Servicing Agreement
among
SUNRISE FUNDING CORPORATION I
("Issuer")
and
SUNRISE LEASING CORPORATION
("Contributor" and "Servicer")
and
NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as Trustee
("Trustee")
Dated as of November 1, 1996
Table of Contents
Section Heading Page
Article 1 Definitions 1
Section 1.01. Defined Terms 1
Article 2 Servicer Representations, Warranties and
Covenants 3
Section 2.01. Representations and Warranties 3
Section 2.02. Covenants 5
Article 3 Administration and Servicing of Lease Contracts 5
Section 3.01. Responsibilities of Servicer 5
Section 3.02. Servicer Standard of Care 8
Section 3.03. Lockbox Account and Servicer Remittances 8
Section 3.04. Servicer Advances 9
Section 3.05. Financing Statements 9
Section 3.06. Maintenance of Insurance Policy; Insurance
Proceeds 10
Section 3.07. Personal Property and Sales Taxes 10
Section 3.08. No Offset 10
Section 3.09. Servicing Compensation 10
Section 3.10. Substitution or Purchase of Lease Contracts and
Lease Receivables 10
Section 3.11. Vendor Agreements 11
Article 4 Accountings, Statement and Reports 11
Section 4.01. Monthly Servicer's Reports 11
Section 4.02. Financial Statements; Certification as to
Compliance; Notice of Default 12
Section 4.03. Independent Accountants' Reports 13
Section 4.04. Access to Certain Documentation and
Information 14
Section 4.05. Trustee to Cooperate 15
Section 4.06. Oversight of Servicing 15
Article 5 The Servicer and the Issuer 16
Section 5.01. Servicer Indemnification 16
Section 5.02. Corporate Existence; Reorganizations 17
Section 5.03. Limitation on Liability of the Servicer and
Others 17
Section 5.04. The Servicer Not to Resign 17
Section 5.05. Issuer Indemnification 18
Article 6 Servicing Termination 18
Section 6.01. Servicer Events of Default 18
Section 6.02. Appointment of Successor Servicer 21
Section 6.03. Notification to Noteholders 22
Section 6.04. Waiver of Past Defaults 22
Section 6.05. Effects of Termination of Servicer 22
Section 6.06. No Effect on Other Parties 22
Article 7 Miscellaneous Provisions 22
Section 7.01. Termination of the Servicing Agreement 23
Section 7.02. Amendments 23
Section 7.03. Governing Law 23
Section 7.04. Notices 24
Section 7.05. Severability of Provisions 24
Section 7.06. Binding Effect 25
Section 7.07. Article Headings and Captions 25
Section 7.08. Legal Holidays 25
Section 7.09. Assignment for Security for the Notes 25
Section 7.10. No Servicing Assignment 25
Section 7.11. Counterparts 25
Section 7.12. Trustee's Protections Under the Indenture 25
25
Signatures
26
Exhibit A - Form of Monthly Servicer's Report
SERVICING AGREEMENT
This Servicing Agreement, dated as of November 1, 1996 (the "Agreement"),
is entered into by and among SUNRISE FUNDING CORPORATION I, a Minnesota
corporation (herein, together with its permitted successors and assigns, the
"Issuer"), SUNRISE LEASING CORPORATION, a Minnesota corporation (herein,
together with its permitted successors and assigns, in its capacity as
contributor, the "Contributor", and in its capacity as servicer, the
"Servicer"), and NORWEST BANK MINNESOTA, NATIONAL ASSOCIATION, as trustee
(herein, together with its permitted successors and assigns, the "Trustee"),
under the Indenture (defined below).
Preliminary Statement
The Issuer has entered into an Indenture, dated as of November 1, 1996
(as amended and supplemented from time to time, the "Indenture"), with the
Trustee and the Servicer, pursuant to which the Issuer intends to issue its
$20,000,000 Lease Receivables-Backed Notes (the "Notes").
The Issuer and the Contributor have entered into a Contribution
Agreement, dated as of November 1, 1996 (the "Contribution Agreement"),
providing for, among other things, the contribution by the Contributor to the
Issuer from time to time of all of its right, title and interest in and to
certain Lease Assets. The Issuer is and will be pledging the Lease Contracts,
the Lease Receivables, the related Equipment and such other rights as granted by
the Contributor to the Issuer to the Trustee as security for the Notes. As a
precondition to the effectiveness of the Contribution Agreement, the
Contribution Agreement requires that the Servicer, the Issuer and the Trustee
enter into this Agreement to provide for the servicing of the Lease Assets.
In order to further secure the Notes, the Issuer is granting to the
Trustee a security interest in, among other things, the Issuer's rights derived
under this Agreement and the Servicer agrees that all covenants and agreements
made by the Servicer herein with respect to the Lease Assets shall also be for
the benefit and security of the Trustee and all Holders from time to time of the
Notes. For its services under this Agreement, the Servicer will receive a
Servicer Fee as provided herein and in the Indenture.
Article 1
Definitions
Section 1.01. Defined Terms. Except as otherwise specified or as the
context may otherwise require, the following terms have the respective meanings
set forth below for all purposes of this Agreement, and the definitions of such
terms are equally applicable both to the singular and plural forms of such terms
and to the masculine, feminine and neuter genders of such terms. Capitalized
terms used but not otherwise defined herein shall have the respective meanings
assigned to such terms in the Indenture.
"Contribution Agreement" shall mean the Contribution Agreement between
the Contributor and the Issuer dated of even date herewith, together with the
Lease Asset Assignment executed and delivered in connection therewith.
"Contributor" shall mean Sunrise Leasing Corporation, a Minnesota
Corporation.
"Independent Accountants" shall initially mean Xxxxxx Xxxxxxxx LLP;
provided, that such firm is independent with respect to the Servicer within the
meaning of the Securities Act of 1933, as amended.
"Issuer" shall mean Sunrise Funding Corporation I, a Minnesota
corporation.
"Lease Assets" shall have the meaning specified in the Contribution
Agreement.
"Lease Contract Files" shall have the meaning specified in the
Contribution Agreement.
"Lease Receivable" shall mean the meaning specified in the Contribution
Agreement.
"Liquidated Lease Receivable" shall mean a Lease Receivable that has
been liquidated pursuant to Section 3.01(b) hereof.
"Lock Box" shall have the meaning specified in Section 3.03 hereof.
"Lockbox Account" shall mean the account established by the Servicer
pursuant to Section 3.03 hereof, into which account shall be deposited payments
related to the Lease Receivables.
"Lockbox Agreement" shall mean the agreement described in Section 3.03
hereof.
"Lockbox Bank" shall initially mean State Street Bank and Trust
Company, and thereafter any successor.
"Monthly Servicer's Report" shall mean the report prepared by the
Servicer pursuant to Section 4.01 hereof.
"Officer's Certificate" shall mean a certificate signed by the Chairman
of the Board, the Vice Chairman of the Board, the President, a Vice President,
the Treasurer or the Secretary of the Servicer.
"Opinion of Counsel" shall mean a written opinion of counsel in a form
that is, and from counsel who is, reasonably acceptable to the person requesting
such opinion.
"Placement Agent" shall mean Xxxxxxxxx Xxxxxxx, Inc., and its
successors in interest.
"Reported Company" shall mean Sunrise Resources, Inc. and its
Affiliates on a consolidated basis; provided, however, if Sunrise Leasing
Corporation is no longer acting as Servicer, then "Reported Company" shall also
mean any successor Servicer appointed pursuant to this Agreement.
"Reported Company's Financial Statements" shall include the Reported
Company's audited consolidated balance sheet, income statement, statement of
cash flows, auditors opinion letter regarding audited financial statements and
all notes to the audited financial statements.
"Servicer" shall initially mean Sunrise Leasing Corporation, until a
successor Person shall have become the Servicer pursuant to the applicable
provisions of this Agreement, and thereafter "Servicer" shall mean such
successor Person.
"Servicer Advance" shall have the meaning set forth in Section 3.04
hereof.
"Servicer Default" shall mean any occurrence or circumstance which with
notice or the lapse of time or both would be a Servicer Event of Default under
this Agreement.
"Servicer Event of Default" shall mean each of the occurrences or
circumstances enumerated in Section 6.01 hereof.
"Servicer Termination Notice" means the notice described in Section
6.01 hereof.
"Servicing Officer" shall mean those officers of the Servicer involved
in, or responsible for, the administration and servicing of the Lease Assets, as
identified on the list of Servicing Officers furnished by the Servicer to the
Trustee and the Noteholders from time to time.
"Substitution Criterion" shall have the meaning specified in the
Contribution Agreement.
