--------------------------------------------------------------------------------
SALE AND SERVICING AGREEMENT
among
NEWCOURT RECEIVABLES ASSET TRUST 1997-1,
as Issuer,
NEWCOURT RECEIVABLES CORPORATION II,
as Trust Depositor,
NEWCOURT FINANCIAL USA, INC.,
as Servicer
and
MANUFACTURERS AND TRADERS TRUST COMPANY,
as Indenture Trustee
Dated as of November 1, 1997
--------------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE ONE DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.01. DEFINITIONS. . . . . . . . . . . . . . . . . . . . . .1
SECTION 1.02. USAGE OF TERMS.. . . . . . . . . . . . . . . . . . . 24
SECTION 1.03. SECTION REFERENCES.. . . . . . . . . . . . . . . . . 24
SECTION 1.04. CALCULATIONS.. . . . . . . . . . . . . . . . . . . . 24
SECTION 1.05. ACCOUNTING TERMS.. . . . . . . . . . . . . . . . . . 24
ARTICLE TWOESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS . . . . . . . . . 25
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER
OF TRUST ASSETS. . . . . . . . . . . . . . . . . . . 25
SECTION 2.02. CONDITIONS TO THE CLOSING. . . . . . . . . . . . . . 25
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE. . . . . . . . . . . . . 26
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS.. . . . . . . . . 26
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS. . . . . . . . . . . . . 28
SECTION 2.06. DELIVERY OF INSTRUMENTS. . . . . . . . . . . . . . . 28
ARTICLE THREEREPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 29
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING
THE TRUST DEPOSITOR. . . . . . . . . . . . . . . . . 29
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING
THE SERVICER.. . . . . . . . . . . . . . . . . . . . 30
ARTICLE FOURPERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS. . 32
SECTION 4.01. CUSTODY OF CONTRACTS.. . . . . . . . . . . . . . . . 32
SECTION 4.02. FILING.. . . . . . . . . . . . . . . . . . . . . . . 33
SECTION 4.03. NAME CHANGE OR RELOCATION. . . . . . . . . . . . . . 33
SECTION 4.04. COSTS AND EXPENSES.. . . . . . . . . . . . . . . . . 33
ARTICLE FIVE SERVICING OF CONTRACTS. . . . . . . . . . . . . . . . . . . . 34
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY
FOR CONTRACT ADMINISTRATION. . . . . . . . . . . . . 34
SECTION 5.02. GENERAL DUTIES.. . . . . . . . . . . . . . . . . . . 34
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT.. . . . . . . . 34
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT.. . . . . . 34
SECTION 5.05. SUBSERVICERS.. . . . . . . . . . . . . . . . . . . . 35
SECTION 5.06. FURTHER ASSURANCE. . . . . . . . . . . . . . . . . . 35
SECTION 5.07. NOTICE TO OBLIGORS.. . . . . . . . . . . . . . . . . 35
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS. . . . 35
SECTION 5.09. PREPAID CONTRACT.. . . . . . . . . . . . . . . . . . 35
SECTION 5.10. ACCELERATION.. . . . . . . . . . . . . . . . . . . . 36
SECTION 5.11. TAXES AND OTHER AMOUNTS. . . . . . . . . . . . . . . 36
SECTION 5.12. SUITS BY SERVICER. . . . . . . . . . . . . . . . . . 36
SECTION 5.13. REMITTANCES. . . . . . . . . . . . . . . . . . . . . 36
SECTION 5.14. SERVICER ADVANCES. . . . . . . . . . . . . . . . . . 36
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT. . . . . . . . . 36
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES. . . . . . . . . . 36
SECTION 5.17. OTHER SERVICER COVENANTS.. . . . . . . . . . . . . . 37
SECTION 5.18. SERVICING COMPENSATION.. . . . . . . . . . . . . . . 37
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER. . . . . . . 37
SECTION 5.20. RECORDS. . . . . . . . . . . . . . . . . . . . . . . 38
SECTION 5.21. INSPECTION.. . . . . . . . . . . . . . . . . . . . . 38
i
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES. . . . . . . . . . 38
ARTICLE SIX COVENANTS OF THE TRUST DEPOSITOR . . . . . . . . . . . . . . . 39
SECTION 6.01. CORPORATE EXISTENCE. . . . . . . . . . . . . . . . . 39
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY
PROMISSORY NOTES. . . . . . . . . . . . . . . . . . 39
SECTION 6.03. SECURITY INTERESTS. . . . . . . . . . . . . . . . . 39
SECTION 6.04. DELIVERY OF COLLECTIONS. . . . . . . . . . . . . . 39
SECTION 6.05. REGULATORY FILINGS. . . . . . . . . . . . . . . . . 39
SECTION 6.06. COMPLIANCE WITH LAW. . . . . . . . . . . . . . . . 39
SECTION 6.07. ACTIVITIES. . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.08. INDEBTEDNESS. . . . . . . . . . . . . . . . . . . . 39
SECTION 6.09. GUARANTEES. . . . . . . . . . . . . . . . . . . . . 39
SECTION 6.10. INVESTMENTS. . . . . . . . . . . . . . . . . . . . 40
SECTION 6.11. MERGER; SALES. . . . . . . . . . . . . . . . . . . 40
SECTION 6.12. DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . 40
SECTION 6.13. OTHER AGREEMENTS. . . . . . . . . . . . . . . . . . 40
SECTION 6.14. SEPARATE CORPORATE EXISTENCE. . . . . . . . . . . . 40
SECTION 6.15. LOCATION; RECORDS. . . . . . . . . . . . . . . . . 41
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES. . . . . . 41
SECTION 6.17. BANKRUPTCY LIMITATIONS.. . . . . . . . . . . . . . . 42
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR
AND OTHERS.. . . . . . . . . . . . . . . . . . . . . 42
SECTION 6.19. CHIEF EXECUTIVE OFFICE.. . . . . . . . . . . . . . . 42
ARTICLE SEVEN ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND . . . 43
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS. . . . . . . . . . . . . 43
SECTION 7.02. RESERVE FUND.. . . . . . . . . . . . . . . . . . . . 43
SECTION 7.03. TRUST ACCOUNT PROCEDURES. . . . . . . . . . . . . . 43
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS.. . . . . . . . . . . . 44
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS. . . . . . . . . . . . 44
SECTION 7.06. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS
FOR BREACH OF REPRESENTATIONS AND WARRANTIES.. . . . 49
SECTION 7.07. REASSIGNMENT OF REPURCHASED OR
SUBSTITUTED CONTRACTS. . . . . . . . . . . . . . . . 49
SECTION 7.08. SELLER'S AND TRUST DEPOSITOR'S REPURCHASE OPTION.. . 50
ARTICLE EIGHT SERVICER DEFAULT; SERVICE TRANSFER . . . . . . . . . . . . . 51
SECTION 8.01. SERVICER DEFAULT.. . . . . . . . . . . . . . . . . . 51
SECTION 8.02. SERVICER TRANSFER. . . . . . . . . . . . . . . . . . 51
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE;
SUCCESSOR SERVICER TO ACT .. . . . . . . . . . . . . 52
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS. . . . . . . . . . . 53
SECTION 8.05. EFFECT OF TRANSFER.. . . . . . . . . . . . . . . . . 53
SECTION 8.06. DATABASE FILE. . . . . . . . . . . . . . . . . . . . 53
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION.. . . . . . . . . 53
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER.. . . . . 53
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER. . . . 54
ARTICLE NINE REPORTS. .. . . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.01. MONTHLY REPORTS. . . . . . . . . . . . . . . . . . . 55
SECTION 9.02. OFFICER'S CERTIFICATE. . . . . . . . . . . . . . . . 55
SECTION 9.03. OTHER DATA.. . . . . . . . . . . . . . . . . . . . . 55
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.. . . . . . . . . . . . 55
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER.. . . . 55
SECTION 9.06. ANNUAL SUMMARY STATEMENT.. . . . . . . . . . . . . . 56
ii
ARTICLE TEN TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . 57
SECTION 10.01. SALE OF TRUST ASSETS.. . . . . . . . . . . . . . . . 57
ARTICLE ELEVENMISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.01. AMENDMENT. . . . . . . . . . . . . . . . . . . . . . 58
SECTION 11.02. PROTECTION OF TITLE TO TRUST.. . . . . . . . . . . . 59
SECTION 11.03. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . 59
SECTION 11.04. NOTICES. . . . . . . . . . . . . . . . . . . . . . . 59
SECTION 11.05. SEVERABILITY OF PROVISIONS.. . . . . . . . . . . . . 61
SECTION 11.06. THIRD PARTY BENEFICIARIES. . . . . . . . . . . . . . 61
SECTION 11.07. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . 61
SECTION 11.08. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . 61
SECTION 11.09. NO BANKRUPTCY PETITION. . . . . . . . . . . . . . . 61
SECTION 11.10. JURISDICTION. . . . . . . . . . . . . . . . . . . . 61
SECTION 11.11. TAX CHARACTERIZATION. . . . . . . . . . . . . . . . 62
SECTION 11.12. INDEMNIFICATION. . . . . . . . . . . . . . . . . . 62
iii
SCHEDULES
Schedule 1 Contract Files Maintained by Third Parties . . . . .S-1
EXHIBITS
Exhibit A Form of Assignment . . . . . . . . . . . . . . . . . . . . .A-1
Exhibit B Form of Closing Certificate of Trust Depositor . . . . . . .B-1
Exhibit C Form of Closing Certificate of Seller. . . . . . . . . . . .C-1
Exhibit D Form of Opinion of Counsel for Trust Depositor regarding
general corporate matters (including perfection opinion) . .D-1
Exhibit E Form of Opinion of Counsel for Trust Depositor regarding
the "TRUE SALE" nature of the transaction . . . . . . . . .E-1
Exhibit F Form of Opinion of Counsel for Trust Depositor regarding
non-consolidation . . . . . . . . . . . . . . . . . . . . .F-1
Exhibit G Form of Certificate Regarding Repurchased Contracts. . . . .G-1
Exhibit H List of Contracts. . . . . . . . . . . . . . . . . . . . . .H-1
Exhibit I Form of Monthly Report to Noteholders and Certificateholder.I-1
Exhibit J Seller's Representations and Warranties . . . . . . . . . .J-1
Exhibit K [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . .K-1
Exhibit L [Reserved] . . . . . . . . . . . . . . . . . . . . . . . . .L-1
Exhibit M Form of Subsequent Transfer Agreement. . . . . . . . . . . .M-1
iv
This SALE AND SERVICING AGREEMENT, dated as of November 1, 1997, is among
Newcourt Receivables Asset Trust 1997-1 (together with its successors and
assigns, the "ISSUER" or the "TRUST"), Newcourt Receivables Corporation II
(together with its successor and assigns, the "TRUST DEPOSITOR"), Manufacturers
and Traders Trust Company (solely in its capacity as the Indenture Trustee,
together with its successors and assigns, the "INDENTURE TRUSTEE") and Newcourt
Financial USA, Inc. (together with its successors and assigns, "NEWCOURT USA"
and, solely in its capacity as the Servicer, together with its successor and
assigns, the "SERVICER").
WHEREAS the Trust Depositor desires to fund the Trust by selling, conveying
and assigning a designated pool of Contracts (as defined herein) together with
certain related security therefor and other related rights and property as
further described herein, which Contracts were originated by Newcourt USA, or
acquired by purchase and assignment by Newcourt USA from the owner thereof, and
subsequently sold by Newcourt USA to the Trust Depositor pursuant to the
Transfer and Sale Agreement (as defined herein);
WHEREAS the Trust is willing to purchase and accept assignment of the
Contracts, together with such related rights and property, from the Trust
Depositor pursuant to the terms hereof; and
WHEREAS the Servicer is willing to service the Contracts for the benefit
and account of the Trust pursuant to the terms hereof;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto agree as follows:
ARTICLE ONE
DEFINITIONS
SECTION 1.01. DEFINITIONS. Whenever used in this Agreement, the following
words and phrases, unless the context otherwise requires, shall have the
following meanings:
"ACCRUAL PERIOD" means the period from and including the most recent
Distribution Date to but excluding the following Distribution Date, PROVIDED,
that the initial Accrual Period following the Closing Date shall be the period
from and including the Closing Date to but excluding the first Distribution Date
following the Closing Date.
"ADCB" means, with respect to any date of determination thereof, the sum
of the Discounted Contract Balances of each Contract included in the group of
Contracts for which an ADCB determination is being made, as of the date of such
determination. For purposes of calculating such sum on any date other than the
last day of a Collection Period, the Discounted Contract Balance of a Contract
shall be as of the last day of the preceding Collection Period or, with respect
to any Subsequent Contract transferred to the Trust after such last day, the
Discounted Contract Balance on the applicable Subsequent Cutoff Date for such
Contract.
"ADDITIONAL CONTRACT" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Addition Event has occurred with
respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"ADDITION EVENT" means, with respect to any transfer of an Additional
Contract to the Trust under Section 2.04, a prepayment of one or more related
Contracts, identified in the corresponding Addition Notice, in full by the
related Obligor.
"ADDITION NOTICE" means, with respect to any transfer of Subsequent
Contracts to the Trust pursuant to Section 2.04 (and the Trust Depositor's
corresponding prior purchase of such Contracts from the Seller), a notice, which
shall be given at least five days prior to the related Subsequent Transfer Date,
identifying the Subsequent Contracts to be
transferred, the ADCB of such Subsequent Contracts and the related Addition
Event or Substitution Event (with respect to an identified Contract or Contracts
then in the Contracts Pool) to which such Subsequent Contract relates, with such
notice to be signed both by the Trust Depositor, and the Seller.
"AFFILIATE" of any specified Person means any other Person controlling or
controlled by, or under common control with, such specified Person. For the
purposes of this definition, "CONTROL" when used with respect to any specified
Person means the power to direct the management and policies of such Person,
directly or indirectly, whether through the ownership of voting securities, by
contract or otherwise; and the terms "CONTROLLING" or "CONTROLLED" have meanings
correlative to the foregoing.
"AGREEMENT" means this Sale and Servicing Agreement, as amended,
supplemented or otherwise modified from time to time in accordance with the
terms hereof.
"AGGREGATE PRINCIPAL AMOUNT" means, with respect to any group of Notes or
the Certificate, at any date of determination, the sum of the Principal Amounts
of such Notes or Certificate on such date of determination.
"APPLICABLE SECURITY" means, with respect to a Vendor Loan, any (i)
Secondary Contract securing such Vendor Loan and (ii) Equipment securing such
Vendor Loan or a related Secondary Contract.
"ASSIGNMENT" means each Assignment, substantially in the form of EXHIBIT A
hereto (in the case of an Assignment executed by the Trust Depositor) and in the
form of EXHIBIT A to the Transfer and Sale Agreement (in the case of an
Assignment executed by the Seller), relating to an assignment, transfer and
conveyance of Contracts and related property to the applicable assignee.
"AVAILABLE AMOUNTS" means, as of any Distribution Date, the sum of (i) all
amounts on deposit in the Collection Account as of the immediately preceding
Determination Date on account of Scheduled Payments and payments received from
Vendors pursuant to Vendor Agreements due on or before, and Prepayments received
on or before, the last day of the Collection Period immediately preceding such
Distribution Date (other than Excluded Amounts), (ii) Recoveries on account of
previously Defaulted Contracts received as of the immediately preceding
Determination Date as well as Expired Lease Proceeds, (iii) Investment Earnings
credited to the Collection Account, and (iv) Late Charges received on or before
the last day of such Collection Period.
"BUSINESS DAY" means any day which is neither a Saturday or a Sunday, nor
another day on which banking institutions in the cities of Indianapolis,
Indiana, Wilmington, Delaware or New York, New York are authorized or obligated
by law, executive order, or governmental decree to be closed.
"BUSINESS TRUST STATUTE" means Chapter 38 of Title 12 of the Delaware Code,
12 Del Code 3801 ET SEQ., as the same may be amended from time to time.
"CALCULATION DATE" means the first day of each calendar month.
"CASUALTY LOSS" means, with respect to any item of Equipment, the loss,
theft, damage beyond repair or governmental condemnation or seizure of such item
of Equipment.
"CERTIFICATE DISTRIBUTION ACCOUNT" has the meaning specified in the Trust
Agreement.
"CERTIFICATE REGISTER" has the meaning specified in the Trust Agreement.
"CERTIFICATEHOLDER" has the meaning specified in the Trust Agreement.
"CERTIFICATE" means the Class E Certificate.
2
"CLASS" means any of the group of Notes or the Certificate identified
herein as, as applicable, the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes, the Class A-4 Notes, the Class B Notes, the Class C Notes, the Class
D Notes, or the Class E Certificate.
"CLASS A NOTES" means the Class A-1 Notes, the Class A-2 Notes, the Class
A-3 Notes and the Class A-4 Notes.
"CLASS A PERCENTAGE" means the ratio (expressed as a percentage) that the
sum of the Initial Class A-2 Principal Amount, Initial Class A-3 Principal
Amount and Initial Class A-4 Principal Amount bears to the sum of the Initial
Class A-2 Principal Amount, Initial Class A-3 Principal Amount, Initial Class
A-4 Principal Amount, Initial Class B Principal Amount, Initial Class C
Principal Amount and Initial Class D Principal Amount.
"CLASS A-1 INTEREST RATE" means [ ] per annum (calculated on the
basis of a year of 360 days and actual days elapsed).
"CLASS A-1 MATURITY DATE" means the December 1998 Distribution Date.
"CLASS A-1 NOTEHOLDER" means the Person in whose name a Class A-1 Note is
registered in the Note Register.
"CLASS A-1 NOTES" means the $127,067,000 aggregate initial principal amount
of Class A-1 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-1 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-1 Notes, the lesser of (a) the Principal
Amount of the Class A-1 Notes and (b) (i) prior to the occurrence of any Event
of Default, or prior to the occurrence and during the continuance of a
Restricting Event, the Total Principal Payment Amount and (ii) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Sectin 7.05(b)(i)-(vii).
"CLASS A-2 INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-2 MATURITY DATE" means the May 2005 Distribution Date.
"CLASS A-2 NOTEHOLDER" means the Person in whose name a Class A-2 Note is
registered in the Note Register.
"CLASS A-2 NOTES" means the $88,278,000 aggregate initial principal amount
of Class A-2 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-2 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-2 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes has been paid in full, and (b) thereafter, the lesser of (i)
the Principal Amount of the Class A-2 Notes and (ii)(A) prior to the occurrence
of any Event of Default, or prior to the occurrence and during the continuance
of a Restricting Event, the difference between (1) the Principal Amount of all
Class A Notes immediately prior to such Distribution Date, and (2) the product
of (x) the Class A Percentage and (y) the ADCB for all Contracts held by the
Trust as of the last day of the Collection Period immediately preceding such
Distribution Date and (B) following the occurrence of an Event of Default, or
following the occurrence and during the continuance of a Restricting Event, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(viii).
"CLASS A-3 INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-3 MATURITY DATE" means the May 2005 Distribution Date.
3
"CLASS A-3 NOTEHOLDER" means the Person in whose name a Class A-3 Note is
registered in the Note Register.
"CLASS A-3 NOTES" means the $107,004,000 aggregate initial principal
amount of Class A-3 Receivable-Backed Notes, Series 1997-1 issued pursuant to
the Indenture.
"CLASS A-3 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-3 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes and Class A-2 Notes has been paid in full, and (b)
thereafter, the lesser of (i) the Principal Amount of the Class A-3 Notes and
(ii)(A) prior to the occurrence of any Event of Default, or prior to the
occurrence and during the continuance of a Restricting Event, the difference
between (1) the Principal Amount of all Class A Notes immediately prior to such
Distribution Date, and (2) the product of (x) the Class A Percentage and (y) the
ADCB for all Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date and (B) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)(i)-(ix).
"CLASS A-4 INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS A-4 MATURITY DATE" means the May 2005 Distribution Date.
"CLASS A-4 NOTEHOLDER" means the Person in whose name a Class A-4 Note is
registered in the Note Register.
"CLASS A-4 NOTES" means the $167,194,000 aggregate initial principal amount
of Class A-4 Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS A-4 PRINCIPAL PAYMENT AMOUNT" means, with respect to any
Distribution Date and the Class A-4 Notes, (a) $0 until the Principal Amount of
the Class A-1 Notes, Class A-2 Notes and Class A-3 Notes has been paid in full,
and (b) thereafter, the lesser of (i) the Principal Amount of the Class A-4
Notes and (ii)(A) prior to the occurrence of any Event of Default, or prior to
the occurrence and during the continuance of a Restricting Event, the difference
between (1) the Principal Amount of all Class A Notes immediately prior to such
Distribution Date, and (2) the product of (x) the Class A Percentage and (y) the
ADCB for all Contracts held by the Trust as of the last day of the Collection
Period immediately preceding such Distribution Date and (B) following the
occurrence of an Event of Default, or following the occurrence and during the
continuance of a Restricting Event, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)-(x).
"CLASS B INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS B MATURITY DATE" means the May 2005 Distribution Date.
"CLASS B NOTEHOLDER" means the Person in whose name a Class B Note is
registered in the Note Register.
"CLASS B NOTES" means the $18,726,000 aggregate initial principal amount of
Class B Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS B PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class B Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-2 Principal
Amount, Initial Class A-3 Principal Amount, Initial Class A-4 Principal Amount,
Initial Class B Principal Amount, Initial Class C Principal Amount and Initial
Class D Principal Amount; and (b) thereafter, the sum of the Initial Class B
Principal Amount, Initial Class C Principal Amount and Initial Class D Principal
Amount.
4
"CLASS B PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class B Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class B Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class B Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class B Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes and Class A-4 Notes has
been paid in full, $0 and (2) thereafter, all remaining Available Amounts after
payment has been made in accordance with Section 7.05(b)(i)-(xi).
"CLASS C INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS C MATURITY DATE" means the May 2005 Distribution Date.
"CLASS C NOTEHOLDER" means the Person in whose name a Class C Note is
registered in the Note Register.
"CLASS C NOTES" means the $10,700,000 aggregate initial principal amount
of Class C Receivable-Backed Notes, Series 1997-1 issued pursuant to the
Indenture.
"CLASS C PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class C Principal Amount bears to (a) until the Principal Amount of all
Class A Notes has been paid in full, the sum of the Initial Class A-2 Principal
Amount, Initial Class A-3 Principal Amount, Initial Class A-4 Principal Amount,
Initial Class B Principal Amount, Initial Class C Principal Amount and Initial
Class D Principal Amount; (b) after the Principal Amount of all Class A Notes
has been paid in full and until the Principal Amount of the Class B Notes has
been paid in full, the sum of the Initial Class B Principal Amount, Initial
Class C Principal Amount and Initial Class D Principal Amount, and (c)
thereafter, the sum of the Initial Class C Principal Amount and Class D
Principal Amount.
"CLASS C PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class C Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class C Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class C Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class C Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes and
Class B Notes has been paid in full, $0 and (2) thereafter, all remaining
Available Amounts after payment has been made in accordance with Section
7.05(b)(i)-(xii).
"CLASS D INTEREST RATE" means [ ]% per annum (calculated on the
basis of a year of 360 days and twelve 30-day months).
"CLASS D MATURITY DATE" means the May 2005 Distribution Date.
"CLASS D NOTEHOLDER" means the Person in whose name a Class D Note is
registered in the Note Register.
"CLASS D NOTES" means the $16,051,000 aggregate initial principal amount
Newcourt Receivables Asset Trust Class D Receivable-Backed Notes, issued
pursuant to the Indenture.
5
"CLASS D PERCENTAGE" means the ratio (expressed as a percentage) that the
Initial Class D Principal Amount bears to (a) until the outstanding principal of
all Class A Notes has been paid in full, the sum of the Initial Class A-2
Principal Amount, Initial Class A-3 Principal Amount, Initial Class A-4
Principal Amount, Initial Class B Principal Amount, Initial Class C Principal
Amount and Initial Class D Principal Amount; (b) after the outstanding principal
of all Class A Notes has been paid in full and until the outstanding principal
of the Class B Notes has been paid in full, the sum of the Initial Class B
Principal Amount, Initial Class C Principal Amount and Initial Class D Principal
Amount, (c)after the Principal Amount of the Class A Notes and Class B Notes has
been paid in full and until the Principal Amount of the Class C Notes has been
paid in full, the sum of the Initial Class C Principal Amount and Initial Class
D Principal Amount; and (d) thereafter, 100%.
"CLASS D PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date and the Class D Notes, (a) $0 until the Principal Amount of the Class A-1
Notes has been paid in full, and (b) thereafter, the lesser of (i) the Principal
Amount of the Class D Notes and (ii)(A) prior to the occurrence of any Event of
Default, or prior to the occurrence and during the continuance of a Restricting
Event, the difference between (1) the Principal Amount of the Class D Notes
immediately prior to such Distribution Date, and (2) the product of (x) the
Class D Percentage and (y) the ADCB for all Contracts held by the Trust as of
the last day of the Collection Period immediately preceding such Distribution
Date and (B) following the occurrence of an Event of Default, or following the
occurrence and during the continuance of a Restricting Event, (1) until the
Principal Amount of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class
B Notes and Class C Notes has been paid in full, $0 and (2) thereafter, all
remaining Available Amounts after payment has been made in accordance with
Section 7.05(b)(i)-(xiii).
"CLASS E CERTIFICATEHOLDER" means the Person in whose name a Class E
Certificate is registered in the Certificate Register.
"CLASS E CERTIFICATE" means the $8,025,000 initial principal amount of
Class E Certificate, representing the beneficial equity interest in the Trust
and issued pursuant to the Trust Agreement.
"CLASS E MATURITY DATE" means the May 2005 Distribution Date.
"CLOSING DATE" means November 26, 1997.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning given such term in the "granting clause" of
the Indenture.
"COLLECTION ACCOUNT" means the Trust Account so designated established
pursuant to Section 7.01.
"COLLECTION PERIOD" means a period beginning on the first day of a calendar
month and ending on, but not including, the first day of the next calendar
month, PROVIDED that the first Collection Period shall be the period beginning
on the Initial Cutoff Date and ending on, but not including, the first day of
the calendar month immediately following the calendar month in which the Closing
Date occurs.
"COLLECTIONS" means all payments received on or with respect to the
Contracts in the Contracts Pool or the related Equipment, including, without
limitation, Scheduled Payments, Prepayments, Recoveries, Late Charges and
Expired Lease Proceeds, all as related to amounts attributable to the Contracts
in the Contracts Pool or the related Equipment (including any such amounts
derived from Vendor recourse provisions) in the Vendor Agreements, but excluding
any Excluded Amounts.
"COMMISSION" means the United States Securities and Exchange Commission.
6
"COMPUTER DISK" means the computer disk generated by the Servicer which
provides information relating to the Contracts and which was used by the Seller
in selecting the Contracts conveyed to the Trust Depositor pursuant to the
Transfer and Sale Agreement (and any Subsequent Purchase Agreement), and
includes the master file and the history file as well as servicing information
with respect to the Contracts.
"CONTRACT" means each End-User Contract and each Vendor Loan but, unless
otherwise specified herein, shall not refer to any Secondary Contract.
"CONTRACT ASSETS" means any of the Initial Contract Assets or Subsequent
Contract Assets.
"CONTRACT FILE" means, with respect to each Contract, the fully executed
original counterpart (for UCC purposes) of the contract, the original
certificate of title or other title document with respect to the related
Equipment (if applicable), and otherwise such documents, if any, that the
Servicer keeps on file in accordance with its customary procedures, evidencing
ownership of such Equipment (if applicable) and all other documents originally
delivered to the Seller or held by the Servicer with respect to any Contract.
"CONTRACTS POOL" as of any date means the Initial Contracts and the
Subsequent Contracts (if any), other than any such Contracts which (i) have been
reconveyed by the Trust to the Trust Depositor, and concurrently by the Trust
Depositor to the Seller, pursuant to Section 7.07 hereof and Section 5.03 of the
Transfer and Sale Agreement, or (ii) have been paid (or prepaid) in full.
"CORPORATE TRUST OFFICE" means, with respect to the Indenture Trustee or
Owner Trustee, as applicable, the office of the Indenture Trustee or Owner
Trustee at which at any particular time its corporate trust business shall be
principally administered, which offices at the date of the execution of this
Agreement are located at the addresses set forth in Section 11.04.
