.
(c) The NAF Entities agree to co-operate with accountants' file
review as may be reasonably necessary in connection with a securitization.
2.5 Payment of Expenses. The NAF Entities shall pay all
customary, usual and reasonable costs and expenses in connection with this
Agreement, and the rating, issuance and sale of the Securities, whether or not
the Securities are issued or sold, such as, without limitation, the fees and
disbursements of NAF Entities attorneys, including such fees incurred in
preparing required legal opinions, and the fees and expenses of any data
processing vendor. The NAF Entities shall pay all of the Lead Manager's
reasonable out-of-pocket expenses related to this Agreement, including all fees
and disbursements of the Lead Manager's and counsel and any outside auditors
required by the rating agencies and the credit enhancer. In addition, the NAF
Entities shall pay all fees and disbursements of counsel to any Purchaser,
rating agencies and the credit enhancer. All such expenses, fees and
disbursements shall be due and payable whether or not any Securities are sold.
2.6 Indemnification. NAF Corp. will indemnify the Lead Manager
against any losses, claims, damages or liabilities to which the Lead Manager may
become
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subject in connection with any matter related to or arising out of this
Agreement; provided, however, there shall be excluded from such indemnification
any such loss, claim, damage or liability which results from the gross
negligence or willful misconduct of the Lead Manager in performing the services
which it is to render pursuant to this agreement. In addition, NAF Corp. shall
indemnify the Lead Manager in the case of claims respecting (a) the accuracy or
completeness of the materials or information provided by the NAF Entities to the
Lead Manager or a Purchaser or (b) any action, or failure to act, by the Lead
Manager undertaken at NAF Corp.'s request or with the consent of NAF Corp.
2.7 Further Assurances. NAF Corp. shall do such further acts and
things and execute and deliver to the Lead Manager such assignments, agreements,
financing statements, powers and instruments as are required by the Lead Manager
to carry into effect the purposes of this Agreement.
SECTION 3. MISCELLANEOUS
3.1 Amendments and Waivers. The provisions hereof may be
amended, supplemented or modified by the parties hereto, in writing.
3.2 Notices. Except where telephonic instructions or notices are
authorized herein to be given, all notices, demands, instructions and other
communications required or permitted to be given to or made upon any party
hereto shall be in writing and shall be personally delivered or sent by
overnight courier service, or by registered, certified or express mail, postage
prepaid, return receipt requested, or by facsimile copy (accompanied by a
telephonic confirmation or receipt thereof), or telegram (with messenger
delivery specified in the case of a telegram) and shall be deemed to be
delivered for purposes of this Agreement on: (a) the second Business Day
following the day on which such notice was placed in the custody of the U.S.
Postal Service, (b) the next Business Day following the day on which such notice
was placed in the custody of any overnight courier service, including express
mail service or (c) the same Business Day on which such notice is sent by
telegram, messenger or facsimile. Unless otherwise specified in a notice sent or
delivered in accordance with the foregoing provisions of this subsection,
notices, demands, instructions and other communications in writing shall be
given to or made upon the respective parties hereto at their respective
addresses (or to their respective facsimile numbers) indicated below, and, in
the case of telephonic instructions or notices, by calling the telephone number
or numbers indicated for such party below:
If to NAF Corp.: National Auto Funding Corporation
4545 Fuller Drive, Suite 101
Irving, TX 75038
Attention: Jim W. Moore
Tel. No.: 214-791-1113
Telecopier No.: 214-791-0464
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If to ContiFinancial: ContiFinancial Services Corporation
277 Park Avenue, 38th Floor
New York, New York 10172
Attention: Chief Counsel
Tel. No.: 212-207-2822
Telecopier No.: 212-207-2935
3.3 Successors and Assigns. (a) This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that NAF Corp. may not assign or transfer any of
its obligations under this Agreement and ContiFinancial may not assign or
transfer any of its obligations under this Agreement without the prior consent
of the other party, which consent shall not unreasonably be withheld.
3.4 Termination. This Agreement (except for Section 2.5 hereof)
shall terminate following the issuance of $600,000,000 in Securities, and
receipt by the Lead Manager of the related Management Fees.
3.5 Counterparts. This Agreement may be executed by one or more
of the parties to this Agreement on any number of separate counterparts, and all
of said counterparts taken together shall be deemed to constitute one and the
same instrument.