"Trustee" shall initially mean Norwest Bank Minnesota, National
Association, until a successor Person shall have become the Trustee pursuant to
the applicable provisions of the Indenture, and thereafter "Trustee" shall mean
such successor Person.
Article 2
Servicer Representations, Warranties and Covenants
Section 2.01. Representations and Warranties. The Servicer makes the
following representations and warranties, which shall survive the Closing Date:
(a) Organization and Good Standing. The Servicer has been duly
incorporated and is validly existing in good standing as a corporation under the
laws of the State of Minnesota, with requisite corporate power and authority to
own its properties, perform its obligations under this Agreement and the
Indenture and to transact the business in which it is now engaged or in which it
proposes to engage; the Servicer is duly qualified to do business and is in good
standing in each State in which the nature of its business requires it to be so
qualified, except where failure to so qualify would not have a material adverse
effect on the ability of the Servicer to perform its obligations under this
Agreement and the Indenture.
(b) Authorization and Binding Obligation. Each of this Agreement and
the Indenture has been duly authorized, executed and delivered by the Servicer
and constitutes the valid and legally binding obligation of the Servicer
enforceable against the Servicer in accordance with its terms, subject as to
enforcement to any bankruptcy, insolvency, reorganization and other similar laws
of general applicability relating to or affecting creditors' rights generally
and to general principles of equity regardless of whether enforcement is sought
in a court of equity or law.
(c) No Violation. The entering into of this Agreement and the
Indenture, the performance by the Servicer of its obligations under this
Agreement and the Indenture and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any material indenture,
agreement, mortgage, deed of trust or other agreement or instrument to which it
is a party or by which it is bound or to which any of its property or assets is
subject, or result in the creation or imposition of any lien, charge or
encumbrance upon any of the property or assets of the Servicer pursuant such an
agreement or instrument, nor will such action result in any violation of the
provisions of its Articles of Incorporation or Bylaws, or any statute or any
order, rule or regulation of any court or any regulatory authority or other
governmental agency or body having jurisdiction over it or any of its
properties; and no consent, approval, authorization, order, registration or
qualification of or with any court, regulatory authority or other governmental
agency or body is required for the Servicer to enter into this Agreement and the
Indenture.
(d) No Proceedings. Except as set forth in the Disclosure Schedule,
there are no proceedings or investigations pending, or to the knowledge of the
Servicer, threatened against or affecting the Servicer or any subsidiary in or
before any court, governmental authority or agency or arbitration board or
tribunal, including but not limited to any such proceeding or investigation with
respect to any environmental or other liability resulting from the ownership or
use of any of the Equipment, which, individually or in the aggregate, involve
the possibility of materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of the Servicer and its
subsidiaries, or the ability of the Servicer to perform its obligations under
this Agreement or the Indenture. The Servicer is not in default with respect to
any order of any court, governmental authority or agency or arbitration board or
tribunal.
(e) Approvals. The Servicer (i) is not in violation of any laws,
ordinances, governmental rules or regulations to which it is subject, (ii) has
not failed to obtain any licenses, permits, franchises or other governmental
authorizations necessary to the ownership of its property or to the conduct of
its business, and (iii) is not in violation in any material respect of any term
of any agreement, charter instrument, bylaw or instrument to which it is a party
or by which it may be bound, which violation or failure to obtain as specified
in (i)-(iii) materially adversely affects the business or condition (financial
or otherwise) of the Servicer and its subsidiaries.
(f) Investment Company. The Servicer is not an investment company which
is required to register under the Investment Company Act of 1940, as amended.
Section 2.02. Covenants. (a) The Servicer covenants as to the Lease
Assets:
(i) The Servicer shall not release or assign any Lien in favor
of the Trustee on any item of Equipment related to any Lease Contract
in whole or in part, except as permitted herein or in the Indenture.
(ii) The Servicer will in all material respects duly fulfill
all obligations on the Servicer's part to be fulfilled under or in
connection with the Lease Assets. The Servicer will not amend, rescind,
cancel or modify any Lease Contract or term or provision thereof,
except as permitted herein or in the Indenture, and the Servicer will
not do anything that would materially impair the rights of the
Noteholders in the Lease Assets, except as contemplated herein or in
the Indenture.
(iii) As more specifically set forth below, in performing its
servicing duties hereunder, the Servicer shall collect all payments
required to be made by the Customers under the Lease Contracts, enforce
all material rights of the Issuer under the Lease Contracts and defend
the Equipment against all Persons, claims and demands whatever. The
Servicer shall not assign, sell, pledge or exchange or in any way
encumber or otherwise dispose of the Equipment, except as permitted
hereunder or in the Indenture.
(b) The Servicer will deliver each of the accountings, statements and
reports described in Article 4 hereof to each party as set forth therein.
Article 3
Administration and Servicing of Lease Contracts
Section 3.01. Responsibilities of Servicer. (a) The Servicer, for the
benefit of the Noteholders, shall be responsible for, and shall, in accordance
with its customary servicing procedure, pursue the managing, servicing,
administering, enforcing and making of collections on the Lease Contracts, the
Lease Receivables, the Equipment and any Insurance Policies, the enforcement of
the Trustee's security interest in the Lease Contracts, the Lease Receivables
and Equipment granted pursuant to the Indenture, and, if applicable, the sale or
the re-leasing of the Equipment upon the expiration or other termination of the
related Lease Contract (or repossession thereof without termination), each in
accordance with applicable law and the standards and procedures set forth in
this Agreement and any related provisions of the Indenture and the Contribution
Agreement. The Servicer's responsibilities shall include collecting and posting
of all payments, responding to inquiries of Customers, investigating
delinquencies, accounting for collections and furnishing monthly and annual
statements to the Trustee and the Noteholders with respect to payments, making
Servicer Advances and using its best efforts to maintain the perfected security
interest of the Trustee in the Trust Estate. Subject to the terms and conditions
of this Agreement, the Servicer (at its expense), acting alone or through a
subservicer, shall have full power and authority, acting at its sole discretion,
to do any and all things in connection with such managing, servicing,
administration, enforcement, collection and such repossession and sale of the
Equipment that it may deem necessary or desirable and in the best interests of
the Noteholders, including the prudent delegation of such responsibilities.
Without limiting the generality of the foregoing, the Servicer, in its own name
or in the name of a subservicer, shall, and is hereby authorized and empowered
by the Trustee in the Trustee's role as secured party, subject to Section 3.02
hereof, to execute and deliver (on behalf of itself, the Noteholders, the
Trustee or any of them) any and all instruments of satisfaction or cancellation,
or of partial or full release or discharge, and all other comparable
instruments, with respect to the Lease Contracts and the Lease Contract Files,
in accordance with the Transaction Documents. Subject to the terms and
conditions of this Agreement, the Servicer, acting alone or through a
subservicer, also may, in its sole discretion, waive any late payment charge or
penalty, or any other fees that may be collected in the ordinary course of
servicing any Lease Contract. Notwithstanding the foregoing, neither the
Servicer, nor any subservicer, shall, except pursuant to a judicial order from a
court of competent jurisdiction, or as otherwise expressly provided in this
Agreement, release or waive the right to collect the Scheduled Payments or any
unpaid balance on any Lease Contract, except with respect to any Lease Contact
which is entered into in order to re-lease Equipment relating to an expired
Lease Contract, in which case the Servicer may terminate such re-lease lease
contract if the Servicer enters into a new re-lease contract, receives the
related Equipment back or receives a payment equal to the fair market value of
such Equipment from the lessee. The Servicer shall remarket Equipment for which
any Lease Contract has expired in a manner consistent with the standard of care
set forth in Section 3.02. The Trustee shall, at the expense of the Servicer,
furnish the Servicer, or at the request of the Servicer, any subservicer, with
any powers of attorney and other documents necessary or appropriate to enable
the Servicer or subservicer to carry out its servicing and administrative duties
hereunder, and the Trustee shall not be responsible for the Servicer's or
subservicer's application or use thereof. Notwithstanding the appointment by the
Servicer of a subservicer hereunder, the Servicer shall remain primarily liable
for the full performance of its obligations hereunder.