"CPR" means a conditional payment rate which assumes that a fraction of the
outstanding Contracts Pool is prepaid on each Distribution Date and also assumes
that all Contracts have the same initial principal balance and amortize at the
same rate.
"CSA" means each conditional sales agreement, including, as applicable,
schedules, subschedules, supplements and amendments to a master conditional
sales agreement, pursuant to which specified assets were conditionally sold to
an Obligor at specified monthly, quarterly, semi-annual or annual payments.
"CUTOFF DATE" means either or both (as the context may require) the Initial
Cutoff Date and any Subsequent Cutoff Date, as applicable to the Contract or
Contracts in question.
"DATE OF PROCESSING" means, with respect to any transaction or Collection,
the date on which such transaction or Collection is first recorded (and, in the
case of a transaction or Collection related to a particular Contract, identified
as to such particular Contract) on the related Seller's or Servicer's computer
master file of Contracts (without regard to the effective date of such
recordation).
"DEFAULTED CONTRACT" means a Contract in the Contracts Pool with respect to
which there has occurred one or more of the following: (i) all or some portion
of any Scheduled Payment under the Contract is more than 120 days delinquent
(or, with respect to a Contract for which there exists available payment
recourse to a Vendor to satisfy the amount in default, and which recourse was
not yet available (pursuant to the contractual terms thereof) or had not yet
been paid by the Vendor prior to the end of such 120 day period, then at such
time thereafter as the Vendor shall have failed to pay such defaulted amount in
accordance with the provisions of the Program Agreement, Vendor Assignment or
other agreement with the Vendor providing such recourse), (ii) the Servicer has
determined in its sole discretion, in accordance with its usual and customary
practices (and taking into account any available Vendor recourse), that such
Contract is not collectible; or (iii) the End User under such Contract becomes
the subject of an Insolvency Event.
7
"DETERMINATION DATE" means, with respect to any Distribution Date, the
third Business Day prior to such Distribution Date.
"DISCOUNT RATE" means, at any date of determination, [ ]%, which
is equal to the sum of (1) the weighted average of the Class A-1 Interest Rate,
Class A-2 Interest Rate, Class A-3 Interest Rate, Class A-4 Interest Rate (each
weighted at (x) the Initial Principal Amount applicable to each Class of Notes
and (y) the expected weighted average life of each Class of Notes assuming a CPR
of 11%) and (2) the Servicing Fee Percentage.
"DISCOUNTED CONTRACT BALANCE" means with respect to any Contract, (i) as of
the related Cutoff Date, the present value of all of the remaining Scheduled
Payments becoming due under such Contract after the applicable Cutoff Date
discounted monthly at the Discount Rate, and (ii) as of any other date of
determination, the sum of (x) the present value of all of the remaining
Scheduled Payments becoming due under such Contract after such date of
determination discounted monthly at the Discount Rate and (y) the aggregate
amount of all Scheduled Payments due and payable under such Contract after the
applicable Cutoff Date and prior to such date of determination (other than
Scheduled Payments related to Contracts that have become Defaulted Contracts or
Prepaid Contracts, and have not been replaced with a Subsequent Contract as
provided in Section 2.04) that have not then been received by the Servicer.
The "Discounted Contract Balance" for each Contract shall be calculated
assuming:
(i) all payments due in any Collection period are due on the last day
of the Collection Period;
(ii) payments are discounted on a monthly basis using a 30 day month
and a 360 day year; and
(iii) all security deposits and drawings under letters of credit,
if any, issued in support of a Contract are applied to reduce
Scheduled Payments in inverse order of the due date thereof.
"DISTRIBUTION DATE" shall mean the twentieth (20th) day of each calendar
month or, if such twentieth (20th) day is not a Business Day, the next
succeeding Business Day, with the first such Distribution Date hereunder being
December 22, 1997.
"DOLLAR" and "$" means lawful currency of the United States of America.
"ELIGIBLE CONTRACT" means at any date of determination, each Contract with
respect to which each of the following is true (to the extent applicable to such
type of Contract):
(a) the information with respect to the Contract, any Secondary
Contract securing the obligations under such Contract, and the Equipment,
if any, subject to the Contract delivered under the Transfer and Sale
Agreement is true and correct in all material respects;
(b) immediately prior to the transfer of such Contract and any
related Equipment (or security interest therein) or Applicable Security (or
security interest therein) to the Trust Depositor, and immediately prior to
the Trust Depositor's concurrent transfer thereof to the Trust, such
Contract was owned by the Seller (and by the Trust Depositor following the
transfer by the Seller) free and clear of any adverse claim, other than
with respect to any Residual Investment;
(c) the Contract did not have a Scheduled Payment that was a
delinquent payment for more than 60 days, and the Contract is not a
Defaulted Contract;
8
(d) no provision of the Contract has been waived, altered or modified
in any respect, except by instruments or documents contained in the
Contract File (other than payment delinquencies permitted under clause (c)
above);
(e) the Contract is a valid and binding payment obligation of the
Obligor and is enforceable in accordance with its terms (except as may be
limited by applicable Insolvency Laws and the availability of equitable
remedies);
(f) the Contract is not and will not be subject to the rights of
rescission, setoff, counterclaim or defense and, to the Seller's knowledge,
no such rights have been asserted or threatened with respect to the
Contract;
(g) the Contract, at the time it was made, did not violate the laws
of the United States or any state, except for any such violations which
would not materially and adversely affect the collectibility of the
Contracts in the Contracts Pool taken as a whole;
(h) (i) the Contract and any related Equipment or interest therein
(other than Residual Investments which are not Guaranteed Residual
Investments) have not been sold, transferred, assigned or pledged by the
Seller to any other Person (other than the financed sale of the Equipment
to the End-User effected through the End-User Contract) and any Equipment
related to such Contract is free and clear of any liens and encumbrances of
any third parties other than the Seller (except for Permitted Liens), and
(ii) either (A) such Contract is secured by a fully perfected lien of the
first priority in favor of the Seller on the related Equipment, or, in the
case of any Vendor Loan, related Applicable Security or (B) in the case of
such a Contract secured by a Vehicle, within 30 calendar days of the
origination or acquisition of such Contract by the Seller all applicable
federal registration or recording procedures were initiated, and the
Seller's interest will be so noted or recorded within 180 days of such
acquisition or origination or a certificate of title or similar evidence of
recordation on which the Seller's interest has been noted has been
obtained;
(i) if the Contract constitutes an "instrument" or "chattel paper"
for purposes of the UCC, there is not more than one "secured party's
original" counterpart of the Contract;
(j) all filings necessary to evidence the conveyance or transfer of
the Seller's ownership interest in the Contract, and the Seller's
corresponding interest in the related Equipment or Applicable Security, as
applicable, to the Trust Depositor (as well as the concurrent conveyance of
such property hereunder from the Trust Depositor to the Trust), have been
made in all appropriate jurisdictions; PROVIDED, that UCC financing
statement filings with respect to Equipment or Applicable Security which
name the Seller as secured party have not been amended to indicate either
the Trust Depositor or the Trust as an assignee (although separate UCC
filings were made against the Seller's interest in Applicable Security in
each jurisdiction where a related Vendor is located);
(k) the Obligor is not, to the Seller's knowledge, subject to
bankruptcy or other insolvency proceedings;
(l) the Obligor's billing address is in the United States and the
Contract is a U.S. dollar-denominated obligation;
(m) the Contract does not require the prior written consent of an
Obligor or contain any other restriction on the transfer or assignment of
the Contract (other than a consent or waiver of such restriction that has
been obtained prior to the Closing Date, with respect to an Initial
Contract, or the Subsequent Transfer Date, with respect to a Subsequent
Contract);
9
(n) either (x) the obligations of the related Obligor under such
Contract are irrevocable and unconditional and non-cancelable (as
distinguished from contractually prepayable) or, if not irrevocable and
unconditional, have the benefit of a Vendor Guarantee or (y) with respect
to certain Leases with Lessees that are governmental entities or
municipalities, if such Lease is canceled in accordance with its terms,
either (1) the Vendor that assigned such Lease to the Seller is
unconditionally obligated to a repurchase such lease from the Seller for a
purchase price not less than the Discounted Contract Balance of such Lease
(as of the date of purchase) plus interest thereon at the Discount Rate
through the Distribution Date following such date of repurchase, or
(2) pursuant to the Transfer and Sale Agreement, the Seller that sold such
Lease to the Trust Depositor has indemnified the Trust Depositor against
such cancellation in an amount at least equal to the Discounted Contract
Balance of such Lease (as of the date or purchase) plus interest thereon at
the Discount Rate through the Distribution Date following such
cancellation, less any amounts paid by the Vendor pursuant to clause (1);
(o) the Contract has an original maturity of not greater than the
term specified in this Agreement;
(p) no adverse selection procedure was used in selecting the Contract
for the Contracts Pool;
(q) the Obligor under the Contract is required to maintain casualty
insurance or to self-insure with respect to the related Equipment in
accordance with the Servicer's normal requirements;
(r) the Contract constitutes chattel paper, an account, an instrument
or a general intangible, in each case as defined under the UCC;
(s) the Contract is not a "consumer lease" as defined in
Section 2A-103(1)(e) of the UCC;
(t) if such Contract is a Lease, the Lessee thereunder has
represented to the related Vendor or Seller that such Lessee has accepted
the related Equipment and has had a reasonable opportunity to inspect and
test such Equipment and the Vendor or Seller has not been notified of any
defects therein;
(u) the Contract is not subject to any guarantee by the Seller, nor
has the Seller established any specific credit reserve with respect to the
related Obligor;
(v) if such Contract is a Lease, such Lease is a "triple net lease"
under which the Obligor is responsible for the maintenance of the related
Equipment in accordance with general industry standards applicable to such
item of Equipment;
(w) if such Contract is a Vendor Loan, such Vendor Loan is secured by
an Eligible Secondary Contract having an aggregate Discounted Contract
Balance for such Eligible Secondary Contract equal to the outstanding
principal amount of such Vendor Loan (assuming the interest rate specified
in such Vendor Loan is the "Discount Rate" for purposes of calculating such
Discounted Contract Balance);
(x) no provision of such Contract provides for a Prepayment Amount
less than the amount calculated in accordance with the definition of
Prepayment Amount (unless otherwise indemnified by the Vendor or the Seller
in an amount equal to the excess of the "Prepayment Amount" as calculated
in accordance with the definition thereof over the amount otherwise payable
upon a prepayment under such Contract); and
(y) such Contract is not an obligation of the United States of
America or an agency, department, or instrumentality of the United States
of America;
10
PROVIDED, that Contracts with respect to which any of the statements in
clauses (c), (o) or (x) above are not true shall also be "Eligible Contracts" if
the Trust Depositor shall have received confirmation from each Rating Agency
that such fact will not result in a Ratings Effect.
"ELIGIBLE INVESTMENTS" with respect to any Distribution Date means
negotiable instruments or securities or other investments maturing on or before
such Distribution Date (a) which, except in the case of demand or time deposits,
investments in money market funds and Eligible Repurchase Obligations, are
represented by instruments in bearer or registered form or ownership of which is
represented by book entries by a Clearing Agency or by a Federal Reserve Bank in
favor of depository institutions eligible to have an account with such Federal
Reserve Bank who hold such investments on behalf of their customers, (b) which,
as of any date of determination, mature by their terms on or prior to the
Distribution Date immediately following such date of determination, and
(c) which evidence:
(i) direct obligations of, and obligations fully guaranteed as to
full and timely payment by, the United States of America (or by any agency
thereof to the extent such obligations are backed by the full faith and
credit of the United States of America);
(ii) demand deposits, time deposits or certificates of deposit of
depository institutions or trust companies incorporated under the laws of
the United States of America or any state thereof and subject to
supervision and examination by federal or state banking or depository
institution authorities; PROVIDED, HOWEVER, that at the time of the Trust's
investment or contractual commitment to invest therein, the commercial
paper, if any, and short-term unsecured debt obligations (other than such
obligation whose rating is based on the credit of a Person other than such
institution or trust company) of such depository institution or trust
company shall have a credit rating from each Rating Agency in the Highest
Required Investment Category granted by such Rating Agency;
(iii) commercial paper, or other short term obligations, having, at the
time of the Trust's investment or contractual commitment to invest therein,
a rating in the Highest Required Investment Category granted by each Rating
Agency;
(iv) demand deposits, time deposits or certificates of deposit that
are fully insured by the FDIC;
(v) notes that are payable on demand or bankers' acceptances issued
by any depository institution or trust company referred to in (ii) above;
(vi) investments in money market funds having, at the time of the
Trust's investment or contractual commitment to invest therein, a rating of
the Highest Required Investment Category from each Rating Agency or having
otherwise been approved in writing by each Rating Agency;
(vii) time deposits (having maturities of not more than 90 days) by an
entity the commercial paper of which has, at the time of the Trust's
investment or contractual commitment to invest therein, a rating of the
Highest Required Investment Category granted by each Rating Agency;
(viii) Eligible Repurchase Obligations; and
(ix) any negotiable instruments or securities or other investments in
which the investment by the Trust therein has been approved in writing by
the Rating Agency.
The Indenture Trustee may purchase or sell to itself or an Affiliate, as
principal or agent, the Eligible Investments described above.
"ELIGIBLE REPURCHASE OBLIGATIONS" means repurchase obligations with respect
to any security that is a direct obligation of, or fully guaranteed by, the
United States of America or any agency or instrumentality thereof the
11
obligations of which are backed by the full faith and credit of the United
States of America, in either case entered into with a depository institution or
trust company (acting as principal) described in clause (c)(ii) of the
definition of Eligible Investments.
"ELIGIBLE SECONDARY CONTRACT" shall mean each Secondary Contract
(i) that satisfies all the criteria set forth in the definition of
"Eligible Contract" except clauses (b), (h) (with respect to ownership by
the Seller of the Contract) and (w) thereof, and except that the term
"Obligor" shall mean "End-User" in all such criteria;
(ii) with respect to which Secondary Contract and the proceeds thereof
the Seller has a duly perfected first priority lien; and
(iii) the transfer of the Seller's security interest in such Secondary
Contract and the proceeds thereof to the Trust Depositor is effective to
create in favor of the Trust Depositor a lien therein and such lien has
been duly perfected.
"END-USER" shall mean any party that uses the Financed Item pursuant to an
End-User Contract.
"END-USER CONTRACT" shall mean any CSA, Secured Note, Lease, IPA, or other
Financing Agreement covering Financed Items originated or purchased by the
Originator.
"EQUIPMENT" means the tangible assets including new and used information
technology equipment (such as mainframe and mini computers, computer work
stations, personal computers, data storage devices and other computer related
peripheral equipment), communications equipment (such as telephone switching and
networking systems), commercial business and industrial equipment (such as
printing presses, machine tools and other manufacturing equipment, photocopiers,
facsimile machines and other office equipment, energy savings and control
equipment, automotive diagnostic and automated testing equipment), medical
equipment (such as diagnostic and therapeutic examination equipment for
radiology, nuclear medicine and ultrasound and laboratory analysis equipment),
resources equipment (such as xxxxxx-bunchers and grapplers), transportation
equipment and construction equipment (such as heavy and medium duty trucks and
highway trailers, school buses, bulldozers, loaders, graters, excavators,
forklifts and other materials handling equipment, golf carts and other road and
off-road machinery) financed or leased by an Obligor pursuant to a Contract
and/or, unless the context otherwise requires, a security interest in such
assets.
"EVENT OF DEFAULT" shall have the meaning specified in Section 5.01 of the
Indenture.
"EXCESS CONTRACT", as of any date of determination, means each Contract
selected by the Servicer in accordance with Section 7.06 at such time as there
shall have been discovered a breach of any of the representations and warranties
set forth in Section 3.05 of the Transfer and Sale Agreement, the removal of
which pursuant to Section 7.06 hereof and the Seller's repurchase thereof or
substitution of a Substitute Contract therefor pursuant to Section 5.01 of the
Transfer and Sale Agreement, shall remedy such breach.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended or
supplemented from time to time.
"EXCLUDED AMOUNTS" means (i) any collections on deposit in the Collection
Account or otherwise received by the Servicer on or with respect to the
Contracts Pool or related Equipment, which collections are attributable to any
taxes, fees or other charges imposed by any Governmental Authority, and (ii) any
collections representing reimbursements of insurance premiums or payments for
services that were not financed by the Seller.
"EXPIRED LEASE" means any Lease that has terminated other than on its
scheduled expiration date.
12
"EXPIRED LEASE PROCEEDS" means any and all cash proceeds or rents realized
from the sale or re-lease of Equipment under an Expired Lease (net of
Liquidation Expenses).
"FDIC" shall mean the Federal Deposit Insurance Corporation, or any
successor thereto.
"FINAL TRUST TERMINATION DATE" means [ ].
"FINANCED ITEMS" means Equipment, Software, Services and other property and
services that are permitted to be financed under Contracts in accordance with
the standard policies and procedures of the Seller.
"FINANCING AGREEMENT" means each financing agreement covering Financed
Items other than a CSA, a Secured Note, a Lease or an IPA.
"GOVERNMENTAL AUTHORITY" means the United States of America, any state or
other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of, or pertaining
to, government.
"GUARANTEED RESIDUAL INVESTMENT" means each Residual Investment that is
made in the form of a full recourse loan to a Vendor or to the related Obligor
on an End-User Contract constituting a Lease.
"HIGHEST REQUIRED INVESTMENT CATEGORY" means (i) with respect to ratings
assigned by S&P, A-1+ for short-term instruments and AAA for long-term
instruments, and (ii) with respect to ratings assigned by Moody's, A2 or P-1 for
one month instruments, A1 or P-1 for three month instruments, Aa3 or P-1 for six
month instruments and Aaa or P-1 for instruments with a term in excess of six
months.
"HOLDER" means (i) with respect to the Certificate, the Person in whose
name the Certificate is registered in the Certificate Register, and (ii) with
respect to a Note, the Person in whose name such Note is registered in the Note
Register.
"INDEBTEDNESS" means, with respect to any Person at any date, (a) all
indebtedness of such person for borrowed money or for the deferred purchase
price of property or services (other than current liabilities incurred in the
ordinary course of business and payable in accordance with customary trade
practices) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under capital leases, (c) all
obligations of such Person in respect of acceptances issued or created for the
account of such Person, and (d) all liabilities secured by any Lien on any
property owned by such Person even though such person has not assumed or
otherwise become liable for the payment thereof.
"INDENTURE" means the Indenture, dated as of the date hereof, between the
Issuer and the Indenture Trustee, as amended, supplemented or otherwise modified
from time to time.
"INDENTURE TRUSTEE" means the Person acting as Indenture Trustee under the
Indenture, its successors in interest and any successor trustee under the
Indenture.
"INDEPENDENT", when used with respect to any specified Person, means such a
Person who (i) is in fact independent of the Issuer, the Trust Depositor or the
Servicer, (ii) is not a director, officer or employee of any Affiliate of the
Issuer, the Trust Depositor or the Servicer, (iii) is not a person related to
any officer or director of the Issuer, the Trust Depositor or the Servicer or
any of their respective Affiliates, (iv) is not a holder (directly or
indirectly) of more than 10% of any voting securities of the Issuer, the Trust
Depositor or the Servicer or any of their respective Affiliates, and (v) is not
connected with the Issuer, the Trust Depositor or the Servicer as an officer,
employee, promoter, underwriter, trustee, partner, director or person performing
similar functions.
"INELIGIBLE CONTRACT" has the meaning specified in Section 7.06.
13
"INITIAL CLASS A-1 PRINCIPAL AMOUNT" means $127,067,000.
"INITIAL CLASS A-2 PRINCIPAL AMOUNT" means $88,278,000.
"INITIAL CLASS A-3 PRINCIPAL AMOUNT" means $107,004,000.
"INITIAL CLASS A-4 PRINCIPAL AMOUNT" means $167,194,000.
"INITIAL CLASS B PRINCIPAL AMOUNT" means $18,726,000.
"INITIAL CLASS C PRINCIPAL AMOUNT" means $10,700,000.
"INITIAL CLASS D PRINCIPAL AMOUNT" means $16,051,000.
"INITIAL CLASS E PRINCIPAL AMOUNT" means $8,025,000.
"INITIAL CONTRACT ASSETS" has the meaning assigned in Section 2.01 of the
Transfer and Sale Agreement.
"INITIAL CONTRACTS" means those Contracts conveyed to the Trust on the
Closing Date.
"INITIAL CUTOFF DATE" means October 31, 1997.
"INITIAL PRINCIPAL AMOUNT" means, when used in the context of a reference
to an individual Class of Securities, the initial principal amount applicable to
such Class as defined above.
"INSOLVENCY EVENT" means, with respect to a specified Person, (a) the
filing of a decree or order for relief by a court having jurisdiction in the
premises in respect of such Person or any substantial part of its property in an
involuntary case under any applicable Insolvency Law now or hereafter in effect,
or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator
or similar official for such Person or for any substantial part of its property,
or ordering the winding-up or liquidation of such Person's affairs, and such
decree or order shall remain unstayed and in effect for a period of
60 consecutive days; or (b) the commencement by such Person of a voluntary case
under any applicable Insolvency Law now or hereafter in effect, or the consent
by such Person to the entry of an order for relief in an involuntary case under
such law, taking possession by a receiver, liquidator, assignee, custodian,
trustee, sequestrator or similar official for such Person or for any substantial
part of this property, or the making by such Person of any general assignment
for the benefit of creditors, or the failure by such Person generally to pay its
debts as such debts become due, or the taking of action by such Person in
furtherance of any of the foregoing.
"INSOLVENCY LAWS" means the Bankruptcy Code of the United States of America
and all other applicable liquidation, conservatorship, bankruptcy, moratorium,
rearrangement, receivership, insolvency, reorganization, suspension of payments,
or similar debtor relief laws from time to time in effect affecting the rights
of creditors generally.
"INSURANCE POLICY" means, with respect to any Contract, an insurance policy
covering physical damage to or loss of the related Equipment.
"INSURANCE PROCEEDS" means. depending on the context, any amounts payable
or any payments made, to the Servicer under any Insurance Policy.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as amended
from time to time.
14
"INVESTMENT EARNINGS" means the investment earnings (net of losses and
investment expenses) on amounts on deposit in the Collection Account and the
Reserve Fund, to be credited to the Collection Account pursuant to Section
7.03.
"IPA" means each installment payment agreement, including as applicable,
schedules, subschedules, supplements and amendments to a software license
agreement, pursuant to which the Originator financed the purchase or acquisition
of specified assets by an Obligor for specified monthly, quarterly or semiannual
payments.
"ISSUER" means the Newcourt Receivables Asset Trust 1997-1, a Delaware
business trust.
"LATE CHARGES" means any late payment fees paid by Obligors on Contracts
after all sums received have been allocated first to regular installments due or
overdue and all such installments are then paid in full.
"LEASE" means each agreement, including both operating and financing
agreements, and, as applicable, schedules, subschedules, supplements and
amendments to a master lease, pursuant to which the Originator, as lessor,
leased specified assets to a Lessee at a specified monthly, quarterly,
semiannual or annual rental.
"LESSEE" means, with respect to any Lease, the Obligor with respect to such
Lease.
"LIEN" means any mortgage, deed of trust, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or other), equity
interest, participation interest, preference, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including, without limitation, any conditional sale or other title retention
agreement, and any financing lease having substantially the same economic effect
as any of the foregoing.
"LIQUIDATION EXPENSES" means, with respect to any Contract, the aggregate
amount of all out-of-pocket expenses reasonably incurred by the Servicer
(including amounts paid to any subservicer) and any reasonably allocated costs
of internal counsel, in each case in accordance with the Servicer's customary
procedures in connection with the repossession, refurbishing and disposition of
any related Equipment upon or after the expiration or earlier termination of
such Contract and other out-of-pocket costs related to the liquidation of any
such Equipment, including the attempted collection of any amount owing pursuant
to such Contract if it is a Defaulted Contract.
"LIQUIDATION PROCEEDS" means, with respect to a Defaulted Contract,
proceeds from the sale, lease or re-lease of the Equipment, proceeds of the
related Insurance Policy and any other recoveries with respect to such Defaulted
Contract and the related Equipment, net of Liquidation Expenses and amounts, if
any, so received that are required to be refunded to the Obligor on such
Contract.
"LIST OF CONTRACTS" means the list identifying each Contract constituting
part of the Trust Assets, which list shall consist of the initial List of
Contracts reflecting the Initial Contracts transferred to the Trust on the
Closing Date, together with any Subsequent List of Contracts amending the most
current List of Contracts reflecting the Subsequent Contracts transferred to the
Trust on the related Subsequent Transfer Date (together with a deletion from
such list of the related Contract or Contracts identified on the corresponding
Addition Notice with respect to which an Addition Event or a Substitution Event
has occurred), and which list in each case (a) identifies each Contract included
in the Contracts Pool, and (b) sets forth as to each such Contract (i) the
Discounted Principal Balance as of the applicable Cutoff Date, and (ii) the
maturity date, and which list (as in effect on the Closing Date) is attached to
this Agreement as EXHIBIT H.
"MATERIAL MODIFICATION" means a termination or release (including pursuant
to prepayment), or an amendment, modification or waiver, or equivalent similar
undertaking or agreement, by the Servicer with respect to a Contract which would
not otherwise be permitted under the standards and criteria set forth in
Sections 5.08 and/or 5.09 hereof, as applicable.
15
"MATURITY DATE" means, as applicable, the Class A-1 Maturity Date, Class
A-2 Maturity Date, Class A-3 Maturity Date, Class A-4 Maturity Date, Class B
Maturity Date, Class C Maturity Date, Class D Maturity Date, or Class E Maturity
Date.
"MONTHLY REPORT" has the meaning specified in Section 9.01.
"MOODY'S" means Xxxxx'x Investors Service, Inc., or any successor thereto.
"NEWCOURT USA" has the meaning assigned such term in the preamble hereto.
"NOTE" means any one of the notes of the Trust of any Class executed and
authenticated in accordance with the Indenture.
"NOTE DISTRIBUTION ACCOUNT" means the account established and maintained as
such pursuant to Section 7.01.
"NOTE REGISTER" has the meaning given such term in Section 2.04 of the
Indenture.
"NOTEHOLDER" means any registered holder of a Note.
"OBLIGOR" means, with respect to any Contract, the Person or Persons
obligated to make payments with respect to such Contract, including any
guarantor thereof.
"OFFICER'S CERTIFICATE" shall mean a certificate signed by any officer of
the Trust Depositor or the Servicer and delivered to the Owner Trustee or the
Indenture Trustee, as the case may be.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
(including internal counsel) for the Trust Depositor or the Servicer and who
shall be reasonably acceptable to the Owner Trustee or the Indenture Trustee, as
the case may be.
"ORIGINATOR" means, with respect to each Contract, the party that is the
original lessor or financing party thereunder.
"OUTSTANDING" has the meaning given such term in the Indenture.
"OWNER TRUSTEE" means the Person acting, not in its individual capacity,
but solely as Owner Trustee, under the Trust Agreement, its successors in
interest and any successor owner trustee under the Trust Agreement.
"PAYING AGENT" means any Person described as such in Section 6.11 of the
Indenture and Section 3.10 of the Trust Agreement.
"PERMITTED LIENS" means (a) with respect to Contracts in the Contracts
Pool:
(i) Liens for state, municipal or other local taxes if such taxes
shall not at the time be due and payable or if the Trust Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto, (ii) Liens in favor of the Trust Depositor created
pursuant to the Transfer and Sale Agreement and transferred to the Trust
pursuant hereto, (iii) Liens in favor of the Trust created pursuant to this
Agreement, and (iv) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement;
and (b) with respect to the related Equipment:
16
(i) materialmen's, warehousemen's, mechanics' and other liens arising
by operation of law in the ordinary course of business for sums not due,
(ii) Liens for state, municipal or other local taxes if such taxes shall
not at the time be due and payable or if the Trust Depositor shall
currently be contesting the validity thereof in good faith by appropriate
proceedings and shall have set aside on its books adequate reserves with
respect thereto, (iii) Liens in favor of the Trust Depositor created
pursuant to the Transfer and Sale Agreement and transferred to the Owner
Trustee pursuant hereto, (iv) Liens in favor of the Trust created pursuant
to this Agreement; (v) Liens in favor of the Indenture Trustee created
pursuant to the Indenture and/or this Agreement, (vi) subordinated liens
which are subordinated to the prior payment of the Notes and Certificate on
terms described herein, and (vii) Liens granted by the End-Users which are
subordinated to the interest of the Trust in such Equipment.