3.6 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
3.7 Integration; Construction. This Agreement represents the
agreement of the parties hereto with respect to the subject matter hereof, and
there are no promises, undertakings, representations or warranties by the
parties hereto relative to the subject matter hereof not expressly set forth or
referred to herein or in the other Facility Agreements.
3.8 Limited Liability. No recourse hereunder or under any other
Facility Agreement shall be had against, and no personal liability shall attach
to, any officer, employee, director, member, affiliate, beneficial owner,
trustee or shareholder of any party hereto, as such, by the enforcement of any
assessment or by any legal or equitable proceeding, by virtue of any statute or
otherwise in respect of any of the Facility Agreements, it being expressly
agreed and understood that each Facility Agreement is solely a corporate or
trust obligation of each party hereto, and that any and all personal liability,
either at common law or in equity, or by statute or constitution, of every such
officer, employee, director, member, affiliate, beneficial owner, trustee or
shareholder for breaches by any party hereto of any obligations under any
Facility Agreement is hereby expressly waived as a condition of and in
consideration for the execution and delivery of this Agreement.
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3.9 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS
OF THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAW OF THE STATE OF NEW YORK, WITHOUT REGARD
TO THE CONFLICTS OF LAW PRINCIPLES THEREOF.
3.10 SUBMISSION TO JURISDICTION; WAIVERS. EACH PARTY HERETO
HEREBY IRREVOCABLY AND UNCONDITIONALLY:
(A) SUBMITS FOR ITSELF AND ITS PROPERTY IN ANY LEGAL ACTION OR
PROCEEDING RELATING TO THIS AGREEMENT AND THE OTHER FACILITY AGREEMENTS TO WHICH
IT IS A PARTY, OR FOR RECOGNITION AND ENFORCEMENT OF ANY JUDGMENT OF THE COURTS
OF THE STATE OF NEW YORK, THE COURTS OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND APPELLATE COURTS FROM ANY THEREOF;
(B) CONSENTS THAT ANY SUCH ACTION OR PROCEEDING MAY BE BROUGHT IN
SUCH COURTS AND WAIVES ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE
VENUE OF ANY SUCH ACTION OR PROCEEDING IN ANY SUCH COURT OR THAT SUCH ACTION OR
PROCEEDING WAS BROUGHT IN AN INCONVENIENT COURT AND AGREES
NOT TO PLEAD OR CLAIM THE SAME;
(C) AGREES THAT SERVICE OF PROCESS IN ANY SUCH ACTION OR
PROCEEDING MAY BE EFFECTED BY MAILING A COPY THEREOF BY REGISTERED OR CERTIFIED
MAIL (OR ANY SUBSTANTIALLY SIMILAR FORM OF MAIL), POSTAGE PREPAID, TO ITS
ADDRESS SET FORTH IN SUBSECTION 3.2 OR AT SUCH OTHER ADDRESS OF WHICH ALL OF THE
OTHER PARTIES HERETO SHALL HAVE BEEN NOTIFIED PURSUANT THERETO;
(D) AGREES THAT NOTHING HEREIN SHALL AFFECT THE RIGHT TO EFFECT
SERVICE OF PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT
TO SUE IN ANY OTHER JURISDICTION; AND
(E) WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY LEGAL ACTION OR PROCEEDING REFERRED
TO IN THIS SUBSECTION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES.
3.11 Acknowledgements. NAF Corp. hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution
and delivery of this Agreement;
(b) ContiFinancial has no fiduciary relationship to NAF Corp.;
and
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(c) no joint venture exists between NAF Corp. and ContiFinancial.
3.12 WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY
AND UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING
RELATING TO THIS AGREEMENT OR ANY OTHER FACILITY AGREEMENT AND FOR ANY
COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered in New York, New York by their proper and duly
authorized officers, members or trustees as of the day and year first above
written.
NATIONAL AUTO FUNDING
CORPORATION
By /s/ Jim W. Moore
Name: Jim W. Moore
Title: President
CONTIFINANCIAL SERVICES
CORPORATION
By /s/ Jerome M. Perelson
Name: Jerome M. Perelson
Authorized Signatory
By /s/ Susan E. O'Donovan
Name: Susan E. O'Donovan
Authorized Signatory
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