(b) Notwithstanding any provision to the contrary herein, the Servicer
(or a subservicer) shall conduct any Lease Contract management, servicing,
administration, collection or enforcement actions in the following manner:
(i) The Servicer, as agent for and on behalf of the Issuer,
with respect to any Defaulted Lease Contract shall follow such
practices and procedures as are normal and consistent with the
Servicer's standards and procedures relating to its own lease
contracts, lease receivables and equipment that are similar to the
Lease Contracts, Lease Receivables and the Equipment, including without
limitation, the taking of appropriate actions to foreclose or otherwise
liquidate any such Defaulted Lease Contract, together with the related
Equipment, to collect any Guaranty Amounts, and to enforce the Issuer's
rights in or under the Contribution Agreement. All Recoveries or
Residual Proceeds in respect of any such Lease Contract, Lease
Receivable and the related Equipment received by the Servicer shall be
remitted to the Trustee for deposit in the Collection Account pursuant
to Section 3.03(a);
(ii) The Servicer may xxx to enforce or collect upon Lease
Contracts as agent for the Trustee. If the Servicer elects to commence
a legal proceeding to enforce a Lease Contract, the act of commencement
shall be deemed to be an automatic assignment of the Lease Contract to
the Servicer for purposes of collection only. If, however, in any
enforcement suit or legal proceeding it is held that the Servicer may
not enforce a Lease Contract on the ground that it is not a real party
in interest or a holder entitled to enforce the Lease Contract, then
the Trustee shall, at the Servicer's request and expense, take such
steps as the Servicer deems necessary and instructs the Trustee in
writing to take to enforce the Lease Contract, including bringing suit
in its name or the name of the Issuer or the names of the Noteholders,
and the Trustee shall be indemnified by the Servicer for any such
action taken;
(iii) The Servicer shall exercise any rights of recourse
against third parties that exist with respect to any Lease Contract in
accordance with the Servicer's usual practice and applicable law. In
exercising recourse rights, the Servicer is authorized on the Trustee's
behalf to release the security interest of the Trustee in the Lease
Contract to the person against whom recourse exists to the extent
necessary, and at the price set forth in the document creating the
recourse. The Servicer will not reduce or diminish such recourse
rights, except to the extent that it exercises such right;
(iv) The Servicer may not accept Substitute Lease Contracts
that do not comply with Section 3.10 hereof, Sections 3.03 and 3.04 of
the Contribution Agreement and Section 4.03 of the Indenture;
(v) Without in any way limiting the generality of Section
3.01(b)(i), the Servicer may waive, modify or vary any terms of any
Lease Contract or consent to the postponement of strict compliance with
any such term if in the Servicer's reasonable and prudent determination
such waiver, modification or postponement is not materially adverse to
the Noteholders; provided, however, that (A) the Servicer shall not
forgive any payment of rent, and (B) the Servicer shall not permit any
modification, waivers, variation or postponements with respect to any
Lease Contract that would decrease the Scheduled Payment, defer the
payment of any principal or interest or any Scheduled Payment, reduce
the Aggregate Implicit Principal Balance relating to the Notes, or
prevent the complete amortization of the Aggregate Implicit Principal
Balance relating to the Notes from occurring by the Calculation Date
preceding the Stated Maturity. The Monthly Servicer's Report shall
indicate any modification of any Scheduled Payment;
(vi) The Servicer shall not consent to the termination of any
Lease Contract in connection with loss of or damage to the related
Equipment unless the Customer has paid an amount not less than an
amount equal to the sum of (a) the present value of the unpaid
Scheduled Payments on such Lease Contract, (discounted at the rate set
forth in such Lease Contract or consistent with the Servicer's past
practice) and (b) the amount set forth in such Lease Contract as the
purchase option price for such Equipment, or if less, the maximum
amount legally collectible under the related Lease Contract;
(vii) In the event that the Servicer or any subservicer in the
enforcement of any Lease Contract or otherwise (A) acquires title to
any item of Equipment with respect to which title was held by the
Customer or (B) reclaims possession of Equipment from the Customer, the
Servicer shall use its best efforts to sell or re-lease such item of
Equipment promptly and consistent with the standard of care set forth
in Section 3.02 hereof. Any Recoveries or Residual Proceeds related
thereto shall be deposited in accordance with Section 3.03(a) hereof;
and
(viii) Notwithstanding any provision to the contrary contained
in this Agreement, the Servicer or any subservicer shall exercise any
right under a Lease Contract to accelerate the unpaid Scheduled
Payments, due or to become due thereunder in such a manner as to
maximize the net proceeds available to the Issuer; provided, however,
that the Servicer will not accelerate any Scheduled Payment unless
permitted to do so by the terms of the Lease Contract or under
applicable law.
Section 3.02. Servicer Standard of Care. In managing, administering,
servicing, enforcing and making collections on the Lease Contracts and Equipment
pursuant to this Agreement, the Servicer will provide such services in a manner
consistent with past practice and applicable law and will not change such
practice in any way that would cause an adverse material change in such
practice. In any event, the Servicer warrants that in providing such services it
will exercise that degree of skill and care consistent with that which other
lessors in the industry customarily exercise with respect to similar lease
contracts and equipment owned or serviced by them. The Servicer shall punctually
perform all of its obligations and agreements under this Agreement and shall
comply with all applicable federal and state laws and regulations, shall
maintain all state and federal licenses and franchises necessary for it to
perform its servicing responsibilities hereunder, and shall not materially
impair the rights of the Noteholders in any Lease Contracts or payments
thereunder.
Section 3.03. Lockbox Account and Servicer Remittances. (a) The
Servicer shall instruct the Customers to send all payments relating to Lease
Receivables directly to a lock box maintained by the Lockbox Bank (the "Lock
Box") for deposit into an account (the "Lockbox Account") maintained at the
Lockbox Bank in the name of, and at the sole control of, the Trustee for the
benefit of the Noteholders. On each Business Day, the Trustee shall, or shall
cause the Lockbox Bank, under the Lockbox Agreement, dated as of November 8,
1996, by and among the Servicer and the Lockbox Bank (the "Lockbox Agreement"),
to transfer all amounts to the Collection Account.
(b) Except as otherwise provided in this Agreement, the Servicer, as
agent of the Issuer, shall remit to the Trustee for deposit in the Collection
Account by [4:00 p.m.], Minneapolis time, on each Business Day the amounts
described below that have been collected by the Servicer through 4:00 p.m.,
Minneapolis time, on the preceding Business Day, so long as such amounts, in the
aggregate, exceed $1,000:
(i) all payments made under the Lease Contracts due after the
Cut-Off Date, including prepayments but excluding taxes and Servicing
Charges, received directly by the Servicer;
(ii) all Residual Proceeds and Recoveries;
(iii) the Purchase Price of any Lease Contract purchased by
the Contributor or the Issuer, to the extent received by the Servicer;
(iv) all Guaranty Amounts; and
(v) all Insurance Proceeds.
The Servicer shall hold in trust for the benefit of the Holders of the
Notes any payment it receives relating to items (i) through (v) above until such
time as the Servicer transfers any such payment to the Trustee for deposit in
the Collection Account.
Section 3.04. Servicer Advances. Not later than 10:00 a.m., Minneapolis
time, on the Determination Date prior to each Payment Date, the Servicer shall
make a Servicer Advance for each Lease Contract which is a Delinquent Lease
Contract on such date by remitting to the Trustee for deposit in the Collection
Account an amount equal to the Scheduled Payments, or portion thereof, which
were due in the prior Due Period but not received and deposited in the
Collection Account on or prior to such Determination Date; provided, however,
that the Servicer shall not be obligated to make any Servicer Advance pursuant
to this Section 3.04 that the Servicer determines in good faith, and in
accordance with its customary servicing practices, is unlikely to be eventually
repaid from Scheduled Payments made by or on behalf of the related Customer;
further provided, that the Servicer may not make a Servicer Advance with respect
to a Lease Contract once it has become a Defaulted Lease Contract. On each
Determination Date, the Servicer shall deliver to the Trustee the Monthly
Servicer's Report listing the aggregate amount of Scheduled Payments not
received for the immediately prior Due Period, the amount of Servicer Advances,
and the amounts which it has determined in its sole discretion, and in
accordance with its customary servicing practices, are unlikely to be
recoverable from the related Customers.
Section 3.05. Financing Statements. The Servicer shall, at its own
expense, make all UCC filings and recordings as may be required pursuant to the
terms of the Indenture. The Servicer shall, in accordance with its customary
servicing procedures and at its own expense, be responsible for such steps as
are necessary to maintain perfection of such security interests. The Trustee
hereby authorizes the Servicer to re-perfect or to cause the re-perfection of
such security interest on its behalf as Trustee, as necessary.
Section 3.06. Maintenance of Insurance Policy; Insurance Proceeds. The
Servicer shall verify, monitor and enforce the acquisition and/or maintenance of
Insurance Policies by a Customer in a manner consistent with past practice,
provided that the Servicer shall do so in a manner consistent with that
practiced by other lessors in the vendor leasing industry with respect to
similar lease contracts and equipment owned or serviced by them. Any Insurance
Proceeds shall be remitted to the Trustee for deposit in the Collection Account
pursuant to Section 3.03(a).