"PERSON" means any individual, corporation, estate, partnership, limited
liability company, joint venture, association, joint stock company, trust
(including any beneficiary thereof), unincorporated organization or government
or any agency or political subdivision thereof.
"PLACEMENT AGENCY AGREEMENT" means the Placement Agency Agreement, dated
November [ ], 1997, between First Union Capital Markets Corp., as Agent
thereunder, the Trust Depositor and Newcourt USA, with respect to the private
placement of the Class D Notes.
"PLACEMENT AGENT" means First Union Capital Markets Corp., as Agent under
the Placement Agency Agreement.
"PREPAID CONTRACT" means any Contract that has terminated or been prepaid
in full prior to its scheduled expiration date (including because of a Casualty
Loss), other than a Defaulted Contract.
"PREPAYMENT AMOUNT" has the meaning specified in Section 5.09.
"PREPAYMENTS" means any and all partial and full prepayments on a Contract
(including, with respect to any Contract and any Collection Period, any
Scheduled Payment (or portion thereof) which is due in a subsequent Collection
Period which the Servicer has received, and (if such Contract is not otherwise
prepayable by its terms) expressly permitted the related Obligor to make, in
advance of its scheduled due date and which will be applied to such Scheduled
Payment on such due date, and any and all cash proceeds or rents realized from
the sale, lease, re-lease or re-financing of Equipment under a Prepaid Contract,
net of Liquidation Expenses), Liquidation Proceeds, amounts received in respect
of Transfer Deposit Amounts and payments upon an optional termination of the
Trust pursuant to Section 7.08.
"PRINCIPAL AMOUNT" means, with respect to a Class of Notes or the
Certificate, as applicable, the aggregate Initial Principal Amount thereof
reduced by (i) the aggregate amount of any distributions applied in reduction of
such principal amount and (ii) the aggregate amount of any distributions then on
deposit in the Note Distribution Account, if any, for such Class of Notes
established in accordance with the Indenture or, as applicable, the Certificate
Distribution Account, if any, for the Certificate established in accordance with
the Trust Agreement, and to be applied in reduction of such principal amount in
accordance with such Indenture or Trust Agreement.
"PROGRAM AGREEMENT" means each vendor finance program agreement pursuant to
which End-User Contracts originated by a Vendor are assigned to the Seller.
"PROSPECTUS" has the meaning given such term in the Underwriting Agreement.
"QUALIFIED ELIGIBLE INVESTMENTS" means Eligible Investments acquired by the
Indenture Trustee in its name and in its capacity as Indenture Trustee, which
are held by the Indenture Trustee in the Collection Account or the Reserve Fund
and with respect to which (a) the Indenture Trustee has noted its interest
therein on its books and records, and (b)
17
the Indenture Trustee has purchased such investments for value without notice of
any adverse claim thereto (and, if such investments are securities or other
financial assets or interests therein, within the meaning of Section 8-102 of
the UCC as enacted in the State of New York, without acting in collusion with a
securities intermediary in violating such securities intermediary's obligations
to entitlement holders in such assets, under Section 8-504 of such UCC, to
maintain a sufficient quantity of such assets in favor of such entitlement
holders), and (c) either (i) such investments are in the possession of the
Indenture Trustee, or (ii) such investments, (A) if certificated securities and
in bearer form, have been delivered to the Indenture Trustee, or in registered
form, have been delivered to the Indenture Trustee and either registered by the
issuer in the name of the Indenture Trustee or endorsed by effective endorsement
to the Indenture Trustee or in blank; (B) if uncertificated securities, the
ownership of which has been registered to the Indenture Trustee on the books of
the issuer thereof (or another person, other than a securities intermediary,
either becomes the registered owner of the uncertified security on behalf of the
Indenture Trustee or, having previously become the registered owner,
acknowledges that it holds for the Indenture Trustee); or (C) if securities
entitlements (within the meaning of Section 8-102 of the UCC as enacted in the
State of New York) representing interests in securities or other financial
assets (or interests therein) held by a securities intermediary (within the
meaning of said Section 8-102), a securities intermediary indicates by book
entry that a security or other financial asset has been credited to the
Indenture Trustee's securities account with such securities intermediary. Any
such Qualified Eligible Investment may be purchased by or through the Indenture
Trustee or any of its Affiliates.
"QUALIFIED INSTITUTION" means (a) the corporate trust department of the
Indenture Trustee or Owner Trustee, or (b) a depository institution organized
under the laws of the United States of America or any one of the states thereof
or the District of Columbia (or any domestic branch of a foreign bank), (i) (A)
which has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, or (2) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies, (B) the parent corporation of which
has either (1) a long-term unsecured debt rating acceptable to the Rating
Agencies, or (2) a short-term unsecured debt rating or certificate of deposit
rating acceptable to the Rating Agencies, or (C) is otherwise acceptable to the
Rating Agencies, and (ii) whose deposits are insured by the FDIC.
"RATING AGENCY" means each of S&P and Moody's, so long as such Persons
maintain a rating on the Notes; and if either S&P or Moody's no longer maintains
a rating on the Notes; such other nationally recognized statistical rating
organization selected by the Trust Depositor.
"RATING AGENCY CONDITION" means, with respect to any action or series of
related actions or proposed transaction or series of related proposed
transactions, that each Rating Agency shall have notified the Trust Depositor
and the Owner Trustee and the Indenture Trustee in writing that such action or
series of related actions or the consummation of such proposed transaction or
series of related transactions will not result in a Ratings Effect.
"RATINGS EFFECT" means, with respect to any action or series of related
actions or proposed transaction or series of related proposed transactions, a
reduction or withdrawal of the rating of any outstanding Class with respect to
which a Rating Agency has previously issued a rating as a result of such action
or series of related actions or the consummation of such proposed transaction or
series of related transactions.
"RECORD DATE" means, with respect to any Distribution Date, the last
Business Day of the preceding calendar month.
"RECOVERIES" means any and all recoveries on account of a Defaulted
Contract, including, without limitation, any and all cash proceeds or rents
realized from the sale, lease, re-lease or re-financing of repossessed Equipment
or other property, Insurance Proceeds, amounts representing late fees and
penalties and amounts received pursuant to a Program Agreement (including,
without limitation, amounts received from any "ultimate net loss pool" that may
have been created under such Program Agreement), but in each case net of
Liquidation Expenses.
18
"REQUIRED HOLDERS" means (i) prior to the payment in full of the Class A
Notes Outstanding, Class A-1 Noteholders, Class A-2 Noteholders, Class A-3
Noteholders and/or Class A-4 Noteholders holding Class A-1 Notes, Class A-2
Notes, Class A-3 Notes and/or Class A-4 Notes evidencing more than 66 2/3% of
the Aggregate Principal Amount of all Class A Notes Outstanding, (ii) from and
after the payment in full of the Class A Notes Outstanding, Holders of Class B
Notes holding Class B Notes evidencing more than 66 2/3% of the Aggregate
Principal Amount of all Class B Notes Outstanding, (iii) from and after the
payment in full of the Class B Notes Outstanding, Holders of Class C Notes
holding Class C Notes evidencing more than 66 2/3% of the Aggregate Principal
Amount of all Class C Notes Outstanding, and (iv) from and after the payment in
full of the Class C Notes Outstanding, Holders of Class D Notes holding Class D
Notes evidencing more than 66 2/3% of the Aggregate Principal Amount of all
Class D Notes Outstanding.
"REQUIREMENTS OF LAW" for any Person means the certificate of incorporation
or articles of association and by-laws or other organizational or governing
documents of such Person, and any law, treaty, rule or regulation, or order or
determination of an arbitrator or Governmental Authority, in each case
applicable to or binding upon such Person or to which such Person is subject,
whether Federal, state or local (including, without limitation, usury laws, the
Federal Truth in Lending Act and Regulation Z and Regulation B of the Board of
Governors of the Federal Reserve System).
"RESERVE FUND" means the Reserve Fund established and maintained pursuant
to Section 7.01 hereof.
"RESERVE FUND AMOUNT" means, initially as of the Closing Date, $8,025,000
(representing the Reserve Fund Initial Deposit) and thereafter, at any date of
determination, means an amount equal to the lesser of (a) the Reserve Fund
Initial Deposit, and (b) the Aggregate Principal Amount of the Notes as of such
date of determination.
"RESERVE FUND INITIAL DEPOSIT" means $8,025,000 which is equal to 1.50% of
the ADCB of the Contracts Pool at the Initial Cutoff Date.
"RESIDUAL INVESTMENT" means, with respect to certain Leases, any funds that
the Seller shall have advanced against all or any portion of the anticipated
residual value of the leased Equipment upon the expiration of such Lease in
accordance with its terms, and in excess of the discounted present value of the
rental payments due under such Lease.
"RESPONSIBLE OFFICER" means, with respect to the Owner Trustee, any officer
in its Corporate Trust Administration Department (or any similar group of a
successor Owner Trustee) customarily performing functions similar to those
performed by persons who at the time shall be such officers, respectively, or to
whom a corporate trust matter is referred because of knowledge of, familiarity
with, and authority to act with respect to a particular matter and with respect
to the Indenture Trustee, the chairman and any vice chairman of the board of
directors, the president, the chairman and vice chairman of any executive
committee of the board of directors, every vice president, assistant vice
president, the secretary, every assistant secretary, cashier or any assistant
cashier, controller or assistant controller, the treasurer, every assistant
treasurer, every trust officer, assistant trust officer and every other officer
or assistant officer of the Indenture Trustee customarily performing functions
similar to those performed by persons who at the time shall be such officers,
respectively, or to whom a corporate trust matter is referred because of
knowledge of, familiarity with, and authority to act with respect to a
particular matter.
"RESTRICTING EVENT" means any of the following events:
(a) As of any Distribution Date, the weighted average ADCB of all
Contracts in respect of which, during the three preceding
Collection Periods, a scheduled payment is more than 60 days past
due exceeds 3.0% of the weighted average ADCB of all Contracts in
the Contracts Pool during such three Collection Periods;
(b) As of any Distribution Date, the product of (i) two multiplied by
(ii) the difference between (x) the ADCB of) all that became
Defaulted
19
Contracts during the six preceding Collection Periods and (y)
Recoveries received during the six preceding Collection Periods
on account of all Defaulted Contracts, exceeds 3.0% of the
weighted average ADCB of Contracts in the Contracts Pool during
such six Collection Periods;
(c) As of any Distribution Date, after giving effect to the
allocations to be made on such date, (i) until the Principal
Amount of all Class A Notes has been paid in full, the sum of (a)
the amount on deposit in the Reserve Fund plus (b) the difference
between (1) the ADCB for all Contracts in the Contracts Pool as
of the last day of the Collection Period immediately preceding
such Distribution Date, and (2) the Principal Amount of all Class
A Notes is less than the lesser of (A) the Principal Amount of
all Class A Notes and (B) $10,700,395; and (ii) thereafter, the
amount on deposit in the Reserve Fund is less than the Reserve
Fund Amount;
(d) A Servicer Default or an Event of Default has occurred and is
continuing.
"SCHEDULED PAYMENT" means, with respect to any Contract, the monthly or
quarterly or semi-annual or annual rent or financing (whether principal or
principal and interest) payment scheduled to be made by the related Obligor
under the terms of such Contract after the related Cutoff Date; it being
understood that Scheduled Payments do not include any Excluded Amounts.
"SECONDARY CONTRACT" shall mean, with respect to a Vendor Loan, each
End-User Contract securing such Vendor Loan.
"SECURED NOTE" means each promissory note with a related security interest
evidenced by written agreement, pursuant to which the purchase of specified
assets by a Obligor is financed for specified monthly, quarterly, semiannual or
annual payments.
"SECURITIES" means the Notes and the Certificate, or any of them.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time to
time.
"SECURITYHOLDERS" means the Holders of the Notes or the Certificate.
"SELLER" means Newcourt USA in its capacity as the Seller of a Contract
under the Transfer and Sale Agreement (including in respect of a Subsequent
Contract pursuant to a Subsequent Purchase Agreement).
"SERVICER" means initially Newcourt USA, or its successor, until any
Servicer Transfer hereunder and thereafter means the Successor Servicer
appointed pursuant to Article VIII below with respect to the duties and
obligations required of the Servicer under this Agreement.
"SERVICER ADVANCE" means, with respect to any Distribution Date, the
amounts, if any, deposited by the Servicer in the Collection Account for such
Distribution Date in respect of Scheduled Payments pursuant to Section 5.14.
"SERVICER DEFAULT" shall have the meaning specified in Section 8.01.
20
"SERVICES" means, in connection with the financing of Software by an
Originator, the support and consulting services related to such Software, the
procurement of which was also financed by such Originator pursuant to a
Contract.
"SERVICING FEE" has the meaning specified in Section 5.18.
"SERVICING FEE PERCENTAGE" means 0.60%.
"SERVICER TRANSFER" has the meaning assigned in Section 8.02(a).
"SERVICING OFFICER" means any officer of the Servicer involved in, or
responsible for, the administration and servicing of Contracts whose name
appears on a list of servicing officers appearing in an Officer's Certificate
furnished to the Indenture Trustee by the Servicer, as the same may be amended
from time to time.
"SOFTWARE" means the computer software programs financed or leased by an
Obligor pursuant to a Contract.
"SOLVENT" means, as to any Person at any time, that (a) the fair value of
the Property of such Person is greater than the amount of such Person's
liabilities (including disputed, contingent and unliquidated liabilities) as
such value is established and liabilities evaluated for purposes of Section
101(31) of the Bankruptcy Code; (b) the present fair saleable value of the
Property of such Person in an orderly liquidation of such Person is not less
than the amount that will be required to pay the probable liability of such
Person on its debts as they become absolute and matured; (c) such Person is able
to realize upon its Property and pay its debts and other liabilities (including
disputed, contingent and unliquidated liabilities) as they mature in the normal
course of business; (d) such Person does not intend to, and does not believe
that it will, incur debts or liabilities beyond such Person's ability to pay as
such debts and liabilities mature; and (e) such Person is not engaged in
business or a transaction, and is not about to engage in a business or a
transaction, for which such Person's property would constitute unreasonably
small capital.
"S&P" means, Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, or any successor thereto.
"SUBSEQUENT CONTRACT" means any Contracts conveyed, assigned and
transferred by the Trust Depositor to the Trust pursuant to Section 2.04 (and
which have been acquired by the Trust Depositor from the Seller pursuant to
Section 2.04 of the Transfer and Sale Agreement), whether an Additional Contract
or a Substitute Contract.
"SUBSEQUENT CONTRACT ASSETS" has the meaning assigned in Section 2.04 of
the Transfer and Sale Agreement.
"SUBSEQUENT CONTRACT QUALIFICATION CONDITIONS" means, with respect to any
Subsequent Contract being transferred to the Trust pursuant to Section 2.04, the
accuracy of each of the following statements as of the related Cutoff Date for
such Contract:
(a) the Discounted Contract Balance of such Subsequent Contract is
not less than that of the related Contract or Contracts identified on the
related Addition Notice (whether a Contract or Contracts with respect to
which there has occurred an Addition Event, or a Substitution Event); and
(b) for each separate Collection Period which corresponds to a
Collection Period in which a payment would have been owing on the related
Contract or Contracts identified on the related Addition Notice, the amount
in respect of Scheduled Payments receivable (assuming Scheduled Payments
are paid and received when due) on the Subsequent Contract in such
Collection Period is not less than that of such related Contract or
Contracts; and
(c) if, instead of such Subsequent Contract being added to the
Contracts Pool on the related Subsequent Transfer Date, such Subsequent
Contract had instead been included in the Contracts Pool as of the Initial
Cutoff Date, and the related Contract or Contracts identified on the
related Addition Notice were not
21
so included (and assuming such hypothetical inclusion satisfied the
criteria set forth in clause (a) and (b) above that would have been
applicable at such time), the representations of the Seller set forth in
Section 3.05 concerning concentrations would not, as a result of such
inclusion, have become inaccurate or incorrect in any material respect; and
(d) no adverse selection procedure shall have been employed in the
selection of such Subsequent Contract from the Seller's portfolio; and
(e) all actions or additional actions (if any) necessary to perfect
the security interest and assignment of such Subsequent Contract to the
Trust Depositor, Trust, and Indenture Trustee shall have been taken as of
or prior to the Subsequent Transfer Date; and
(f) the maturity date for the last Scheduled Payment due under such
Subsequent Contract will be on or prior to the November 2004 Distribution
Date or, to the extent the final payment on such Contract is due after the
November 2004 Distribution Date, only scheduled payments due on or prior to
such date will be included in the Discounted Contract Balance of such
Subsequent Contract.
"SUBSEQUENT CUTOFF DATE" means the date specified as such for Subsequent
Contracts in the related Subsequent Transfer Agreement.
"SUBSEQUENT LIST OF CONTRACTS" means a list, in the form of the initial
List of Contracts delivered on the Closing Date, but listing each Subsequent
Contract transferred to the Trust pursuant to the related Subsequent Transfer
Agreement.
"SUBSEQUENT PURCHASE AGREEMENT" means, with respect to any Subsequent
Contracts, the agreement between the Seller and the Trust Depositor pursuant to
which the Seller will transfer the Subsequent Contracts to the Trust Depositor,
the form of which is attached to the Transfer and Sale Agreement as EXHIBIT B.
"SUBSEQUENT TRANSFER AGREEMENT" means the agreement described in Section
2.04 hereof.
"SUBSEQUENT TRANSFER DATE" means any date on which Subsequent Contracts are
transferred to the Trust.
"SUBSTITUTE CONTRACT" means a Contract transferred to the Trust under
Section 2.04 with respect to which a related Substitution Event has occurred
with respect to a Contract or Contracts then held in the Contracts Pool and
identified in the related Addition Notice.
"SUBSTITUTE CONTRACT TRANSFER CONDITION" means, with respect to any
Substitute Contract being transferred to the Trust pursuant to Section 2.04 in
respect of a related Contract or Contracts identified on the related Addition
Notice which is of a type described in clause (a) or (b) of the definition of
Substitution Event (a "TYPE"), the condition that after giving effect to such
transfer, the ADCB of all Substitute Contracts transferred to the Trust since
the Closing Date in respect of related Contracts of the same Type shall not
exceed 10% of the ADCB of the Initial Contracts as of the Initial Cutoff Date.
"SUBSTITUTION EVENT" means, with respect to any transfer of a related
Substitute Contract to the Trust under Section 2.04, the occurrence of any of
the following: (a) one or more Contracts then held in the Trust and identified
in the related Addition Notice has become a Defaulted Contract, (b) one or more
Contracts then held in the Trust and identified in the related Addition Notice
has been subjected to a Material Modification, or (c) one or more Contracts then
held in the Trust and identified in the related Addition Notice is the subject
of a breach of a representation or warranty under the Transfer and Sale
Agreement or other provision which breach or other provision, in the absence of
a substitution of a Substitute Contract for such Contract or Contracts, would
require the payment of a Transfer Deposit Amount to the Trust in respect of such
Contract.
22
"SUCCESSOR SERVICER" has the meaning given such term in Section 8.02(b).
"TAX OPINION" means, with respect to any action, an Opinion of Counsel to
the effect that, for federal income tax purposes, (i) following such action the
Trust will not be deemed to be an association (or publicly traded partnership)
taxable as a corporation, (ii) following such action the Trust will be
disregarded as a separate entity from the Trust Depositor, and (iii) such action
will not affect the tax characterization as debt of Notes of any outstanding
Class issued by the Trust for which an Opinion of Counsel has been provided that
such Notes are debt.
"TOTAL PRINCIPAL PAYMENT AMOUNT" means, with respect to any Distribution
Date, the difference between (a) the aggregate outstanding principal of all
Classes of Notes and (b) the ADCB for all Contracts held by the Trust as of the
last day of the Collection Period immediately preceding such Distribution Date.
"TRANSACTION DOCUMENTS" means this Agreement, the Transfer and Sale
Agreement, the Indenture, the Trust Agreement, the Administration Agreement, the
Note Depository Agreement, any Subsequent Transfer Agreement, any Subsequent
Purchase Agreement, the Underwriting Agreements, the Placement Agency Agreement,
and the Note Purchase Agreement (as defined in the Placement Agency Agreement).
"TRANSFER AND SALE AGREEMENT" means the Transfer and Sale Agreement dated
as of November 1, 1997 by and between the Seller and the Trust Depositor, as
amended, supplemented or otherwise modified from time to time.
"TRANSFER DATE" means the Business Day immediately preceding each
Distribution Date.
"TRANSFER DEPOSIT AMOUNT" means, with respect to Ineligible Contracts or
Excess Contracts, on any date of determination, the sum of the Discounted
Contract Balances of such Contracts, together with accrued interest thereon
through such date of determination at the Discount Rate in effect at the time
such Contracts was transferred to the Trust, and any outstanding Servicer
Advances thereon.
"TRANSFERRED ASSETS" means all right, title and interest of the
transferring party in, to and under the following:
(i) the Initial Contracts and Subsequent Contracts, and all
monies due or to become due in payment of such Contracts on and after the
related Cutoff Dates, any Prepayment Amounts, any payments in respect of a
casualty or early termination, and any Recoveries received with respect
thereto, but excluding any Scheduled Payments due prior to the related
Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of
any Vendor Loan, related Applicable Security, including all proceeds from
any sale or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect
to such Contracts or the Obligor thereunder under any Vendor Agreements
with the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi) rights of the Trust Depositor under the Transfer and Sale
Agreement, including, without limitation, in respect of the obligation of
the Seller to repurchase or substitute for Contracts under certain
circumstances as specified therein;
23
(vii) each Assignment; and
(viii) all income from and proceeds of the foregoing;
PROVIDED, that Transferred Assets shall not include any Residual Investment
other than the Guaranteed Residual Investment.
"TRUST" means the trust created by the Trust Agreement and funded pursuant
to this Agreement, consisting of the Trust Assets.
"TRUST ACCOUNTS" means, collectively, the Collection Account, the Reserve
Fund and the Note Distribution Account, or any of them.
"TRUST ACCOUNT PROPERTY" means the Trust Accounts, all amounts and
investments held from time to time in any Trust Account (whether in the form of
deposit accounts, physical property, book-entry securities, uncertificated
securities or otherwise), including without limitation the Reserve Fund Initial
Deposit, and all proceeds of the foregoing.
"TRUST AGREEMENT" means the Amended and Restated Trust Agreement, dated as
of the date hereof, between the Trust Depositor and the Owner Trustee, as
amended, supplemented or otherwise modified from time to time.
"TRUST ASSETS" has the meaning given to such term in Section 2.01(b) (and
in Section 2.04(a) in respect of Subsequent Contracts and related assets
transferred to the Trust pursuant to Subsequent Transfer Agreements).
"TRUST DEPOSITOR" has the meaning assigned such term in the preamble
hereunder, or any successor entity thereto.
"TRUST ESTATE" shall have the meaning specified in the Trust Agreement.
"TRUSTEES" means the Owner Trustee and the Indenture Trustee, or any of
them individually as the context may require.
"UCC" means the Uniform Commercial Code as enacted in Indiana; PROVIDED,
HOWEVER, in the event that, by reason of mandatory provisions of law, any and
all of the attachment, perfection or priority of the Lien of the Trust in and to
the Trust Assets or the Lien of the Indenture Trustee in and to the Collateral
is governed by the Uniform Commercial Code as in effect in a jurisdiction other
than the State of Indiana, the term UCC shall mean the Uniform Commercial Code
as in effect in such other jurisdiction for purposes of the provisions hereof
relating to such attachment, perfection or priority and for purposes of
definitions related to such provisions.
"UCC FILING LOCATIONS" means the States of Indiana and Delaware and each
other State in which the Seller/Servicer maintains the Contract Files related to
Contracts in the Contracts Pool (as of the Closing Date, the State of Texas, and
each State in which a Vendor which is an Obligor on a Vendor Loan is located (as
defined in the UCC in such State).
"UNCOLLECTIBLE ADVANCE" means with respect to any Determination Date and
any Contract, the amount, if any, advanced by the Servicer pursuant to Section
5.14 which the Servicer has as of such Determination Date determined in good
faith will not be ultimately recoverable by the Servicer.
"UNDERWRITING AGREEMENT" means the Underwriting Agreement, dated November
[ ], 1997, among First Union Capital Markets Corp. (as an underwriter
thereunder and as Representative of the underwriters), the Trust Depositor, and
Newcourt USA.
24
"UNITED STATES" means the United States of America.
"UNREIMBURSED SERVICER ADVANCES" means, at any time, the amount of all
previous Servicer Advances (or portions thereof) as to which the Servicer has
not been reimbursed as of such time pursuant to Sections 7.01 or 7.05 and which
the Servicer has determined in its sole discretion are Uncollectible Advances,
and with respect to which the Servicer has given a written certification to such
effect to each Trustee.
"VEHICLE" means any motor vehicle.
"VENDOR" means, with respect to a Contract, the equipment manufacturer,
dealer or distributor, or software licensor or distributor, or other Person that
provided financing under such Contract in connection with the acquisition or use
by an End-User of such party's Equipment, Software, Services or other products.
"VENDOR AGREEMENTS" means the collective reference to Vendor Assignments
and Program Agreements.
"VENDOR ASSIGNMENT" means each assignment agreement pursuant to which an
individual End-User Contract originated by a Vendor is assigned to the Seller.
"VENDOR GUARANTEE" means the irrevocable obligation of a Vendor to pay to
the Seller the aggregate oustanding principal amount of a Contract which has
been cancelled by the related Obligor pursuant to the terms of such Contract.
"VENDOR LOAN" means a limited recourse loan agreement payable by a Vendor
and secured by the Vendor's interest in Secondary Contracts and by the
Equipment, if any, related thereto.
"VICE PRESIDENT" of any Person means any vice president of such Person,
whether or not designated by a number or words before or after the title "VICE
PRESIDENT," who is a duly elected officer of such Person.
SECTION 1.02. USAGE OF TERMS. With respect to all terms in this
Agreement, the singular includes the plural and the plural the singular; words
importing any gender include the other genders; references to "WRITING" include
printing, typing, lithography and other means of reproducing words in a visible
form; references to agreements and other contractual instruments include all
amendments, modifications and supplements thereto or any changes therein entered
into in accordance with their respective terms and not prohibited by this
Agreement; references to Persons include their permitted successors and assigns;
and the term "INCLUDING" means "INCLUDING WITHOUT LIMITATION."
SECTION 1.03. SECTION REFERENCES. All section references, unless
otherwise indicated, shall be to Sections in this Agreement.
SECTION 1.04. CALCULATIONS. Except as otherwise provided herein, all
interest rate and basis point calculations hereunder will be made on the basis
of a 360-day year and twelve 30-day months and will be carried out to at least
three decimal places.
SECTION 1.05. ACCOUNTING TERMS. All accounting terms used but not
specifically defined herein shall be construed in accordance with generally
accepted accounting principles in the United States.
25
ARTICLE TWO
ESTABLISHMENT OF TRUST; TRANSFER OF CONTRACTS
SECTION 2.01. CREATION AND FUNDING OF TRUST; TRANSFER OF TRUST ASSETS.
(a) The Trust shall be created pursuant to the terms and conditions of the Trust
Agreement, upon the execution and delivery of the Trust Agreement and the filing
by the Owner Trustee of an appropriately completed Certificate of Trust under
the Business Trust Statute. The Trust Depositor, as settlor of the Trust, shall
fund and convey assets to the Trust pursuant to the terms and provisions hereof.
The Trust shall be administered pursuant to the provisions of this Agreement and
the Trust Agreement for the benefit of the Noteholders and Certificateholder.
The Owner Trustee is hereby specifically recognized by the parties hereto as
empowered to conduct business dealings on behalf of the Trust in accordance with
the terms hereof and of the Trust Agreement.
(b) On the Closing Date, the Trust Depositor shall sell, transfer, assign,
set over and otherwise convey to the Trust by execution of an Assignment
substantially in the form of EXHIBIT A hereto, without recourse other than as
expressly provided herein, (i) all the right, title and interest of the Trust
Depositor in and to the Transferred Assets, (ii) the remittances, deposits and
payments made into the Trust Accounts from time to time and amounts in the Trust
Accounts from time to time (and any investments of such amounts), and (iii) all
proceeds and products of the foregoing (the property in clauses (i)-(iii) above,
the corpus of the Trust, being the "TRUST ASSETS"). Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
sale, conveyance and transfer of ownership of the Trust Assets, rather than the
granting of a security interest to secure a borrowing, and that the Trust Assets
shall not be property of the Trust Depositor, in the event such transfer is
deemed to be of a mere security interest to secure a borrowing, the Trust
Depositor shall be deemed to have granted the Trust a perfected first priority
security interest in such Trust Assets and this Agreement shall constitute a
security agreement under applicable law, securing the obligations and/or
interests represented by the Securities, in the order and priorities, and
subject to the other terms and conditions of, this Agreement, the Indenture and
the Trust Agreement, together with such other obligations or interests as may
arise hereunder and thereunder in favor of the parties thereto.
SECTION 2.02. CONDITIONS TO THE CLOSING. On or before the Closing Date,
the Trust Depositor shall deliver or cause to be delivered the following
documents to the Owner Trustee and Indenture Trustee:
(a) The initial List of Contracts, certified by the Chairman of the
Board, President or any Vice President of the Trust Depositor, together
with an Assignment substantially in the form of EXHIBIT A hereto (along
with delivery of any instruments required under Section 2.06).
(b) A certificate of an officer of the Seller substantially in the
forms of EXHIBITS C-1 and C-2 hereto and of an officer of the Trust
Depositor substantially in the form of EXHIBIT B hereto.
(c) Opinions of counsel for the Seller and the Trust Depositor
substantially in the form of EXHIBITS D, E and F hereto (and including as
an addressee thereof each Rating Agency).
(d) A letter from Ernst & Young LLP, or another nationally recognized
accounting firm, addressed to the Seller and stating that such firm has
reviewed a sample of the Initial Contracts and performed specific
procedures for such sample with respect to certain contract terms and which
identifies those Initial Contracts which do not conform.
(e) Copies of resolutions of the Board of Directors of the Seller,
the Servicer and the Trust Depositor or of the Executive Committee of the
Board of Directors of the Seller, the Servicer and the Trust Depositor
approving the execution, delivery and performance of this Agreement and the
other Transaction Documents to which any of them is a party, as applicable,
and the transactions contemplated hereunder and
26
thereunder, certified in each case by the Secretary or an Assistant
Secretary of the Seller, the Servicer and the Trust Depositor.
(f) Officially certified, recent evidence of due incorporation and
good standing of each of the Seller and the Trust Depositor under the laws
of Delaware.
(g) Evidence of proper filing with appropriate officers in the UCC
Filing Locations of UCC financing statements executed by the Seller, as
debtor, naming the Trust Depositor as secured party (and the Owner Trustee
as assignee) and identifying the Contract Assets as collateral; and
evidence of proper filing with appropriate officer in the UCC Filing
Locations of UCC financing statements executed by the Trust Depositor, as
debtor, naming the Owner Trustee as secured party (and the Indenture
Trustee as assignee) and identifying the Trust Assets as collateral; and
evidence of proper filing with appropriate officers in the UCC Filing
Locations of UCC financing statements executed by the Trust and naming the
Indenture Trustee as secured party and identifying the Collateral, as
collateral.
(h) An Officer's Certificate listing the Servicer's Servicing
Officers.
(i) Evidence of deposit in the Collection Account of all funds
received with respect to the Initial Contracts after the Initial Cutoff
Date to the Closing Date, together with an Officer's Certificate from the
Servicer to the effect that such amount is correct.
(j) Evidence of deposit in the Reserve Fund of the Reserve Fund
Initial Deposit by the Trust Depositor.
(k) A fully executed Transfer and Sale Agreement.
(l) A fully executed Trust Agreement.
(m) A fully executed Administration Agreement.
(n) A fully executed Indenture.
(o) An opinion of Winston & Xxxxxx to the effect that (i) for federal
income tax purposes, the Class A-1 Notes, Class A-2 Notes, Class A-3 Notes,
Class A-4 Notes, Class B Notes and Class C Notes will be characterized as
debt and the Trust will not be characterized as an association (or publicly
traded partnership) taxable as a corporation, and (ii) for State of Indiana
income tax purposes, the characterization of the Trust will correspond to
its characterization for federal income tax purposes and the Class A-1
Notes, Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes and
Class C Notes will be characterized as debt for state income tax purposes.
SECTION 2.03. ACCEPTANCE BY OWNER TRUSTEE. On the Closing Date, upon
receipt of an Opinion of Counsel to the effect that the conditions set forth in
Section 2.02 have been satisfied, the Owner Trustee shall issue on behalf of the
Trust to, or upon the order of, the Trust Depositor the Certificate representing
ownership of a beneficial interest in 100% of the Trust and the Owner Trustee
shall issue, and the Indenture Trustee shall authenticate, to, or upon the order
of, the Trust Depositor the Notes secured by the Collateral. The Owner Trustee
hereby acknowledges its acceptance, on behalf of the Trust, of the Trust Assets,
and declares that it shall maintain such right, title and interest in accordance
with the terms of this Agreement and the Trust Agreement upon the trust herein
and therein set forth.
SECTION 2.04. CONVEYANCE OF SUBSEQUENT CONTRACTS. (a) Subject to the
conditions set forth in paragraph (b) below, the Trust Depositor shall sell,
transfer, assign, set over and otherwise convey to the Trust, without recourse
other than as expressly provided herein and therein, (i) all the right, title
and interest of the Trust Depositor in and to
27
the Subsequent Contracts listed on the Subsequent List of Contracts (including,
without limitation, all rights to receive payments which are collected pursuant
thereto on or after the related Subsequent Cutoff Date, including any
liquidation proceeds therefrom, but excluding any rights to receive payments
which were collected pursuant thereto prior to such Subsequent Cutoff Date), and
(ii) all other rights and property interests consisting of Transferred Assets
related to such Subsequent Contracts (the property in clauses (i)-(ii) above,
upon such transfer, becoming part of the Trust Assets). Although the Trust
Depositor and the Owner Trustee agree that such transfer is intended to be a
sale of ownership, rather than the granting of a security interest to secure a
borrowing, and that the Trust Assets following such transfer shall not be
property of the Trust Depositor, in the event such transfer is deemed to be of a
mere security interest to secure a borrowing, the Trust Depositor shall be
deemed to have granted the Trust a perfected first priority security interest in
such Trust Assets and this Agreement shall constitute a security agreement under
applicable law, securing the obligations and/or interests represented by the
Securities, in the order and priorities, and subject to the other terms and
conditions of, this Agreement, the Indenture and the Trust Agreement, together
with such other obligations or interests as may arise hereunder and thereunder
in favor of the parties hereto and thereto.
(b) The Trust Depositor shall transfer to the Trust the Subsequent
Contracts and the other property and rights related thereto described in
paragraph (a) above only upon the satisfaction of each of the following
conditions on or prior to the related Subsequent Transfer Date (and the delivery
of a related Addition Notice by the Trust Depositor shall be deemed a
representation and warranty by the Trust Depositor, and of the Seller, that such
conditions have been or will be, as of the related Subsequent Transfer Date,
satisfied):
(i) The Trust Depositor shall have provided the Owner Trustee
and the Indenture Trustee with a timely Addition Notice complying with the
definition thereof contained herein;
(ii) there shall have occurred, with respect to each such
Subsequent Contract, a corresponding Addition Event or Substitution Event
with respect to one or more Contracts then in the Contracts Pool;
(iii) the Subsequent Contract(s) being conveyed to the Trust,
satisfy the Subsequent Contract Qualification Conditions;
(iv) if such Subsequent Contracts include Substitute Contracts,
after giving effect to the conveyance, the Substitute Contract Transfer
Condition shall remain satisfied;
(v) the Trust Depositor shall have delivered to the Owner
Trustee a duly executed written assignment (including an acceptance by the
Owner Trustee) in substantially the form of EXHIBIT M hereto (the
"SUBSEQUENT TRANSFER AGREEMENT"), which shall include a Subsequent List of
Contracts listing the Subsequent Contracts;
(vi) the Trust Depositor shall have deposited or caused to be
deposited in the Collection Account all Collections received with respect
to the Subsequent Contracts on or after the related Subsequent Cutoff Date;
(vii) as of each Subsequent Transfer Date, neither the Seller nor
the Trust Depositor were insolvent nor will any of them have been made
insolvent by such transfer nor are any of them aware of any pending
insolvency;
(viii) no selection procedures believed by the Seller or the Trust
Depositor to be adverse to the interests of the Noteholders or
Certificateholder shall have been utilized in selecting the Subsequent
Contracts;
(ix) each of the representations and warranties made by the
Seller pursuant to Article III of the Transfer and Sale Agreement
applicable to the Subsequent Contracts shall be true and correct as of the
related
28
Subsequent Transfer Date, and the Seller shall have performed all
obligations to be performed by them hereunder or thereunder on or prior to
such Subsequent Transfer Date; and
(x) the Seller shall, at its own expense, on or prior to the
Subsequent Transfer Date, indicate in its Computer Disk that the Subsequent
Contracts identified on the Subsequent List of Contracts in the Subsequent
Transfer Agreement have been sold to the Issuer through the Trust Depositor
pursuant to this Agreement and the Transfer and Sale Agreement.
SECTION 2.05. RELEASE OF EXCLUDED AMOUNTS. The Indenture Trustee hereby
agrees to release to the Trust from the Transferred Assets, and the Trust hereby
agrees to release to the Trust Depositor, an amount equal to the Excluded
Amounts immediately upon identification thereof, which release shall be
automatic and shall require no further act by the Indenture Trustee or the
Trust, PROVIDED that the Indenture Trustee or Owner Trustee shall execute and
deliver such instruments of release and assignment, or otherwise confirm the
foregoing release, as may reasonably be requested in writing by the Trust
Depositor. Upon such release, such Excluded Amounts shall not constitute and
shall not be included in the Transferred Assets.
SECTION 2.06. DELIVERY OF INSTRUMENTS. The Trust Depositor shall deliver
possession of all "instruments" (within the meaning of Article 9 of the UCC) not
constituting part of chattel paper (within the meaning of such Article 9), which
evidence any Contract and which it has received pursuant to Section 2.06 of the
Transfer and Sale Agreement to the Owner Trustee on the Closing Date (or, if
applicable, on the relevant Subsequent Transfer Date). Pursuant to Section 3.05
of the Indenture the Owner Trustee is required to deliver such instruments to
the Indenture Trustee as pledgee under the Indenture. Accordingly, the Owner
Trustee hereby authorizes and directs the Trust Depositor to deliver possession
of any such instruments to the Indenture Trustee on behalf of and for the
account of the Owner Trustee, and agrees that such delivery shall satisfy the
condition set forth in the first sentence of this Section 2.06 above.
[remainder of this page intentionally left blank]
29
ARTICLE THREE
REPRESENTATIONS AND WARRANTIES
The Seller under the Transfer and Sale Agreement has made, and upon
execution of each Subsequent Purchase Agreement is deemed to remake, each of the
representations and warranties set forth in EXHIBIT J hereto and has consented
to the assignment by the Trust Depositor to the Issuer of the Trust Depositor's
rights with respect thereto. Such representations speak as of the execution and
delivery of this Agreement and as of the Closing Date in the case of the Initial
Contracts, and as of the applicable Subsequent Transfer Date in the case of the
Subsequent Contracts, but shall survive the sale, transfer and assignment of the
Contracts to the Trust. Pursuant to Section 2.01 of this Agreement, the Trust
Depositor has sold, assigned, transferred and conveyed to the Issuer as part of
the Trust Assets its rights under the Transfer and Sale Agreement, including
without limitation, the representations and warranties of the Seller therein as
set forth in EXHIBIT J attached hereto, together with all rights of the Trust
Depositor with respect to any breach thereof including any right to require the
Seller to repurchase or substitute for any Contract in accordance with the
Transfer and Sale Agreement. It is understood and agreed that the
representations and warranties set forth or referred to in this Section shall
survive delivery of the Contract Files to the Owner Trustee or any custodian.
The Trust Depositor hereby represents and warrants to the Issuer that it
has entered into the Transfer and Sale Agreement with the Seller, that the
Seller has made the representations and warranties in the Transfer and Sale
Agreement as set forth in EXHIBIT J hereto, that such representations and
warranties run to and are for the benefit of the Trust Depositor, and that
pursuant to Section 2.01 of this Agreement the Trust Depositor has transferred
and assigned to the Issuer all rights of the Trust Depositor to cause the Seller
under the Transfer and Sale Agreement to repurchase or substitute for Contracts
in the event of a breach of such representations and warranties.
SECTION 3.01. REPRESENTATIONS AND WARRANTIES REGARDING THE TRUST
DEPOSITOR. By its execution of this Agreement and each Subsequent Transfer
Agreement, the Trust Depositor represents and warrants to the Issuer, the Owner
Trustee, the Indenture Trustee, the Noteholders and the Certificateholder that:
(a) SELLER'S REPRESENTATIONS AND WARRANTIES. The representations and
warranties set forth in EXHIBIT J are true and correct.
(b) ORGANIZATION AND GOOD STANDING. The Trust Depositor is a
corporation duly organized, validly existing and in good standing under the
laws of Delaware and has the corporate power to own its assets and to
transact the business in which it is currently engaged. The Trust
Depositor is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or other) of the Trust Depositor or the Trust.
(c) AUTHORIZATION; VALID SALE; BINDING OBLIGATIONS. The Trust
Depositor has the power and authority to make, execute, deliver and perform
this Agreement and the other Transaction Documents to which it is a party
and all of the transactions contemplated under this Agreement and the other
Transaction Documents to which it is a party, and to create the Trust and
cause it to make, execute, deliver and perform its obligations under this
Agreement and the other Transaction Documents to which it is a party and
has taken all necessary corporate action to authorize the execution,
delivery and performance of this Agreement and the other Transaction
Documents to which it is a party and to cause the Trust to be created.
This Agreement and the related Subsequent Transfer Agreement, if any, shall
effect a valid sale, transfer and assignment of the Trust Assets,
enforceable against the Trust Depositor and creditors of and purchasers
from the Trust Depositor. This Agreement and the other Transaction
Documents to which the Trust Depositor is a party constitute the legal,
valid and binding obligation of the Trust Depositor enforceable in
accordance with their terms, except as
30
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies.
(d) NO CONSENT REQUIRED. The Trust Depositor is not required to
obtain the consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity
or enforceability of this Agreement or the other Transaction Documents to
which it is a party.
(e) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which it is a party by the
Trust Depositor, and the consummation of the transactions contemplated
hereby and thereby, will not violate any Requirement of Law applicable to
the Trust Depositor, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Trust Depositor is a
party or by which the Trust Depositor or any of the Trust Depositor's
properties may be bound, or result in the creation or imposition of any
security interest, lien, charge, pledge, preference, equity or encumbrance
of any kind upon any of its properties pursuant to the terms of any such
mortgage, indenture, contract or other agreement, other than as
contemplated by the Transaction Documents.
(f) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Trust Depositor threatened, against the Trust
Depositor or any of its properties or with respect to this Agreement, the
other Transaction Documents to which it is a party or the Securities (1)
which, if adversely determined, would in the reasonable judgment of the
Trust Depositor have a material adverse effect on the business, properties,
assets or condition (financial or otherwise) of the Trust Depositor or the
Trust or the transactions contemplated by this Agreement or the other
Transaction Documents to which the Trust Depositor is a party or (2)
seeking to adversely affect the federal income tax or other federal, state
or local tax attributes of the Certificate or Notes.
(g) BULK SALES. The execution, delivery and performance of this
Agreement do not require compliance with any "bulk sales" laws by the Trust
Depositor.
(h) SOLVENCY. The transactions under this Agreement do not and will
not render the Trust Depositor insolvent.
(i) TAXES. The Trust Depositor has filed or caused to be filed all
tax returns which, to its knowledge, are required to be filed and has put
all taxes shown to be due and payable on such returns or on any assessments
made against it or any of its property and all other taxes, fees or other
charges imposed on it or any of its property by any Governmental Authority
(other than any amount of tax due, the validity of which is currently being
contested in good faith by appropriate proceedings and with respect to
which reserves in accordance with generally accepted accounting principles
have been provided on the books of the Trust Depositor); no tax lien has
been filed and, to the Trust Depositor's knowledge, no claim is being
asserted, with respect to any such tax, fee or other charge.
(j) PLACE OF BUSINESS; NO CHANGES. The Trust Depositor's sole place
of business (within the meaning of Article 9 of the UCC) is as set forth in
Section 11.04 below. The Trust Depositor has not changed its name, whether
by amendment of its Certificate of Incorporation, by reorganization or
otherwise, and has not changed the location of its place of business,
within the four months preceding the Closing Date.
Such representations speak as of the execution and delivery of this Agreement
and as of the Closing Date in the case of the Initial Contracts, and as of the
applicable Subsequent Transfer Date in the case of the Subsequent Contracts, but
shall survive the sale, transfer and assignment of the Contracts to the Trust.
31
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING THE SERVICER. The
Servicer represents and warrants to the Issuer, the Owner Trustee, the Indenture
Trustee, the Noteholders and the Certificateholder that:
(a) ORGANIZATION AND GOOD STANDING. The Servicer is a corporation
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has the corporate power to own its
assets and to transact the business in which it is currently engaged. The
Servicer is duly qualified to do business as a foreign corporation and is
in good standing in each jurisdiction in which the character of the
business transacted by it or properties owned or leased by it requires such
qualification and in which the failure so to qualify would have a material
adverse effect on the business, properties, assets, or condition (financial
or otherwise) of the Servicer or the Trust. The Servicer is properly
licensed in each jurisdiction to the extent required by the laws of such
jurisdiction to service the Contracts in accordance with the terms hereof.
(b) AUTHORIZATION; BINDING OBLIGATIONS. The Servicer has the power
and authority to make, execute, deliver and perform this Agreement and the
other Transaction Documents to which the Servicer is a party and all of the
transactions contemplated under this Agreement and the other Transaction
Documents to which the Servicer is a party, and has taken all necessary
corporate action to authorize the execution, delivery and performance of
this Agreement and the other Transaction Documents to which the Servicer is
a party. This Agreement and the other Transaction Documents to which the
Servicer is a party constitute the legal, valid and binding obligation of
the Servicer enforceable in accordance with their terms, except as
enforcement of such terms may be limited by bankruptcy, insolvency or
similar laws affecting the enforcement of creditors' rights generally and
by the availability of equitable remedies.
(c) NO CONSENT REQUIRED. The Servicer is not required to obtain the
consent of any other party or any consent, license, approval or
authorization from, or registration or declaration with, any Governmental
Authority in connection with the execution, delivery, performance, validity
or enforceability of this Agreement and the other Transaction Documents to
which the Servicer is a party.
(d) NO VIOLATIONS. The execution, delivery and performance of this
Agreement and the other Transaction Documents to which the Servicer is a
party by the Servicer will not violate any Requirements of Law applicable
to the Servicer, or constitute a material breach of any mortgage,
indenture, contract or other agreement to which the Servicer is a party or
by which the Servicer or any of the Servicer's properties may be bound, or
result in the creation of or imposition of any security interest, lien,
pledge, preference, equity or encumbrance of any kind upon any of its
properties pursuant to the terms of any such mortgage, indenture, contract
or other agreement, other than as contemplated by the Transaction
Documents.
(e) LITIGATION. No litigation or administrative proceeding of or
before any court, tribunal or governmental body is currently pending, or to
the knowledge of the Servicer threatened, against the Servicer or any of
its properties or with respect to this Agreement, or any other Transaction
Document to which the Servicer is a party which, if adversely determined,
would in the reasonable judgment of the Servicer have a material adverse
effect on the business, properties, assets or condition (financial or
otherwise) of the Servicer or the Trust or the transactions contemplated by
this Agreement or any other Transaction Document to which the Servicer is a
party.
[remainder of this page intentionally left blank]
32
ARTICLE FOUR
PERFECTION OF TRANSFER AND PROTECTION OF SECURITY INTERESTS;
SECTION 4.01. CUSTODY OF CONTRACTS. (a) Subject to the terms and
conditions of this Section 4.01, the contents of each Contract File shall be
held in the custody of the Servicer for the benefit of, and as agent for, the
Noteholders, the Certificateholder, the Indenture Trustee, and the Issuer as the
owner thereof; provided, however, that the contents of each Contract File
identified on Schedule 1 hereto shall be held in the custody of the Person(s) as
set forth in Schedule 1.
(b) The Servicer agrees to maintain the related Contract Files at its
offices where they are currently maintained, or at such other offices of the
Servicer in the UCC Filing Locations as shall from time to time be identified to
the Trustees by written notice; provided, however, that the Contract Files
identified on Schedule 1 hereto will be maintained by third parties identified
on Schedule 1 at the locations listed on Schedule 1. The Servicer may
temporarily move individual Contract Files or any portion thereof without notice
as necessary to conduct collection and other servicing activities in accordance
with its customary practices and procedures; PROVIDED, HOWEVER, that the
Servicer will take all action necessary to maintain the perfection of the
Trust's interest in the Contracts and the proceeds thereof. It is intended that
by the Servicer's agreement pursuant to Section 4.01(a) above and this Section
4.01(b) the Trustees and the Issuer shall be deemed to have possession of the
Contract Files for purposes of Section 9-305 of the Uniform Commercial Code of
the State in which the Contract Files are located.
(c) As custodian, the Servicer shall have and perform the following powers
and duties:
(i) hold the Contract Files on behalf of the Noteholders and the
Certificateholder and the Issuer and the Indenture Trustee, maintain
accurate records pertaining to each Contract to enable it to comply with
the terms and conditions of this Agreement, maintain a current inventory
thereof, conduct annual physical inspections of Contract Files held by it
under this Agreement and certify to the Owner Trustee and the Indenture
Trustee annually that it or the Person(s) identified on Schedule 1
continues to maintain possession of such Contract Files;
(ii) implement or maintain policies and procedures in writing and
signed by a Servicing Officer with respect to persons authorized to have
access to the Contract Files on the Servicer's premises or at the locations
set forth on Schedule 1 and the receipting for Contract Files taken from
their storage area by an employee of the Servicer for purposes of servicing
or any other purposes;
(iii) attend to all details in connection with maintaining custody
of the Contract Files on behalf of the Noteholders and the
Certificateholder, the Issuer and the Indenture Trustee;
(iv) at all times maintain the original of each fully executed
Contract and store such original Contract in a fireproof vault;
(v) indicate in the appropriate computer records that the
Contracts as of the Closing Date (or Subsequent Transfer Date, as the case
may be) have been transferred to the Trust and that a security interest in
such Contracts has been granted to the Indenture Trustee; and
(vi) within ninety (30) days of the Closing Date (or Subsequent
Transfer Date, as the case may be) deliver an Officer's Certificate to the
Owner Trustee and the Indenture Trustee certifying that as of a date no
earlier than the Closing Date (or Subsequent Transfer Date, as the case may
be) it has conducted an inventory of the Contract Files (which in the case
of Subsequent Contracts, need be only of the Contract Files
33
related to such Subsequent Contracts) and that there exists a Contract File
for each Contract and stating all exceptions to such statement, if any.
(d) In performing its duties under this Section 4.01, the Servicer agrees
to act with reasonable care, using that degree of skill and care that it
exercises with respect to similar contracts for the financing of Financed Items
owned and/or serviced by it, and in any event with no less degree of skill and
care than would be exercised by a prudent servicer of such Financed Items. The
Servicer shall promptly report to the Owner Trustee and the Indenture Trustee
any failure by it to hold the Contract Files as herein provided and shall
promptly take appropriate action to remedy any such failure. In acting as
custodian of the Contract Files, the Servicer further agrees not to assert any
legal or beneficial ownership interest in the Contracts or the Contract Files,
except as provided in Section 5.06. The Servicer agrees to indemnify the
Noteholders, the Certificateholder, the Owner Trustee, the Issuer and the
Indenture Trustee for any and all liabilities, obligations, losses, damages,
payments, costs, or expenses of any kind whatsoever which may be imposed on,
incurred by or asserted against the Noteholders, the Certificateholder, the
Owner Trustee, the Issuer and the Indenture Trustee as the result of any act or
omission by the Servicer relating to the maintenance and custody of the Contract
Files or any other action or omission of the Servicer in the performance of its
duties and obligations as Servicer hereunder; PROVIDED, HOWEVER, that the
Servicer will not be liable for any portion of any such amount resulting from
the gross negligence or willful misconduct of any Noteholder, Certificateholder,
the Owner Trustee, the Issuer or the Indenture Trustee. The Trustees shall have
no duty to monitor or otherwise oversee the Servicer's performance as custodian
hereunder.
SECTION 4.02. FILING. On or prior to the Closing Date, the Servicer shall
cause the UCC financing statement(s) referred to in Section 2.02(g) to be filed
and from time to time the Servicer shall take and cause to be taken such actions
and execute such documents as are necessary or desirable or as the Owner Trustee
or Indenture Trustee may reasonably request to perfect and protect the Trust's
first priority perfected interest in the Trust Assets against all other persons,
including, without limitation, the filing of financing statements, amendments
thereto and continuation statements, the execution of transfer instruments and
the making of notations on or taking possession of all records or documents of
title.
SECTION 4.03. NAME CHANGE OR RELOCATION. (a) During the term of this
Agreement, neither the Servicer nor the Trust Depositor shall change, nor shall
the Trust Depositor permit the Seller to change, its name, identity or structure
or relocate its chief executive office without first giving at least 30 days'
prior written notice to the Owner Trustee and the Indenture Trustee. Within
five (5) days after the Servicer becomes aware of, or receives written notice of
a change in the location at which any of the Contract Files identified on
Schedule 1 are maintained, the Servicer shall give written notice of such change
to the Owner Trustee and Indenture Trustee.
(b) If any change in either the Servicer's, the Seller's or the Trust
Depositor's name, identity or structure or other action would make any financing
or continuation statement or notice of lien seriously misleading within the
meaning of applicable provisions of the UCC or any title statute, the Servicer,
no later than five days after the effective date of such change, shall file such
amendments as may be required to preserve and protect the Trust's interests in
the Trust Assets and the proceeds thereof. In addition, neither the Seller, the
Servicer nor the Trust Depositor shall change its place of business (within the
meaning of Article 9 of the UCC), or change or permit a change in the locations
in which Contract Files are maintained, from the locations specified in Section
11.04 or the UCC Filing Locations unless it has first taken such action as is
advisable or necessary to preserve and protect the Trust's interest in the Trust
Assets. Promptly after taking any of the foregoing actions, the Servicer shall
deliver to the Owner Trustee and the Indenture Trustee an Opinion of Counsel
reasonably acceptable to the Owner Trustee and the Indenture Trustee stating
that, in the opinion of such counsel, all financing statements or amendments
necessary to preserve and protect the interests of the Issuer and Indenture
Trustee in the Trust Corpus have been filed, and reciting the details of such
filing.
SECTION 4.04. COSTS AND EXPENSES. The Servicer agrees to pay all
reasonable costs and disbursements in connection with the perfection and the
maintenance of perfection, as against all third parties, of the Trust's right,
title and interest in and to the Contracts (including, without limitation, the
security interest in the Equipment related thereto).
34
ARTICLE FIVE
SERVICING OF CONTRACTS
SECTION 5.01. APPOINTMENT AND ACCEPTANCE; RESPONSIBILITY FOR CONTRACT
ADMINISTRATION. Newcourt USA is hereby appointed as Servicer and custodian (as
contemplated in Article IV hereof) pursuant to this Agreement. Newcourt USA
accepts the appointment and agrees to act as the Servicer and custodian pursuant
to this Agreement.
The Servicer will have the sole obligation to manage, administer, service and
make collections on the Contracts and perform or cause to be performed all
contractual and customary undertakings of the holder of the Contracts to the
Obligor. The Owner Trustee, at the written request of a Servicing Officer,
shall furnish the Servicer with any powers of attorney or other documents
necessary or appropriate in the opinion of the Servicer to enable the Servicer
to carry out its servicing and administrative duties hereunder. The Servicer is
hereby appointed the servicer hereunder until such time as any Servicer Transfer
may be effected under Article Eight.