Section 3.07. Personal Property and Sales Taxes. The Servicer shall, on
behalf of the Issuer, pay or cause to be paid all personal property, sales and
use taxes on or with respect to the Equipment, or the acquisition or leasing
thereof, as and when such taxes become due, to the extent a Customer has paid
amounts to the Servicer or into the Lockbox Account for such taxes. The Servicer
shall also cause to be filed in a timely manner any and all returns and reports
required in connection with the payment of such taxes.
Section 3.08. No Offset. Prior to the termination of this Agreement,
the obligations of the Servicer under this Agreement shall not be subject to any
defense, counterclaim or right of offset which the Servicer has or may have
against the Issuer, the Trustee or any Noteholder whether in respect of this
Agreement, the Indenture, the Notes, the Contribution Agreement, any Lease
Contract, Lease Receivable, Equipment or otherwise.
Section 3.09. Servicing Compensation. As compensation for the
performance of its obligations under this Agreement, the Servicer shall be
entitled to receive the Servicer Fee and the Servicing Charges. The Servicer Fee
shall be paid monthly, commencing on the Initial Payment Date and terminating on
the first to occur of (i) the receipt of the last Scheduled Payment and related
Residual Proceeds with respect to the last remaining Lease Contract, (ii) the
receipt of Recoveries and Insurance Proceeds with respect to the last remaining
Lease Contract, or (iii) the date on which the Issuer or the Contributor
purchases the last remaining Lease Contract or Lease Receivable, as the case may
be. The Servicer Fee shall be paid by the Issuer to the Servicer at the times
and in the priority as set forth in the Indenture. The Servicer shall pay all
expenses incurred by it in connection with its servicing activities hereunder,
including, without limitation, payment of the fees and disbursements of the
Independent Accountants, payment of expenses incurred in connection with
distributions and reports to the Trustee and the Noteholders and payment of the
Fees of the Lockbox Bank under the Lockbox Agreement, and shall not be entitled
to reimbursement for such expenses; provided, however, that the Servicer will be
entitled to prompt reimbursement from the Issuer for reasonable costs and
expenses incurred by the Servicer (including reasonable attorney's fees and
out-of-pocket expenses) in connection with the realization, attempted
realization or enforcement of rights and remedies upon Defaulted Lease
Contracts, from amounts received as Recoveries from any Defaulted Lease
Contracts.
Section 3.10. Substitution or Purchase of Lease Contracts and Lease
Receivables. (a) The Servicer shall not allow termination of a Lease Contract
prior to the scheduled expiration date or prepayment of any Lease Contract
(except as may be specifically required under such Lease Contract in connection
with a casualty to the related Equipment), unless the Issuer has (i) pledged to
the Trustee a Substitute Lease Contract, a Substitute Lease Receivable and the
related Equipment, and delivered to the Trustee the original executed
counterpart of such Substitute Lease Contract or (ii) remitted the Purchase
Price of such prepaid Lease Contract and the related Equipment to the Servicer
for deposit in the Collection Account in accordance with Section 3.03(a) hereof;
provided, further, that purchases and substitutions of Lease Contracts pursuant
to this subparagraph (a) shall comply with the requirements of Section 4.03 of
the Indenture and the criteria set forth in Section 3.04 of the Contribution
Agreement.
(b) The Servicer shall permit the Issuer to (i) obtain the release of
the Trustee's security interest in any Defaulted Lease Contract or Delinquent
Lease Contract by remittance by the Issuer to the Servicer for deposit in the
Collection Account in accordance with Section 3.03(a) hereof or (ii) substitute
for any Defaulted Lease Contract or Delinquent Lease Contract a Substitute Lease
Contract, a Substitute Lease Receivable and the related Equipment upon the
delivery to the Trustee of the original executed counterpart of the Substitute
Lease Contract; provided that, releases and substitutions of Lease Receivables
pursuant to this subparagraph (b) shall comply with the requirements of Section
4.03 of the Indenture and the criteria set forth in Section 3.04 of the
Contribution Agreement.
(c) Notwithstanding any other provision contained in this Agreement,
the Servicer shall not, with respect to a Defaulted Lease Contract, negotiate or
enter into a new lease with the Customer relating to the Equipment or the
Customer's obligations under such Defaulted Lease Contract unless the Issuer has
obtained a release of the Trustee's security interest in, or made a substitution
for, the Lease Contract in the manner set forth in subsection (b) hereof.
(d) In the event that the Contributor is required, as a result of the
breach by it of certain representations or warranties, to obtain a release of
the Trustee's security interest in a Lease Contract or to substitute a Lease
Contract pursuant to Section 3.03 of the Contribution Agreement, the Servicer
shall permit such release or substitution in accordance with the terms of
Sections 3.03 and 3.04 thereof.
Section 3.11. Vendor Agreements. The Servicer shall comply at all times
with the terms and provisions of each Vendor Agreement to the extent that such
Vendor Agreement applies to any Lease Contract.
Article 4
Accountings, Statements and Reports
Section 4.01. Monthly Servicer's Reports. No later than 10:00 a.m.,
Minneapolis time, on each Determination Date, the Servicer shall deliver to the
Issuer, the Placement Agent, the Trustee and each Noteholder the Monthly
Servicer's Report in the form attached as Exhibit A with respect to the activity
in the immediately preceding Due Period. In the course of preparing the Monthly
Servicer's Report, the Servicer shall seek direction from the Issuer as to
remittance of the funds to be paid pursuant to Section 12.02(d)(vii) of the
Indenture. Lease Contracts and Lease Receivables which have been substituted for
or purchased by the Company or the Issuer shall be identified by the related
Customer lease number. On each Payment Date, the Servicer shall deliver to the
Trustee a computer disk or tape in a format acceptable to the Trustee containing
the information from which the Servicer prepared the Monthly Servicer's Report,
as well as any additional information reasonably requested by the Trustee prior
to such Payment Date. The Trustee shall have no responsibility to review or
otherwise examine the content of the computer disk or tape, and holds the
computer disk or tape solely for purposes of easing the transition to successor
servicer, should such transition be necessitated.
Section 4.02. Financial Statements; Certification as to Compliance;
Notice of Default. (a) The Servicer (and the successor Servicer if the initial
Servicer is no longer the Servicer) shall deliver to the Trustee, the Placement
Agent and each Holder (and, upon the request of any Noteholder, to any
prospective transferee of any Note):
(i) within one hundred and twenty (120) days after the end of
each fiscal year of the Reported Company, a copy of the Reported
Company's Financial Statements, all in reasonable detail and
accompanied by an opinion of a firm of independent certified public
accountants stating that such financial statements present fairly the
financial condition of the Reported Company (or, in the case of a
successor Servicer, such successor Servicer's financial condition) and
have been prepared in accordance with generally accepted accounting
principles consistently applied (except for changes in application in
which such accountants concur), and that the examination of such
accountants in connection with such financial statements has been made
in accordance with generally accepted auditing standards, and
accordingly included such tests of the accounting records and such
other auditing procedures as were considered necessary in the
circumstances;
(ii) with each set of Reported Company's Financial Statements
delivered pursuant to subsection (a)(i) above, an Officer's Certificate
stating that such officer has reviewed the relevant terms of the
Indenture, the Contribution Agreement and this Agreement, and has made,
or caused to be made, under such officer's supervision, a review of the
transactions and conditions of the Reported Company during the period
covered by the Reported Company's Financial Statements then being
furnished, that the review has not disclosed the existence of any
Servicer Default or Servicer Event of Default or, if a Servicer Default
or a Servicer Event of Default exists, describing its nature and what
action the Servicer has taken and is taking with respect thereto, and
that on the basis of such review the officer signing such certificate
is of the opinion that during such period the Servicer has serviced the
Lease Contracts in compliance with the procedures hereof except as
disclosed in such certificate;
(iii) immediately upon becoming aware of the existence of any
condition or event which constitutes a Servicer Default or a Servicer
Event of Default, a written notice describing its nature and period of
existence and what action the Servicer is or proposes to take with
respect thereto;
(iv) promptly upon the Servicer's becoming aware of:
(A) any proposed or pending investigation of it or
the Issuer by any governmental authority or agency, or
(B) any pending or proposed court or administrative
proceeding which involves or may involve the possibility of
materially and adversely affecting the properties, business,
prospects, profits or condition (financial or otherwise) of
the Servicer, the Contributor or the Issuer,
a written notice specifying the nature of such investigation or
proceeding and what action the Servicer is taking or proposes to take
with respect thereto and evaluating its merits;
(v) with reasonable promptness any other data and information
which may be reasonably requested from time to time, including without
limitation any information required to be made available at any time to
any prospective transferee of any Notes in order to satisfy the
requirements of Rule 144A under the Securities Act of 1933, as amended;
and
(vi) quarterly, unaudited versions of the Reported Company's
consolidated balance sheet and income statement.
(b) On or before each July 31, so long as any of the Notes are
outstanding, the Servicer shall furnish to the Trustee an Officer's Certificate
either stating that such action has been taken with respect to the recording,
filing, and rerecording and refiling of any financing statements and
continuation statements as necessary to maintain the security interest of the
Trustee created by the Indenture with respect to the Trust Estate and reciting
the details of such action or stating that no such action is necessary to
maintain such security interest. Such Officer's Certificate shall also describe
the recording, filing, rerecording and refiling of any financing statements and
continuation statements that will be required to maintain the security interest
of the Trustee in the Trust Estate until the date such next Officer's
Certificate is due.
Section 4.03. Independent Accountants' Reports. After the third month
after the Closing Date and each fiscal year of the Issuer thereafter (commencing
with the fiscal year ending March 31, 1997), the Servicer at its expense shall
cause the Independent Accountants (who may also render and deliver other
services to the Servicer and its Affiliates) to prepare an agreed-upon
procedures letter addressed to the Servicer and the Trustee as of the close of
the applicable month or the close of such year, to the effect that the
Independent Accountants have compared the information contained in the Monthly
Servicer's Reports delivered for the relevant period with information contained
in the accounts and records for such period, and, where applicable, on the basis
of such procedures and comparison, report matters which come to the Independent
Accountants' attention to indicate that the information contained in the Monthly
Servicer's Reports does not reconcile with the information contained in the
Servicer's accounts and records. If any letter delivered pursuant to this
Section 4.03 (commencing with the letter relating to the fiscal year ending
March 31, 1997) discloses such exceptions, the Servicer at its expense shall
cause the Independent Accountants to deliver an agreed-upon procedures letter
addressed to the Servicer and the Trustee for each subsequent three-month
period. Such obligation shall continue until the Independent Accountants deliver
a letter relating to a three-month period that does not disclose any such
exceptions. Thereafter, the Servicer shall cause a letter to be delivered
relating to each fiscal year in accordance with the first sentence of this
Section 4.03. The Servicer shall deliver to the Trustee a copy of any such
agreed-upon procedures letters within ninety (90) days of the close of the
relevant period.
Section 4.04. Access to Certain Documentation and Information. (a) The
Servicer shall provide to the Trustee or any Noteholder and their duly
authorized representatives, attorneys or accountants access to any and all
documentation and to any existing data processing systems (including, but not
limited to, any data that can reasonably be generated therefrom) regarding the
Trust Estate (including the Lease Schedule) that the Servicer may possess, such
access being afforded without charge but only upon reasonable request and during
normal business hours so as not to interfere unreasonably with the Servicer's
normal operations or customer or employee relations, at offices of the Servicer
designated by the Servicer. Upon the occurrence of a Servicer Event of Default
(as defined in Article 6 of the Indenture), the Servicer shall provide to the
Trustee and any successor servicer such access to documentation and data
processing systems as is necessary to facilitate the transfer of servicing
duties from the Servicer to any successor servicer as soon as possible.
(b) At all times during the term hereof, the Servicer shall keep
available at its principal executive office for inspection by Noteholders and
the Trustee a list of all Lease Contracts the interests in which are then held
as a part of the Trust Estate, together with a reconciliation of such list to
that set forth in the Lease Schedule and each of the Monthly Servicer's Reports,
indicating the cumulative addition and removal of the Issuer's interest in the
Lease Contracts from the Trust Estate.
(c) The Servicer will maintain accounts and records as to each
respective Lease Contract serviced by the Servicer that are accurate and
sufficiently detailed as to permit (i) the reader thereof to know as of the most
recent Calculation Date the status of such Lease Contract, including any
payments, Insurance Proceeds, Residual Proceeds and Recoveries received or owing
(and the nature of each) thereon and (ii) the reconciliation between payments,
Insurance Proceeds, Residual Proceeds or Recoveries on (or with respect to) each
Lease Contract and the amounts from time to time deposited in the Collection
Account in respect of such Lease Contract.
(d) The Servicer will maintain all of its computerized accounts and
records so that, from and after the time of the acquisition of an interest in
the Lease Assets by the Issuer and the grant of the security interest in the
Lease Contracts, the Lease Receivables and the related Equipment to the Trustee,
the Servicer's accounts and records (including any back-up computer archives)
that refer to any Lease Contract, Lease Receivable or Equipment indicate clearly
that the Lease Contracts, the Lease Receivables and the related Equipment are
owned by the Issuer and are pledged to the Trustee for the benefit of the
Noteholders. Indication of the Trustee's interest in a Lease Contract or a Lease
Receivable will be deleted from or modified on the Servicer's accounts and
records when, and only when, the related Lease Contract has been paid in full,
replaced with a Substitute Lease Contract or purchased by the Contributor or the
Issuer or assigned to the Servicer pursuant to this Agreement, as the case may
be. The indication of the Trustee's interest in an item of Equipment may be
deleted only if such Equipment is sold in accordance with the Transaction
Documents.
(e) Nothing in this Section 4.04 shall affect the obligation of the
Servicer to observe any applicable law prohibiting disclosure of information
regarding the Customers, and the failure to provide information otherwise
required by this Section 4.04 as a result of such observance by the Servicer,
shall not constitute a breach of this Section 4.04.
(f) All information obtained by the Trustee or any Noteholder regarding
the Customers and the Lease Contracts, whether upon exercise of its rights under
this Section 4.04 or otherwise, shall be maintained by the Trustee or the
Noteholder, as applicable, in confidence and shall not be disclosed to any other
Person, unless such disclosure does not violate any applicable law or regulation
or any proprietary rights of the Contributor, the Issuer or the Servicer, or
unless such disclosure is necessary to enforce the rights of the Trustee under
this Servicing Agreement and the Indenture or unless ordered to so disclose by a
court of appropriate jurisdiction.
Section 4.05. Trustee to Cooperate. Upon payment (including through
application of any prepayment) in full of any Lease Contract, the Servicer will
notify the Trustee by written certification (which certification shall include a
statement to the effect that all amounts received in connection with such
payments in full which are required to be deposited in the Collection Account
pursuant to Section 3.03 hereof have been so deposited) of a Servicing Officer
and shall request delivery of the Lease Contract to the Servicer. Upon receipt
of such delivery request, the Trustee shall, within seven (7) days of such
request, in proper form, by the Servicer, release such Lease Contract to the
Servicer. Upon release of such Lease Contract, the Servicer is authorized to
execute an instrument in satisfaction of such Lease Contract and to do such
other acts and execute such other documents as it deems necessary to discharge
the Customer thereunder and, if applicable, release any security interest in the
Equipment related thereto. The Servicer shall determine when a Lease Contract
has been paid in full. Upon the written request of a Servicing Officer and
subject to the Trustee's rights to indemnity contained herein and in the
Indenture, the Trustee shall perform such other acts as reasonably requested in
writing by the Servicer and otherwise cooperate with the Servicer in enforcement
of the Noteholders' rights and remedies with respect to Lease Contracts. Subject
to the terms of the Indenture, the Trustee has no liability for the acts of the
Servicer hereunder.
Section 4.06. Oversight of Servicing. (a) Prior to each Payment Date,
the Trustee shall review the Monthly Servicer's Report related thereto and shall
determine the following:
(i) that such Monthly Servicer's Report is complete on its
face;
(ii) that the amount deposited into the Collection Account
from the Lockbox Account is the same as the amount set forth in the
Monthly Servicer's Report as so credited; and
(iii) that the amounts credited to and withdrawn from the
Collection Account and the Pre-Funding Account and the balance of such
account, as set forth in the records of the Trustee, are the same as
the amount set forth in the Monthly Servicer's Report.
(b) In the event of any discrepancy between the information set forth
in subparagraph (a) as calculated by the Servicer from that determined or
calculated by the Trustee, the Trustee shall promptly notify the Servicer of
such discrepancy. If within thirty (30) days of such notice being provided to
the Servicer, the Trustee and the Servicer are unable to resolve such
discrepancy, the Trustee shall promptly notify the Holders of the Notes of such
discrepancy. The Trustee is not required to take any other action at such time
unless so directed in writing by the Servicer.
(c) Based solely on the information included in the Lease Schedule
delivered on the Delivery Date and the electronic reports provided on each
Payment Date thereafter, the Trustee shall determine that any Substitute Lease
Contracts delivered under Section 3.10 satisfy the Substitution Criterion
described in Section 3.04(b) of the Contribution Agreement.