SECTION 5.02. GENERAL DUTIES. The Servicer will service, administer and
enforce the Contracts in the Contracts Pool on behalf of the Trust and will have
full power and authority to do any and all things in connection with such
servicing and administration which it deems necessary or desirable and as shall
not contravene the provisions of this Agreement. The Servicer will manage,
service, administer, and make collections on the Contracts in the Contracts Pool
with reasonable care, using that degree of skill and attention that the Servicer
exercises with respect to all comparable contracts that it services for itself
or others. The Servicer's duties will include collection and posting of all
payments, responding to inquiries of Obligors regarding the Contracts in the
Contracts Pool, investigating delinquencies, accounting for collections,
furnishing monthly and annual statements with respect to collections and
payments in accordance with Article Nine hereof, making Servicer Advances in its
discretion, and using its best efforts to maintain the perfected first priority
security interest of the Indenture Trustee in the Trust Assets. The Servicer
will follow its customary standards, policies, and procedures and will have full
power and authority, acting alone, to do any and all things in connection with
such managing, servicing, administration, and collection that it deems necessary
or desirable. If the Servicer commences a legal proceeding to enforce a
Defaulted Contract pursuant to Section 5.15 or commences or participates in a
legal proceeding (including a bankruptcy proceeding) relating to or involving a
Contract in the Contracts Pool, the Trust will be deemed to have automatically
assigned such Contract to the Servicer for purposes of commencing or
participating in any such proceeding as a party or claimant, and the Servicer is
authorized and empowered by the Trust, pursuant to this Section 5.02, to execute
and deliver, on behalf of itself and the Trust, any and all instruments of
satisfaction or cancellation, or partial or full release or discharge, and all
other notices, demands, claims, complaints, responses, affidavits or other
documents or instruments in connection with any such proceedings. If in any
enforcement suit or legal proceeding it is held that the Servicer may not
enforce a Contract on the ground that it is not a real party in interest or a
holder entitled to enforce the Contract, then the Owner Trustee will, at the
Servicer's expense and written direction, take steps on behalf of the Trust to
enforce the Contract, including bringing suit in the Trust's name.
SECTION 5.03. CONSENT TO ASSIGNMENT OR REPLACEMENT. At the request of an
Obligor, the Servicer may in its sole discretion consent to the assignment of
the related Contract or the sublease of a unit of the Equipment relating to a
Contract, so long as such Obligor remains liable for all of its obligations
under such Contract. Upon the request of any Obligor, the Servicer may, in its
sole discretion, provide for the substitution or replacement of any unit of
Equipment for a substantially similar unit of Equipment, so long as such Obligor
remains liable for all of its obligations under such Contract.
SECTION 5.04. DISPOSITION UPON TERMINATION OF CONTRACT. Upon the
termination of a Contract included in the Contracts Pool as a result of a
default by the Obligor thereunder, and upon any such Contract becoming a
Defaulted Contract, the Servicer will use commercially reasonable efforts to
dispose of any related Equipment. Without
35
limiting the generality of the foregoing, the Servicer may dispose of any such
Equipment by purchasing such Equipment or by selling such Equipment to any of
its Affiliates for a purchase price equal to the fair market value thereof. The
Servicer will deposit any Prepayments and any Expired Lease Proceeds of any such
disposition in accordance with Section 7.01.
SECTION 5.05. SUBSERVICERS. The Servicer may enter into servicing
agreements with one or more subservicers (including any Affiliate of the
Servicer) to perform all or a portion of the servicing functions on behalf of
the Servicer; PROVIDED that the Servicer shall remain obligated and be liable to
the Trust for servicing and administering the Contracts in the Contracts Pool in
accordance with the provisions of this Agreement without diminution of such
obligation and liability by virtue of the appointment of such subservicer, to
the same extent and under the same terms and conditions as if the Servicer alone
were servicing and administering such Contracts. The fees and expenses of the
subservicer (if any) will be as agreed between the Servicer and its subservicer
and neither the Owner Trustee, the Trust, the Indenture Trustee nor the Holders
will have any responsibility therefor. All actions of a subservicer taken
pursuant to such a subservicer agreement will be taken as an agent of the
Servicer with the same force and effect as though performed by the Servicer.
SECTION 5.06. FURTHER ASSURANCE. The Owner Trustee and the Indenture
Trustee will execute and deliver to the Servicer, and the Servicer will prepare
and furnish any subservicer, with any powers of attorney and other documents
necessary or appropriate to enable the Servicer or a subservicer, as applicable,
to carry out its servicing and administrative duties under this Agreement.
SECTION 5.07. NOTICE TO OBLIGORS. The Servicer will not be required to
notify any Obligor that such Obligor's Contract or related Equipment, or any
security interest in such Contract or such Equipment, has been sold,
transferred, assigned, or conveyed pursuant to the Transfer and Sale Agreement
or pursuant to this Agreement; PROVIDED that, in the event that the Servicer
resigns or is replaced, then if the place for payment pursuant to any Contract
is changed, the Successor Servicer must give each related Obligor prompt written
notice of the appointment of the Successor Servicer and the place to which such
Obligor should make payments pursuant to each such Contract.
SECTION 5.08. COLLECTION EFFORTS; MODIFICATION OF CONTRACTS. The
Servicer will make reasonable efforts to collect all payments called for under
the terms and provisions of the Contracts in the Contracts Pool as and when the
same become due, and will follow those collection procedures which it follows
with respect to all comparable contracts that it services for itself or others.
The Servicer may, subject to Sections 5.09 and 5.10, at the request of an
Obligor and at the Servicer's option, waive, modify or otherwise vary any other
provision of a Contract in accordance with its customary and usual practices,
PROVIDED, that no such waiver, modification or variance shall, without the
consent of each Rating Agency, have the effect of accelerating (except as
provided in Sections 5.09 and 5.10), delaying, reducing or extending the date
for payment of Scheduled Payments with respect to such Contract, [PROVIDED
FURTHER, that to the extent consistent with the Servicer's past practices, the
Servicer may on only one occasion with respect to any Contract, permit a
deferment of not more than [ ] consecutive Scheduled Payments
(collectively, a "SKIPPED PAYMENT") under such Contract to the end of the term
of such Contract so long as, as of the Date of Processing for such Skipped
Payment (i) the sum of the Discounted Contract Balances of all Contracts with
respect to which there have been effected Skipped Payment modifications since
the Initial Cutoff Date does not exceed [ ]% of the ADCB for the Contracts
Pool as of the Initial Cutoff Date, and (ii) such Skipped Payment is deferred to
no later than the last day of the Collection Period related to the Distribution
Date that is twelve months prior to the [ ]. The Servicer may also
in its discretion waive any late payment charge or any other fees that may be
collected in the ordinary course of servicing any Contract in the Contracts
Pool.]
SECTION 5.09. PREPAID CONTRACT. The Servicer may, at its option and in
accordance with its customary and usual practices, agree to permit a Contract in
the Contracts Pool that is not otherwise contractually prepayable by its terms
to become a Prepaid Contract (which shall not include a Contract that becomes an
Prepaid Contract due to a Casualty Loss); PROVIDED, that the Servicer will not
permit the early termination or full prepayment of such a Contract unless (i)
such early termination or full prepayment would not result in the Trust
receiving an amount (the "PREPAYMENT AMOUNT') less than the sum of (A) the
Discounted Contract Balance on the Determination Date immediately prior to the
36
date of such prepayment plus any accrued and unpaid interest payments thereon
(at the Discount Rate) and (B) any outstanding Servicer Advances thereon, or
(ii) if such early termination or full prepayment would result in the Trust
receiving a Prepayment Amount less than the amount set forth in clause (i),
either the Vendor or the Seller shall have agreed to pay the Trust the
difference between the Prepayment Amount actually paid and the amount set forth
in clause (i) (such payment by the Vendor or Seller also to be considered a
"PREPAYMENT AMOUNT").
SECTION 5.10. ACCELERATION. The Servicer, in its sole discretion, may
accelerate (or elect not to accelerate) the maturity of all or any Scheduled
Payments under any Contract in the Contracts Pool under which a default under
the terms thereof has occurred and is continuing (after the lapse of any
applicable grace period); PROVIDED that the Servicer is required to accelerate
the Scheduled Payments due under any Contract in the Contracts Pool (and take
other action in accordance with the Seller's past practice, including
repossessing or otherwise converting the related Equipment, to realize upon the
value of such Contract and the related Equipment) to the fullest extent
permitted by the terms of such Contract, promptly after such Contract becomes a
Defaulted Contract.
SECTION 5.11. TAXES AND OTHER AMOUNTS. To the extent provided for in any
Contract in the Contracts Pool, the Servicer will make reasonable efforts to
collect (or cause to be collected) all payments with respect to amounts due for
taxes, assessments and insurance premiums relating to such Contracts or the
Equipment and remit such amounts to the appropriate Governmental Authority or
insurer on or prior to the date such payments are due.
SECTION 5.12. SUITS BY SERVICER. Notwithstanding anything herein to the
contrary, the Servicer (other than in its capacity as the Seller) does not have
any obligation pursuant to this Agreement to appear in, prosecute or defend any
legal action which is not incidental to its servicing duties under this
Agreement.
SECTION 5.13. REMITTANCES. The Servicer will service all Collections in
accordance with Section 7.01 hereof.
SECTION 5.14. SERVICER ADVANCES. For each Collection Period, if the
Servicer determines that any Scheduled Payment (or portion thereof) which was
due and payable pursuant to a Contract in the Contracts Pool during such
Collection Period was not received prior to the end of such Collection Period,
the Servicer may make a Servicer Advance in an amount up to the amount of such
delinquent Scheduled Payment (or portion thereof) , to the extent that in its
sole discretion it determines that it can recoup such amount from subsequent
Collections under the related Contract. The Servicer will deposit any Servicer
Advances into the Collection Account on or prior to 11:00 a.m. (Indianapolis
time) on the related Transfer Date, in immediately available funds. The
Servicer will be entitled to be reimbursed for Servicer Advances pursuant to
Sections 7.05(a) and 7.05(b).
SECTION 5.15. REALIZATION UPON DEFAULTED CONTRACT. The Servicer will use
its best efforts consistent with its customary and usual practices and
procedures in its servicing of contracts to repossess or otherwise comparably
convert the ownership of any Equipment relating to a Defaulted Contract and will
act as sales and processing agent for Equipment or Applicable Security which it
repossesses. The Servicer will follow such other practices and procedures as it
deems necessary or advisable and as are customary and usual in its servicing of
contracts and other actions by the Servicer in order to realize upon such
Equipment or Applicable Security, which practices and procedures may include
reasonable efforts to enforce all obligations of Obligors and repossessing and
selling such Equipment or Applicable Security at public or private sale in
circumstances other than those described in the preceding sentence. Without
limiting the generality of the foregoing, the Servicer may sell any such
Equipment or Applicable Security to the Servicer or its Affiliates for a
purchase price equal to the then fair market value thereof. In any case in
which any such Equipment or Applicable Security has suffered damage, the
Servicer will not expend funds in connection with any repair or toward the
repossession of such Equipment or Applicable Security unless it determines in
its discretion that such repair and/or repossession will increase the
Liquidation Proceeds by an amount greater than the amount of such expenses. The
Servicer will remit to the Collection Account the Liquidation Proceeds received
in connection with the sale or disposition of Equipment or Applicable Security
relating to a Defaulted Contract in accordance with Section 7.01 net of any
amounts payable to a Vendor.
37
SECTION 5.16. MAINTENANCE OF INSURANCE POLICIES. The Servicer will use
its best efforts to ensure that each Obligor maintains an Insurance Policy with
respect to the related Equipment in an amount at least equal to the sum of the
Discounted Contract Balance of the related Contract in the Contracts Pool;
PROVIDED that the Servicer, in accordance with its customary servicing
procedures, may allow Obligors to self-insure. Additionally, the Servicer will
require that each Obligor maintain property damage liability insurance during
the term of each Contract in the Contracts Pool in amounts and against risks
customarily insured against by the Obligor on equipment owned by it. If an
Obligor fails to maintain property damage insurance, the Servicer may purchase
and maintain such insurance on behalf of, and at the expense of, the Obligor.
In connection with its activities as Servicer of the Contracts, the Servicer
agrees to present, on behalf of itself, the Trust, the Indenture Trustee and the
Holders, claims to the insurer under each Insurance Policy and any such
liability policy, and to settle, adjust and compromise such claims, in each
case, consistent with the terms of each Contract. The Servicer's Insurance
Policies with respect to the related Equipment will insure against liability for
personal injury and property damage relating to such Equipment, will name the
Indenture Trustee as an insured thereunder and will contain a breach of warranty
clause.
SECTION 5.17. OTHER SERVICER COVENANTS. The Servicer hereby covenants
that:
(a) CONTRACT FILES. The Servicer will, at its own cost and expense,
maintain all Contract Files in accordance with its customary procedures.
Without limiting the generality of the preceding sentence, the Servicer
will not dispose of any documents constituting the Contract Files in any
manner which is inconsistent with the performance of its obligations as the
Servicer pursuant to this Agreement and will not dispose of any Contract
except as contemplated by this Agreement.
(b) COMPLIANCE WITH LAW. The Servicer will comply, in all material
respects, with all laws and regulations of any Governmental Authority
applicable to the Servicer or the Contracts in the Contracts Pool and
related Equipment and Contract Files or any part thereof; PROVIDED that the
Servicer may contest any such law or regulation in any reasonable manner
which will not materially and adversely affect the value of (or the rights
of the Trust on behalf of the Holders or the Indenture Trustee on behalf of
the Noteholders, with respect to) the Trust Assets.
(c) OBLIGATIONS WITH RESPECT TO CONTRACTS; MODIFICATIONS. The
Servicer will duly fulfill and comply with, in all material respects, all
obligations on the part of the Trust Depositor to be fulfilled or complied
with under or in connection with each Contract in the Contracts Pool and
will do nothing to impair the rights of the Indenture Trustee and the
Holders in, to and under the Trust Assets. The Servicer will perform such
obligations under the Contracts in the Contracts Pool and will not change
or modify the Contracts, except as otherwise provided herein and except
insofar as any such failure to perform, change or modify would not
materially and adversely affect the value of (or the rights of the Trust,
on behalf of the Holders, or the Indenture Trustee, on behalf of the
Noteholders, with respect to) the Contracts or the related Equipment.
(d) NO BANKRUPTCY PETITION. Prior to the date that is one year and
one day after the payment in full of all amounts owing in respect of all
outstanding Securities, the Servicer will not institute against the Trust
Depositor, or the Trust, or join any other Person in instituting against
the Trust Depositor or the Trust, any bankruptcy, reorganization,
arrangement, insolvency or liquidation proceedings or other similar
proceedings under the laws of the United States or any state of the United
States. This Section 5.17(d) will survive the termination of this
Agreement.
(f) LOCATION OF CONTRACT FILES. Except for those Contract Files
identified on Schedule 1 hereto, the Contract Files shall remain at all
times in the possession of the Servicer.
SECTION 5.18. SERVICING COMPENSATION. As compensation for its servicing
activities hereunder and reimbursement for its expenses as set forth in Section
5.19, the Servicer shall be entitled to receive a monthly servicing fee in
respect of any Collection Period (or portion thereof) prior to the termination
of the Trust (with respect to each
38
Collection Period, the "SERVICING FEE") equal to one-twelfth of the product of
(A) the Servicing Fee Percentage and (B) the ADCB of the Contracts Pool as of
the first day of such Collection Period.
SECTION 5.19. PAYMENT OF CERTAIN EXPENSES BY SERVICER. The Servicer will
be required to pay all expenses incurred by it in connection with its activities
under this Agreement, including fees and disbursements of independent
accountants, the Owner Trustee, the Indenture Trustee, taxes imposed on the
Servicer, expenses incurred in connection with payments and reports pursuant to
this Agreement, and all other fees and expenses not expressly stated under this
Agreement for the account of the Trust or the Trust Depositor, but excluding
Liquidation Expenses incurred as a result of activities contemplated by Section
5.15. The Servicer will be required to pay all reasonable fees and expenses
owing to the Owner Trustee or the Indenture Trustee in connection with the
maintenance of the Trust Accounts. The Servicer shall be required to pay such
expenses for its own account and shall not be entitled to any payment or
reimbursement therefor other than the Servicing Fee.
SECTION 5.20. RECORDS. The Servicer shall, during the period it is
Servicer hereunder, maintain such books of account and other records as will
enable the Owner Trustee and the Indenture Trustee to determine the status of
each Contract.
SECTION 5.21. INSPECTION. (a) At all times during the term hereof, the
Servicer shall afford the Owner Trustee and the Indenture Trustee and their
respective authorized agents reasonable access during normal business hours to
the Servicer's records relating to the Contracts and will cause its personnel to
assist in any examination of such records by the Owner Trustee or the Indenture
Trustee, or such authorized agents, and allow copies of the same to be made.
The examination referred to in this Section will be conducted in a manner which
does not unreasonably interfere with the Servicer's normal operations or
customer or employee relations. Without otherwise limiting the scope of the
examination the Owner Trustee or the Indenture Trustee may, using generally
accepted audit procedures, verify the status of each Contract and review the
Computer Disk and records relating thereto for conformity to Monthly Reports
prepared pursuant to Article Nine and compliance with the standards represented
to exist as to each Contract in this Agreement.
(b) At all times during the term hereof, the Servicer shall keep available
a copy of the List of Contracts at its principal executive office for inspection
by Securityholders.
SECTION 5.22. TRUSTEES TO COOPERATE IN RELEASES. At the same time as
(i) any Lease in the Contracts Pool becomes an Expired Lease and the Equipment
related to such Lease is sold, (ii) any Contract becomes a Prepaid Contract and
in connection therewith the Equipment related to such Prepaid Contract is sold,
or (iii) the Servicer substitutes or replaces any unit of Equipment as
contemplated in Section 5.03, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee, on behalf of the Noteholders, will to the extent requested by
the Servicer release the Trust's interest in the Equipment relating to such
Expired Lease or Prepaid Contract or such substituted or replaced Equipment, as
the case may be; PROVIDED that such release will not constitute a release of the
Trust's interest in the proceeds of such sale (other than with respect to
Equipment that is replaced pursuant to Section 5.03). In connection with any
sale of such Equipment, the Owner Trustee, on behalf of the Trust, and the
Indenture Trustee will execute and deliver to the Servicer any assignments,
bills of sale, termination statements and any other releases and instruments as
the Servicer may request in order to effect such release and transfer; PROVIDED
that neither the Owner Trustee nor the Indenture Trustee will make any
representation or warranty, express or implied, with respect to any such
Equipment in connection with such sale or transfer and assignment. Nothing in
this Section 5.22 shall diminish the Servicer's obligations pursuant to Section
7.01 with respect to the proceeds of any such sale.
[remainder of this page intentionally left blank]
39
ARTICLE SIX
COVENANTS OF THE TRUST DEPOSITOR
SECTION 6.01. CORPORATE EXISTENCE. During the term of this Agreement, the
Trust Depositor will keep in full force and effect its existence, rights and
franchises as a corporation under the laws of the jurisdiction of its
incorporation and will obtain and preserve its qualification to do business in
each jurisdiction in which such qualification is or shall be necessary to
protect the validity and enforceability of this Agreement, the other Transaction
Documents and each other instrument or agreement necessary or appropriate to the
proper administration of this Agreement and the transactions contemplated
hereby. In addition, all transactions and dealings between the Trust Depositor
and its Affiliates will be conducted on an arm's-length basis.
SECTION 6.02. CONTRACTS NOT TO BE EVIDENCED BY PROMISSORY NOTES. The
Trust Depositor will take no action to cause any Contract not originally
evidenced by an instrument as described in Section 2.06, to be evidenced by an
instrument (as defined in the UCC), except in connection with the enforcement or
collection of such Contract.
SECTION 6.03. SECURITY INTERESTS. The Trust Depositor will not sell,
pledge, assign or transfer to any other Person, or grant, create, incur, assume
or suffer to exist any Lien on any Contract in the Contracts Pool or related
Equipment, whether now existing or hereafter transferred to the Trust, or any
interest therein. The Trust Depositor will immediately notify the Owner Trustee
and the Indenture Trustee of the existence of any Lien on any Contract in the
Contracts Pool or related Equipment; and the Trust Depositor shall defend the
right, title and interest of the Trust in, to and under the Contracts in the
Contracts Pool and the related Equipment, against all claims of third parties;
PROVIDED, HOWEVER, that nothing in this Section 6.03 shall prevent or be deemed
to prohibit the Trust Depositor from suffering to exist Permitted Liens upon any
of the Contracts in the Contracts Pool or any related Equipment.
SECTION 6.04. DELIVERY OF COLLECTIONS. The Trust Depositor agrees to pay
to the Servicer promptly (but in no event later than two Business Days after
receipt) all Collections received by the Trust Depositor in respect of the
Contracts in the Contracts Pool, for application in accordance with Section
7.01.
SECTION 6.05. REGULATORY FILINGS. The Trust Depositor shall make any
filings, reports, notices, applications and registrations with, and seek any
consents or authorizations from, the Commission and any state securities
authority on behalf of the Trust as may be necessary or that Trust Depositor
deems advisable to comply with any federal or state securities or reporting
requirements laws.
SECTION 6.06. COMPLIANCE WITH LAW. Trust Depositor hereby agrees to
comply in all material respects with all Requirements of Law applicable to Trust
Depositor.
SECTION 6.07. ACTIVITIES. The Trust Depositor shall not engage in any
business or activity of any kind, or enter into any transaction or indenture,
mortgage, instrument, agreement, contract, lease or other undertaking, which is
not directly related to the transactions contemplated and authorized by this
Agreement or the other Transaction Documents; provided, however, that the Trust
Depositor may purchase and sell Contracts to other Persons in securitization
transactions involving Newcourt USA.
SECTION 6.08. INDEBTEDNESS. The Trust Depositor shall not create, incur,
assume or suffer to exist any Indebtedness or other liability whatsoever, except
(i) obligations incurred under this Agreement, or (ii) liabilities incident to
the maintenance of its corporate existence in good standing.
SECTION 6.09. GUARANTEES. The Trust Depositor shall not become or remain
liable, directly or contingently, in connection with any Indebtedness or other
liability of any other Person, whether by guarantee, endorsement (other
40
than endorsements of negotiable instruments for deposit or collection in the
ordinary course of business), agreement to purchase or repurchase, agreement to
supply or advance funds, or otherwise.
SECTION 6.10. INVESTMENTS. The Trust Depositor shall not make or suffer
to exist any loans or advances to, or extend any credit to, or make any
investments (by way of transfer of property, contributions to capital, purchase
of stock or securities or evidences of indebtedness, acquisition of the business
or assets, or otherwise) in, any Person except (i) for purchases of Contracts
pursuant to the Transfer and Sale Agreement or purchases of Contracts permitted
by Section 6.07, or (ii) for investments in Eligible Investments in accordance
with the terms of this Agreement.
SECTION 6.11. MERGER; SALES. The Trust Depositor shall not enter into any
transaction of merger or consolidation, or liquidate or dissolve itself (or
suffer any liquidation or dissolution) or acquire or be acquired by any Person,
or convey, sell, lease or otherwise dispose of all or substantially all of its
property or business, except as provided for in this Agreement.
SECTION 6.12. DISTRIBUTIONS. The Trust Depositor shall not declare or
pay, directly or indirectly, any dividend or make any other distribution
(whether in cash or other property) with respect to the profits, assets or
capital of the Trust Depositor or any Person's interest therein, or purchase,
redeem or otherwise acquire for value any of its capital stock now or hereafter
outstanding, except that so long as no Event of Default has occurred and is
continuing and no Event of Default would occur as a result thereof or after
giving effect thereto and the Trust Depositor would continue to be Solvent as a
result thereof and after giving effect thereto, the Trust Depositor may declare
and pay dividends on its capital stock.
SECTION 6.13. OTHER AGREEMENTS. The Trust Depositor shall not become a
party to, or permit any of its properties to be bound by, any indenture,
mortgage, instrument, contract, agreement, lease or other undertaking, except
this Agreement and the other Transaction Documents to which it is a party and
any agreement relating to the purchase and sale of Contracts permitted by
Section 6.07; nor shall it amend or modify the provisions of its Certificate of
Incorporation or issue any power of attorney except to the Owner Trustee, the
Indenture Trustee or the Servicer.
SECTION 6.14. SEPARATE CORPORATE EXISTENCE. The Trust Depositor shall:
(i) Maintain its own deposit account or accounts, separate
from those of any Affiliate, with commercial banking institutions.
The funds of the Trust Depositor will not be diverted to any other
Person or for other than corporate uses of the Trust Depositor.
(ii) Ensure that, to the extent that it shares the same
officers or other employees as any of its stockholders or Affiliates,
the salaries of and the expenses related to providing benefits to such
officers and other employees shall be fairly allocated among such
entities, and each such entity shall bear its fair share of the salary
and benefit costs associated with all such common officers and
employees.
(iii) Ensure that, to the extent that it jointly contracts
with any of its stockholders or Affiliates to do business with vendors
or service providers or to share overhead expenses, the costs incurred
in so doing shall be allocated fairly among such entities, and each
such entity shall bear its fair share of such costs. To the extent
that the Trust Depositor contracts or does business with vendors or
service providers when the goods and services provided are partially
for the benefit of any other Person, the costs incurred in so doing
shall be fairly allocated to or among such entities for whose benefit
the goods and services are provided, and each such entity shall bear
its fair share of such costs. All material transactions between Trust
Depositor and any of its Affiliates shall be only on an arm's length
basis.
41
(iv) To the extent that the Trust Depositor and any of its
stockholders or Affiliates have offices in the same location, there
shall be a fair and appropriate allocation of overhead costs among
them, and each such entity shall bear its fair share of such expenses.
(v) Conduct its affairs strictly in accordance with its
Certificate of Incorporation and observe all necessary, appropriate
and customary corporate formalities, including, but not limited to,
holding all regular and special stockholders' and directors' meetings
appropriate to authorize all corporate action, keeping separate and
accurate minutes of its meetings, passing all resolutions or consents
necessary to authorize actions taken or to be taken, and maintaining
accurate and separate books, records and accounts, including, but not
limited to, payroll and intercompany transaction accounts.
(vi) Take or refrain from taking, as applicable, each of the
activities specified in the "nonsubstantive consolidation" opinion of
Winston & Xxxxxx, delivered on the Closing Date, upon which the
conclusions expressed therein are based.
SECTION 6.15. LOCATION; RECORDS. The Trust Depositor (x) shall not move
outside the State of Indiana, the location of its chief executive office,
without 45 days' prior written notice to the Owner Trustee and the Indenture
Trustee and (y) shall not move or permit the Servicer to move the location of
the Contract Files from the location(s) thereof on the Closing Date (and shall
not move or permit any Person to move the location of the Contract Files
identified on Schedule 1 from the location(s) listed therein), without
forty-five (45) days' prior written notice to the Owner Trustee and the
Indenture Trustee and (z) will promptly take all actions required (including,
but not limited to, all filings and other acts necessary or advisable under the
UCC of each relevant jurisdiction in order to continue the first priority
perfected security interest of the Indenture Trustee in all Contracts in the
Contracts Pool. The Trust Depositor will give the Owner Trustee and the
Indenture Trustee prompt notice of a change within the State of Indiana of the
location of its chief executive office.
SECTION 6.16. LIABILITY OF TRUST DEPOSITOR; INDEMNITIES. The Trust
Depositor shall be liable in accordance herewith only to the extent of the
obligations specifically undertaken by the Trust Depositor under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Servicer from and against any
taxes that may at any time be asserted against any such Person with respect to
the transactions contemplated herein and in the other Transaction Documents,
including any sales, gross receipts, general corporation, tangible personal
property, Illinois personal property replacement privilege or license taxes
(but, in the case of the Issuer, not including any taxes asserted with respect
to, and as of the date of, the sale of the Contracts to the Issuer or the
issuance and original sale of the Securities, or asserted with respect to
ownership of the Contracts, or federal or other income taxes arising out of
distributions on the Certificate or the Notes) and costs and expenses in
defending against the same.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, the Indenture Trustee and the Securityholders from and
against any loss, liability or expense incurred by reason of the Trust
Depositor's willful misfeasance, bad faith or negligence (other than errors in
judgment) in the performance of its duties under this Agreement, or by reason of
reckless disregard of its obligations and duties under this Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Issuer,
the Owner Trustee, and the Indenture Trustee from and against all costs,
expenses, losses, claims, damages and liabilities arising out of or incurred in
connection with the acceptance or performance of the trusts and duties herein
and, in the case of the Owner Trustee, in the Trust Agreement and, in the case
of the Indenture Trustee, in the Indenture, except to the extent that such cost,
expense, loss, claim, damage or liability in the case of (i) the Owner Trustee,
shall be due to the willful misfeasance, bad faith or negligence of the Owner
Trustee, or shall arise from the breach by the Owner Trustee of any of its
representations or warranties set forth in Section 7.03 of the Trust Agreement,
or (ii) the Indenture Trustee, shall be due to the willful misfeasance, bad
faith or negligence of the Indenture Trustee.