(d) Other than as specifically set forth elsewhere in this Agreement,
the Trustee shall have no obligation to supervise, verify, monitor or administer
the performance of the Servicer and shall have no liability for any action taken
or omitted by the Servicer.
(e) The Trustee shall consult fully with the Servicer as may be
necessary from time to time to perform or carry out the Trustee's obligations
hereunder. The Servicer hereby agrees to cooperate as necessary with the
Trustee.
Article 5
The Servicer and the Issuer
Section 5.01. Servicer Indemnification. (a) The Servicer shall
indemnify and hold harmless the Trustee, the Contributor, the Issuer, the
Placement Agent and the Trust Estate, for the benefit of the Noteholders, from
and against any loss, liability, claim, expense, damage or injury suffered or
sustained to the extent that such loss, liability, claim, expense, damage or
injury arose out of or was imposed by reason of the failure by the Servicer to
perform its duties under this Agreement or are attributable to errors or
omissions of the Servicer related to such duties; provided, however, that the
Servicer shall not indemnify any party to the extent that acts of fraud, gross
negligence or breach of fiduciary duty by such party contributed to such loss,
liability, claim, expense, damage or injury.
(b) Indemnification under this Section 5.01 shall include, without
limitation, reasonable fees and expenses of counsel and expenses of litigation
reasonably incurred. If the Servicer has made any indemnity payments to the
Trustee, the Placement Agent or the Noteholders pursuant to this Section and
such party thereafter collects any of such amounts from others, such party will
promptly repay such amounts collected to the Servicer, without interest. The
provisions of this Section 5.01 shall survive any expiration or termination of
this Agreement.
Section 5.02. Corporate Existence; Reorganizations. (a) The Servicer
shall keep in full effect its existence and good standing as a corporation in
the state of its incorporation and will obtain and preserve its qualification to
do business as a foreign corporation in each jurisdiction in which such
qualification is or shall be necessary to enable the Servicer to perform its
duties under this Agreement, except where the failure to so qualify would not
have a material adverse effect on the Trust Estate or the ability of the
Servicer to perform its duties hereunder; provided, however, that the Servicer
may reincorporate in another state, if to do so would be in the best interests
of the Servicer and would not have a material adverse effect upon the
Noteholders.
(b) The Servicer shall not (i) (other than pursuant to one or more
additional lease financings) convey, transfer or lease substantially all of its
assets as an entirety to any Person, or (ii) merge or consolidate with another
Person, unless (A) such Person or the merged or consolidated entity acquires
substantially all the assets of the Servicer as an entirety and executes and
delivers to the Contributor, the Issuer and the Trustee an agreement, in form
and substance reasonably satisfactory to the Contributor, Issuer and the
Trustee, which contains an assumption by such Person or entity of the due and
punctual performance and observance of each covenant and condition to be
performed or observed by the Servicer under this Agreement and (B) the Servicer
has obtained the prior written consent of the Holders of a majority in principal
amount of the Notes Outstanding.
Section 5.03. Limitation on Liability of the Servicer and Others.
Except as provided in Section 5.01, neither the Servicer nor any of the
officers, directors, employees or agents of the Servicer shall be under any
liability for any action taken or for refraining from the taking of any action
in its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such person against any
liability which would otherwise be imposed by reason of willful misconduct, bad
faith or gross negligence (which includes negligence with respect to the duties
of the Servicer explicitly set forth in this Agreement) in the performance of
its duties hereunder. The Servicer and any officer, director, employee or agent
of the Servicer may rely in good faith on any document of any kind prima facie
properly executed and submitted by any Person with respect to any matters
arising hereunder. No implied covenants or obligations shall be read into the
Servicing Agreement against the Servicer. In the event the Servicer performs any
activities beyond the requirements of this Agreement, the Servicer shall have
the option but will not be required to perform such activities in the future.
Section 5.04. The Servicer Not to Resign. (a) The Servicer shall not
resign from the duties and obligations hereby imposed on it by this Agreement
except upon a determination by its Board of Directors that by reason of change
in applicable legal requirements, with which the Servicer cannot reasonably
comply, the continued performance by the Servicer of its duties under this
Agreement would cause it to be in violation of such legal requirements, said
determination to be evidenced by a resolution from its Board of Directors to
such effect, accompanied by an Opinion of Counsel to such effect and reasonably
satisfactory to the Trustee.
(b) No such resignation shall become effective until a successor
Servicer shall have assumed the responsibilities and obligations of the Servicer
hereunder.
(c) Except as provided in Sections 5.02 and 6.01 hereof, the duties and
obligations of the Servicer under this Agreement shall continue until this
Agreement shall have been terminated as provided in Section 8.01 hereof, and
shall survive the exercise by the Issuer or the Trustee of any right or remedy
under this Agreement, or the enforcement by the Issuer, the Trustee or any
Noteholder of any provision of the Notes or this Agreement.
Section 5.05. Issuer Indemnification. The Issuer shall indemnify and
hold harmless the Servicer (but solely from the amounts to be distributed as set
forth in Section 12.02(d)(vii) of the Indenture) from and against any loss,
liability, expense, damage or injury suffered or sustained by the Servicer,
including but not limited to any judgment, award, settlement, reasonable
attorneys' fees and other costs and expenses incurred in connection with the
defense of any actual or threatened action, proceeding or claim, which arises
out of the Servicer's activities hereunder; provided, however, that the Issuer
shall not indemnify the Servicer if the Servicer's activities constituted fraud,
willful misconduct, gross negligence (which includes negligence with respect to
the duties of the Servicer which are explicitly set forth in this Agreement) or
breach of fiduciary duty by the Servicer or for any amounts for which the
Servicer is obligated to indemnify the Issuer or other Persons pursuant to
Section 5.01 hereof.
Article 6
Servicing Termination
Section 6.01. Servicer Events of Default. (a) Any of the following acts
or occurrences shall constitute a Servicer Event of Default:
(i) any failure by the Servicer to deliver to the Trustee for
payment to Noteholders any proceeds or payments received from a
Customer or in respect of the Trust Estate and required to be so
delivered under the terms of the Indenture and this Agreement that
continues unremedied until 10:00 a.m., Minneapolis time, for two
Business Days; provided, however, that the Trustee, upon receiving
actual knowledge of such failure, shall give the Servicer prompt
written, telecopied or telephonic notice of such failure.
Notwithstanding the foregoing, any failure by the Trustee to deliver
such notice to the Servicer shall not prevent the occurrence of a
Servicer Event of Default; or
(ii) any failure by the Servicer to deliver a Monthly
Servicer's Report pursuant to Section 4.01 hereof that continues
unremedied until 10:00 a.m., Minneapolis time, the Business Day
following the date delivery is required; provided, however, that if the
Servicer has not delivered the Monthly Servicer's Report by 12:00 noon,
Minneapolis time, on the Determination Date, the Trustee shall give the
Servicer notice of such failure. Notwithstanding the foregoing, any
failure by the Trustee to deliver such notice to the Servicer shall not
prohibit the occurrence of a Servicer Event of Default; or
(iii) any failure by the Servicer to make a Servicer Advance
pursuant to Section 3.04 hereof or to deposit any Purchase Price
received by it that continues unremedied until 10:00 a.m., Minneapolis
time, the following Business Day following the date delivery is
required; provided, however, that if the Servicer has not made the
Servicer Advance or deposited any Purchase Price received by it by
12:00 noon, Minneapolis time, on the Determination Date and the Trustee
has received written notification from the Servicer by way of the
Monthly Servicer's Report or otherwise that such Servicer Advance or
Purchase Price is to be paid, the Trustee shall give the Servicer
prompt written, telecopied or telephonic notice of such failure.
Notwithstanding the foregoing, any failure by the Trustee to deliver
such notice to the Servicer shall not prevent the occurrence of a
Servicer Event of Default; or
(iv) any failure by the Servicer to make remittances or
deliver notices pursuant to Section 3.03 hereof, that continues
unremedied until 10:00 a.m., Minneapolis time, of the third successive
Business Day; or
(v) any failure on the part of the Servicer duly to observe or
perform any other covenants or agreements of the Servicer set forth in
this Agreement or the Indenture, as the case may be, or any
representation or warranty of the Servicer set forth in Section 2.01 of
this Agreement shall prove to be incorrect in any material respect,
which failure or breach continues unremedied for a period of thirty
(30) days after the date on which the Servicer becomes aware of such
failure or breach, or written notice of such failure or breach,
requiring the situation giving rise to such breach or non-conformity to
be remedied, shall have been given to a Servicing Officer of the
Servicer by the Trustee or the Issuer or to a Servicing Officer of the
Servicer and the Trustee by Holders of Notes representing not less than
25% of the aggregate principal amount of the Notes Outstanding; or
(vi) any assignment by the Servicer to a delegate of its
duties or rights under this Agreement, except as specifically permitted
hereunder, or any attempt to make such an assignment; or
(vii) the entry of a decree or order for relief by a court
having jurisdiction in respect of the Servicer or a petition against
the Servicer in an involuntary case under any federal bankruptcy laws,
as now or hereafter in effect, or any other present or future federal
or state bankruptcy, insolvency or similar law, or appointing a
receiver, liquidator, assignee, trustee, custodian, sequestrator or
other similar official for the Servicer or for any substantial part of
its property, or ordering the winding up or liquidation of the affairs
of the Servicer and the continuance of any such decree or order
unstayed and in effect, or failure for such petition to be dismissed,
for a period of 60 consecutive days; or
(viii) the commencement by the Servicer of a voluntary case
under any federal bankruptcy laws, as now or hereafter in effect, or
any other present or future federal or state bankruptcy, insolvency,
reorganization or similar law, or the consent by the Servicer to the
appointment of or taking possession by a conservator, receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar
official in any insolvency, readjustment of debt, marshalling of assets
and liabilities, bankruptcy or similar proceedings of or relating to
the Servicer or relating to a substantial part of its property, or the
making by the Servicer of an assignment for the benefit of creditors,
or the failure by the Servicer generally to pay its debts as such debts
become due or if the Servicer shall admit in writing its inability to
pay its debts as they become due, or the taking of corporate action by
the Servicer in furtherance of any of the foregoing; or
(ix) the occurrence of a Trigger Event if the initial Servicer
is the Servicer.
(b) So long as a Servicer Event of Default shall not have been remedied
within the period set forth in subparagraphs (i), (ii), (iii), (iv), (v) or
(vii) above, as applicable, the Trustee shall, by notice (the "Servicer
Termination Notice") given in writing to the Servicer, terminate all, but not
less than all, of the rights and obligations of the Servicer under this
Agreement. Notwithstanding the foregoing, a delay in or failure of performance
under Sections 6.01(a)(ii) or 6.01(a)(v) hereof for a period of 30 or more days
shall not constitute a Servicer Event of Default if such delay or failure could
not have been prevented by the exercise of reasonable diligence by the Servicer
and such delay or failure was caused by acts of declared or undeclared war,
public disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,
hurricanes, earthquakes, floods or similar causes; provided, however, that in
any event, such delay or failure shall constitute a Servicer Event of Default if
it continues unremedied for a period of thirty (30) days. The preceding sentence
shall not relieve the Servicer from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement.
(c) In the event of the occurrence of a Trigger Event, the Trustee may,
and if directed by Holders of Notes representing at least 66-2/3% of the
aggregate amount of Notes Outstanding, shall, by a Servicer Termination Notice
given in writing to the Servicer, terminate all but not less than all of the
rights and obligations of the Servicer under this Agreement.
(d) In the event that Sunrise Leasing Corporation resigns or is
terminated as Servicer pursuant to this Agreement and a successor Servicer is
appointed hereunder, the Holders of Notes representing at least 66-2/3% of the
aggregate amount of the Notes Outstanding may direct the Trustee to, and the
Trustee shall, terminate, by a Servicer Termination Notice given in writing to
such successor Servicer, all but not less than all of the rights and obligations
of such successor Servicer under this Agreement and appoint a new successor
Servicer which has been approved by such Holders.
(e) On or after the receipt by the Servicer of a Servicer Termination
Notice, all authority and power of the Servicer under this Agreement, whether
with respect to the Notes or the Lease Contracts or otherwise shall pass to and
be vested in the successor Servicer appointed pursuant to Section 6.02 hereof,
and, without limitation, such successor Servicer is hereby authorized and
empowered to execute and deliver, on behalf of the Servicer, as attorney-in-fact
or otherwise, any and all documents and other instruments, and to do or
accomplish all other acts or things necessary or appropriate to effect the
purposes of such notice of termination, whether to complete the transfer of the
Lease Contracts and related documents, or otherwise. The Servicer agrees to
cooperate with the Trustee and the successor Servicer in effecting the
termination of the responsibilities and rights of the Servicer hereunder,
including, without limitation, the transfer to the successor Servicer for
administration by it of all cash amounts that shall at the time be held by the
Servicer for deposit, or have been deposited by the Servicer or thereafter
received with respect to Lease Contracts. To assist the successor Servicer in
enforcing all rights under the Lease Contracts and the Insurance Polices to the
extent they relate to the Lease Contracts, the outgoing Servicer, at its own
expense, shall transfer its records (electronic and otherwise) relating to such
Lease Contracts to the successor Servicer in such form as the successor Servicer
may reasonably request and shall transfer the related Lease Contracts (to the
extent not held by the Trustee) and all other records, correspondence and
documents relating to the Lease Contracts that it may possess to the successor
Servicer in the manner and at such times as the successor Servicer shall
reasonably request. In addition to any other amounts that are then payable to
the Servicer under this Agreement, the Servicer shall be entitled to receive
reimbursements for any unreimbursed Servicer Advance made during the period
prior to the delivery of a Servicer Termination Notice pursuant to this Section
6.01 which terminates the obligations and rights of the Servicer under this
Agreement.
Section 6.02. Appointment of Successor Servicer. (a)
(i) On and after the time the Servicer resigns as Servicer
pursuant to Section 5.04 hereof or is terminated as Servicer pursuant
to a Servicer Termination Notice pursuant to Section 6.01 hereof, the
Trustee shall appoint a successor Servicer acceptable to the Holders of
Notes representing at least 66-2/3% of the aggregate amount of the
Notes Outstanding.
(ii) The successor Servicer shall be the successor in all
respects to the Servicer in its capacity as Servicer under this
Agreement and the transactions set forth or provided for herein and
shall be subject to all the responsibilities, duties and liabilities
relating thereto placed on the Servicer by the terms and provisions
hereof; provided, however, that the successor Servicer (x) shall not be
required to make any Servicer Advance if such Servicer Advance would be
prohibited by applicable law and (y) shall not be liable for any acts
or omissions of the outgoing Servicer or for any breach by the outgoing
Servicer of any of its representations and warranties contained herein
or in any related document or agreement. Subject to the consent of the
Holders representing at least 66-2/3% of the aggregate amount of the
Notes Outstanding, the successor Servicer may subcontract with another
firm to act as subservicer so long as the successor Servicer remains
fully responsible and accountable for performance of all obligations of
the Servicer on and after the time the Servicer receives the Servicer
Termination Notice. The successor Servicer shall be entitled to the
Servicer Fee in connection with acting as Servicer hereunder.
(b) The Servicer, the Issuer, the Trustee and such successor Servicer
shall take such action, consistent with this Agreement, as shall be necessary to
effectuate any such succession. Upon such succession, the successor Servicer
shall notify the Customers that it has been appointed Servicer under this
Agreement with respect to the Lease Contracts.
Section 6.03. Notification to Noteholders. The Servicer shall promptly
notify the Issuer and the Trustee of any Servicer Event of Default upon actual
knowledge thereof by a Servicing Officer. Upon any termination of, or
appointment of a successor to, the Servicer pursuant to this Article 6, the
Trustee shall give prompt written notice thereof to the Noteholders at their
respective addresses appearing in the Note Register.
Section 6.04. Waiver of Past Defaults. The Trustee shall, at the
direction of the Holders of Notes representing more than 66-2/3% of the
aggregate amount of the Notes Outstanding, on behalf of all Noteholders, waive
any default by the Servicer in the performance of its obligations hereunder and
its consequences, other than a default with respect to required deposits and
payments in accordance with Article 3 or a default of the type set forth in
clause (vii) or (viii) of Section 6.01(a) hereof, which waiver shall require the
consent of each Noteholder. Upon any such waiver of a past default, such default
shall cease to exist, and any Servicer Event of Default arising therefrom shall
be deemed to have been remedied for every purpose of this Agreement. No such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon except to the extent expressly waived.
Section 6.05. Effects of Termination of Servicer. (a) Upon the
appointment of the successor Servicer, the predecessor Servicer shall remit any
Scheduled Payments and any other payments or proceeds that it may receive
pursuant to any Lease Contract or otherwise to the successor Servicer after such
date of appointment.