42
The Trust Depositor shall be liable directly to and will indemnify any
injured party or any other creditor of the Trust for all losses, claims,
damages, liabilities and expenses of the Trust to the extent that the Trust
Depositor would be liable if the Trust were a partnership under the Delaware
Revised Uniform Limited Partnership Act in which the Trust Depositor were a
general partner; PROVIDED, HOWEVER, that the Trust Depositor shall not be liable
for any losses incurred by a Certificateholder in the capacity of an investor in
the Certificate or a Noteholder in the capacity of an investor in the Notes. In
addition, any third party creditors of the Trust (other than in connection with
the obligations described in the immediately preceding sentence for which the
Trust Depositor shall not be liable) shall be deemed third party beneficiaries
of this paragraph. The obligations of the Trust Depositor under this paragraph
shall be evidenced by by Certificate described in the Trust Agreement.
The Trust Depositor shall indemnify, defend and hold harmless the Owner
Trustee and the Indenture Trustee from and against any loss, liability or
expense incurred by reason of the Trust Depositor's or Issuer's violation of
federal or state securities laws in connection with the offering and sale of the
Notes and the Certificate.
Indemnification under this Section shall include, without limitation,
reasonable fees and expenses of counsel and expenses of litigation; PROVIDED,
HOWEVER, that the indemnification under this Section, notwithstanding anything
to the contrary, is limited to the assets of the Trust Depositor. If the Trust
Depositor shall have made any indemnity payments pursuant to this Section and
the Person to or on behalf of whom such payments are made thereafter shall
collect any of such amounts from others, such Person shall promptly repay such
amounts to the Trust Depositor, without interest.
Indemnification under this Section shall survive the resignation or removal
of the Owner Trustee or the Indenture Trustee, as the case may be, and the
termination of this Agreement.
SECTION 6.17. BANKRUPTCY LIMITATIONS. The Trust Depositor shall not,
without the affirmative vote of a majority of the members of the Board of
Directors of the Trust Depositor (which must include the affirmative vote of at
least two duly appointed Independent directors) (A) dissolve or liquidate, in
whole or in part, or institute proceedings to be adjudicated bankrupt or
insolvent, (B) consent to the institution of bankruptcy or insolvency
proceedings against it, (C) file a petition seeking or consent to reorganization
or relief under any applicable federal or state law relating to bankruptcy, (D)
consent to the appointment of a receiver, liquidator, assignee, trustee,
sequestrator (or other similar official) of the corporation or a substantial
part of its property, (E) make a general assignment for the benefit of
creditors, (F) admit in writing its inability to pay its debts generally as they
become due, or (G) take any corporate action in furtherance of the actions set
forth in clauses (A) through (F) above; PROVIDED, HOWEVER, that no director may
be required by any shareholder of the Trust Depositor to consent to the
institution of bankruptcy or insolvency proceedings against the Trust Depositor
so long as it is Solvent.
SECTION 6.18 LIMITATION ON LIABILITY OF TRUST DEPOSITOR AND OTHERS. The
Trust Depositor and any director or officer or employee or agent of the Trust
Depositor may rely in good faith on any document of any kind, PRIMA FACIE
properly executed and submitted by any Person respecting any matters arising
hereunder. The Trust Depositor and any director or officer or employee or agent
of the Trust Depositor shall be reimbursed by the Owner Trustee or the Indenture
Trustee, as the case may be, for any contractual damages, liability or expense
incurred by reason of the Owner Trustee's or the Indenture Trustee's willful
misfeasance, bad faith or negligence (except errors in judgment) in the
performance of their respective duties hereunder, or by reason of reckless
disregard of their respective obligations and duties hereunder. The Trust
Depositor shall not be under any obligation to appear in, prosecute or defend
any legal action that shall not be incidental to its obligations under this
Agreement, and that in its opinion may involve it in any expense or liability.
SECTION 6.19. CHIEF EXECUTIVE OFFICE. During the term of this Agreement,
the Trust Depositor will maintain its chief executive office in one of the
States of the United States, except Louisiana, Tennessee, Colorado, Kansas, New
Mexico, Oklahoma, Utah or Wyoming.
43
ARTICLE SEVEN
ESTABLISHMENT OF ACCOUNTS; DISTRIBUTIONS; RESERVE FUND
SECTION 7.01. TRUST ACCOUNTS; COLLECTIONS. (a) On or before the
Closing Date, the Trust Depositor shall establish the Collection Account, Note
Distribution Account, Certificate Distribution Account and Reserve Fund, each in
the name of the Indenture Trustee for the benefit of the Noteholders and the
Certificateholder, respectively. The Servicer and Indenture Trustee are hereby
required to ensure that each of the Trust Accounts is established and maintained
as a segregated corporate trust account with a Qualified Institution. If any
institution with which any of the accounts established pursuant to this Section
7.01(a) are established ceases to be a Qualified Institution, the Servicer or
the Indenture Trustee (as the case may be) shall within 10 Business Days
establish a replacement account at a Qualified Institution after notice of such
event.
(b) The Servicer shall deposit or cause to be deposited, without deposit
into any intervening account, into the Collection Account as promptly as
practical after the Date of Processing (but in any case not later than the
second Business Day following the Date of Processing thereof, and in all events
not later than two Business Days following actual receipt of such remittance by
the Servicer), all Collections on deposit with the Servicer in the form of
available funds, and all Collections otherwise received by the Servicer.
(c) Notwithstanding Section 7.01(b), the Servicer shall deposit or cause
to be deposited, on the Closing Date and on each Subsequent Transfer Date
thereafter, in immediately available funds into the Collection Account, all
Collections received after the applicable Cutoff Date and through and including
the Closing Date or Subsequent Transfer Date, as the case may be, in respect of
Contracts being transferred to the Trust on such date.
(d) Notwithstanding Sections 7.01(b) and (c), the Servicer shall not be
required to deposit or cause to be deposited Collections on any Contracts in the
Contracts Pool on which (and to the extent that) the Servicer has previously
made a Servicer Advance which has not been reimbursed, which amounts the
Servicer may retain (as reimbursement of such Servicer Advance).
(e) Notwithstanding Sections 7.01(b) and (c), if (i) the Servicer makes a
deposit into the Collection Account in respect of a Collection of a Contract in
the Contract Pool and such Collection was received by the Servicer in the form
of a check which is not honored for any reason, or (ii) the Servicer makes a
mistake with respect to the amount of any Collection and deposits an amount that
is less than or more than the actual amount of such Collection, the Servicer
shall appropriately adjust the amount subsequently deposited into the Collection
Account to reflect such dishonored check or mistake. Any Scheduled Payment in
respect of which a dishonored check is received shall be deemed not to have been
paid.
SECTION 7.02. RESERVE FUND.
(a) On the Closing Date, the Trust Depositor, shall deposit the Reserve
Fund Initial Deposit into the Reserve Fund from the net proceeds of the
Securities.
(b) If on any Distribution Date, the amounts on deposit in the Reserve
Fund (after giving effect to all deposits thereto or withdrawals therefrom on
such Distribution Date) is greater than the Reserve Fund Amount, the Indenture
Trustee shall distribute the excess of the amount on deposit in the Reserve Fund
over the Reserve Fund Amount to the Holder of the Certificate.
SECTION 7.03. TRUST ACCOUNT PROCEDURES. If the Servicer so directs, in
writing, the Indenture Trustee shall invest the amounts in the Trust Accounts in
Qualified Eligible Investments of the type specified in such written direction
44
that mature not later than one Business Day prior to the next succeeding
Distribution Date. Once such funds are invested, the Indenture Trustee shall
not change the investment of such funds. Any loss on such investments shall be
deposited in the applicable Trust Account by the Servicer out of its own funds
immediately as realized. Funds in the Trust Accounts not so invested must be
insured to the extent permitted by law by the Bank Insurance Fund or the Savings
Association Insurance Fund of the Federal Deposit Insurance Corporation.
Subject to the restrictions herein, the Indenture Trustee may purchase a
Qualified Eligible Investment from itself or an Affiliate. Subject to the
other provisions hereof, the Indenture Trustee shall have sole control over each
such investment and the income thereon, and any certificate or other instrument
evidencing any such investment, if any, shall be delivered directly to the
Indenture Trustee or its agent, together with each document of transfer, if any,
necessary to transfer title to such investment to the Indenture Trustee in a
manner which complies with this Section 7.03. All Investment Earnings on
investments of funds in the Trust Accounts shall be deposited in the Collection
Account pursuant to Section 7.01 and distributed on the next Distribution Date
pursuant to Section 7.05. The Trust Depositor and the Trust agree and
acknowledge that the Indenture Trustee is to have "CONTROL" (within the meaning
of Section 8-102 of the UCC as enacted in Illinois) of collateral comprised of
"INVESTMENT PROPERTY" (within the meaning of Section 9-115 of the UCC as enacted
in Illinois) for all purposes of this Agreement. In the absence of timely
written direction from the Servicer, the Indenture Trustee shall invest amounts
in the Trust Accounts in Qualified Eligible Investments of the type specified in
clause (vi) of the definition of Eligible Investments herein.
SECTION 7.04. SECURITYHOLDER DISTRIBUTIONS. (a) Each Noteholder and
Certificateholder as of the related Record Date shall be paid on the next
succeeding Distribution Date by check mailed to such Noteholder or
Certificateholder at the address for such Noteholder or Certificateholder
appearing on the Note Register or Certificate Register or by wire transfer if
such Noteholder or Certificateholder provides written instructions to the
Indenture Trustee, or Owner Trustee, respectively, at least ten days prior to
such Distribution Date.
(b) The Indenture Trustee shall serve as the Paying Agent hereunder and
shall make the payments to the Noteholders and Certificateholder required
hereunder. The Indenture Trustee hereby agrees that all amounts held by it for
payment hereunder will be held in trust for the benefit of the Noteholders and
Certificateholder.
SECTION 7.05. ALLOCATIONS AND DISTRIBUTIONS.
(a) ALLOCATIONS AND DISTRIBUTIONS PRIOR TO AN EVENT OF DEFAULT OR A
RESTRICTING EVENT. On each Determination Date prior to an Event of Default or a
Restricting Event, the Servicer, pursuant to written monthly payment
instructions and notification, shall instruct the Indenture Trustee to withdraw,
and on the succeeding Distribution Date the Indenture Trustee acting in
accordance with such written instructions shall withdraw, the amounts required
to be withdrawn from the Collection Account pursuant to this Section and
deposited to the Note Distribution Account (pursuant to Sections 3.01 and
8.02(b) of the Indenture) in order to make the following payments or allocations
from the Available Amounts for the related Distribution Date (in each case, such
payment or transfer to be made only to the extent funds remain available
therefor after all prior payments and transfers for such Distribution Date have
been made), in the following order of priority:
(i) pay to the Servicer, the amount of any Unreimbursed Servicer
Advance;
(ii) pay to the Servicer the monthly Servicing Fee for the
preceding monthly period together with any amounts in respect of the
Servicing Fee that were due in respect of prior monthly periods that remain
unpaid (PROVIDED, HOWEVER, that upon the occurrence and during the
continuance of an Obligor Event, the Servicing Fee shall instead be paid
after the allocation described in clause (xiii) below);
(iii) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders an amount equal to interest accrued in respect of the related
Class A-1 Notes at the Class A-1 Interest Rate for the Accrual Period
immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; PROVIDED that if the Available Amounts
45
remaining to be allocated pursuant to this clause are less than the full
amount required to be so allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-1 Note PRO RATA based upon the
outstanding Principal Amount thereof;
(iv) pay to the Indenture Trustee on behalf of the Class A-2
Noteholders an amount equal to interest accrued in respect of the related
Class A-2 Notes at the Class A-2 Interest Rate for the Accrual Period
immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; PROVIDED that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-2 Note PRO RATA based upon the
outstanding Principal Amount thereof;
(v) pay to the Indenture Trustee on behalf of the Class A-3
Noteholders an amount equal to interest accrued in respect of the related
Class A-3 Notes at the Class A-3 Interest Rate for the Accrual Period
immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; PROVIDED that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-3 Note PRO RATA based upon the
outstanding Principal Amount thereof
(vi) pay to the Indenture Trustee on behalf of the Class A-4
Noteholders an amount equal to interest accrued in respect of the related
Class A-4 Notes at the Class A-4 Interest Rate for the Accrual Period
immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; PROVIDED that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so allocated, such remaining Available Amounts shall
be allocated to the Holder of each Class A-4 Note PRO RATA based upon the
outstanding Principal Amount thereof
(vii) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the Class B
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amount shall be paid to the Holder of each Class B Note
PRO RATA based on the outstanding Principal Amount thereof;
(viii) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the Class C
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be paid to the Holder of each Class C
Note PRO RATA based on the outstanding Principal Amount thereof;
(ix) pay to the Indenture Trustee on behalf of the Class D
Noteholders an amount equal to interest accrued thereon at the Class D
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be paid to the Holder of each Class D
Note PRO RATA based on the outstanding principal amount thereof;
(x) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A-1 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be
46
allocated pursuant to this clause are less than the full amount required to
be so paid, such remaining Available Amounts shall be allocated to each
Class A-1 Note PRO RATA based on the outstanding principal amount thereof
and (ii) if the amount to be allocated pursuant to this clause exceeds the
amount needed to repay outstanding Class A-1 Note principal in full, then
such excess shall be applied in repayment of principal on the Class A-2
Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the Class A-2 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-2
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-2 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-3 Notes;
(xii) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, the Class A-3 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-3
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-3 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-4 Notes;
(xiii) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, the Class A-4 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-4
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-4 Note principal in full, then such
excess shall be applied in repayment of principal on the Class B Notes;
(xiv) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class B
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class B Note principal in full, then such
excess shall be applied in repayment of principal on the Class C Notes;
(xv) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class C
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class C Note principal in full, then such
excess shall be applied in repayment of principal on the Class D Notes;
(xvi) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class D
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding
47
Class D Note principal in full, then such excess shall be applied in
accordance with the priorities in clauses (xvii) and (xviii) below;
(xvii) pay to the Indenture Trustee, for deposit into the Reserve
Fund, such remaining Available Amounts up to such amount as may be required
to cause the amounts on deposit in the Reserve Fund to equal the Reserve
Fund Amount; and
(xviii) pay any remaining Available Amounts to the Holder of the
Class E Certificate.
Prior to the occurrence of an Event of Default or Restricting Event, if the
Available Amounts are less than the amount required to make in full the payments
and allocations set forth in Sections 7.05(a)(i)-(ix), amounts held in the
Reserve Fund shall be withdrawn in order for any of such payments or allocations
to be made and such amounts will be considered as Available Amounts for such
purpose only. In addition, to the extent Available Amounts are insufficient to
provide for the repayment in full of the Class A-1 Notes on the Class A-1
Maturity Date (or, following the repayment in full of the Class A-1 Notes, to
the extent such Available Amounts are insufficient to provide for the repayment
in full of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B
Notes, Class C Notes, Class D Notes or Class E Certificate on their respective
Maturity Dates, in such order of priority), then amounts held in the Reserve
Fund shall be withdrawn and applied to repay principal of such Notes or
Certificate in such order of priority on such respective Maturity Dates until
the Reserve Fund is exhausted.
(b) ALLOCATIONS AND PAYMENTS AFTER AN EVENT OF DEFAULT OR A RESTRICTING
EVENT. On each Determination Date after the occurrence of an Event of Default
or on each Determination Date after the occurrence, but only during the
continuance, of a Restricting Event, the Servicer, pursuant to monthly payment
instructions and notification, shall instruct the Indenture Trustee to withdraw,
and on the succeeding Distribution Date the Indenture Trustee acting in
accordance with such instructions shall withdraw, the amounts required to be
withdrawn from the Collection Account pursuant to this Section and deposited to
the Note Distribution Account (pursuant to Sections 3.01 and 8.02(b) of the
Indenture) in order to make the following payments or allocations from the
Available Amounts for the related Distribution Date (in each case, such payment
or transfer to be made only to the extent funds remain available therefor after
all prior payments and transfers for such Distribution Date have been made), in
the following order of priority:
(i) pay to the Indenture Trustee the amount of any unpaid fees
and expenses to which the Indenture Trustee is entitled under Section
5.06(a)(i) of the Indenture;
(ii) pay to the Servicer, the amount of any Unreimbursed Servicer
Advances;
(iii) pay to the Servicer the monthly Servicing Fee for the
preceding monthly period together with any amounts in respect of the
Servicing Fee that were due in respect of prior monthly periods that remain
unpaid;
(iv) pay to the Indenture Trustee on behalf of the Class A-1
Noteholders, Class A-2 Noteholders, Class A-3 Noteholders and the Class A-4
Noteholders an amount equal to interest accrued in respect of the related
Class A-1 Notes, Class A-2 Notes, Class A-3 Notes and Class A-4 Notes at
the respective Class A-1 Interest Rate, Class A-2 Interest Rate, Class A-3
Interest Rate and Class A-4 Interest Rate for the Accrual Period
immediately preceding such Distribution Date, together with any such
amounts that accrued in respect of prior Accrual Periods for which no
allocation was previously made; PROVIDED that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so allocated, such remaining Available Amounts shall
be allocated to the Holders of the Class A-1 Notes, Class A-2 Notes, Class
A-3 Notes and Class A-4 Notes PRO RATA based upon the then-outstanding
Principal Amounts thereof;
(v) pay to the Indenture Trustee on behalf of the Class B
Noteholders an amount equal to the interest accrued thereon at the Class B
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any amounts that accrued in respect of
prior Accrual Periods for which no
48
allocation was previously made; PROVIDED, that if the Available Amounts
remaining to be allocated pursuant to this clause are less than the full
amount required to be so paid, such remaining Available Amount shall be
paid to the Holder of each Class B Note PRO RATA based on the outstanding
Principal Amount thereof;
(vi) pay to the Indenture Trustee on behalf of the Class C
Noteholders, an amount equal to the interest accrued thereon at the Class C
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be paid to the Holder of each Class C
Note PRO RATA based on the outstanding Principal Amount thereof;
(vii) pay to the Indenture Trustee on behalf of the Class D
Noteholders, an amount equal to the interest accrued thereon at the Class D
Interest Rate for the Accrual Period immediately preceding such
Distribution Date, together with any such amounts that accrued in respect
of prior Accrual Periods for which no allocation was previously made;
PROVIDED, that if the Available Amounts remaining to be allocated pursuant
to this clause are less than the full amount required to be so paid, such
remaining Available Amounts shall be paid to the Holder of each Class D
Note PRO RATA based on the outstanding principal amount thereof;
(viii) pay to the Indenture Trustee, on behalf of the Class A-1
Noteholders, the Class A-1 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-1
Note PRO RATA based on the outstanding principal amount thereof and (ii) if
the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-1 Note principal in full, then such
excess shall be applied in repayment of principal on Class A-2 Notes;
(ix) pay to the Indenture Trustee, on behalf of the Class A-2
Noteholders, the Class A-2 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-2
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-2 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-3 Notes;
(x) pay to the Indenture Trustee, on behalf of the Class A-3
Noteholders, the Class A-3 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-3
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-3 Note principal in full, then such
excess shall be applied in repayment of principal on the Class A-4 Notes;
(xi) pay to the Indenture Trustee, on behalf of the Class A-4
Noteholders, the Class A-4 Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class A-4
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class A-4 Note principal in full, then such
excess shall be applied in repayment of principal on the Class B Notes;
(xii) pay to the Indenture Trustee, on behalf of the Class B
Noteholders, the Class B Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be
49
allocated pursuant to this clause are less than the full amount required to
be so paid, such remaining Available Amounts shall be allocated to each
Class B Note PRO RATA based on the outstanding principal amount thereof,
and (ii) if the amount to be allocated pursuant to this clause exceeds the
amount needed to repay outstanding Class B Note principal in full, then
such excess shall be applied in repayment of principal on the Class C
Notes;
(xiii) pay to the Indenture Trustee, on behalf of the Class C
Noteholders, the Class C Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class C
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class C Note principal in full, then such
excess shall be applied in repayment of principal on the Class D Notes;
(xiv) pay to the Indenture Trustee, on behalf of the Class D
Noteholders, the Class D Principal Payment Amount for such Distribution
Date; PROVIDED (i) that if the Available Amounts remaining to be allocated
pursuant to this clause are less than the full amount required to be so
paid, such remaining Available Amounts shall be allocated to each Class D
Note PRO RATA based on the outstanding principal amount thereof, and (ii)
if the amount to be allocated pursuant to this clause exceeds the amount
needed to repay outstanding Class D Note principal in full, then such
excess shall be applied in repayment of principal on the Class E
Certificate; and
(xv) pay all other remaining Available Amounts to the Holder of
the Class E Certificate.
Following the occurrence and during the continuance of an Event of Default
or Restricting Event, if the Available Amounts are less than the amount required
to make in full the payments and allocations set forth in Sections
7.05(b)(i)-(xiv), amounts held in the Reserve Fund shall be withdrawn in order
for any of such payments or allocations to be made (in the same order of
priority) and such amounts will be considered as Available Amounts for such
purpose only. In addition, to the extent Available Amounts are insufficient to
provide for the repayment in full of the Class A-1 Notes on the Class A-1
Maturity Date (or, following the repayment in full of the Class A-1 Notes, to
the extent such Available Amounts are insufficient to provide for the repayment
in full of the Class A-2 Notes, Class A-3 Notes, Class A-4 Notes, Class B Notes,
Class C Notes, Class D Notes or Class E Certificate on their respective Maturity
Dates, in such order of priority), then amounts held in the Reserve Fund shall
be withdrawn and applied to repay principal of such Notes or Certificate in such
order of priority on such respective Maturity Dates until the Reserve Fund is
exhausted.
SECTION 7.06. REPURCHASES OF, OR SUBSTITUTION FOR, CONTRACTS FOR BREACH OF
REPRESENTATIONS AND WARRANTIES. Upon a discovery by the Servicer, the Trust
Depositor or the Trustees of a breach of a representation or warranty of the
Seller as set forth in EXHIBIT J hereto or as made or deemed made in any
Addition Notice or any Subsequent Purchase Agreement relating to Subsequent
Contracts that materially adversely affects the Trust's interest in such
Contract (without regard to the benefits of the Reserve Fund) (an "INELIGIBLE
CONTRACT"), or of an inaccuracy with respect to the representations as to
concentrations of the Initial Contracts made under Section 3.05 of the Transfer
and Sale Agreement, the party discovering the breach shall give prompt written
notice to the other parties (and the Servicer shall, with respect to an
inaccuracy concerning concentrations, select one or more Contracts, without
employing adverse selection, as the related Excess Contract for purposes of this
Section), PROVIDED, that the Trustees shall have no duty or obligation to
inquire or to investigate the breach by the Seller of any of such
representations or warranties. The Seller, as provided in the Transfer and
Sale Agreement and in accordance with this Section 7.06, shall repurchase each
such Ineligible Contract or Excess Contract, at a repurchase price equal to the
Transfer Deposit Amount, not later than thirty (30) days following the date the
Seller becomes aware of, or receives written notice from any Trustee, the
Servicer or the Trust Depositor of, any such breach or inaccuracy and which
breach or inaccuracy has not otherwise been cured; PROVIDED, HOWEVER, that if
the Seller is able to effect a substitution for any such Ineligible Contract or
Excess Contract in compliance with Section 2.04, the Seller may, in lieu of
repurchasing such Contract, effect a substitution for such
50
affected Contract with a Substitute Contract not later than the date a
repurchase of such affected Contract would be required hereunder, and PROVIDED
FURTHER that with respect to a breach of representation or warranty relating to
the Contracts in the aggregate and not to any particular Contract the Seller may
select Contracts (without adverse selection) to repurchase (or substitute for)
such that had such Contracts not been included as part of the Trust Assets (and,
in the case of a substitution, had such Substitute Contract been included as
part of the Trust Assets instead of the selected Contract) there would have been
no breach of such representation or warranty. Notwithstanding any other
provision of this Agreement, the obligation of the Seller under the Transfer and
Sale Agreement and described in this Section 7.06 shall not terminate or be
deemed released by any party hereto upon a Servicer Transfer pursuant to Article
Eight. The repurchase obligation described in this Section 7.06 is in no way to
be satisfied with monies in the Reserve Fund.
SECTION 7.07. REASSIGNMENT OF REPURCHASED OR SUBSTITUTED CONTRACTS. Upon
receipt by the Indenture Trustee for deposit in the Collection Account of the
Transfer Deposit Amount as described in Section 7.06 (or upon the Subsequent
Transfer Date related to a Substitute Contract described in Section 7.06) or the
repurchase price set forth in Section 7.08, and upon receipt of a certificate of
a Servicing Officer in the form attached hereto as EXHIBIT G, the Indenture
Trustee shall assign to the Seller all of the Trust's right, title and interest
in the repurchased or substituted Contract and related Trust Assets without
recourse, representation or warranty, and such reassigned Contract shall no
longer thereafter be included in any calculations of Discounted Contract
Balances required to be made hereunder or otherwise be deemed a part of the
Trust.
SECTION 7.08. SELLER'S AND TRUST DEPOSITOR'S REPURCHASE OPTION. As
provided in the Transfer and Sale Agreement, on written notice to the Indenture
Trustee at least twenty (20) days prior to a Distribution Date, and provided
that the ADCB of all Contracts in the Contracts Pool is then less than 10% of
the ADCB of such Contracts as of the Initial Cutoff Date, the Seller, through
the Trust Depositor, may (but is not required to) repurchase from the Trust on
that Distribution Date all outstanding Contracts at a price equal to the sum of
(a) aggregate outstanding Principal Amount of the Securities (other than the
Class E Certificate) as of the current Distribution Date thereon, and (b) the
amount of unreimbursed Servicer Advances (if any) as well as accrued and unpaid
monthly Servicing Fees to the date of such repurchase. Such price is to be
deposited in the Collection Account one Business Day before such Distribution
Date, against the Owner Trustee's and Indenture Trustee's and Trust Depositor's
release of the Contracts and the Contract Files to the Seller.
[remainder of this page intentionally left blank]
51
ARTICLE EIGHT
SERVICER DEFAULT; SERVICE TRANSFER
SECTION 8.01. SERVICER DEFAULT. "SERVICER DEFAULT" means the occurrence
of any of the following:
(a) any failure by the Servicer to make any payment, transfer or
deposit or to give instructions or notice to the Owner Trustee or the
Indenture Trustee pursuant to this Agreement on or before the date
occurring three Business Days after the date such payment, transfer,
deposit, or such instruction or notice or report is required to be made or
given, as the case may be, under the terms of this Agreement; or
(b) failure on the part of the Servicer duly to observe or perform in
any material respect any other covenants or agreements of the Servicer set
forth in this Agreement which has a material adverse effect on the
Noteholders or Certificateholder, which continues unremedied for a period
of 30 days after the first to occur of (i) the date on which written
notice of such failure requiring the same to be remedied shall have been
given to the Servicer by the Indenture Trustee or to the Servicer and the
Indenture Trustee by the Noteholders or Certificateholder or the Indenture
Trustee on behalf of such Noteholders of Notes aggregating not less than
25% of the Principal Amount of any Class adversely affected thereby and
(ii) the date on which the Servicer becomes aware thereof and such failure
continues to materially adversely affect such Noteholders or
Certificateholder for such period; or
(c) any representation, warranty or certification made by the
Servicer in this Agreement or in any certificate delivered pursuant to the
this Agreement shall prove to have been incorrect when made, which has a
material adverse effect on the Noteholders or Certificateholder and which
continues to be incorrect in any material respect for a period of 30 days
after the first to occur of (i) the date on which written notice of such
incorrectness requiring the same to be remedied shall have been given to
the Servicer and the Owner Trustee by the Indenture Trustee, or to the
Servicer, the Owner Trustee and the Indenture Trustee by Noteholders or
Certificateholder or by the Indenture Trustee on behalf of Noteholders of
Notes aggregating not less than 25% of the Principal Amount of any Class
adversely affected thereby and (ii) the date on which the Servicer becomes
aware thereof, and such incorrectness continues to materially adversely
affect such Holders for such period; or
(d) an Insolvency Event shall occur with respect to the Servicer.