(b) After the delivery of a Servicer Termination Notice, the outgoing
Servicer shall have no further obligations with respect to the management,
administration, servicing, enforcement, custody or collection of the Lease
Contracts, and the successor Servicer shall have all of such obligations, except
that the outgoing Servicer will transmit or cause to be transmitted directly to
the successor Servicer, promptly on receipt and in the same form in which
received, any amounts held by the outgoing Servicer (properly endorsed where
required for the successor Servicer to collect them) received as payments upon
or otherwise in connection with the Lease Contracts. The outgoing Servicer's
indemnification obligations pursuant to Section 5.01 hereof will survive the
termination of the Servicer but will not extend to any acts or omissions of a
successor Servicer.
Section 6.06. No Effect on Other Parties. Upon any termination of the
rights and powers of the Servicer pursuant to Section 6.01, or upon any
appointment of a successor Servicer, all the rights, powers, duties and
obligations of the other parties under this Agreement, the Indenture, the
Contribution Agreement and the Purchase Agreement shall remain unaffected by
such termination or appointment and shall remain in full force and effect
thereafter.
Article 7
Miscellaneous Provisions
Section 7.01. Termination of the Servicing Agreement. (a) Other than as
set forth herein, the respective duties and obligations of the Servicer, the
Issuer and the Trustee created by this Agreement shall terminate upon the
discharge of the Indenture in accordance with its terms; and the respective
duties and obligations of the Trustee shall terminate with respect to the
Trustee in the event the Trustee resigns or is replaced under Section 7.09 of
the Indenture; provided, however, that no resignation or removal of the Trustee
and no appointment of a successor Trustee shall become effective until the
acceptance of appointment by the successor Trustee under Section 7.10 of the
Indenture. Upon the termination of this Agreement pursuant to this Section
7.01(a), the Servicer shall pay all monies with respect to the Lease Contracts,
the Lease Receivables and the related Equipment held by the Servicer, and to
which the Servicer is not entitled, to the Issuer or upon the Issuer's order.
The Servicer's indemnification obligations pursuant to Section 5.01 hereof will
survive the termination of this Agreement.
(b) This Agreement shall not be automatically terminated as a result of
an Event of Default under the Indenture or any action taken by the Trustee
thereafter with respect thereto, and any liquidation or preservation of the
Trust Estate by the Trustee thereafter shall be subject to the rights of the
Servicer to service the Lease Receivables and to collect servicing compensation
as provided hereunder; provided, however, that nothing in this Section 7.01
shall be construed to limit the Trustee's right to foreclose on or otherwise
liquidate the Lease Assets in accordance with the Indenture.
Section 7.02. Amendments. (a) This Agreement may be amended from time
to time by the Issuer, the Servicer and the Trustee, without the consent of any
of the Noteholders, to cure any ambiguity, to correct or supplement any
provisions herein that may be inconsistent with any other provisions herein and
therein, as the case may be, or to add or amend any other provisions with
respect to matters or questions arising under this Agreement; provided, however,
that such action shall not, as evidenced by an Opinion of Counsel, adversely
affect in any material respect the interests of any Noteholder.
(b) This Agreement may also be amended from time to time by the Issuer
and the Servicer, with the consent of the Trustee, and the holders of not less
than 66-2/3% in aggregate principal amount of Notes outstanding, for the purpose
of adding any provisions to or changing in any manner or eliminating any of the
provisions of this Agreement; provided, however, that no such amendment shall,
without the consent of each Noteholder (i) alter the priorities with which any
allocation of funds shall be made under this Agreement; (ii) permit the creation
of any lien on the Trust Estate (other than the lien of the Indenture) or any
portion thereof or deprive any such Noteholder of the benefit of this Agreement
with respect to the Trust Estate or any portion thereof; or (iii) modify this
Section 7.02 or Sections 6.02 or 6.04 hereof.
(c) Promptly after the execution of any amendment, the Servicer shall
send to the Trustee and each Holder of the Notes a conformed copy of each such
amendment.
(d) It shall not be necessary, in any consent of Noteholders under this
Section 7.02, to approve the particular form of any proposed amendment, but it
shall be sufficient if such consent shall approve the substance thereof. The
manner of obtaining such consent and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable regulations
as the Trustee may prescribe.
(e) Any amendment or modification effected contrary to the provisions
of this Section 7.02 shall be void.
Section 7.03. Governing Law. This Agreement shall be construed in
accordance with the internal laws of the State of Minnesota without regard to
conflict of laws principles and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
Section 7.04. Notices. All demands, notices and communications
hereunder shall be in writing and shall be delivered or mailed by registered or
certified United States mail, postage prepaid, or via facsimile with
confirmation in writing and addressed as follows:
(a) if to the Issuer, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx
Xxxxxx, Xxxxxxxxx 00000 (telephone (000) 000-0000), Attention: President;
(b) if to the Contributor, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx
Xxxxxx, Xxxxxxxxx 00000 (facsimile (000) 000-0000), Attention: President;
(c) if to the Servicer, at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx 000, Xxxxxx
Xxxxxx, Xxxxxxxxx 00000 (facsimile (000) 000-0000), Attention: President;
(d) if to the Trustee, at Xxxxx Xxxxxx xxx Xxxxxxxxx Xxxxxx,
Xxxxxxxxxxx, Xxxxxxxxx (facsimile (000) 000-0000), Attention: Corporate Trust
Services-Asset-Backed Administration;
(e) if to any Noteholder, at its address for notices specified in the
Note Register; and
Any of the Persons in subclauses (a) through (c) above may change the
address for notices hereunder by giving notice of such change to other Persons.
Any change of address shown on the Note Register shall, after the date of such
change, be effective to change the address for such Noteholder hereunder. All
notices and demands shall be deemed to have been given either at the time of the
delivery thereof to any officer of the Person entitled to receive such notices
and demands at the address of such Person for notices hereunder, or on the third
day after the mailing thereof to such address, as the case may be.
Section 7.05. Severability of Provisions. If one or more of the
provisions of this Agreement shall be for any reason whatever held invalid, such
provisions shall be deemed severable from the remaining covenants and provisions
of this Agreement, and shall in no way affect the validity or enforceability of
such remaining provisions, the rights of any parties hereto, or the rights of
the Trustee or any Noteholder. To the extent permitted by law, the parties
hereto waive any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any respect.
Section 7.06. Binding Effect. All provisions of this Agreement shall be
binding upon and inure to the benefit of the respective successors and assigns
of the parties hereto, and all such provisions shall inure to the benefit of the
Noteholders. This Agreement may not be modified except by a writing signed by
all parties hereto.
Section 7.07. Article Headings and Captions. The article headings and
captions in this Agreement are for convenience of reference only, and shall not
limit or otherwise affect the meaning hereof.
Section 7.08. Legal Holidays. In the case where the date on which any
action required to be taken, document required to be delivered or payment
required to be made is not a Business Day, such action, delivery or payment need
not be made on such date, but may be made on the next succeeding Business Day.
Section 7.09. Assignment for Security for the Notes. The Servicer
understands that the Issuer will assign to and grant to the Trustee a security
interest in all of its right, title and interest to this Agreement. The Servicer
consents to such assignment and grant and further agree that all
representations, warranties, covenants and agreements of the Servicer made
herein shall also be for the benefit of and inure to the Trustee and all Holders
from time to time of the Notes.
Section 7.10. No Servicing Assignment. Notwithstanding anything to the
contrary contained herein, except as provided in Sections 6.02 and 6.04 hereof,
this Agreement may not be assigned by the Issuer, the Contributor or the
Servicer (except with respect to the appointment of a subservicer) without the
prior written consent of the Holders of Notes representing not less than 66-2/3%
of the aggregate amount of the Notes Outstanding.
Section 7.11. Counterparts. This Agreement may be executed in one or
more counterparts all of which together shall constitute one original document.
Section 7.12. Trustee's Protections Under the Indenture. All
protections, indemnities and rights provided to the Trustee under Article 7 of
the Indenture with respect to the duties of the Trustee duties under the
Indenture shall apply with equal force and effect to the duties of the Trustee
under this Servicing Agreement.
In WITNESS WHEREOF, the Issuer, the Contributor, the Servicer and the
Trustee have caused this Agreement to be duly executed by their respective
officers thereunto duly authorized as of the date and year first above written.
Sunrise Funding Corporation I, as Issuer
By /s/ R. Xxxxxxx Xxxx
Name: R. Xxxxxxx Xxxx
Title: President
SUNRISE LEASING CORPORATION, as
Contributor and as Servicer
By /s/ Xxxxx X. Xxxxxxx
Name: Xxxxx X. Xxxxxxx
Title: Chief Financial Officer
NORWEST BANK MINNESOTA, NATIONAL
ASSOCIATION, as Trustee
By /s/ Xxxxxx Xxxxxxxxx
Name: Xxxxxx Xxxxxxxxx
Title: Corporate Trust Officer