Notwithstanding the foregoing, a delay in or failure of performance
referred to under clause (a) above for a period of five Business Days or
referred to under clause (b) or (c) for a period of 60 days (in addition to any
period provided in (a), (b) or (c)) shall not constitute a Servicer Default
until the expiration of such additional five Business Days or 60 days,
respectively, if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or other similar occurrences. Upon the occurrence of any such event
the Servicer shall not be relieved from using its best efforts to perform its
obligations in a timely manner in accordance with the terms of this Agreement
and the Servicer shall provide the Owner Trustee, the Indenture Trustee and the
Trust Depositor prompt notice of such failure or delay by it, together with a
description of its efforts to so perform its obligations. The Servicer shall
immediately notify the Indenture Trustee in writing of any Servicer Default.
SECTION 8.02. SERVICER TRANSFER. (a) If a Servicer Default has occurred
and is continuing, (x) the Required Holders, or (y) the Indenture Trustee may,
by written notice (a "TERMINATION NOTICE") delivered to the parties hereto,
terminate all (but not less than all) of the Servicer's rights and obligations
under this Agreement.
52
(b) Upon delivery of the notice required by Section 8.02(a) (or, if later,
on a date designated therein), and on the date that a successor Servicer shall
have been appointed pursuant to Section 8.03 (such appointment being herein
called a "SERVICER TRANSFER"), all rights, benefits, fees, indemnities,
authority and power of the Servicer under this Agreement, whether with respect
to the Contracts, the Contract Files or otherwise, shall pass to and be vested
in such successor (the "SUCCESSOR SERVICER") pursuant to and under this Section
8.02; and, without limitation, the Successor Servicer is 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 any and all
acts or things necessary or appropriate to effect the purposes of such notice of
termination. The Servicer agrees to cooperate with 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 which shall at the time be held by
the Servicer for deposit, or have been deposited by the Servicer, in the
Collection Account, or for its own account in connection with its services
hereafter or thereafter received with respect to the Contracts. The Servicer
shall transfer to the Successor Servicer all records held by the Servicer
relating to the Contracts in such electronic form as the Successor Servicer may
reasonably request and (ii) any Contract Files in the Servicer's possession. In
addition, the Servicer shall permit access to its premises (including all
computer records and programs) to the Successor Servicer or its designee, and
shall pay the reasonable transition expenses of the Successor Servicer. Upon a
Servicer Transfer, the Successor Servicer shall also be entitled to receive the
Servicing Fee for performing the obligations of the Servicer.
SECTION 8.03. APPOINTMENT OF SUCCESSOR SERVICER; RECONVEYANCE; SUCCESSOR
SERVICER TO ACT . Upon delivery of the notice required by Section 8.02(a) (or,
if later, on a date designated therein), the Servicer shall continue to perform
all servicing functions under this Agreement until the date specified in the
Termination Notice or, if no such date is specified, until a date mutually
agreed by the Servicer and the Indenture Trustee. The Indenture Trustee shall
as promptly as possible after the giving of or receipt of a Termination Notice,
appoint a Successor Servicer, and such Successor Servicer shall accept its
appointment by a written assumption in a form acceptable to the Indenture
Trustee and Owner Trustee. If within 60 days of delivery of a Termination
Notice the Indenture Trustee is unable to obtain any bids from eligible
servicers and the Servicer shall have yet to cure the Servicer Default, then the
Indenture Trustee shall offer the Trust Depositor, and the Trust Depositor shall
offer the Seller, the right to accept retransfer of all the Trust Assets, and
such parties may accept retransfer of such Trust Assets in consideration of the
Trust Depositor's delivery to the Collection Account on or prior to the next
upcoming Distribution Date of a sum equal to the Aggregate Principal Amount of
all Securities (other than the Certificate) then outstanding, together with
accrued and unpaid interest thereon through such date of deposit (provided, that
the Indenture Trustee, if so directed by the Required Holders, need not accept
and effect such reconveyance in the absence of evidence (which may include
valuations of an investment bank or similar entity) reasonably acceptable to
such Trustee or Required Holders that such retransfer would not constitute a
fraudulent conveyance of the Trust Depositor or the Seller).
In the event that a Successor Servicer has not been appointed and has not
accepted its appointment at the time when the then Servicer has ceased to act as
Servicer, the Indenture Trustee without further action shall automatically be
appointed the Successor Servicer. Notwithstanding the foregoing, if the
Indenture Trustee is legally unable or prohibited from so acting, it shall
petition a court of competent jurisdiction to appoint any established financial
institution having a net worth of at least $50,000,000 and whose regular
business includes the servicing of contracts similar to the Contracts as the
Successor Servicer hereunder. On or after a Servicer Transfer, 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, and
the terminated Servicer shall be relieved of such responsibilities, duties and
liabilities arising after such Servicer Transfer; PROVIDED, HOWEVER, that (i)
the Successor Servicer will not assume any obligations of the Servicer described
in Section 8.03 and (ii) the Successor Servicer shall not be liable for any acts
or omissions of the Servicer occurring prior to such Servicer Transfer or for
any breach by the Servicer of any of its representations and warranties
contained herein or in any related document or agreement. As compensation
therefor, the Successor Servicer shall be entitled to receive reasonable
compensation equal to the monthly Servicing Fee. The Owner Trustee,
Securityholders and the Indenture Trustee and such successor shall take such
action, consistent with this Agreement, as shall be necessary to effectuate any
such succession. To the extent the terminated Servicer has
53
made Servicer Advances, it shall be entitled to reimbursement of the same
notwithstanding its termination hereunder, to the same extent as if it had
continued to service the Contracts hereunder. In addition, it is understood and
agreed that if an Event of Default has occurred and a Servicer Transfer is being
effected by action of the Indenture Trustee hereunder, any documented expenses
reasonably incurred by the Indenture Trustee in connection with effecting such
Servicer Transfer shall be deemed expenses reimbursable from Available Amounts
after an Event of Default pursuant to Section 7.05(b)(i) hereof and Section
5.06(a)(i) of the Indenture.
SECTION 8.04. NOTIFICATION TO SECURITYHOLDERS. (a) Promptly following
the occurrence of any Servicer Default, the Servicer shall give written notice
thereof to the Trustees, the Trust Depositor and each Rating Agency at the
addresses described in Section 11.04 and to the Noteholders and
Certificateholder at their respective addresses appearing on the Note Register
and the Certificate Register, respectively.
(b) Within 10 days following any termination or appointment of a Successor
Servicer pursuant to this Article VIII, the Indenture Trustee shall give written
notice thereof to each Rating Agency and the Trust Depositor at the addresses
described in Section 11.04, and to the Noteholders and Certificateholder at
their respective addresses appearing on the Note Register and the Certificate
Register, respectively.
SECTION 8.05. EFFECT OF TRANSFER. (a) After a Servicer Transfer, the
terminated Servicer shall have no further rights or obligations under this
Agreement, including, without limitation, with respect to the management,
administration, servicing, custody or collection of the Contracts and the
Successor Servicer appointed pursuant to Section 8.03 shall have all of such
obligations, except that the terminated Servicer will transmit or cause to be
transmitted directly to the Successor Servicer for its own account, promptly on
receipt and in the same form in which received, any amounts (properly endorsed
where required for the Successor Servicer to collect them) received as payments
upon or otherwise in connection with the Contracts.
(b) A Servicer Transfer shall not affect the rights and duties of the
parties hereunder (including but not limited to the indemnities of the Servicer)
other than those relating to the management, administration, servicing, custody
or collection of the Contracts.
SECTION 8.06. DATABASE FILE. The Servicer will provide the Successor
Servicer with a magnetic tape containing the database file for each Contract on
and as of the Business Day before the actual commencement of servicing functions
by the Successor Servicer following the occurrence of a Servicer Default.
SECTION 8.07. SUCCESSOR SERVICER INDEMNIFICATION. The original Servicer
shall defend, indemnify and hold the Successor Servicer and any officers,
directors, employees or agents of the Successor Servicer harmless against any
and all claims, losses, penalties, fines, forfeitures, legal fees and related
costs, judgments and any other costs, fees, and expenses that the Successor
Servicer may sustain in connection with the claims asserted at any time by third
parties against the Successor Servicer which result from (i) any willful or
grossly negligent act taken or omission by the Servicer or (ii) a breach of any
representations of the Servicer in Section 3.02. Notwithstanding anything to
the contrary, the indemnification provided by this Section 8.07 shall survive
(a) a Service Transfer and/or (b) the termination of this Agreement.
SECTION 8.08. RESPONSIBILITIES OF THE SUCCESSOR SERVICER. The Successor
Servicer will not be responsible for delays attributable to the Servicer's
failure to deliver information, defects in the information supplied by the
Servicer or other circumstances beyond the control of the Successor Servicer.
The Successor Servicer will make arrangements with the Servicer for the
prompt and safe transfer of, and the Servicer shall provide to the Successor
Servicer, all necessary servicing files and records, including (as deemed
necessary by the Successor Servicer at such time): (i) microfiche loan
documentation, (ii) servicing system tapes, (iii) Contract payment history, (iv)
collections history and (v) the trial balances, as of the close of business on
the day immediately preceding conversion to the Successor Servicer, reflecting
all applicable Contract information. The current
54
Servicer shall be obligated to pay the costs associated with the transfer of the
servicing files and records to the Successor Servicer.
The Successor Servicer shall have no responsibility and shall not be in
default hereunder nor incur any liability for any failure, error, malfunction or
any delay in carrying out any of its duties under this Agreement if any such
failure or delay results from the Successor Servicer acting in accordance with
information prepared or supplied by a Person other than the Successor Servicer
or the failure of any such Person to prepare or provide such information. The
Successor Servicer shall have no responsibility, shall not be in default and
shall incur no liability (i) for any act or failure to act by any third party,
including the Servicer, the Trust Depositor or the Trustees or for any
inaccuracy or omission in a notice or communication received by the Successor
Servicer from any third party or (ii) which is due to or results from the
invalidity, unenforceability of any Contract with applicable law or the breach
or the inaccuracy of any representation or warranty made with respect to any
Contract.
If the Indenture Trustee or any other Successor Servicer assumes the role
of Successor Servicer hereunder such Successor Servicer shall be entitled to the
benefits of (and subject to the provisions of) Section 5.05 concerning
delegation of duties to subservicers.
SECTION 8.09. RATING AGENCY CONDITION FOR SERVICER TRANSFER.
Notwithstanding the foregoing provisions relating to a Servicer Transfer, no
Servicer Transfer shall be effective hereunder unless prior written notice
thereof shall have been given to the Rating Agencies, and the Rating Agency
Condition shall have been satisfied with respect thereto.
[remainder of this page intentionally left blank]
55
ARTICLE NINE
REPORTS
SECTION 9.01. MONTHLY REPORTS. With respect to each Distribution Date and
the related Collection Period, the Servicer will provided to each Trustee, and
each Rating Agency, on the related Determination Date, a monthly statement (a
"MONTHLY REPORT") substantially in the form of EXHIBIT I hereto. On each
Distribution Date, the Indenture Trustee will forward to each Noteholder a copy
of the Monthly Report for the related Collection Period.
SECTION 9.02. OFFICER'S CERTIFICATE. Each Monthly Report delivered
pursuant to Section 9.01 shall be accompanied by a certificate of a Servicing
Officer certifying the accuracy of the Monthly Report and that no Servicer
Default or event that with notice or lapse of time or both would become a
Servicer Default has occurred, or if such event has occurred and is continuing,
specifying the event and its status.
SECTION 9.03. OTHER DATA. In addition, the Servicer shall, upon the
request of any Trustees, or any Rating Agency, furnish such Trustee or Rating
Agency, as the case may be, such underlying data used to generate a Monthly
Report as may be reasonably requested.
SECTION 9.04. ANNUAL REPORT OF ACCOUNTANTS.
(a) The Servicer shall cause a firm of nationally recognized independent
chartered accountants (the "INDEPENDENT ACCOUNTANTS"), who may also render other
services to the Servicer or its Affiliates, to deliver to the Trustees and each
Rating Agency, on or before March 31 (or 90 days after the end of the Servicer's
fiscal year, if other than December 31) of each year, beginning on March 31,
1998 with respect to the twelve months ended the immediately preceding December
31 (or other applicable date), a report addressed to the Board of Directors of
the Servicer and to the Trustees, to the effect that such Independent
Accountants have, at the request of the Servicer, reviewed certain documents and
records relating to the servicing of the Contracts in the Contracts Pool
(including but not limited to the Monthly Reports for such year), and based on
such review, which was performed in accordance with generally accepted standards
for review engagements and which consisted primarity of inquiry, analytical
procedures and discussion related to information supplied to such Independent
Accountants, no matters came to the attention of such Independent Accountants
that caused them to believe that (i) such servicing was not conducted in
compliance with Section Five of this Agreement or (ii) the Monthly Reports for
such year were not prepared in accordance with Section 9.01. A copy of such
report (the "REVIEW ENGAGEMENT REPORT") may be obtained by any Securityholder by
a request in writing to the Indenture Trustee, in the case of a Noteholder, or
to the Owner Trustee, in the case of a Certificateholder, addressed to its
respective Corporate Trust Office. In the event such firm of Independent
Accountants requires the Indenture Trustee to agree to the procedures performed
by such firm of Independent Accountants, the Servicer shall direct the Indenture
Trustee in writing to so agree; it being understood and agreed that the
Indenture Trustee will deliver such letter of agreement in conclusive reliance
upon the direction of the Servicer, and the Indenture Trustee has not made any
independent inquiry or investigation as to, and shall have no obligation or
liability in respect of, the sufficiency, validity or correctness of such
procedures.
(b) The Review Engagement Report shall also indicate that the firm is
independent of the Servicer within the meaning of the Code of Professional
Ethics of the American Institute of Certified Public Accountants.
SECTION 9.05. ANNUAL STATEMENT OF COMPLIANCE FROM SERVICER. The Servicer
will deliver to the Trustees, and each of the Rating Agencies, on or before
January 31 of each year commencing January 31, 1998, an Officer's Certificate
stating that (a) a review of the activities of the Servicer during the prior
calendar year and of its performance under this Agreement was made under the
supervision of the officer signing such certificate and (b) to such officer's
knowledge, based on such review, the Servicer has fully performed or cause to be
performed in all material respects all its obligations under this Agreement and
no Servicer Default has occurred or is continuing, or, if there has been a
56
Servicer Default, specifying each such default known to such officer and the
nature and status thereof and the steps being taken or necessary to be taken to
remedy such event. A copy of such certificate may be obtained by any
Securityholder by a request in writing to the Indenture Trustee, with respect to
any Noteholder, or the Owner Trustee, with respect to any Certificateholder.
SECTION 9.06. ANNUAL SUMMARY STATEMENT. On or prior to January 31 of each
year, commencing January 31, 1998, the Servicer shall prepare and provide to
each Trustee, and each Rating Agency, a cumulative summary of the information
required to be included in the Monthly Reports for the Collection Periods ending
during the immediately preceding calendar year.
[remainder of this page intentionally left blank]
57
ARTICLE TEN
TERMINATION
SECTION 10.01. SALE OF TRUST ASSETS.
(a) Upon any sale of the assets of the Trust pursuant to Section 9.02 of
the Trust Agreement, the Servicer shall instruct the Indenture Trustee to
deposit the proceeds from such sale after all payments and reserves therefrom
have been made (the "INSOLVENCY PROCEEDS") in the Collection Account. On the
Distribution Date on which the Insolvency Proceeds are deposited in the
Collection Account (or, if such proceeds are not so deposited on a Distribution
Date, on the Distribution Date immediately following such deposit), the Servicer
shall instruct the Indenture Trustee to allocate and apply (after the
application on such Distribution Date of Available Amounts and funds on deposit
in the Reserve Fund pursuant to Section 7.04) the Insolvency Proceeds as if (and
in the same order of priority as) the Insolvency Proceeds were Available Amounts
being allocated and distributed on such date pursuant to Section 7.04(b).
(b) As described in Article Nine of the Trust Agreement, notice of any
termination of the Trust shall be given by the Servicer to the Owner Trustee and
the Indenture Trustee as soon as practicable after the Servicer has received
notice thereof.
(c) Following the satisfaction and discharge of the Indenture and the
payment in full of the principal of and interest on the Notes, the
Certificateholder will succeed to the rights of the Noteholders hereunder and
the Owner Trustee will succeed to the rights of, and assume the obligations of,
the Indenture Trustee pursuant to this Agreement.
[remainder of this page intentionally left blank]
58
ARTICLE ELEVEN
MISCELLANEOUS
SECTION 11.01. AMENDMENT.
(a) This Agreement may be amended by the Trust Depositor, the Servicer,
the Indenture Trustee and the Issuer, collectively, without the consent of any
Securityholders, to cure any ambiguity, to correct or supplement any provisions
in this Agreement which are inconsistent with the provisions herein, or to add
any other provisions with respect to matters or questions arising under this
Agreement that shall not be inconsistent with the provisions of this Agreement,
PROVIDED, HOWEVER that any such action shall not, as evidenced by an Opinion of
Counsel, adversely affect in any material respect the interests of any
Securityholder.
(b) This Agreement may also be amended from time to time by the Trust
Depositor, the Servicer, the Indenture Trustee and the Issuer, with the consent
of the Required Holders, for the purpose of adding any provisions to or changing
in any manner or eliminating any of the provisions of this Agreement or of
modifying in any manner the rights of the Noteholders or the Certificateholder;
PROVIDED, HOWEVER, that no such amendment shall (i) increase or reduce in any
manner the amount of, or accelerate or delay the timing of (A) Collections of
payments on the Contracts or distributions that shall be required to be made on
any Note or Certificate (including by way of amendment of related definitions),
or (B) the manner in which the Reserve Fund is applied, or (ii) change in any
manner (including through amendment of related definitions), the Holders which
are required to consent to any such amendment, or (iii) make any Note or
Certificate payable in money other than Dollars, without the consent of the
Holders of all Notes and the Certificate of the relevant affected Class then
outstanding.
(c) Prior to the execution of any such amendment or consent, the Indenture
Trustee shall furnish written notification of the substance of such amendment or
consent, together with a copy thereof, to each Rating Agency.
(d) Promptly after the execution of any such amendment or consent, the
Indenture Trustee, shall furnish written notification of the substance of such
amendment or consent to each Certificateholder and Noteholder, respectively. It
shall not be necessary for the consent of Noteholders and the Certificateholder
pursuant to Section 11.01(b) to approve the particular form of any proposed
amendment or consent, but it shall be sufficient if such consent shall approve
the substance thereof. The manner of obtaining such consents and of evidencing
the authorization by Noteholders and Certificateholder of the execution thereof
shall be subject to such reasonable requirements as the Indenture Trustee may
prescribe.
(e) Prior to the execution of any amendment to this Agreement, the Owner
Trustee and Indenture Trustee shall be entitled to receive and rely upon an
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent to such execution
as set forth in the Transaction Documents have been satisfied. Such Trustee
may, but shall not be obligated to, enter into any such amendment which affects
such Trustee's own rights, duties or immunities under this Agreement or
otherwise.
(f) Notwithstanding anything to the contrary in this Section 11.01, the
Trust Depositor or the Servicer, acting on behalf of the Trust Depositor, may
request each Rating Agency to approve a formula for determining the Reserve Fund
Amount that is different from the formula or result determined from the current
definition thereof contained herein so as to result in a decrease in the amount
of the Reserve Fund Amount or the manner by which such Reserve Fund is funded.
If each Rating Agency delivers to the Indenture Trustee and Owner Trustee a
written notice or letter satisfying the Rating Agency Condition in connection
with such change, then the Reserve Fund Amount will be theretofore determined in
accordance with such changed formula or manner of funding, and an amendment to
this Agreement effecting such change may be executed without the consent of any
Securityholders.
59
SECTION 11.02. PROTECTION OF TITLE TO TRUST.
(a) The Servicer shall execute and file such financing statements and
cause to be executed and filed such continuation statements, all in such manner
and in such places as may be required by law fully to preserve, maintain and
protect the interest of the Issuer, the Securityholders, the Indenture Trustee
and the Owner Trustee in the Contracts and in the proceeds thereof. The
Servicer shall deliver (or cause to be delivered) to the Owner Trustee and the
Indenture Trustee file-stamped copies of, or filing receipts for, any document
filed as provided above, as soon as available following such filing.
(b) Neither the Seller, the Trust Depositor nor the Servicer shall change
its name, identity or corporate structure in any manner that would, could or
might make any financing statement or continuation statement filed in accordance
with Section 4.02(a) seriously misleading within the meaning of Section 9-402(7)
of the UCC, unless it shall have given the Issuer, the Owner Trustee and the
Indenture Trustee at least 60 days' prior written notice thereof and shall have
promptly filed appropriate amendments to all previously filed financing
statements or continuation statements.
(c) The Seller, the Trust Depositor and the Servicer shall give the
Issuer, the Owner Trustee and the Indenture Trustee at least 60 days' prior
written notice of any relocation of the principal executive office of the
Seller, or the Trust Depositor or the Servicer if, as a result of such
relocation, the applicable provisions of the UCC would require filing of any
amendment of any previously filed financing or continuation statement or of any
new financing statement, and the Servicer shall promptly file or cause to be
filed any such amendment or new financing statement. The Servicer shall at all
times maintain each office from which it shall service Contracts, and its
principal executive office, within the United States.
(d) The Servicer shall maintain or cause to be maintained accounts and
records as to each Contract accurately and in sufficient detail to permit (i)
the reader thereof to know at any time the status of such Contract, including
payments and recoveries made and payments owing (and the nature of each) and
(ii) reconciliation between payments or recoveries on (or with respect to) each
Contract and the amounts from time to time deposited in or credited to the
Collection Account in respect of each Contract.
(e) The Servicer shall maintain or cause to be maintained its computer
systems so that, from and after the time of sale under this Agreement of the
Contracts, the Servicer's master computer records (including any backup
archives) that shall refer to a Contract indicate clearly the interest of the
Issuer and the Indenture Trustee in such Contract and that such Contract is
owned by the Issuer and has been pledged to the Indenture Trustee. Indication
of the Issuer's ownership of and the Indenture Trustee's interest in a Contract
shall be deleted from or modified on the Servicer's computer systems when, and
only when, the related Contract shall have been paid in full or repurchased or
substituted for.
(f) The Servicer shall deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency promptly after the execution and delivery of this
Agreement and of each amendment hereto, an Opinion of Counsel either (A) stating
that, in the opinion of such counsel, all financing statements and continuation
statements have been executed and filed that are necessary fully to preserve and
protect the interest of the Owner Trustee and the Indenture Trustee and reciting
the details of each filings or referring to prior Opinions of Counsel in which
such details are given, or (B) stating that, in the opinion of such counsel, no
such action shall be necessary to preserve and protect such interest.
SECTION 11.03. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York and the obligations, rights,
and remedies of the parties under the Agreement shall be determined in
accordance with such laws, except that the duties of the Owner Trustee shall be
governed by the laws of the State of Delaware.
60
SECTION 11.04. NOTICES. All notices, demands, certificates, requests and
communications hereunder ("notices") shall be in writing and shall be effective
(a) upon receipt when sent through the U.S. mails, registered or certified mail,
return receipt requested, postage prepaid, with such receipt to be effective the
date of delivery indicated on the return receipt, or (b) one Business Day after
delivery to an overnight courier, or (c) on the date personally delivered to an
Authorized Officer of the party to which sent, or (d) on the date transmitted by
legible telecopier transmission with a confirmation of receipt, in all cases
addressed to the recipient as follows:
(i) If to the Servicer or Seller:
Newcourt Financial USA, Inc.
2700 Bank One Tower
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(ii) If to the Trust Depositor:
Newcourt Receivables Corporation II
2700 Bank One Tower
000 Xxxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iii) If to the Indenture Trustee:
Manufacturers and Traders Trust Company
0 X&X Xxxxx, 0xx Xxxxx
Xxxxxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxx
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
(iv) If to the Owner Trustee:
Chase Manhattan Bank Delaware
0000 Xxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxx 00000-0000
Attention: Corporate Trust Administration Department
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
61
(v) If to Moody's:
Xxxxx'x Investors Service, Inc.
00 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: ABS Monitoring Department
Telecopier No.: (000) 000-0000
(vi) If to S&P:
Standard & Poor's Ratings Services, a division
of The McGraw Hill Companies
00 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Structured Finance Ratings
Fax No.: (000) 000-0000
Each party hereto may, by notice given in accordance herewith to each of the
other parties hereto, designate any further or different address to which
subsequent notices shall be sent.
SECTION 11.05. SEVERABILITY OF PROVISIONS. If one or more of the
covenants, agreements, provisions or terms of this Agreement shall be for any
reason whatsoever held invalid, then such covenants, agreements, provisions or
terms shall be deemed severable from the remaining covenants, agreements,
provisions or terms of this Agreement and shall in no way affect the validity or
enforceability of the other provisions of this Agreement or of the Notes or
Certificate or the rights of the Holders thereof.
SECTION 11.06. THIRD PARTY BENEFICIARIES. Except as otherwise specifically
provided herein, the parties hereto hereby manifest their intent that no third
party shall be deemed a third party beneficiary of this Agreement, and
specifically that the Obligors are not third party beneficiaries of this
Agreement.
SECTION 11.07. COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be an original and all of which shall together
constitute but one and the same instrument.
SECTION 11.08. HEADINGS. The headings of the various Articles and Sections
herein are for convenience of reference only and shall not define or limit any
of the terms or provisions hereof.
SECTION 11.09. NO BANKRUPTCY PETITION. Each of the Indenture Trustee, the
Servicer, the Owner Trustee and each Holder (by acceptance of the applicable
Securities) covenants and agrees that, prior to the date that is one year and
one day after the payment in full of all amounts owing in respect of all
outstanding Securities, it will not institute against the Trust Depositor, or
the Trust, or join any other Person in instituting against the Trust Depositor
or the Trust, any bankruptcy, reorganization, arrangement, insolvency or
liquidation proceedings or other similar proceedings under the laws of the
United States or any state of the United States. This Section 11.09 will
survive the termination of this Agreement.
SECTION 11.10. JURISDICTION. Any legal action or proceeding with respect
to this Agreement may be brought in the courts of the United States for the
Southern District of New York, and by execution and delivery of this Agreement,
each party hereto consents, for itself and in respect of its property, to the
non-exclusive jurisdiction of those courts. Each such party irrevocably waives
any objection, including any objection to the laying of venue or based on
62
the grounds of FORUM NON CONVENIENS, which it may now or hereafter have to the
bringing of any action or proceeding in such jurisdiction in respect of this
Agreement or any document related hereto.
SECTION 11.11. TAX CHARACTERIZATION. Notwithstanding the provisions of
Section 2.01 and Section 2.04 hereof, the Trust Depositor and Owner Trustee
agree that pursuant to Treasury Regulations Section 301.7701-3(b)(1)(ii), the
Trust is to be disregarded as a separate entity from the Trust Depositor for
federal and State of Indiana income tax purposes.
SECTION 11.12. INDEMNIFICATION. The Servicer will indemnify the Trust
Depositor, the Trust, the Owner Trustee and the Indenture Trustee and any of
their officers, directors, employees or agents (each an "INDEMNIFIED PARTY")
from and against any and all claims, losses, penalties, fines, forfeitures,
legal fees and related costs, judgments and any other costs, fees and expenses
that any Indemnified Party may sustain in connection with claims asserted by
third parties against such Indemnified Party which result from any act or
omission on the part of the Servicer with respect to the Trust pursuant to this
Agreement except where such claims arise out of any willful misconduct, gross
negligence or bad faith on the part of such Indemnified Party. Indemnification
under this Section shall survive the resignation or removal of the Owner Trustee
or Indenture Trustee, as the case may be, and the termination of this Agreement.
[remainder of this page intentionally left blank]
63
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Chase Manhattan Bank Delaware, not in
its individual capacity but solely as
Owner Trustee on behalf of the Trust
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
NEWCOURT RECEIVABLES CORPORATION II, as Trust
Depositor
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
NEWCOURT FINANCIAL USA, INC., as Servicer
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
MANUFACTURERS AND TRADERS TRUST COMPANY,
not in its individual capacity but solely as
Indenture Trustee
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
64
EXHIBIT A
[Form of Assignment]
In accordance with the Sale and Servicing Agreement (the "SALE AND
SERVICING AGREEMENT") dated as of November 1, 1997 made by and between the
undersigned, as Trust Depositor ("TRUST DEPOSITOR"), Newcourt Financial USA,
Inc., as Servicer, Manufacturers and Traders Trust Company as Indenture Trustee
and the Newcourt Receivables Asset Trust 1997-1 (the "TRUST"), as assignee
thereunder, the undersigned does hereby sell, transfer, convey and assign, set
over and otherwise convey to the Trust (i) all the right, title and interest of
the Trust Depositor in and to the Initial Contracts listed on the initial List
of Contracts delivered on the Closing Date (including, without limitation, all
rights to receive Collections with respect thereto on or after the Initial
Cutoff Date, but excluding any Scheduled Payments due prior to the Initial
Cutoff Date and any Excluded Amounts), and (ii) all other Transferred Assets
relating to the foregoing.
Capitalized terms used herein have the meaning given such terms in the Sale
and Servicing Agreement.
This Assignment is made pursuant to and in reliance upon the representation
and warranties on the part of the undersigned contained in Article III of the
Agreement and no others.
IN WITNESS WHEREOF, the undersigned has caused this Assignment to be duly
executed this [ ] day of November, 1997.
NEWCOURT RECEIVABLES CORPORATION II
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
A-1
EXHIBIT B
[Form of Closing Certificate of Trust Depositor]
NEWCOURT RECEIVABLES CORPORATION II
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is [________] of Newcourt Receivables
Corporation II, a Delaware corporation (the "TRUST DEPOSITOR"), and that as such
is duly authorized to execute and deliver this certificate on behalf of the
Trust Depositor in connection with the Sale and Servicing Agreement (the
"AGREEMENT") dated as of [ ], 1997 (the "EFFECTIVE DATE") by and
among the Trust Depositor, [ ] (the "INDENTURE TRUSTEE"), as Indenture
Trustee, Newcourt Financial USA, Inc. ("NEWCOURT USA"), as Servicer, and the
Newcourt Receivables Asset Trust 1997-1 ("ISSUER") (all capitalized terms used
herein without definition having the respective meanings set forth in the
Agreement), and further certifies as follows:
(1) Attached hereto as EXHIBIT I is a true and correct copy of the
Certificate of Incorporation of the Trust Depositor, together with all
amendments thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of the Trust Depositor since
_____, and no such amendment has been authorized by the Board of Directors
or shareholders of the Trust Depositor.
(3) Attached hereto as EXHIBIT II is a Certificate of the Secretary
of State of the State of Delaware dated [ ], 1997 stating that
the Trust Depositor is duly incorporated under the laws of the State of
Delaware and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of the
Bylaws of the Trust Depositor, as amended, which were in full force and
effect on [ ], 1997, and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to the unanimous written consent of the Board
of Directors of the Trust Depositor relating to the execution, delivery and
performance of (among other things) the Agreement; the Transfer and Sale
Agreement dated as of the Effective Date among the Trust Depositor and
Newcourt USA; the Amended and Restated Trust Agreement dated as of the
Effective Date between the Trust Depositor and [ ] (the "OWNER
TRUSTEE"), as Owner Trustee; the Administration Agreement dated as of the
Effective Date among the Trust Depositor, the Issuer, the Indenture
Trustee, and Newcourt USA, as Administrator; the Placement Agency Agreement
(as defined in the Agreement); and the Underwriting Agreements (as defined
in the Agreement) (collectively, the "PROGRAM AGREEMENTS"). Said
resolutions have not been amended, modified, annulled or revoked, and are
on the date hereof in full force and effect and are the only resolutions
relating to these matters which have been adopted by the Board of
Directors.
(6) No event with respect to the Trust Depositor has occurred and is
continuing which would constitute an Event of Default or an event that,
with notice or the passage of time or both, would become an Event of
Default as defined in the Agreement. To the best of my knowledge after
reasonable investigation, there has been no material adverse change in the
condition, financial or otherwise, or the earnings, business affairs or
business prospects of the Trust Depositor, whether or not arising in the
ordinary course of business since the respective dates as of which
information is given in the Prospectus and except as set forth therein.
(7) All federal, state and local taxes of the Trust Depositor due and
owing as of the date hereof have been paid.
B-1
(8) All representations and warranties of the Trust Depositor
contained in the Program Agreements or any other related documents, or in
any document, certificate or financial or other statement delivered in
connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or, to
our knowledge, threatened against the Trust Depositor before any court,
administrative agency or other tribunal (a) asserting the invalidity of the
Program Agreements; (b) seeking to prevent the consummation of any of the
transactions contemplated by the Program Agreements; or (c) which is likely
materially and adversely to affect the Trust Depositor's performance of its
obligations under, or the validity or enforceability of, the Program
Agreements.
(10) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or state or federal court
is required to be obtained by the Trust Depositor for the Trust Depositor's
consummation of the transactions contemplated by the Program Agreements,
except such as have been obtained or made and such as may be required under
the blue sky laws of any jurisdiction in connection with the issuance and
sale of the Securities.
(11) The Trust Depositor is not a party to any agreements or
instruments evidencing or governing indebtedness for money borrowed or by
which the Trust Depositor or its property is bound (other than the Program
Agreements and agreements evidencing the purchase and sale of Contracts
permitted by Section 6.07 of the Agreement). Neither the Seller's transfer
and assignment of the Contract Assets to the Trust Depositor, the Trust
Depositor's concurrent transfer and assignment of the Trust Assets to the
Trust, nor the concurrent transfer and assignment of the Collateral by the
Trust to the Indenture Trustee nor the issuance and sale of the Certificate
and the Notes, nor the execution and delivery of the Program Agreements,
nor the consummation of any other of the transactions contemplated therein,
will violate or conflict with any agreement or instrument to which the
Trust Depositor is a party or by which it is otherwise bound.
(12) In connection with the transfer of Contracts and related
collateral contemplated in the Agreement, (a) the Trust Depositor has not
made such transfer with actual intent to hinder, delay or defraud any
creditor of the Trust Depositor, and (b) the Trust Depositor has not
received less than a reasonably equivalent value in exchange for such
transfer, is not on the date thereof insolvent (nor will become insolvent
as a result thereof), is not engaged (or about to engage) in a business or
transaction for which it has unreasonably small capital, and does not
intend to incur or believe it will incur debts beyond its ability to pay
when matured.
(13) Each of the agreements and conditions of the Trust Depositor to
be performed on or before the Closing Date pursuant to the Program
Agreements have been performed in all material respects.
* * * *
B-2
IN WITNESS WHEREOF, I have affixed my signature hereto this [ ]
day of [ ], 1997.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
EXHIBIT C
[Form of Closing Certificate of Servicer/Seller]
NEWCOURT FINANCIAL USA, INC.
OFFICER'S CERTIFICATE
The undersigned certifies that he/she is ___________ of Newcourt Financial
USA, Inc. ("NEWCOURT USA"), and that as such he/she is duly authorized to
execute and deliver this certificate on behalf of Newcourt USA, as Servicer, in
connection with the Sale and Servicing Agreement (the "AGREEMENT") dated as of
November 1, 1997 (the "EFFECTIVE DATE") by and among Newcourt USA, as Servicer,
Newcourt Receivables Corporation II ("NRC"), Manufacturers and Traders Trust
Company as Indenture Trustee, and Newcourt Receivables Asset Trust 1997-1
("ISSUER"), and as a Seller in connection with the Transfer and Sale Agreement
dated as of the Effective Date (the "TRANSFER AND SALE AGREEMENT") by and among
Newcourt USA, as Seller, and NRC (all capitalized terms used herein without
definition having the respective meanings set forth in the Agreement), and
further certifies as follows (it being understood that these certifications are
being relied upon by, among others, Winston & Xxxxxx in connection with its
delivery of a legal opinion (the "OPINION") required in connection with the
subject transactions addressing, among other things, enforceability and UCC
perfection issues, and by the Underwriters in connection with their undertakings
in connection with the subject transactions):
(1) Attached hereto as EXHIBIT I is a true and correct copy of the
Certificate of Incorporation of Newcourt USA, together with all amendments
thereto as in effect on the date hereof.
(2) There has been no other amendment or other document filed
affecting the Certificate of Incorporation of Newcourt USA since [_______],
19__, and no such amendment has been authorized by the Board of Directors
or shareholders of Newcourt USA.
(3) Attached hereto as EXHIBIT II is a Certificate of the Secretary
of State of the State of Delaware dated [______], 1997 stating that
Newcourt USA is duly incorporated under the laws of the State of Delaware
and is in good standing.
(4) Attached hereto as EXHIBIT III is a true and correct copy of the
Bylaws of Newcourt USA which were in full force and effect on [________],
19__ and at all times subsequent thereto.
(5) Attached hereto as EXHIBIT IV is a true and correct copy of
resolutions adopted pursuant to a unanimous written consent of the Board of
Directors of Newcourt USA and relating to the authorization, execution,
delivery and performance of (among other things) the Transfer and Sale
Agreement; the Agreement; the Underwriting Agreements (as defined in the
Agreement); the Placement Agency Agreement (as defined in the Agreement);
and the Administration Agreement dated as of the Effective Date among
Newcourt USA, NRC, the Issuer and Manufacturers and Traders Trust Company
as Indenture Trustee (the "INDENTURE TRUSTEE") (the "ADMINISTRATION
AGREEMENT"). Said resolutions have not been amended, modified, annulled or
revoked, and are on the date hereof in full force and effect and are the
only resolutions relating to these matters which have been adopted by the
Board of Directors.
(6) No event with respect to Newcourt USA has occurred and is
continuing which would constitute an Event of Default or Servicer Default
or an event that, with notice or the passage of time, would constitute an
Event of Default or Servicer Default as defined in the Sale and Servicing
Agreement. To the best of my knowledge after reasonable investigation,
there has been no material adverse change in the condition, financial or
otherwise, or the earnings, business affairs or business prospects of
Newcourt USA, whether or
C-1
not arising in the ordinary course of business, since the respective dates
as of which information is given in the Prospectus and except as set forth
therein.
(7) All federal, state and local taxes of Newcourt USA due and owing
as of the date hereof have been paid.
(8) All representations and warranties of Newcourt USA contained in
the Transfer and Sale Agreement, the Sale and Servicing Agreement, the
Underwriting Agreements, the Placement Agency Agreement and the
Administration Agreement (collectively, the "PROGRAM AGREEMENTS") or in any
document, certificate or financial or other statement delivered in
connection therewith are true and correct as of the date hereof.
(9) There is no action, investigation or proceeding pending or, to my
knowledge, threatened against Newcourt USA before any court, administrative
agency or other tribunal (a) asserting the invalidity of any Program
Agreement to which Newcourt USA is a party; or (b) which is likely
materially and adversely to affect Newcourt USA's performance of its
obligations under, or the validity or enforceability of, the Program
Agreements.
(10) No consent, approval, authorization or order of, and no notice to
or filing with, any governmental agency or body or state or federal court
is required to be obtained by Newcourt USA for Newcourt USA's consummation
of the transactions contemplated by the Program Agreements, except such as
have been obtained or made and such as may be required under the blue sky
laws of any jurisdiction in connection with the issuance and sale of the
Notes or Certificate.
(11) Neither Newcourt USA's transfer and assignment of the Contract
Assets to NRC, NRC's concurrent transfer and assignment of the Trust Assets
to the Trust, nor the concurrent transfer and assignment by the Trust of
the Collateral to the Indenture Trustee, nor the issuance and sale of the
Notes or Certificate or the entering into of the Program Agreements, nor
the consummation of any other of the transactions contemplated therein,
will violate or conflict with any agreement or instrument to which Newcourt
USA is a party or by which it is otherwise bound.
(12) In connection with the transfers of Contracts and related assets
contemplated in the Transfer and Sale Agreement, (a) Newcourt USA has not
made such transfer with actual intent to hinder, delay or defraud any
creditor of Newcourt USA, and (b) Newcourt USA has not received less than a
reasonably equivalent value in exchange for such transfer, is not on the
date hereof insolvent (nor will Newcourt USA become insolvent as a result
thereof), is not engaged (or about to engage) in a business or transaction
for which it has unreasonably small capital, and does not intend to incur
or believe it will incur debts beyond its ability to pay when matured.
(13) Each of the agreements and conditions of Newcourt USA to be
performed or satisfied on or before the Closing Date under the Program
Agreements has been performed or satisfied in all material respects.
(14) Newcourt USA has not executed for filing any UCC financing
statements listing the Contract Assets as collateral other than financing
statements relating to the transactions contemplated in the Transfer and
Sale Agreement.
(15) With respect to the financing statements described in the
Opinion which are identified as Specific Agreement Filings naming Newcourt
USA as debtor, Newcourt USA has conducted a review of its internal records
and determined that the individual financing agreements described as
collateral in such Specific Agreement Filings are not, and do not relate
to, Contracts being conveyed by Newcourt USA and constituting part of the
Initial Contracts Pool, and Newcourt USA further represents that such
agreements are
C-2
never to be conveyed as a Subsequent Contract. In addition, Newcourt USA
has conducted a review of its internal records and determined that the
single Contract in the Initial Contracts Pool secured by a mortgage on real
property is not part of either of the fixed mortgage loan pools described
in the financing statements of record with respect to such pools and
referred to in the Opinion, and Newcourt USA further represents that no
agreement that is part of any such fixed mortgage loan pool will ever by
conveyed as a Subsequent Contract.
IN WITNESS WHEREOF, I have affixed my signature hereto this [ ]
day of [ ], 1997.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
C-3
EXHIBIT D
Form of Opinion of Counsel for Trust Depositor
Regarding General Corporate Matters
(Including Perfection Opinion)
D-1
EXHIBIT E
Form of Opinion of Counsel for Trust
Depositor Regarding the "TRUE SALE" Nature
of the Transaction
E-1
EXHIBIT F
[Form of Opinion of Counsel for Trust
Depositor Regarding Non-consolidation]
F-1
EXHIBIT G
[Form of Certificate Regarding Repurchased Contracts]
Newcourt Financial USA, Inc.
Certificate Regarding Repurchased Contracts
The undersigned certifies that he/she is a ____________________________ of
Newcourt Financial USA, Inc., a Delaware corporation (the "SERVICER"), and that
as such he/she is duly authorized to execute and deliver this certificate on
behalf of the Servicer pursuant to Section 7.07 of the Sale and Servicing
Agreement (the "AGREEMENT") dated as of November 1, 1997 by and among Newcourt
Receivables Corporation II, as Trust Depositor, the Servicer, Manufacturers and
Traders Trust Company as Indenture Trustee, and Newcourt Receivables Asset Trust
1997-1 (all capitalized terms used herein without definition having the
respective meanings specified in the Agreement), and further certifies that:
1. The Contracts on the attached schedule are to be repurchased by the
Seller on the date hereof, or substituted for by the Seller, pursuant
to and in accordance with Section 7.06 of the Agreement and Section
5.01 of the Transfer and Sale Agreement.
2. Upon deposit of the Transfer Deposit Amount for such Contracts (or the
effective conveyance of one or more Substitute Contracts therefor),
such Contracts may, pursuant to Section 7.07 of the Agreement, be
assigned by the Owner Trustee to the Seller.
IN WITNESS WHEREOF, I have affixed hereunto my signature this ______ day of
______, ____.
Newcourt Financial USA, Inc.
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
By:
---------------------------------------
Printed Name:
----------------------
Title:
-----------------------------
G-1
EXHIBIT H
[List of Contracts]
H-1
EXHIBIT I
[Form of Monthly Report to Noteholders And Certificateholder]
[see attached]
I-1
EXHIBIT J
[Seller's Representations and Warranties]
SECTION 3.02. REPRESENTATIONS AND WARRANTIES REGARDING EACH CONTRACT AND
AS TO CERTAIN CONTRACTS IN THE AGGREGATE. The Seller jointly and severally
represents and warrants (x) with respect to subsections (a) and (b) below, as to
each Contract as of the execution and delivery of this Agreement and as of the
Closing Date, and as of each Subsequent Transfer Date with respect to each
Subsequent Contract, and (y) with respect to subsections (c) through (e) below,
as to the Contracts Pool in the aggregate as of the Closing Date, and as of each
Subsequent Transfer Date with respect to Subsequent Contracts (after giving
effect to the addition of such Subsequent Contracts to the Contracts Pool),
that:
(a) LIST OF CONTRACTS. The information set forth in the List of
Contracts (as the same may be amended or deemed amended in respect of a
conveyance of Subsequent Contracts on a Subsequent Transfer Date) is true,
complete and correct as of the applicable Cutoff Date.
(b) ELIGIBLE CONTRACT. Such Contract satisfies the criteria for the
definition of Eligible Contract set forth in the Sale and Servicing
Agreement as of the date of its conveyance hereunder.
(c) CONTRACTS SECURED BY FIXTURES. In the Seller's reasonable
judgment, not more than [____]% of the ADCB of the Contracts Pool consists
of Contracts secured by Equipment constituting fixtures.
(d) CONTRACTS SECURED BY OTHER REAL PROPERTY. Not more than [_____]%
of the ADCB of the Contracts Pool consists of Contracts additionally
secured by other real property (exclusive of or in addition to Equipment
constituting fixtures).
(e) CONTRACTS SECURED BY VEHICLES. Not more than [________]% of the
ADCB of the Contracts Pool consists of Contracts secured by Equipment
constituting Vehicles.
SECTION 3.03. REPRESENTATIONS AND WARRANTIES REGARDING THE INITIAL
CONTRACTS IN THE AGGREGATE. Each Seller jointly and severally represents and
warrants, as of the Closing Date, that:
(a) AMOUNTS. The ADCB of the Contracts as of the Initial Cutoff Date
equals the sum of the principal balance of the Class A-1 Notes, the Class
A-2 Notes, Class A-3 Notes, Class A-4 Notes, the Class B Notes, the Class C
Notes and the Class D Notes on the Closing Date.
(b) CHARACTERISTICS. The Initial Contracts have the following
additional characteristics: (i) no Contract has a remaining maturity of
more than [______] months; (ii) the final scheduled Distribution Date on
the Contract with the latest maturity is not later than [_______________];
(iii) no Contract was originated after the Initial Cutoff Date; and (iv)
not more than [____]% of the Initial Contracts (as measured by ADCB)
provide for Scheduled Payments due on a basis other than monthly.
SECTION 3.04. REPRESENTATIONS AND WARRANTIES REGARDING THE CONTRACT FILES.
The Seller represents and warrants as of the Closing Date with respect to the
Initial Contracts (or as of the Subsequent Transfer Date, with respect to
Subsequent Contracts), that (i) immediately prior to such date (as applicable),
the Seller had possession of each original Contract and the related complete
Contract File (except for the Contracts identified in clause (ii) of this
Section 3.04), and there were no other custodial agreements relating to the same
in effect; (ii) immediately prior to such date (as applicable), the Persons
listed on Schedule 1 to the Sale and Servicing Agreement had possession of the
original Contracts and related complete Contract Files identified on Schedule 1
to the Sale and Servicing Agreement; (iii) each of such documents which is
required to be signed by the Obligor has been signed by the Obligor in the
appropriate spaces; (iv) all blanks on any form have been properly filled in and
each form has otherwise been correctly prepared;
J-1
and (v) the complete Contract File for each Contract is in the possession of the
Servicer except for the Contracts and related Contract Files identified on
Schedule 1 to the Sale and Servicing Agreement which are in the possession of
the Persons listed therein.
SECTION 3.05. REPRESENTATIONS AND WARRANTIES REGARDING CONCENTRATIONS OF
INITIAL CONTRACTS. The Seller represents and warrants as of the Closing Date,
as to the composition of the Initial Contracts in the Contracts Pool as of the
Initial Cutoff Date, that:
(i) the ADCB of all End-User Contracts with Obligors that are
governmental entities or municipalities does not exceed [______]%
of the ADCB of the Contracts Pool;
(ii) the ADCB of all End-User Contracts which finance, lease or are
related to Software will not exceed [______]% of the ADCB of the
Contracts Pool;
(iii) the ADCB of all End-User Contracts with Obligors who comprise the
three (3) largest Obligors (measured by ADCB as of the date of
determination) does not exceed [______]% of the ADCB of the
Contracts Pool;
(iv) the ADCB of all End-User Contracts with Obligors who comprise the
twenty (20) largest Obligors (measured by ADCB as of the date of
determination) does not exceed [_______]% of the ADCB of the
Contracts Pool;
(v) the ADCB of all End-User Contracts related to a single Vendor, or
representing a Vendor Loan of such Vendor, does not exceed [___]%
of the ADCB of the Contracts Pool;
(vi) the ADCB of all End-User Contracts with Obligors located in a
single State of the United States does not exceed [_______]% of
the ADCB of the Contracts Pool; and
(vii) in the Seller's reasonable judgment, the Discounted Contract
Balance of End-User Contracts in the Contract Pool that are "true
leases" does not exceed [_______]% of the ADCB of the Contracts
Pool.
[remainder of page intentionally blank]
J-2
EXHIBIT K
[Reserved]
K-1
EXHIBIT L
[Reserved]
L-1
EXHIBIT M
[Form of Subsequent Transfer Agreement]
SUBSEQUENT TRANSFER AGREEMENT (the "AGREEMENT"), dated as of [________], by
and among Newcourt Receivables Asset Trust 0000-0 (xxx "XXXXX"), Xxxxxxxx
Receivables Corporation II, a Delaware corporation (the "TRUST DEPOSITOR"),
Manufacturers and Traders Trust Company, as Indenture Trustee (the "INDENTURE
TRUSTEE") and Newcourt Financial USA, Inc., a Delaware corporation, as Servicer
pursuant to the Sale and Servicing Agreement referred to below.
WITNESSETH:
WHEREAS, the Trust, the Trust Depositor, the Servicer and the Indenture
Trustee, are parties to the Sale and Servicing Agreement, dated as of November
1, 1997 (the "SALE AND SERVICING AGREEMENT");
WHEREAS, pursuant to the Sale and Servicing Agreement, the Trust Depositor
wishes to sell the Subsequent Contracts to the Trust, and the Trust wishes to
purchase the same, for the consideration described in the Sale and Servicing
Agreement; and
WHEREAS, the Servicer has timely delivered an Addition Notice related to
such conveyance as required in by Section 2.04(b) of the Sale and Servicing
Agreement;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Capitalized terms used herein shall have the meanings ascribed
to them in the Sale and Servicing Agreement unless otherwise defined herein.
"SUBSEQUENT CUTOFF DATE" shall mean, with respect to the
Subsequent Contracts transferred hereby, [_____].
"SUBSEQUENT CONTRACTS" shall mean, for purposes of this
Agreement, the Subsequent Contracts listed in the Subsequent List of
Contracts attached hereto as EXHIBIT A.
"SUBSEQUENT TRANSFER DATE" shall mean, with respect to the
Subsequent Contracts transferred hereby, [______].
SECTION 2. SUBSEQUENT LIST OF CONTRACTS. The Subsequent List of Contracts
attached hereto as Exhibit A is an amendment to the initial List of Contracts
attached as EXHIBIT H to the Sale and Servicing Agreement, as contemplated in
the definition of List of Contracts set forth therein. The Subsequent List of
Contracts separately identifies the Subsequent Contracts to be transferred
pursuant to this Agreement on the Subsequent Transfer Date, and also further
separately identifies the related Contract or Contracts with respect to which an
Addition Event or Substitution Event has occurred and which Contracts are being
deleted from the List of Contracts by virtue of the delivery of the Subsequent
List of Contracts.
SECTION 3. TRANSFER OF SUBSEQUENT CONTRACTS. Subject to and upon the
terms and conditions set forth in Section 2.04(b) of the Sale and Servicing
Agreement and this Agreement, the Trust Depositor hereby sells, transfers,
assigns, sets over and otherwise conveys to the Trust:
M-1
(i) the Subsequent Contracts identified in the related Addition
Notice, and all monies due or to become due in payment of such Contracts on
and after the related Subsequent Cutoff Dates, any Prepayment Amounts, any
payments in respect of a casualty or early termination, and any Recoveries
received with respect thereto, but excluding any Scheduled Payments due
prior to the related Cutoff Date and any Excluded Amounts;
(ii) the Equipment related to such Contracts and, in the case of
any Vendor Loan, related Applicable Security, including all proceeds from
any sale or other disposition of such Equipment (but subject to the
exclusion and release herein of Excluded Amounts);
(iii) the Contract Files;
(iv) all payments made or to be made in the future with respect
to such Contracts or the Obligor thereunder under any Vendor Agreements
with the Seller and under any guarantee or similar credit enhancement with
respect to such Contracts;
(v) all Insurance Proceeds with respect to each such Contract;
(vi all rights (but not the obligations) of the Trust Depositor
under the Transfer and Sale Agreement related to such Contracts (to the
extent not already conveyed under Section 2.01(b) of the Sale and Servicing
Agreement), as well as all rights, but not the obligations, of the Trust
Depositor under the Subsequent Purchase Agreement related to such
Contracts; and
(vii) all income from and proceeds of the foregoing;
PROVIDED, that such Contract Assets shall in no case include any Residual
Investment other than Guaranteed Residual Investments.
It is the intention of the Trust Depositor and Owner Trustee that the transfer
contemplated by this Agreement shall constitute an absolute assignment and sale
of the Subsequent Contracts from the Trust Depositor to the Trust, conveying
good title thereto free and clear of any Liens.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE TRUST DEPOSITOR. (a)
The Trust Depositor hereby represents and warrants to the Trust that the
representations and warranties of the Trust Depositor set forth in Section 3.01
of the Sale and Servicing Agreement are true and correct as of the Subsequent
Transfer Date.
(b) The Trust Depositor hereby repeats and remakes with respect to the
Subsequent Contracts as of the Subsequent Transfer Date the representations and
warranties set forth in Exhibit J to the Sale and Servicing Agreement and deemed
to be made with respect to the Subsequent Contracts thereunder.
(c) The Trust Depositor hereby represents and warrants that (a) the ADCB
of the Subsequent Contracts listed on the Subsequent List of Contracts and
conveyed to the Trust Depositor pursuant to this Agreement is $___________ as of
the Subsequent Cutoff Date, and (b) the conditions set forth in Section 2.04(b)
of the Sale and Servicing Agreement have been satisfied as of the Subsequent
Transfer Date.
SECTION 5. RATIFICATION OF AGREEMENT. As supplemented by this
Agreement, the Sale and Servicing Agreement is in all respects ratified and
confirmed and, as so supplemented by this Agreement, shall be read, taken and
construed as one and the same instrument.
M-2
SECTION 6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts (and by different parties in separate counterparts), each of which
shall be an original but all of which together shall constitute one and the same
instrument.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in
accordance with the laws of the State of New York, without reference to its
conflict of law provisions, and the obligations, rights and remedies of the
parties hereunder shall be determined in accordance with such laws.
SECTION 8. AUTHORIZATION OF TRUSTEE. By its execution hereof, the
Trust Depositor hereby authorizes and directs the Owner Trustee to execute and
deliver this Agreement on behalf of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
first written above.
NEWCOURT RECEIVABLES CORPORATION II
By:
---------------------------------------
Printed Name:
Title:
By:
---------------------------------------
Printed Name:
Title:
NEWCOURT FINANCIAL USA, INC., as Servicer
By:
---------------------------------------
Printed Name:
Title:
By:
---------------------------------------
Printed Name:
Title:
NEWCOURT RECEIVABLES ASSET TRUST 1997-1
By: Wilmington Trust Company, not in its
individual capacity but solely as Owner
Trustee on behalf of the Trust
By:
---------------------------------------
Printed Name:
Title:
M-3
MANUFACTURERS AND TRADERS TRUST COMPANY, not in
its individual capacity but solely as
Indenture Trustee
By:
---------------------------------------
Printed Name:
Title:
M-4
